Jakarta – Indonesia signed a new letter of intent with the International Monetary Fund (IMF) yesterday, paving the way for the disbursement of a long-delayed US$400 million (S$732 million) loan.

The fourth letter of intent to the IMF focuses on accelerating privatisations and asset sales and pushing ahead with banking and law reforms, Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti said. He said the letter of intent was now ready to be sent to the IMF board for approval.

The new agreement contains reform pledged by the Indonesian government in return for an IMF overall aid package of US$4.8 billion. The government also intends to extend the loan programme by another year to 2003, Mr Kuntjoro-Jakti told reporters at the Finance Ministry.

The IMF's Jakarta representative, Mr David Nellor, has said the IMF expects to disburse the new loans after the board meets next month. "The IMF board will review the Indonesian government's letter of intent in mid-January," he said.

In a statement distributed at a press conference, Mr Kuntjoro-Jakti said the proposals contained in the letter aimed to "stimulate the real sector through macroeconomic stability, speeding up asset sales to the private sector and continuing banking and law reforms".

He also said the new letter of intent highlights the importance of improving tax and Customs administration to support a healthy and sustainable fiscal policy.