IMF chief confirms threat to Indonesia over dollar peg<\/p>\n
BRUSSELS (AFP): The International Monetary Fund has warned
\nIndonesian that its 43-billion-dollar bailout of the country
\ncould be jeopardized by its plan to peg the rupiah to the dollar,
\nIMF Managing Director Michel Camdessus said here yesterday.<\/p>\n
After meeting with EU finance ministers, Camdessus confirmed
\nhe had written to President Soeharto last week spelling out the
\norganization's opposition to Indonesia's establishment of a
\ncurrency board.<\/p>\n
\"What I expressed to President Soeharto is that going to a
\ncurrency board without previous consultation with the IMF ...
\nwould be a violation of our arrangement,\" he said.<\/p>\n
\"Second the risk this would entail for the success of the
\nprogram would be such that the risk was very high that the (IMF)
\nexecutive board, which has to review the program in early July,
\nwould decide to interrupt the program and the financing of
\nIndonesia.\"<\/p>\n
British Chancellor of the Exchequer Gordon Brown said the
\nIMF's view that a currency board would be \"premature,\" had been
\nstrongly backed by the EU finance ministers.<\/p>\n
He hinted that Britain was planning a new initiative aimed at
\nalleviating some of the social impact of the Indonesian crisis.<\/p>\n
Reuters reported earlier on the day that the European finance
\nministers would discuss the Indonesian currency proposal.<\/p>\n
\"I expect we will talk about it over lunch,\" Dutch Finance
\nMinister Gerrit Zalm told reporters when asked whether the
\ncontroversial currency board plan would be discussed at the
\nministers' one day meeting in Brussels.<\/p>\n
\"Indonesia is the only (Asian) country where the situation is
\nnot very clear,\" European monetary affairs Commissioner Yves-
\nThibault de Silguy said, stressing the EU believed the most
\ndifficult part of the Asian crisis was now \"behind us\".<\/p>\n
Indonesia looked set to press ahead with a proposal for a
\nfixed exchange rate system locking the rupiah into the dollar
\ndespite the risk that it could undermine a $43 billion bailout
\npackage put together by the International Monetary Fund.<\/p>\n
The deputy secretary-general of the Indonesian Council, Fuad
\nBawazier, was reported on Monday as saying the government was on
\ntrack to proceed with the plan despite growing international
\npressure for it to be abandoned.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/imf-chief-confirms-threat-to-indonesia-over-dollar-peg-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}