Managing Director's Announcement: IMF Board Approves Extended Arrangement To Support Indonesia's Economic Program

• Pages: 269-270

Page 269

In a statement issued on August 25, IMF Managing Director Michel Camdessus said: "I am pleased to announce that the IMF's Executive Board today approved the next SDR 734 million (about $1 billion) credit tranche for Indonesia. At the same time, the Executive Board approved an Extended Fund Facility (EFF) for Indonesia totaling SDR 4.7 billion (about $6.2 billion) in support of the government's broad-based program to achieve economic recovery. The EFF replaces the three-year standby credit approved by the IMF

The longer repayment period will allow time for the reform program to take affect.

-Camdessus on November 5, 1997, under which disbursements have already amounted to SDR 3.7 billion (about $4.9 billion), and covers its remaining 26-month period through November 2000 [see Press Release No. 97/50, IMF Survey, November 17,1997, page 354]. The amount of the credit available under the EFF and its duration are identical to those remaining under the stand-by credit that it replaces. However, the repayment period for financing under the EFF, which is intended to support economic programs dealing with deep-seated structural problems, is substantially longer than under a stand-by credit.

The replacement of the stand-by by the EFF is in response to the broadening Page 270 of Indonesia's economic strategy in recent months under the stand-by credit to include a wide-ranging program of structural reforms. These include programs for the restructuring of the banking and corporate sectors, as well as the deregulation of monopolies, the privatization of state-owned industries, and trade liberalization. This...