JAKARTA, 28 July 2003 - Indonesia said on Monday it had formally decided to end its loan programme with the IMF once it expires at the end of the year, ending a financial lifeline that has been in place since the 1997-98 Asian financial crisis. Ministers had been saying for months that Indonesia would not seek a new loan deal once the current $5 billion programme ended but the decision had needed President Megawati Sukarnoputri's final seal of approval.
"The government will end the working programme with the IMF, which incorporated letters of intent, at the end of 2003," chief economics minister Dorodjatun Kuntjoro-Jakti told reporters after a cabinet meeting chaired by Megawati. "The government will repay loan principal and interest to the IMF according to a schedule that has been set, as well enter into a post (IMF) monitoring programme."
Indonesia owes the International Monetary Fund around $9.2 billion. The current programme comprises letters of intent that set out economic reforms needed for Indonesia to tap loans. In comments likely to allay investors' concerns Indonesia might struggle to stick to economic reforms once the programme ends, Dorodjatun said: "The government will issue a number of policies and priority programmes in a bid to sustain reforms and the economic recovery."
He said those policies would be detailed on August 15 when the government is due to hand down its draft budget for 2004. The IMF's prescriptions and tight timetables for reform were often a source of tension between the two sides, leading at one point to an eight-month stalemate when loans were frozen.
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