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GOVERNMENT DECIDED POLICY AFTER THE COMPLETION OF PROGRAMME WITH THE IMF

Jakarta, 28 July 2003 - President Megawati Soekarnoputri today chaired a cabinet meeting discussing options of policies after the completion of the working programme with the IMF, which is scheduled to end in December 2003. The meeting was attended by the Vice President, Coordinating Minister for Political and Security Affairs, Coordinating Minister for Economic Affairs, Minister of Finance, Minister of Development Planning/Chairman of National Planning Board, Governor of Bank Indonesia, Minister of Trade and Industry, Minister for State-owned Enterprises, Minister of Energy and Mineral Resources, Minister of Technology, Minister of Information and Communication and Secretary of State.

The decision that was taken at the Meeting makes a direct reference to the Decree of the People's Consultative Assembly No. VI/MPR/2002 that stated: "...With regard to the completion of the programme with the IMF at the end of 2003, the Government should not extent it, and carefully prepare an exit plan that would avoid monetary instability..."

The details of the decision made at the Cabinet meeting are:

1. The Government will complete the current programme with the IMF, which incorporates the letters of intent, according to the schedule at the end of 2003;
2. The Government then will repay loan principal and interest to the IMF according to a schedule that has been set, as well as enter into a post programme monitoring;
3. Should the economic conditions in the following years permit, the elected Government in 2004 could opt for an accelerated payment of loan principal and interest to the IMF;
4. The Government will issue policies and priority programmes to continue reforms and economic recovery, which will consist of the following group of policies:

a. Macro Economic Stability Program;
b. Financial Sector Reform;
c. Improve Investment, Exports and Job Creation Conditions.

The Government will detail these policies and programmes during the submission of the Budget Plan for the Year 2004 to the Parliament on August 15, 2003.