JAKARTA, Indonesia (AP) _ Indonesia has signed a new letter of intent with the International Monetary Fund, paving the way for the release of another $1 billion in aid, the government said Sunday.

IMF officials said Indonesia has made progress in overcoming its economic crisis but needs to move ahead rapidly with bank restructuring and boosting development spending.

The agreement was prepared before a wave of deadly protests and riots in the streets of Jakarta late last week. In the deal, the IMF and Indonesia said they expected deflation in November and December and that inflation for the entire year could fall below a previous estimate of 80 percent.

In 1999 the government and the IMF said they expect inflation to fall toward 10 percent.

Overall, the IMF has pledged $11.3 billion to help Indonesia overcome its financial crisis, as long as Indonesia continues to make progress on economic and structural reforms.

The IMF has about $3.3 billion left of the total amount to disburse, and other international donors and nations are funneling in billions of dollars more.

The IMF agreement reiterated that the economy would contract 15 percent this year and anticipated ``modest growth during 1999-2000.''