President blames rupiah's fall on complex problems<\/p>\n
JAKARTA (JP): President Abdurrahman Wahid blamed the strong
\nvolatility of the rupiah, which dropped to a 16-month low of Rp
\n9,000 to the American dollar on Tuesday morning, on the
\ncomplexity of problems Indonesia is facing.<\/p>\n
\"The financial market is greatly concerned about the complex
\ndifficulties we are encountering. Hence, the rupiah has been
\nhighly volatile,\" Abdurrahman told a news conference on Tuesday.<\/p>\n
The market, the President added, notices the disharmony among
\nthe people, the absence of resoluteness in the nation to
\nsafeguard the authority of the government.<\/p>\n
He said the government could not work alone in defending the
\nrupiah.<\/p>\n
\"All of us should feel duty-bound to safeguard the rupiah,\"
\nAbdurrahman said in reply to a question as to whether the latest
\nsteep fall of the currency had perhaps been set off by his
\ncontroversial remark about the pending arrest of several
\nlegislators allegedly implicated in corruption and recent waves
\nof violence in Jakarta and other provinces.<\/p>\n
The rupiah closed at Rp 8,960 per U.S. dollar on Tuesday, the
\nsame as the previous day, after touching an intraday low of Rp
\n9,000 against the American greenback.<\/p>\n
Dealers said there was some profit-taking against the dollar
\nin the afternoon after Abdurrahman denied reports that some top
\npoliticians would be arrested on suspicion of inciting riots in
\nthe country.<\/p>\n
Asked about the implementation of the reform measures
\nstipulated in the government's June letter of intent to the
\nInternational Monetary Fund, Abdurrahman asserted that the reform
\nagenda was by and large being executed according to the
\ndeadlines.<\/p>\n
His ministers, he added, had done their utmost to cooperate in
\nmeeting the reform deadlines, although he admitted that not all
\nof the programs had been accomplished.<\/p>\n
\"But the IMF itself has expressed satisfaction about the pace
\nof the reform implementation, indicating that what had so far
\nbeen completed was already quite impressive,\" the President said.<\/p>\n
He stressed that the country's economic growth would not have
\nexceeded most analysts' estimates if the implementation of the
\nreform measures was way below the target.<\/p>\n
The IMF postponed the disbursement of its second loan tranche
\nto Indonesia in April after the government failed to meet most of
\nthe reform deadlines as stipulated in the January letter of
\nintent.<\/p>\n
The IMF will make a complete review of the June reform agenda
\nlater this month.<\/p>\n
Temporary weakness<\/p>\n
Meanwhile, Bank Indonesia senior deputy governor Anwar
\nNasution said that the current weakness of the rupiah was only
\ntemporary due to a combination of external and internal factors.<\/p>\n
Speaking to reporters after meeting the President, Anwar said
\nthat other currencies in the region had been weakening against
\nthe U.S. dollar, but the rupiah's weakness had been worsened by
\ndomestic political uncertainty.<\/p>\n
Anwar said that the rupiah would strengthen again if the
\ncountry continued to implement the economic reform program agreed
\nupon with the IMF and if political uncertainty subsided.<\/p>\n
He declined to make any predictions as to when the currency
\nwould rebound, saying that it \"is hard to predict amid the
\ncurrent situation.\"<\/p>\n
But he said the central bank would do its best to defend the
\nrupiah, including through market intervention and interest rate
\npolicy.<\/p>\n
He declined to say how many dollars would be sold by Bank
\nIndonesia to shore up the rupiah.<\/p>\n
In a related development, finance minister Bambang Sudibyo
\nsaid that the government had no plans at the moment to revise the
\nexchange rate assumption used in the 2000 state budget.<\/p>\n
Speaking on the sidelines of a hearing on the new tax bill
\nwith the House of Representatives, Bambang said that a mechanism
\nto revise the budget would be through a budget amendment normally
\ndiscussed with the House in October.<\/p>\n
The government has assumed an exchange rate of Rp 7,000 per
\nU.S. dollar in the current state budget.<\/p>\n
Bambang also said that although the weakening of the rupiah
\nwould inflate government dollar-based spending, it would be
\noffset by dollar earnings, particularly from oil revenue.<\/p>\n
He said oil prices were currently at a record high.<\/p>\n
Bambang said the current weakening of the rupiah was largely
\ndue to noneconomic factors.<\/p>\n
Separately, Cabinet Secretary Marsillam Simanjuntak announced
\nthat the President supported the decision of the minister of
\ncommunications to raise bus fares.<\/p>\n
\"But the rate and timing of the increase have yet to be
\ndecided,\" Marsillam said at a news briefing on the results of the
\nweekly economic monitoring meeting on Monday afternoon.<\/p>\n
Abdurrahman, according to Marsillam, stressed the importance
\nof improving transportation services and safety and of
\ndifferentiating the policy on fares for city bus services and
\nintercity transportation.<\/p>\n
\"The main reasoning behind the policy on different fares is
\nthat intercity transportation is not as sensitive to fare hikes
\nas city buses, which mostly serve commuters,\" added Rizal Ramli,
\nchief of the State Logistics Agency, who acts as rapporteur of
\nthe weekly meeting.<\/p>\n
Rizal said the President also instructed the industry and
\ntrade ministry to take concerted measures in cooperation with the
\nbanking industry to raise capacity utilization at manufacturing
\ncompanies in a bid to further expand exports.<\/p>\n
Abdurrahman ordered the minister of finance to allocate a
\nportion of off-budget funds to an emergency relief fund to
\nimprove the government's capacity to cope with natural disasters,
\nMarsillam added. (prb\/vin\/rei)<\/p>",
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