IMF to Sign Loan Pact Due to Key Indonesia Reforms

JAKARTA, INDONESIA —  Indonesia is expected to sign an agreement today with the International Monetary Fund, clearing the way for as much as $400 million in loans, after pushing through key reforms in recent days.

Indonesia will secure IMF approval for the payment after “implementing several legal and political reforms,” said Anwar Nasution, the acting central bank governor.

Under the agreement, the fund will release a payment of between $380 million and $400 million to Indonesia as part of a $5-billion loan program, subject to approval by IMF directors. The government briefed IMF officials on its progress during the weekend.

Indonesia needs IMF funds as it tries to put its economy back on track and salvage investor confidence. The rupiah has lost about one-fifth of its value this year as investors doubt whether President Abdurrahman Wahid’s government is committed to putting the country’s economy back on track.

The government missed an earlier target to sign the latest pact by July 20 as it struggled to meet IMF conditions including tax reforms and progress in restructuring billions of dollars in corporate debt. The IMF delayed its last $372-million loan payment for two months after the government failed to implement key reforms.

The government said Wednesday it has restructured $5 billion in corporate debt this year through a government-sponsored debt mediation group and aims to restructure a total of $14 billion by end of the year.