IMF’s Lagarde says “no” Indonesian loan offer

International Monetary Fund Managing Director Christine Lagarde walks into her press conference upon the conclusion of her visit to Indonesia at the Grand Hyatt Hotel September 2, 2015 in Jakarta, Indonesia. IMF Staff Photo/Stephen Jaffe
International Monetary Fund Managing Director Christine Lagarde walks into her press conference upon the conclusion of her visit to Indonesia at the Grand Hyatt Hotel September 2, 2015 in Jakarta, Indonesia. IMF Staff Photo/Stephen Jaffe

The International Monetary Fund (IMF) managing director Christine Lagarde dismissed speculation that her visit to Jakarta this week was to discuss a loan offer with the Indonesian government.

“At the risk of sounding like a parrot, the answer is no. I was not here to discuss any loan arrangements,” Lagarde said, responding to a question during a press conference at the end of her two-day visit in the Indonesian capital.

Lagarde said her return to Indonesia was at the invitation of Bank Indonesia (BI), the country’s central bank, to participate in a one-day conference on Asian finance co-hosted by BI and IMF.

The speculation was rife in the Indonesian media ahead of Lagarde’s visit as the country is feeling the pinch of the global economic slowdown and continued deprecation of its currency against the US dollar to its lowest in 17 years.

Government officials have also said that it is falling behind on funding to realize President Joko Widodo’s ambitious infrastructure projects.

IMF senior resident in Indonesia, Ben Bingham, denied the speculation ahead of Lagarde’s arrival, saying it had “no foundation.”

The government has allocated Rp 290 trillion for infrastructure development in this year’s budget and increased its allocation in the proposed 2016 state budget to Rp 313,5 trillion.

Lagarde reiterated that the IMF’s mission is not to invest in infrastructure development projects and their financing in general.

“Our mission has to do with financial stability with surveillance of macroeconomic policies of membership the 188 members but we are very cognizant of the importance of infrastructure in the region,” she said.

In his opening remarks at the Asian African conference in April, Joko told 30 leaders and delegates from 92 countries that it was an “obsolete” idea to think the world economic problems can only be solved by the IMF, World Bank and the Asian Development Bank (ADB).

However, the ADB announced Tuesday that it has approved a $400-million-program loan to help  Indonesia to develop its financial sector, including expanding access to financial services for poor households.

“A deep, liquid and efficient financial sector is critical for stability and growth, and this assistance supports reforms, including measures to help the newly integrated financial sector regulator, OJK, to become fully operational,” Jim Nugent, director general of ADB’s Southeast Asia Department said in a statement.

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