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Wednesday, 30 August, 2000, 15:50 GMT 16:50 UK
Indonesia in IMF talks
Indonesia's chief economics minister Rizal Ramli (left) meets the IMF team in Jakarta
Indonesia is asking the IMF to delay the next loan
An IMF mission arrived in Jakarta on Wednesday for talks with Indonesia's new economics ministers aimed at clarifying the country's latest agreement with the fund.

IMF officials on Tuesday said the fund would not be renegotiating the agreement, under which Indonesia receives regular loans in return for implementing tough economic reforms.

But the visit comes one day after new chief economics minister Rizal Ramli said some parts of Indonesia's latest letter of intent may no longer apply because "conditions have changed quite considerably."

Mr Ramli - an outspoken economist who has been highly critical of the IMF in the past - said he wanted the fund to delay disbursement of a fresh $400m loan tranche while the new government made its own study of the IMF programme.

Repeated commitments

He also said he thought the IMF's role should be restricted to macroeconomics and monetary policy.

The Indonesian rupiah - which had slipped on currency markets when the new government was appointed - was largely unaffected by Mr Ramli's comments.

Analysts said any changes to the $5bn, three-year loan deal with the IMF were likely to be minor as President Abdurrahman Wahid had repeatedly committed himself to honouring it.

Mr Ramli would be forced to fall into line with the policy, they said.

But any signs that Indonesia was backing away from reforms would send shockwaves through the community of donors and investors who have injected billions of dollars into the shattered economy in the past three years.

Additional measures

In its latest IMF letter of intent, signed on 31 July by members of the previous government, Indonesia pledged to implement additional measures in the areas of asset recovery, bank reform and corporate restructuring.

In earlier documents related to the IMF programme, Indonesia told the fund it envisaged achieving economic growth of 5-6% a year in the medium term and aimed to keep inflation below 5% annually.

It said the programme would enable it to build up reserves to a level providing six months of import cover and reduce the government's debt-to-GDP ratio to 65% by 2004 from about 100% in early 2000.

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Rise and fall of strongman Suharto
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30 Aug 00 | Asia-Pacific
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25 Aug 00 | Asia-Pacific
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