Clinton consults with Soeharto about bailout<\/p>\n
WASHINGTON (Reuters): President Bill Clinton spoke with
\nIndonesian President Soeharto for about 30 minutes by telephone
\non Friday night, a White House official said on Saturday, amid
\nreports a bailout for Indonesia faced potential cutoff because of
\na disagreement about economic policy.<\/p>\n
Clinton telephoned Soeharto "to go over the current situation
\nwith respect to Indonesia," the White House official said without
\nproviding any details about the substance of their conversation.<\/p>\n
But a report on Saturday in The Washington Post said the head
\nof the International Monetary Fund had warned in a letter of cut
\noff in bailout funds for Indonesia because of dispute about how
\nto revive its battered economy.<\/p>\n
IMF Managing Director Michel Camdessus' warning was contained
\nin a letter to Soeharto, specifically criticizing the possibility
\nthat the government was considering radically changing the
\ncountry's monetary system to fix the rupiah's value against the
\nU.S. dollar, the Post said.<\/p>\n
But an IMF official in Washington had no comment on the Post
\nstory and declined to provide a copy of the letter.<\/p>\n
Meanwhile, Indonesian House Speaker Harmoko said in
\nPandeglang, West Java, yesterday that all factions in the House
\nfully supported the government plan on CBS.<\/p>\n
"I have talked to all the four factions at the House and all
\ncome out in support of CBS as they are confident the system will
\nstabilize the rupiah rate and restore certainty for economic and
\nbusiness activities," Harmoko was quoted by Antara as saying.<\/p>\n
The Washington Post said it had obtained a copy of Camdessus'
\nletter in which the IMF chief warned he would recommend the 182-
\nnation organization suspend a rescue effort worth more than $40
\nbillion intended to help Indonesia regain economic stability.<\/p>\n
"In the present circumstances... if a currency board proposal
\nwere adopted, we would not be able to recommend to the IMF Board
\nthe continuation of the current program because of the risks to
\nthe Indonesian economy," the Post quoted Camdessus.<\/p>\n
"This would be a very unfortunate development, as it would
\nshrink even further the reserve basis for the currency board and
\nfurther undermine its very slim chance of success," Camdessus was
\nquoted as saying.<\/p>\n
The IMF is scheduled to disburse $3 billion to Indonesia in
\nthe middle of next month, after a review of its compliance with
\nterms agreed for the international rescue effort.<\/p>\n
Indonesia, Thailand and South Korea each are receiving
\nmultibillion-dollar international bailouts under the auspices of
\nthe IMF.<\/p>\n
As the Indonesian rupiah has plummeted in value, signs have
\nincreased that Soeharto favored moving to a Hong Kong-style
\ncurrency board to fix the rupiah's value against the dollar as
\nadvocated by U.S. professor Steve Hanke, recently appointed a
\nspecial adviser to an Indonesian economic policy committee,<\/p>\n
Little enthusiasm has been expressed for such a proposal by
\nkey IMF member countries, with both the United States and Germany
\nsaying they felt it was premature for Indonesia.<\/p>\n
But none has warned so bluntly as Camdessus that Indonesia
\nfaced a potential cutoff of funds if it went ahead with a
\ncurrency board.<\/p>\n
Australia<\/p>\n
In Canberra, Australian Treasurer Peter Costello said
\nyesterday the best way for Indonesia to stabilize the rupiah was
\nthrough the International Monetary Fund program rather than
\nthrough a currency board.<\/p>\n
"If they follow that (IMF) program, and if they adhere to that
\nprogram, that is their best opportunity to stabilize their
\ncurrency," Costello told Channel Nine television when asked about
\nthe currency board proposal.<\/p>\n
Australia has pledged US$1 billion to the IMF package for
\nIndonesia when it was put together last year, and Costello
\nreiterated the government's position that the funds were
\nconditional on compliance with the IMF program.<\/p>\n
"I think that in Indonesia it's the IMF program which is going
\nto give international confidence, and I believe that the
\nIndonesian authorities should be following that program and not
\ndeparting from it," he said.<\/p>\n
That included cleaning up the banking system, running a good
\nbudgetary policy and ensuring Indonesia had the currency policy
\ndiscussed with the IMF, Costello said.<\/p>\n
"If they depart from that program, and this is all about
\nconfidence, a lot of people in the international community will
\ntake a second look," he said.<\/p>\n
Costello said the financial instability was spilling over into
\nsocial instability, and it was important to get the economy back
\non track to prevent further unrest.<\/p>\n
"There are obvious problems in Indonesia and it will take now
\na great deal of political improvement to deal with that, but the
\nbasis of it will also be improving the economy," he said.<\/p>\n
Related stories -- Page 11 and 12<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/clinton-consults-with-soeharto-about-bailout-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }