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IMF Expected to OK Indonesia Aid

May 1, 1998

WASHINGTON (AP) _ Clinton administration officials and the IMF say Indonesia is making sufficient progress on key economic reforms so that another $1 billion in emergency financial aid can be approved for the Asian nation. But concerns linger about how committed President Suharto’s government is to change.

Stanley Fischer, the IMF’s deputy managing director, said Thursday that Suharto’s government probably will receive approval for the payment when the agency’s executive board meets Monday. Clinton administration officials agreed the vote would be favorable.

Fischer told an international conference, ``We see no sense of confrontation, rather a sense of trying to work things out″ with the government.

There have been reports from Jakarta, the Indonesian capital, of deep-seated problems involving Suharto’s family and friends over multibillion-dollar monopolies they control, including such commodities as cloves and palm oil.

Fischer said differences between the IMF and the Suharto government on these issues ``have been taken care of.″

Indonesia is struggling with its worst economic crisis since the 1960s, with inflation and unemployment soaring. Students are staging near-daily protests urging Suharto to step down.

The 182-nation IMF approved a $43 billion rescue package for Indonesia last autumn and made an initial $ 3 billion payment. However it suspended further aid earlier this year out of concern the government was failing to meet stringent bailout requirements.

After three weeks of negotiations last month, the two sides worked out a compromise in which Indonesia said it would end most monopolies while the IMF allowed the country to delay lifting some subsidies on food prices. The fund agreed to pay out the second $3 billion installment on a month- by- month basis in order to keep pressure on Suharto’s government.

The Clinton administration is trying to get Congress to approve a contribution of $18 billion to the IMF, whose coffers have been depleted by multibillion-dollar bailout packages for Indonesia, Thailand and South Korea.

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