Jakarta – The International Monetary Fund (IMF) is to release $US486 million to Indonesia as part of its ninth review of Indonesia performance.

The executive board of the IMF announced yesterday the completion of its latest review, which opens the way for release of a further US$486 million in loans.

The IMF said the review was carried out under a US$5 billion Extended Fund Facility arrangement, which opens the way for bringing the total amount drawn to about US$4 billion.

Shigemitsu Sugisaki, deputy managing director and acting chair, said budget performance through the first quarter was well within the program's target and was on track to achieve the full-year target of 1.8 percent of GDP.

"The Indonesian authorities are to be commended for their continued strong policy performance under their arrangement with the fund. The economy is sustaining steady growth, despite a number of external and domestic shocks, inflation has continued to decline and there has been an additional buildup of international reserves," Mr Sugisaki said. "These developments have contributed to a further improvement in financial market sentiment, manifested in a strengthening of the rupiah, and a sharp rise in the stock market." He said Indonesia's fiscal policy remained geared toward achieving a significant fiscal consolidation and reduction in public debt. Other priorities in the fiscal area were being met through a strengthening of the decentralization framework and efforts to enhance the public expenditure management system.

"Bank Indonesia's prudent conduct of monetary policy has contributed to a sustained decline in inflation and appreciation of the rupiah. These developments have allowed interest rates to decline in support of economic recovery, and a continued cautious monetary stance will help achieve a further and lasting decline in inflation," he said.

Progress had also been made in structural areas, including on IBRA recoveries, which were on track to meet the annual target.

Now the priority was to ensure a transparent disposition of the assets of IBRA's largest debtors, and enhance recoveries from the bank shareholder settlement agreements through intensified efforts to ensure compliance. The authorities were also encouraged to keep up the momentum of the privatization program.

"Financial sector reforms continue to advance on schedule. The divestment of Bank Danamon was recently concluded, the timetable for the divestment of Bank Lippo has been announced, and the initial public offering [IPO] of the country's largest bank, Bank Mandiri, is expected to be concluded shortly. A comprehensive plan to strengthen the financial sector safety net has been completed, representing an important milestone in the reform of the financial system," Mr Sugisaki said.

Sustained strong progress on the government's comprehensive reform agenda would be key to improving Indonesia's investment climate and maintaining market confidence. Priorities were legal and judicial reforms, including the establishment of the Anti-Corruption Commission, the adoption of amendments to the bankruptcy law and the reform of the Commercial Court.