Bambang says inflation rate will drop sharply<\/p>\n
WASHINGTON (Dow Jones): Indonesian Finance Minister Bambang
\nSubianto said Friday Indonesia's rate of inflation will drop
\nsharply in coming months and that since June the base money
\nsupply, Indonesia's key monetary indicator, has shown no growth.<\/p>\n
Bambang's comments were in the text of speech to be delivered
\nat a conference hosted by the Brookings Institute and the Harvard
\nInstitute for International Development.<\/p>\n
\"Although the sharp depreciation of the rupiah is still
\nworking its way through our price system, I am confident that the
\nrelative stability of the rupiah in the past few months, combined
\nwith monetary restraints will allow for a substantial decline in
\ninflation over the coming months,\" Bambang said.<\/p>\n
In the speech, Bambang called for tighter supervision of
\nbanks, enforcement of laws impartially, better financial
\ndisclosure, the avoidance of moral hazard, and that bank managers
\nbe more severely punished for bank failures.<\/p>\n
At the conference, Bambang said the essence of the banking
\nbill now being debated by the House of Representatives (DPR) was
\nis that Indonesian banks will be allowed full foreign ownership
\nand that foreign banks will be free to open branches in
\nIndonesia.<\/p>\n
\"A bank is a bank,\" Bambang said, adding that all banks in
\nIndonesia will be supervised in the same manner regardless of
\ntheir ownership.<\/p>\n
Bambang said current law doesn't allow for foreign ownership
\nof banks in Indonesia.<\/p>\n
He explained the most difficult part of handling the failed
\nbanks is selling off the property they own.<\/p>\n
Bambang, who acknowledged in his comments that Indonesia's
\npast exchange rate regime \"encouraged risky behavior,\" said the
\nminimum estimated cost of the bank bailout is $1.5 billion.<\/p>\n
Although the Indonesian government has taken big stakes in
\nseven big banks, four of which are still in operation, the
\ngovernment has no interest in keeping those banks under its
\ncontrol and wants to sell it shares as soon as possible, Bambang
\nsaid.<\/p>\n
Bambang also expressed satisfaction with the outlook for this
\nyear's rice crop.<\/p>\n
\"A sharp improvement in our agricultural sector will help
\ncushion the impact of the economic crisis that is forcing
\nmillions of job losers to return to the rural areas,\" he said.<\/p>",
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