'Govt must be open on effects of crisis'<\/p>\n
JAKARTA (JP): The government must be open about the effects of
\nthe currency crisis on Indonesia and what kind of international
\nmeasures it seeks, as secrecy could lead to more speculation, the
\nInstitute for Development of Economics and Finance (Indef) has
\nsaid.<\/p>\n
Indef's chief analyst Didik J. Rachbini said yesterday the
\nlack of transparency in information provoked more speculation in
\nthe currency market.<\/p>\n
For example, uncertainty about the financial aid package
\nexpected from the International Monetary Fund (IMF) to help the
\ngovernment cope with the currency crisis had lowered public
\nexpectations about an economic recovery, he said.<\/p>\n
\"The market was initially optimistic about IMF's help when it
\nwas announced last week, until (Minister\/State Secretary)
\nMoerdiono said later that we were not getting money from them,\"
\nhe said.<\/p>\n
\"How can the public be calm and rational about this if they
\nhave no idea what our position is?\" he asked.<\/p>\n
State secretary Moerdiono denied Tuesday that Indonesia was
\nseeking financial aid from the IMF, but was merely seeking
\ntechnical assistance.<\/p>\n
IMF's deputy head Stanley Fischer said yesterday he did not
\nknow the amount of the bailout package for Indonesia, but said
\nthe package of measures could be in place in a couple of weeks.<\/p>\n
The rupiah has lost over 35 percent of its value against the
\nU.S. dollar since speculative attacks hit the currency in early
\nJuly. The government announced that it would either postpone or
\nreview US$35.6 billion worth of state-related projects to
\nminimize the impact of the currency crisis, but analysts have
\nsaid the measures are not enough.<\/p>\n
Didik said the economy was ailing now and Moerdiono's
\nstatement only intensified the illness. The government must act
\nas a social communicator to help ease the panic in the market, he
\nsaid.<\/p>\n
He said the newly appointed presidential economics advisor
\nWidjojo Nitisastro could not fill this role as he was never very
\nopen with the public.<\/p>\n
Veteran economist Widjojo was appointed by President
\nSoeharto last week to help restore Indonesia's economy, on the
\nsame day the government announced it asked for IMF's help.<\/p>\n
Didik said the press-shy Widjojo was a good technocrat 20
\nyears ago when everything was kept in the dark by the government,
\nbut changes had forced the government to be more open.<\/p>\n
\"What we need is not only a technocrat, but also a 'techno-
\npolitician', because the current situation could lead to
\ninstability, not only economically but also politically,\" he
\nsaid, adding that political action was needed to restore public
\ntrust.<\/p>\n
President Soeharto and government officials needed to address
\nthe public on the current situation and be more open about what
\nthe country was doing to cope with it, he said.<\/p>\n
The President also needed to call on conglomerates to help the
\ngovernment cope with the turmoil and to communicate with the
\npublic, he said.<\/p>\n
Indef's chairman Faisal Basri said the problem did not lie in
\nthe volatile market anymore but in how to restore the public's
\ntrust in the government.<\/p>\n
\"The confidential crisis has been building throughout the
\nvulnerable history of Indonesia's economy,\" he said, adding that
\nthe government had lost its credibility largely in 1986 when it
\nlast devalued the rupiah against the dollar.<\/p>\n
\"That afternoon we were told there would be no devaluation,
\nbut the rupiah was devalued the same night nonetheless,\" he said.<\/p>\n
Indef's program director M. Nawir Messi said yesterday the
\ninstitute predicted economic growth would only be 6.4 percent
\nthis year, as a result of the crisis.<\/p>\n
The drop was less than other predictions because Indonesia's
\neconomy had grown substantially by about 7 percent in the first
\nhalf of this year, Nawir said.<\/p>\n
He said he was optimistic that there would be a slight surplus
\nin the current account deficit, because exports grew by 9.4
\npercent the first half of this year, while the growth of imports
\nonly amounted to 0.7 percent during the same period.<\/p>\n
Based on this data, Nawir said the growth of exports would
\nreach about 8 percent by the end of the year.<\/p>\n
However, the ill effects of the currency crisis would continue
\ninto next year, when economic growth would decline further to 6
\npercent, he said.<\/p>\n
\"The country has suffered the effects of the crisis in the
\nlast four months of this year, but it will not be able to recover
\nuntil the second half of next year,\" he said.<\/p>\n
Explanations<\/p>\n
In a related development, the United Development Party (PPP)
\nand Indonesian Democratic Party (PDI) factions at the House of
\nRepresentatives urged the government yesterday to give a
\ncomprehensive report on the rupiah at a plenary House session.<\/p>\n
The factions' leaders, Hamzah Haz and Bachtiar Chamsyah, said
\nthey sent a letter to the House leadership asking for a plenary
\nsession to hear government explanations about the currency's
\nturbulence.<\/p>\n
\"The government gave a statement to the House on Sept. 16
\nabout the currency turmoil and what measures had and would be
\ntaken to cope with the problem,\" Hamzah was quoted by Antara as
\nsaying.<\/p>\n
But additional explanations were warranted because the crisis
\nseemed to be worse than earlier estimated, as could be seen from
\nthe government's request for IMF assistance, Hamzah said.<\/p>\n
Chairman of the PDI faction Budi Hardjono concurred that the
\ngovernment should brief the House on the latest monetary
\nsituation.<\/p>\n
His faction, Hamzah said, also insisted that whatever
\nassistance was agreed upon between the government and the IMF
\nduring negotiations should be approved by the House before it was
\nimplemented.<\/p>\n
\"We need to remind the government that foreign loans for the
\npublic sector require House approval,\" Hardjono said. (das\/vin)<\/p>",
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