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Thursday, 7 September, 2000, 21:10 GMT 22:10 UK
Indonesia signs new IMF deal
Bank Indonesia acting governor Anwar Nasution (left) shakes hands with IMF representative John Dodsworth (right)
Indonesia has renewed its reform commitments
Indonesia has signed a slightly revised letter of intent with the IMF, preparing the way for the release of new funds.

As expected, the document differed little in substance from a letter of intent signed on 31 July by members of Indonesia's previous government. But it included a fresh 10-point reform programme put together by the country's new chief economics minister Rizal Ramli.

The new commitments were made as part of a $5bn, three-year loan deal with the IMF, under which Indonesia receives regular loans in return for implementing tough economic reforms.

Mr Ramli had previously said that he wanted the IMF to delay disbursement of a fresh $400m loan tranche which had become due while the new government made its own study of the economic rescue programme.

Those funds are now likely to be handed over later this month.

Infrastructure spending

Mr Ramli said the letter of intent would be reviewed after three months instead of the two months stipulated in previous documents.

Among other changes, the letter called for any Indonesian budget surplus to be spent on rural infrastructure rather than on reducing debts and for the World Bank and Asian Development Bank to play a greater role in overseeing agricultural reforms.

Mr Ramli has previously criticised the IMF for being intrusive and said it should confine itself to macroeconomics and monetary policy.

Bank Indonesia acting governor Anwar Nasution said the letter contained "no major changes" in monetary policy.

The three key elements of this policy remained the adoption of a floating exchange rate system, the anchoring of monetary policy to the inflation target and the acceleration of banking sector reforms, he said.

The new agreement with the IMF also said the Indonesian government would take the initiative as to the contents of future draft letters of intent rather than the IMF as before.

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30 Aug 00 | Business
Indonesia in IMF talks
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