Alatas stresses the need to reform monetary system

Alatas stresses the need to reform monetary system

JAKARTA (JP): Minister of Foreign Affairs Ali Alatas yesterday underlined the need to restructure the international monetary system which has had an increasingly detrimental effect on developing countries.

"The restructuring of the international monetary system is felt to be increasingly urgent because the absence of a solid system will continue to create havoc, especially in the trade and development field," Alatas said.

The minister was speaking at the inauguration of Soemadi Brotodiningrat as the foreign ministry's new director-general for foreign economic relations. He replaces Wisber Loeis who is now ambassador to Japan.

Soemadi was formerly Indonesia's permanent representative at the United Nations office in Geneva.

According to Alatas, the current international monetary system needs to be corrected due to the adverse effects it creates on developing countries.

"The growing burden of foreign debt and the fluctuation of foreign currencies along with the decline in the flow of aid and investments have caused a reversal of financial flow from the developing countries to the developed ones," he explained.

Alatas' statement reflects the growing worry among officials here over the alarming rise of the Japanese yen against the dollar (yendaka).

The Japanese government is the largest provider of loans to Indonesia. Over 40 percent of the country's foreign loans are in yen.

Indonesia has been hard hit by the rising trend of the yen which adds an additional $300 million to the debt for every one percent increase.

President Soeharto a day earlier also expressed concern over the matter and urged multilateral donors to consider the long- term effects of the yendaka.

Alatas noted yesterday that by using its credibility in managing the resources of its development funds, Indonesia must "ensure that international financial and monetary problems are tackled cohesively and comprehensively," he said without elaborating on a possible solution.

Despite being one of the world's biggest debtors, Indonesia in the past 28-years has never been forced to reschedule its foreign debt payments.

In fact Indonesia as chair of the 111-nation Non-Aligned Movement has championed the cause of other debt burdened countries by highlighting the need for lender countries to address the problem.

To further close the economic gap between developed and developing countries Alatas also pointed out the need for a constructive North-South dialog.

"I believe that continuous efforts to increase the dialog between the developed and developing countries will result in a constructive framework to many of the world's problems we face," he said.

Apart from urging a restructuring of the international monetary system, Alatas also stressed the significant role now occupied by Soemadi.

"The process of globalization and the accentuation of world economic issues will place the Director-General of Foreign Economic Relations in an increasingly important position," he said.

Among former director-general Wisber Loeis' legacies was the successful chairmanship of the senior official meetings of the Asia Pacific Economic Cooperation forum last year.

Loeis' responsibilities will be taken over by the new director-general, Alatas later told journalists.(mds)