Joanne Collins, Jakarta – The International Monetary Fund said on Tuesday it was still aiming to release a delayed $400 million loan to Indonesia next month, erasing fears an agreement was many weeks away.
Hopes of an imminent loan release dimmed last week when a high level Fund mission left Jakarta saying only it would complete its review of the country's reform efforts before September.
But IMF senior representative in Jakarta John Dodsworth told Reuters on Tuesday the success of the mission had been underestimated.
Asked if the loan would be released in August, Dodsworth said: "Yes that's certainly our joint objective with the authorities here ... sometime in second-half of August, that is our aim."
The loan, frozen since December over a raft of missed economic targets, is vital to trigger more foreign aid for the near-ruined economy and to woo investors back. A $5.8 billion debt rescheduling agreement with the Paris Club of official creditors signed in April last year also hinges on an active IMF programme.
Speaking in an interview with Reuters Television in Tokyo, Dodsworth also allayed fears looming impeachment hearings by the country's top legislature against President Abdurrahman Wahid could set the loan's release back further. "We would expect this [loan disbursement] to go ahead in the same way," he said.
The top legislature is due to meet from August 1 to consider sacking Wahid over his chaotic 21-month rule, but has threatened to sit as early as Friday if he carries out a threat to declare a state of emergency that day and call early elections. Few analysts expect him to survive, whenever the assembly meets.
The IMF's first deputy managing director, Stanley Fischer, said last week the potential for instability meant an August loan was "not certain by any means". The $400 million loan is part of a $5 billion, three-year IMF programme signed with Jakarta in January last year.
No rush on bank sales
In an unexpected move, the Fund also backed down on the divestment of key banks, originally slated for sale in December and partly the reason the $400 million was delayed. Dodsworth said negotiations for a maximum 30-percent strategic stake sale in Indonesia's largest retail bank, Bank Central Asia (BCA) , should not be rushed.
"There is still a process going on with BCA and commercial negotiations cannot be hurried and should not be subject to deadlines," Dodsworth said. Indonesia's powerful bank restructuring agency (IBRA) which controls BCA, was due to announce the winning bids for the stake sale last month.
"Indonesia needs to make asset sales but needs to make them on the right terms... I'm happy as long at end of the day, the bank is sold and to a strong partner," he added. The Fund has been critical of Indonesia's footdragging over asset sales, partly blaming it for stalling the economic recovery.
"... think we need to be a bit a little bit more patient in regard to these deals."