Subject: No money for E.Timor transition, says IMF

No money for E.Timor transition, says IMF

By Paul Tait

DARWIN, Australia, Nov 7 (Reuters) - The International Monetary Fund will not give money to East Timor during the United Nations transitional administration of the battered territory, a regional IMF official said on Sunday.

``In the transitional stage, since East Timor is not a member, the assistance of the fund will be limited to policy advice and technical assistance,'' IMF Asia and Pacific representative Luis Valdivieso said.

``No financial assistance will be involved...we expect that once the East Timorese government is constituted the procedures for membership could be initiated and at that point East Timor could have access to funds,'' he said.

Valdivieso told reporters the Fund was working with other agencies, such as the World Bank, to assess how much was needed for immediate humanitarian relief and economic reconstruction.

The World Bank is conducting a multi-agency assessment mission and will set up a trust fund for East Timor ahead of a donors' meeting next month.

MACROECONOMIC REPORT

The IMF is examining how to set up a macroeconomic framework and will soon report to the U.N. Transitional Administration in East Timor (UNTAET), which is yet to take up its full role of civil administration and peacekeeping.

Pro-Indonesia militias went on destructive rampages after East Timorese voted in August for independence from Indonesia, which invaded the former Portuguese colony in 1975.

Indonesia ratified the ballot in October and the last of its troops left the territory a week ago.

Hundreds of thousands of East Timorese refugees fled in fear of the militias and much of the capital, Dili, was destroyed.

UNTAET will replace a multinational intervention force which Jakarta reluctantly allowed into East Timor in September and is expected to be in place for between two and three years.

Valdivieso said it was crucial a currency and regulatory authority were put in place as soon as possible.

``It is a matter of urgency, payments need to be made and a stable single currency should be chosen,'' he said.

Senior East Timorese figures such as former governor Mario Carrascalao want the Portuguese escudo as the official currency. Valdivieso warned against making hasty, emotional decisions.

``I'm not prejudging whether the escudo is an emotional decision,'' Valdivieso said. ``It would need to be discussed with the Portuguese government, because it has implications for their monetary policy...it has implications for the European Union.''

He said the IMF would have an estimate next week of how much rupiah still in circulation would have to be retired.

``We understand it is a significant amount,'' he said, adding it was important talks with Indonesia continued.

The Fund will also recommend the setting up of a regulatory authority to oversee the fledgling East Timorese economy, which World Bank officials have said could eventually be based on natural resources, coffee and tourism.

The United Nations has said $199 million was needed to cover emergency needs, the reconstruction phase and to reinvigorate an economy that was propped up for over 20 years by Indonesia.


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