Indonesia to Repay $3.7b of IMF Loan

A Business News report says the government will repay about US$3.7 billion or half of the country's debt to the International Monetary Fund ahead of schedule, the multilateral lender.

The statement did not specify when the government would make the payment. Indonesia has been a cash strapped country for a long time and I for one would be interested to know where al this money is coming from. With what I refer to as 'higher priorities', the government seems to be dismissing those in need and sacrificing much needed infrastructure just to appease the IMF.

The country owes around US$7.8 billion to the IMF which Indonesia received in the form of standby loans as part of a multibillion dollar bailout program after the regional financial crisis of late 1990s. The original schedule called for repayment of the total debt by December 2010.

Reserves have surged on higher revenue from oil and gas exports amid rising crude-oil prices as well as estimated monthly inflows of around $1 billion since January from stock market investors bullish about Indonesia's economic outlook. The government has forecast economic growth of 5.9 percent this year compared to last year's 5.6 percent.

According to the report some have criticized the advance repayment of the IMF loan because of concerns over the sustainability of the country's foreign reserves. Those worries were heightened by the recent fall in the value of the rupiah against the U.S. dollar as foreign investors fled emerging markets on interest rate jitters.