RI to keep fiscal policy prudent<\/p>\n
JAKARTA (JP): President Soeharto assured a visiting World Bank
\ndelegation yesterday that Indonesia would continue its sound
\neconomic management and would always be prudent in managing its
\nforeign debts.<\/p>\n
The President, according to Finance Minister Mar'ie Muhammad,
\nmade the remarks in response to a suggestion from the World Bank
\nteam that the Indonesian government step up its sound macro-
\neconomic management in light of an uncertain international
\neconomic climate.<\/p>\n
\"The World Bank acknowledges our prudent policies. However,
\njudging from recent developments in the world's economy and from
\nthe recent experiences of Mexico's financial crisis, the World
\nBank has asked us to step up our sound economic management even
\nmore,\" reported Mar'ie.<\/p>\n
Mar'ie yesterday accompanied the World Bank team, led by the
\nnew Vice President for East Asia and the Pacific Region Russell
\nCheetham, in a meeting with President Soeharto.<\/p>\n
Cheetham, who was the director of the World Bank's resident
\nstaff here in the 1980s, recently replaced Gautam Kaji.<\/p>\n
President Soeharto, Mar'ie added, reassured Cheetham that
\nIndonesia will continue managing its debts in a prudent manner by
\naccepting only soft and semi-concessional loans of long-term
\nmaturities.<\/p>\n
\"But the President also told Mr. Cheetham that he'd like the
\nWorld Bank and other multilateral agencies to consider the impact
\nof the rising yen on Indonesia's debt burdens,\" Mar'ie said
\nwithout elaborating on what Soeharto meant specifically.<\/p>\n
Cheetham will coordinate and preside over the annual meeting
\nof the Consultative Group on Indonesia (CGI), an organization of
\ndonor agencies and countries headed by the World Bank.<\/p>\n
CGI is scheduled to meet again in Paris in July.<\/p>\n
Soeharto also expressed his concern on Tuesday about the
\nexcessive yen appreciation to Peter Sullivan, the Asian
\nDevelopment Bank Vice President for the Far East.<\/p>\n
Senior officials of the National Development Planning Board
\nsaid Wednesday that the government is likely to review the
\nfinancing of several development projects, including those of the
\nstrategic industries, due to the rising yen.<\/p>\n
Cheetham said he was impressed with Indonesia's high economic
\ngrowth, which exceeded seven percent last year, and he hoped that
\nthe high economic expansion would be maintained to enhance equity
\nand alleviate poverty.<\/p>\n
He said he and President Soeharto discussed the latest
\nsituation of the world economy and the impact the recent
\nfinancial crisis in Mexico has had on other countries. They also
\nexchanged views as to what kind of economic management could
\neffectively cope with all that uncertainty.<\/p>\n
Weak<\/p>\n
Reports from Tokyo yesterday indicated that the dollar remains
\nweak as investors sat on the sidelines waiting for a crucial
\nBundesbank meeting, which the market did not expect to result in
\na cut in German interest rates.<\/p>\n
The spot dollar was quoted at 88.31-33 yen in late trading
\nafter moving between 88.16 yen and 88.47 yen, compared with
\n88.45-48 yen a day earlier and New York's late Wednesday quote of
\n88.43 yen.<\/p>\n
Although Indonesia has never once rescheduled its debt since
\n1967, some analysts have expressed concerns about the rising
\nJapanese currency because, they say, every time the yen goes up
\nby one percent against the dollar, it adds $300 million or more
\nto Indonesia's debts outstanding.<\/p>\n
The Japanese government, the biggest provider of Indonesia's
\nloans, already stated two weeks ago that it had no remedy for the
\ngrowing debt burden that the yen's sharp rise has inflicted upon
\nthe recipients of its loans.<\/p>\n
Official figures cite that Indonesia's foreign debts, most of
\nwhich are long-term government loans, totaled around US$88
\nbillion. About 40 percent of those loans is denominated in yen,
\nwith annual interest rates of between two-and-a-half and three
\npercent.<\/p>\n
About 15 percent of the country's 1995-1996 State Budget,
\nwhich commences next month, will be financed by foreign
\ndevelopment loans.<\/p>\n
Mar'ie said last week that the government planned to increase
\nthe proportion of yen in Indonesia's foreign exchange reserves
\n(around $13 billion) from the present level of 35 percent.<\/p>\n
The minister also said that the government would \"try to
\nlobby\" multilateral agencies whose loans are sometimes partly
\nyen-denominated, to denominate all their loans in U.S. dollars.
\n(hdj)<\/p>",
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