Politic-Economic-Society-Tech

IMF Sees September Mission To Indonesia

The IMF yesterday expressed the possibility of a mission to Indonesia in September, following a draft letter of intent issued on Friday containing Jakarta's reform pledges in return for a $400 million aid tranche, reports AFP. "The change in government itself need not cause a mission to go there," stressed IMF spokesman Thomas Dawson. "The developments in Indonesia in the last week were part of sort of that baseline scenario... but the mission had been in touch with [then-vice president and now newly appointed President Megawati Sukarnoputri] and actually had a meeting with her."

Although Megawati sacked ousted President Abdurrahman Wahid's entire cabinet as the first order of business, she ordered the ministers to keep on working but not to make any major decisions without her approval until the new cabinet is formed, the story notes. 

The draft letter agreed to on Friday must first be approved and signed by the IMF board before it will allow the release of the stalled loan tranche. The loan has been held up by the IMF since December because of Jakarta's alleged foot-dragging on economic reforms.

The news comes as Les Echos (France, p.6) reports that following Megawati's appointment and Wahid's "voluntary exile," the political transition in Indonesia is nearing completion. A new vice-president should be elected today by the National Assembly, and a new cabinet announced by the end of the week or over the weekend at the latest.

Megawati cannot afford an impasse on the financial support provided by the Bretton Woods institutions, the story says. The fiscal deficit has been spinning dangerously out of control since the beginning of the year. The markets would prefer to see former economic advisers Laksamana Sukardi and Kwik Kian Gie [named to the top economic posts], but their determination to push through reforms and fight corruption created difficulties for them in government. Economics professor Sri Mulyani may be a good candidate of compromise-a key virtue in Indonesian politics, the story says.

source:  WorldNews, July 27, 2001