Five group to review RI's reform program<\/p>\n
JAKARTA (JP): The International Monetary Fund (IMF) and the
\nIndonesian government have agreed to form five discussion groups
\nto review the multi-billion dollar bailout package, IMF Asia
\nPacific director Hubert Neiss said yesterday.<\/p>\n
Neiss said after meeting with Coordinating Minister for
\nEconomic, Financial and Industrial Affairs Ginandjar Kartasasmita
\nthat the first group would focus on monetary policy and the
\nsecond group would concentrate on efforts to strengthen the
\nbanking sector.<\/p>\n
\"Both are necessary to control inflation,\" Neiss told
\njournalists after an hour-long meeting with Ginandjar.<\/p>\n
The third group will be in charge of reviewing the 1998\/1999
\nbudget and deciding how to fit necessary subsidies into a
\nfeasible budgetary framework.<\/p>\n
The fourth group will focus on structural reforms, \"which in
\nour view are essential to pave the way for the resumption of
\ngrowth in the Indonesian economy once the crisis is over,\" Neiss
\nsaid.<\/p>\n
The fifth group will discuss external corporate debt
\nrestructuring initiatives.<\/p>\n
\"This is a very important element in creating the necessary
\nconfidence to turn around the present crisis,\" Neiss added.<\/p>\n
Neiss said he would stay in Indonesia for \"as long as
\nnecessary,\" as the two sides attempt to negotiate an end to the
\nstandoff.<\/p>\n
\"We of course aim to conduct this discussion as efficiently as
\npossible so that we do not have any undue delay (in disbursing
\naid),\" Neiss said.<\/p>\n
The IMF has withheld the second US$3 billion tranche of a
\nUS$43 billion aid package pending a review of progress in
\nimplementing reforms agreed to by the Indonesian government on
\nJan 15. The promised reforms include dismantling cartels and
\nmonopolies and restructuring the banking sector.<\/p>\n
Ginandjar declined to answer reporters' questions after the
\nmeeting but later said in a statement that the Indonesian
\ndelegation to the first and second groups will be led by Sjahril
\nSabirin, the central bank governor.<\/p>\n
The delegation to the third group will be led by Fuad
\nBawazier, the new finance minister. The fourth group delegation
\nwill be led by the Minister of Industry and Trade Mohamad (Bob)
\nHasan and the delegation to the fifth group will be jointly led
\nby the new State Minister for the Empowerment of State
\nEnterprises Tanri Abeng, and Radius Prawiro, chairman of the
\ngovernment team set up to tackle the problem of external
\ncorporate debt.<\/p>\n
The IMF team will report back to the Fund's executive board in
\nWashington, which is scheduled to discuss the delayed
\ndisbursement of the US$3.0 billion aid at a meeting next month.<\/p>\n
The current meetings are the first full review of the reform
\nprogram undertaken since the first aid payments were made. The
\nmeetings are also due to set reform targets for the next three
\nmonths.<\/p>\n
On Jan. 15 President Soeharto signed up to a 50-point program
\nof economic reforms in return for a US$43 bail-out package
\nbrokered by the IMF. He later criticized the reforms for failing
\nto arrest the fall in value of the rupiah.<\/p>\n
The rupiah was trading at about 10,200 to the dollar yesterday
\nafternoon, down more than 70 percent from its level in July when
\nthe currency crisis started to bite.<\/p>\n
Reports from Japan quoted Vice President B.J. Habibie as
\nhaving told a visiting Japanese official last weekend that it
\nwould be difficult for Indonesia to implement two of the 50
\nreforms and that it needed to renegotiate a further eight points
\nin the Jan 15. agreement.<\/p>\n
The reports cited liberalizing the trade and distribution of
\ncloves, used mostly for local cigarettes, and several basic food
\nitems as the two main sticking points.<\/p>\n
The IMF standoff with Indonesia has sparked a flurry of
\ninternational efforts to bring about reconciliation between the
\ntwo parties in recent weeks.<\/p>\n
Japanese Prime Minister Ryutaro Hashimoto made a trip to
\nJakarta last weekend for talks with Soeharto and has since
\ncontacted leaders in Australia, Britain, Singapore, South Korea,
\nand the United States to enlist their help in assisting Indonesia
\novercome its economic crisis.<\/p>\n
U.S. Treasury official David Lipton was also in town yesterday
\nand discussed the economic crisis at a meeting with Minister of
\nFinance Fuad Bawazier.<\/p>\n
Lipton, declined to disclose the content of the meeting or the
\npurpose of his mission, only saying: \"We were having discussions,
\nand we will continue to have further discussions.\"<\/p>\n
Fuad told journalists yesterday that Indonesia's crisis and
\nthe weakening rupiah were on the meeting's agenda.<\/p>\n
Fuad also met with German and Japanese officials yesterday.<\/p>\n
\"They all support us and understand the real problems
\nIndonesia is facing. They are ready to contribute, in real
\nactions, to help solve the crisis,\" Fuad said.<\/p>\n
Fuad said countries which had committed financial aid to
\nIndonesia through the IMF were currently waiting for the results
\nof negotiations between Indonesian officials and the IMF team.<\/p>\n
Fuad acknowledged that there were still a number of issues
\npertaining to the reform package which needed further
\nclarification, including measures to deal with corporate debt,
\nstabilizing the rupiah and reducing inflation.<\/p>\n
\"All these things are related to the IMF. Donor countries
\nwhich made financial commitments through the IMF are awaiting the
\nresults of our negotiations with the IMF team,\" he said.<\/p>\n
Fuad said that following negotiations with IMF, the government
\nwould open talks with other creditors like the World Bank and
\nAsian Development Bank which have also committed aid to
\nIndonesia.<\/p>\n
\"All negotiations will have the same nuance, that is how to
\nsolve our crisis. Because if our problem is not solved, it could
\naffect other crisis-ridden Asian countries and eventually affect
\nEuropean countries and the United States,\" Fuad said.<\/p>\n
Fuad also said the government was now working on efforts to
\nbolster the rupiah and reduce inflation simultaneously.<\/p>\n
\"We are in the process of formulating a policy which will
\nstabilize the rupiah exchange rate. We cannot wait until price of
\nbasic commodities rises again,\" Fuad said.<\/p>\n
However, Fuad declined to confirm if this would mean fixing
\nthe exchange rate using a currency board, a move which has been
\nstrongly opposed by the IMF and major donor countries. (rid)<\/p>",
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