Reforms could turn economy around: IMF<\/p>\n
JAKARTA (JP): International Monetary Fund managing director
\nMichel Camdessus said yesterday Indonesia had taken decisive
\nsteps that, if implemented fully, could turn its economy around.<\/p>\n
The IMF chief, speaking to journalists at Hotel Borobudur
\nInter-Continental, said the reform package which President
\nSoeharto announced earlier was wholeheartedly endorsed by the
\nPresident.<\/p>\n
Camdessus stressed that Soeharto would \"take personal
\nresponsibility\" for the program that abolished long-held
\nmonopolies and cartels and insisted on greater fiscal
\ntransparency.<\/p>\n
\"This revitalized program is bold and far-reaching, addressing
\nall of the critical problem areas of the economy and deserving
\nthe full support of the international community,\" Camdessus said
\nin a statement.<\/p>\n
\"I am confident that, if this program is implemented with the
\ndetermination and commitment that I myself have seen over the
\npast two days, Indonesia should be able to soon begin to overcome
\nits economic crisis,\" he said.<\/p>\n
World Bank president James D. Wolfenshon shared Camdessus'
\noptimism and said in a statement, \"This is a huge step forward in
\nrestoring investor confidence.\"<\/p>\n
\"The program contains just about everything the government can
\nhope to do to get its economy back on track and to protect the
\npoor from the worst effects of the financial crisis,\" he said.<\/p>\n
Wolfenshon said the World Bank was ready to do its share in
\nproviding quick-disbursing loans to support the reforms and help
\nthe government implement the program on schedule.<\/p>\n
However, Camdessus warned that the government could not
\nbacktrack on the current reform program if it wanted to prevent
\nthe rupiah and the local stock market from crashing a second
\ntime.<\/p>\n
The rupiah nose-dived to over 10,000 to the U.S. dollar on
\nJan. 8, prompting world leaders, including U.S. President Bill
\nClinton, to step in and urge President Soeharto to stick to an
\nIMF-backed reform program.<\/p>\n
Camdessus blamed \"vested interests\" for obstructing the
\nimplementation of the first program agreed by the government last
\nOctober in exchange for the US$40 billion bailout package.<\/p>\n
\"The program went off track and the currency free-fell. To my
\njudgment, we have to make sure that it does not occur again,\"
\nCamdessus said.<\/p>\n
He said the fear that some parties could \"sabotage\" the
\nprogram triggered President Soeharto to form the Economic and
\nMonetary Resilience Council to oversee the program. The council
\nwould be headed by Soeharto himself.<\/p>\n
Camdessus said the agreement signed by Soeharto yesterday
\ndemonstrated the government's recognition and willingness to deal
\nwith existing problems even if they were difficult and painful.<\/p>\n
He said the program was also aimed at alleviating the plight
\nof the poor, but said his \"thoughts go to those who may
\nexperience hardships\" as the government gradually reduced
\nsensitive fuel subsidies.<\/p>\n
He voiced hope that the program would also encourage
\nbusinesses to bring their money back for investment in the future
\nof the country.<\/p>\n
\"We have the impression that the amount which is abroad is not
\nnegligible,\" Camdessus said.<\/p>\n
\"The amount is extremely difficult to value, but with the
\nreturn of confidence and a very responsible interest rate policy,
\nthis return could intervene rapidly,\" he added.<\/p>\n
The reform program included a commitment to a macroeconomic
\nframework designed to revive economic stability, backed with
\nstructural reforms to restore investor confidence.<\/p>\n
Central to the program is a detailed set of proposed financial
\nsector reforms and policy changes in the areas of trade and
\ninvestment, public finance and the strengthening of safety nets
\nto protect the poor.<\/p>\n
World Bank country director for Indonesia Dennis de Tray said
\nthe bank's staff had collaborated in preparing the reform
\nprogram, especially in the areas of structural and financial
\nsector reforms.<\/p>\n
\"The World Bank will support the proposed policy reforms
\nthrough a set of adjustment and investment loans to be developed
\nas soon as possible,\" de Tray said. (aly\/rid)<\/p>\n
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