New leader will still face complex challenges: Mari<\/p>\n
JAKARTA (JP): Indonesia's prospective new leader would still
\nhave to deal with the complex challenges of economic recovery and
\npolitical stability, Centre for Strategic and International
\nStudies (CSIS) economist Mari Pangestu warned on Monday.<\/p>\n
Mari said that one of the most daunting challenges for whoever
\nwould lead the country would be to deliver domestic macroeconomic
\nstability.<\/p>\n
\"The problems we are facing are very huge such as the budget,
\ninflation, and bank restructuring. These must be dealt with by
\nwhoever would lead the country amid the limitations posed by the
\nweak legal (system) and (state) institutions,\" she told reporters
\non the sidelines of an economic discussion.<\/p>\n
The camp of the embattled President Abdurrahman Wahid is still
\nin intense talks with the country's prominent political figures
\nto resolve the national leadership crisis. There has been
\ngrowing pressure, particularly from legislators, for the
\nPresident to step down and hand over power to the popular Vice
\nPresident Megawati Soekarnoputri.<\/p>\n
The House is set to convene on Wednesday to decide on whether
\nto impeach the President or not.<\/p>\n
The current political impasse has contributed to the sharp
\ndrop in the value of the rupiah against the U.S. dollar, which
\ncreates inflationary pressure and threatens the 2001 state budget
\ndeficit to widen to a dangerous level of around 6 percent of
\ngross domestic product.<\/p>\n
Some economists have suggested that a change in the country's
\nleadership would help stop the rupiah's fall and remove other
\neconomic woes.<\/p>\n
But Mari said that the country's economic problems were far
\nmore complex, pointing out to delays in the disbursement of loans
\nfrom multilateral, capital outflow, fiscal problem, and worsening
\nof macroeconomic indicators.<\/p>\n
\"We are in for a slower economic growth ... this is a
\ntremendous problem,\" she said.<\/p>\n
\"Macroeconomic stability has now become the most important
\nissue,\" she said.<\/p>\n
She said that if the government failed to deliver
\nmacroeconomic stability, the country could easily fall into a
\nsecond economic crisis.<\/p>\n
Mari said that one of the most important agenda for the
\ngovernment to help resolve the economic woes was to immediately
\namend relations with the International Monetary Fund.<\/p>\n
\"The IMF wants to see the government implement credible
\n(economic) policies,\" she said.<\/p>\n
The IMF delayed the disbursement of its third US$400 million
\nloan tranche to the country late last December due to signs that
\nthe government was wavering with the implementation of key
\neconomic reform program.<\/p>\n
The IMF money is seen as a crucial factor to allow the World
\nBank, the Asian Development to provide a greater financial
\nsupport for the country, and for the Paris Club of creditor
\nnations to provide sovereign debt restructuring facility which is
\ncrucial for the sustainability of the state budget.<\/p>\n
The IMF has applauded the government's decision to launch
\ndifficult measures to contain the state budget deficit at a safer
\nlevel of around 3.8 percent of GDP through a series of painful
\nmeasures, and to delay the plans to issue bonds backed up with
\nrevenue from the sales of natural gas to Singapore.<\/p>\n
But the Fund has insisted that it would only agree to resume
\neconomic talks if the government fully adopted the recommendation
\nof an independent panel team on the revision of the Bank
\nIndonesia law.<\/p>\n
The government has proposed that the current Bank Indonesia
\nboard of governors must resign once the new revised law has been
\napproved by the House, but the panel has suggested that such a
\nproposal is a serious mistake.<\/p>\n
\"It is crucial for the IMF team to come and begin (economic)
\ntalks with the government,\" Mari said.<\/p>\n
She also said that it would be important for Bank Indonesia to
\nmaintain its tight monetary policy amid the current uncertainties
\nto help curb inflation.<\/p>\n
She said that a better coordination between Bank Indonesia and
\nthe government over monetary and fiscal policies was crucial to
\nhelp maintain inflation at a reasonable level.<\/p>\n
On the state budget issue, Mari warned that there could be
\nhigher deficit if the government failed to meet the set of
\ntargets. (rei)<\/p>",
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