Robert Go, Jakarta – A new draft agreement between the International Monetary Fund and Indonesia will impose fewer conditions and targets for the country, in what is perhaps an admission that IMF's past policies for the country may have missed the mark.

The IMF's board is expected to approve this latest letter of intent, which will trigger the continuation of a stalled US$5-billion programme and the release of a US$400-million tranche, before September.

IMF Asia-Pacific Director Anoop Singh said: "The government is facing a difficult economic situation. We now have a good appreciation of the need to be patient." Defending the IMF's past demands, Mr Singh said: "Look at the letters of intent in the context of the period in which it was done and the priorities then."

The IMF halted its programme last December after the government missed several key reform targets. A team sent in April failed to reach an accord with Jakarta and left empty handed. Some Indonesian officials said the IMF breached its role as a macro-economic institution when it insisted on micromanaging specific reform targets, especially those for restructuring agency Ibra.

Yesterday, a visibly pleased Finance Minister Rizal Ramli said: "This draft includes a simplification and a streamlining of past agreements. It only has 35 'conditionalities' instead of the 140 that were included in past agreements. Previous agreements touched on sectoral issues and other things. This focuses on the core functions of the IMF's assistance."

Mr Dipo Alam, a lead negotiator for the government, described the current draft agreement as more reasonable and achievable. He said: "It is a victory for both. The IMF wins too if they get all their targets met by the government." IMF approval before September is crucial to Indonesia, which faces two important meetings with its international creditors grouped under the Paris Club and the CGI. Without IMF support, Jakarta will not get debt-rescheduling facilities and future commitments from the two creditor groups.