IMF head hopes Indonesia avoids return to chaos<\/p>\n
TOKYO (Reuters): Expressing concern about conditions in
\nIndonesia, IMF Managing Director Horst Koehler urged Jakarta in
\nan interview published on Thursday to implement a raft of policy
\nchanges to boost confidence in its shattered economy.<\/p>\n
Koehler, speaking in Singapore to the local Business Times
\nnewspaper and to the International Herald Tribune (IHT), said the
\nIndonesian government needed to be more decisive in its efforts
\nto tackle a situation he described as very difficult and complex.<\/p>\n
"The IMF will stay engaged in Indonesia if they want us to
\nstay engaged," the IHT quoted Koehler as saying. "We still have
\nto hope that order comes and that it will not fall back into
\nchaos."<\/p>\n
His comments were a measure of the tense relations between the
\nInternational Monetary Fund (IMF) and Indonesia, which is still
\nstruggling with the legacy of a financial crisis in 1997 that
\ndevastated its economy and its banking system.<\/p>\n
The IMF has provided a series of loans to help Jakarta back on
\nits feet, but last month it withheld a US$400 million installment
\nof a $5 billion credit line after the government failed to
\nimplement a number of agreed economic reforms.<\/p>\n
The IHT said Fund officials would hold talks with the
\ngovernment in Jakarta on Friday to try to unblock the loan, but
\nChief Economics Minister Rizal Ramli said no meeting was planned.<\/p>\n
"A team will be here, maybe in end of January or early
\nFebruary," Ramli told Reuters in Jakarta. He said he had recently
\nexchanged views with Koehler but declined to go into detail.<\/p>\n
One of the sticking points concerns the impact of
\ncontroversial new regional autonomy laws that Indonesia is
\nimplementing to help calm separatist tension and animosity over
\nJakarta's grip on the state's coffers.<\/p>\n
Ramli on Tuesday chided the IMF for making a fuss over an
\nissue on which it had previously kept silent.<\/p>\n
Some analysts and businessmen have criticized the hastily
\nprepared autonomy laws, fearing they may add to Indonesia's
\ninstability and create new layers of bureaucracy and corruption
\nacross Indonesia's 30 provinces and more than 300 districts.<\/p>\n
The Business Times quoted Koehler as saying decentralization
\nshould be managed in such a way that Indonesia's budget does not
\nget out of control.<\/p>\n
He also called on the government to accept the need for an
\nindependent central bank, which he said would be "important for
\nstabilizing the confidence of private markets".<\/p>\n
The independence of the bank is guaranteed by law, but
\nPresident Abdurrahman Wahid wants to replace the board because
\nsome of its members were linked to the discredited regime of
\nformer president Soeharto.<\/p>\n
The Business Times said Koehler also urged the Indonesian Bank
\nRestructuring Agency to speed up the recovery of assets and to
\ntake a tough line against recalcitrant corporate debtors.<\/p>",
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