Linda Silaen, Jakarta – The International Monetary Fund said Friday that Indonesia's economy in 2004 could grow by more than the government's forecast of between 4% and 5%.

The IMF's director for Asia Pacific, Daniel Citrin, who is leading a review of Indonesia's economy, also said the government's 2004 budget deficit target of 1% of gross domestic product was "reasonable." The Washington-based fund believes growth could surprise on the upside in 2004 due to Indonesia's efforts to stabilize its economy, Citrin said. The exchange rate remains stable, which has allowed the central bank to reduce interest rates, he added.

Over the next two weeks the fund team will review Indonesia's efforts to reform its economy. The IMF lends money to Indonesia under a $5 billion program, in return for which the country commits to overhauling its economy.

Key commitments under the current program include selling a controlling stake in the nationalized PT Bank Danamon by this month, and offering shares in state-owned PT Bank Mandiri through an initial public offering in the second half.

Indonesia has said it won't ask the IMF for more loans when its current program expires at the end of this year.

The country must prove to investors it is serious about reforms, especially in the judicial sector, in the coming months to win back foreign investor confidence before the IMF pulls out.