JAKARTA, Sept 8: A senior International Monetary Fund official said Monday that Indonesia was "on track" with programmes aimed at overcoming its economic crisis, and was working on a new agreement intended to help companies obtain new credit, reports AP.

Hubert Neiss, IMF director for Asia and Pacific affairs, said the main element of a letter of intent between Indonesia and the fund, expected to be in place by Friday, would be a framework for domestic debt restructuring for the resumption of bank loans to corporations.

"Corporations have to normalise relations with commercial banks in order to get new credits and restart production," he said after a meeting with senior Indonesian economic ministers.

He added that Indonesia must maintain a tight monetary policy despite the pressure it exerts on the economy.

"The economy is still in an adjustment period following the shocks in balance of payments and the depreciation of the rupiah." Neiss said. "Unfortunately, monetary policy has to remain tight ana that's a sacrifice the economy has to take."

Another issue is the sharp rise in the price of rice and possible measures to correct it, Neiss said.

He added that rice subsidies will be maintainer "as long as necessary," but must be confined only to the poor.

Despite government efforts, rice prices nave risen sharply in recent weeks. Combined with a lack of supply, this has to a threat of malnutrition in some parts of the world’s fourth most populous nation.

Nelss, who is in Jakarta for a monthly review of Indonesia's economic programme, a prerequisite for the disbursement of IMF credits, said the IMF is "happy with the progress" of the country's economic reform.

He also expressed optimism that Indonesian companies will Join the government -sponsored debt restructuring plan agreed, to in Frankfurt in June.

"It's a slow process, and we have to be patient," he said of the plan.