Robert Go, Jakarta – A long-delayed International Monetary Fund (IMF) loan tranche to Indonesia, worth around US$400 million (S$728 million), would be released next month. But this was likely to happen only after Jakarta's political questions were resolved, a key Indonesian adviser and analysts said yesterday.

Senior economist Dr M Sadli said: "The team will go back to Washington with a draft of the new letter of intent. It will take until the end of the month for them to prepare a deal. "It's got little to do with politics, but at the earliest, the new agreement can only be signed in August." Dr Sadli's remarks came after Asia-Pacific Director Anoop Singh told Vice-President Megawati Sukarnoputri of the IMF's commitment to Indonesia.

Mr Singh added that Ms Megawati had asked for more flexibility from the IMF, given Indonesia's severe problems. IMF First Managing Director Stanley Fischer earlier said the timetable for the next loan tranche to Indonesia was "not certain by any means because of the potential instabilities".

Several analysts have speculated that the IMF would wait until the first week of August, when President Abdurrahman Wahid will face an impeachment challenge from legislators, before deciding the fate of its loans.

Dr Raden Pardede, head of Danareksa Research Institute, said: "It makes sense for them to wait. Otherwise, they may have to deal with a new government team and further revisions of their agreements." An IMF source, however, said "We do not base our decisions on political considerations."