Asia rebounding, but Indonesia lagging: Koehler
Asia rebounding, but Indonesia lagging: Koehler
WASHINGTON (Dow Jones): Indonesia continues to lag its Southeast Asian neighbors in rebounding from the financial crisis of three years ago and President Abdurrahman Wahid must set a clear path to recovery, the head of the International Monetary Fund (IMF) declared Monday.
Horst Koehler, who became managing director of the IMF in May, told a gathering at the National Press Club that the nations that were embroiled in the Asian financial crisis must persevere with structural reforms - especially Indonesia - despite their recent recovery from this tumultuous period.
"We have to keep up the momentum of structural reforms - particularly in the financial sector - and on this basis I do think we will see further improvements," Koehler said of Southeast Asia.
"Indonesia is of course a bit more difficult. It is a tragedy how this country (came) into a crisis and it is very difficult (to see) how it will get out," he said.
"The intentions of President Wahid are undoubtedly the right intentions but it's obviously very difficult to organize a government so that they are performing on a well-considered, agreed basis," the IMF boss added,
Earlier Monday, President Wahid apologized to Indonesia's People's Consultative Assembly for failing to address the economic and social ills facing his government.
He also pledged a cabinet reshuffle to placate lawmakers calling for accountability over the continuing problems in the economy and in Indonesia's outlying provinces, where religious violence has claimed hundreds of lives.
Koehler said it is critical for Wahid to set clear goals for his government and to ensure strong support for his policies.
"The IMF stands ready to give further advice, but the important main issue is that the government itself - headed by the president - should organize itself in a way that the country and the economy...knows clearly the direction, and the commitment of the government," he said.
The IMF chief had a more cheerful prognosis for the rest of Southeast Asia, particularly South Korea and Thailand. He said recent meetings with leaders in the region have reassured him that governments there remain committed to pushing on with structural reforms.
"I think in Thailand and in Korea the leaders I talked with know that they cannot assume that their job (of) restructuring financial sector has already finished," Koehler said.
Koehler also said the world economy would grow strongly, by an estimated 4.75 percent, but he warned against complacency in tackling global economic problems.
"The outlook for the world economy is the best we have seen in a decade," said Koehler, who pointed to the strong U.S. economy as the engine driving the global growth.
"But there should be no complacency. Many difficult problems remain to be solved. One risk of the relatively good global economic situation is that it could weaken the momentum and resolve for continued reform and structural change," Koehler said.
The IMF has issued credits and loans to 92 countries worth a total of US$66.5 billion.
Most of the lending has gone to Asia and Eastern Europe.