Indonesia, IMF sign loans pact


There has been scant progress since Megawati took over in July but the IMF is locking in a schedule for 2002 reform

By staff and wire reports

JAKARTA, Indonesia -- The International Monetary Fund and Indonesia agreed Tuesday on a deal to keep loans to the country back on track.

The IMF issued a statement Tuesday that its team in Indonesia has inked a pact on 2002 reforms with the government.

The deal still has to be sent to the IMF's board for approval. But it should help rekindle interest in Indonesia, a country where many multinationals have been hesitant to maintain operations.

Tuesday's agreement should lead to a fourth letter of intent between Indonesia and the IMF.

Little progress since Wahid

It's the latest in a series of deals meant to keep economic reforms on track. The IMF suspended dealings with Indonesia earlier this year when the country collapsed into political turmoil, during the ousting of President Abdurrahman Wahid.

It resumed its $5 billion loan program with an August deal. Though there has been little progress on economic reform under new President Megawati Sukarnoputri, and even some backtracking on privatizations, the new accord should lead to fresh funds for Indonesia.

Details have yet to be released. But Indonesia has agreed to reforms on banking, privatization and legal issues, according to Reuters news agency.

Bank Central Asia selloff on again this year

An earlier draft of the IMF pact showed the two sides were targeting Indonesia's economy growing between 3 and 4 percent next year.

The agreement has now gone to IMF headquarters in Washington, D.C.

Overseas companies such as Canadian insurer ManuLife have complained that Indonesian laws are applied unevenly, sometimes to favor local businessmen.

Indonesian State Enterprises Minister Laksamana Sukardi said Tuesday the government plans to sell up to 51 percent of Bank Central Asia, the largest commercial bank in the country, by year-end.

The country agreed to sell off that stake by December 31 in the last letter of intent. But officials -- including Sukardi -- have said the country will not be able to hit that deadline because of poor market conditions.

Sukardi had changed his tune on Tuesday.

"Final bids must be submitted by the third week of December," he said. "The signing of the deal and purchase agreement is to be done in the fourth week of December."

Reuters contributed to this report.