Indonesia pledges to work hard for IMF agreement

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Tuesday, February 20 12:39 PM SGT

Indonesia pledges to work hard for IMF agreement: minister

JAKARTA, Feb 20 (AFP) -

Indonesia said it would would work hard to reach agreement with the International Monetary Fund following warnings that a continued standoff would lead to an international loss of confidence, reports said Tuesday.

Finance Minister Priyadi Praptosuharjo's comments came as senior economics minister Rizal Ramli left late Monday for Washington to hold fresh talks with the IMF.

Praptosuharjo acknowledged that any break with the IMF, primarily over central bank independence, would risk cancellation of the crucial Paris Club debt rescheduling agreeement, the Jakarta Post reported.

"But we'll make efforts to avoid that...We'll work hard to reach agreement with the IMF," he was quoted as saying.

The Paris Club of 19 sovereign creditors agreed last April to reschedule 2.8 billion dollars of Indonesian debt.

"There are concerns that if relations with the IMF are not good, the Paris Club (debt rescheduling) may also be cancelled," Praptosuharjo said.

Jakarta's refusal so far to back down on plans to limit the central bank's independence and its reluctance to totally ban regional government loans has seen the IMF delay its latest 400 million dollar loan tranche, due in December.

Ramli has accused the IMF of pushing too hard in the face of the country's complex political challenges. Trade and Industry Minister Luhut Panjaitan said last Friday the IMF should stop interfering in the small details of Indonesia's economic program.

Praptosuharjo's conciliatory comments Monday followed warnings from four of President Abdurrahman Wahid's hand-picked foreign economic advisors that any break with the IMF would result in a collapse of international confidence in the country.

"The symbolism of such a decision to go it alone would be powerful," said an aide memoire to the president from the four advisors, which include Singapore senior minister Lee Kuan Yew and former US Federal Reserve chairman Paul Volcker.

"We would urge that you consider very carefully the clear risks of such an approach, risks that range far beyond the loss of immediate financial and budgetary assistance."

The advisors issued their warnings after meeting with Wahid here on Saturday.

An editorial in Tuesday's Post criticised Ramli for "brushing aside" the IMF's postponement of the loan disbursement as a "petty annoyance."

"...the postponement means much more than a deferred cash injection, namely an international vote of no confidence in the government's willingness and capability to implement the reform measures already agreed on."

The daily urged firmer and speedier implementation of reform.

"Otherwise, the economy will plunge into an abyss with more devastating political and social repercussions than those experienced by the nation in 1998."

The IMF has so far disbursed some one billion dollars of a five billion dollar bailout package, tied to economic reforms, pledged in the wake of the devastating regional financial crisis, which started in 1997.

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