CIDES warns Megawati of tough challenges<\/p>\n
JAKARTA (JP): President Megawati Soekarnoputri still faces
\ntough challenges ahead in fixing the country's severe economic
\nproblems, despite her success in obtaining strong international
\nsupport, according to CIDES director Umar Juoro.<\/p>\n
CIDES (Center for Information and Development Studies), is a
\nprivate think-tank linked to former president B.J. Habibie.<\/p>\n
\"Although President Megawati's government has succeeded in
\nwinning the confidence of major international donors, it still
\nfaces many challenges that must be dealt with,\" Umar said during
\na monthly media briefing.<\/p>\n
Megawati assumed power in July after lawmakers dismissed
\nAbdurrahman Wahid for incompetence in dealing with the country's
\neconomic and political crisis.<\/p>\n
Mega presented to the House last week the 2002 draft state
\nbudget which has been commended by many as the right step for
\nhelping to maintain macroeconomic stability and a starting point
\nin consolidating the country's fiscal sector.<\/p>\n
This was also followed by the decision of the International
\nMonetary Fund early this week to disburse a US$395 million loan
\nto the country, a vital element in winning other assistance from
\ninternational lenders.<\/p>\n
But Umar said that there were still many problems outside of
\nthe budget issue.<\/p>\n
He pointed out that slow progress in the corporate debt
\nrestructuring program had been a major factor preventing
\ninvestors from returning to the country.<\/p>\n
\"Foreign investors, thus far, have given a positive response
\nto President Megawati's government, yet they are not willing to
\ninvest large amounts of capital, and are awaiting a more
\nfavorable business climate,\" he said.<\/p>\n
The 1997 economic crisis drove many local corporations to
\nnear bankruptcy, rendering them unable to repay massive domestic
\nand foreign debts.<\/p>\n
The debt overhang has been a factor discouraging banks from
\nchanneling badly needed loans, analysts have said.<\/p>\n
Umar said that other challenging problems included the
\ngovernment privatization program, and the disposal of assets
\nunder the Indonesian Bank Restructuring Agency.<\/p>\n
He added that the possibility of a deeper global economic
\nrecession following the terrorist attacks on the U.S. would
\ncreate bigger challenges for Megawati and her economic team in
\ntrying to restore the economy.(dmr)<\/p>",
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