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.