IMF terms spark riots in Indonesia

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AFTER a delay of nearly two months Indonesia was finally given the second tranche of the International Monetary Fund (IMF) bailout, totalling almost $1bn. However the strict terms under which the loan was made have contributed to an outbreak of rioting in the Indonesian city of Medan. This in turn unsettled the financial markets and share prices slid over 2 per cent.

Originally Indonesia was scheduled to receive $3bn on 15 March but the IMF said it was unhappy about the government's willingness to implement a reform programme it believed had been agreed. A flurry of talks were then held.

Yesterday it became clear that not only has the disbursement been cut by a third but it also came accompanied by a warning from the IMF that the rest would not be paid if there was more back-sliding.

On Monday the Indonesian government ended fuel subsidies, which sent the price of petrol and kerosene, used by the poor for cooking, soaring. The government also ended the clove monopoly in the hands of President Suharto's son Hutomo Mandala Putra.