IMF, Indonesia Set To Strike Agreement

Sent by INDO-CHAOS's News-Hunter: "T.O" from Japan

JAKARTA (Nikkei)-The Indonesian government and the International Monetary Fund are likely to reach a tentative agreement on a suspended $ 43 billion IMF rescue program as early as Saturday.

Negotiations on the bailout had been suspended because of Jakarta's refusal to fully implement the IMF reforms. Upon agreement, the IMF is expected to resume a $3 billion installment of aid.

The agreement under discussion calls for concessions on both sides. Jakarta would give up a plan to peg the rupiah to the U.S. dollar, while the IMF would allow Jakarta to postpone cuts in energy subsidies.

The two sides apparently agreed the suspension of the IMF bailout would only prolong the economic turmoil in the world's fourth most populous nation, undermining security in the whole Asian region.

During negotiations, the Indonesian side informed the IMF of its decision to give up its plan to peg the rupiah.

The IMF, for its part, agreed Jakarta could postpone reducing its energy subsidies to avoid hiking public-utility charges in April. The IMF also said it would allow Indonesia's food agency to continue regulating agricultural trading and permit Jakarta to extend about 5 trillion rupiah in subsidies for agricultural imports and pharmaceutical materials.

The IMF is also likely to allow Jakarta to modify some of the 50 economic reforms mandated under the terms of the rescue package. Indonesia is expected to make its final decision Friday night.