Australia's RBA urges fast aid for Indonesia
Australia's RBA urges fast aid for Indonesia
SYDNEY (Reuters): The Reserve Bank of Australia said yesterday
the Indonesian situation was now so desperate that immediate
pressure for structural reform had to be set aside for emergency
measures.
In a speech peppered with medical allusions, deputy RBA
governor Stephen Grenville argued the patient was so near death
it was time to refocus the reform effort on the core economic
issues -- the exchange rate, foreign debt and rebuilding the
financial sector.
"To be sure, reform in the structural issues of governance is
eminently desirable, but what is needed now is the kind of triage
we see in an emergency room -- sorting the life-saving critical
priorities from longer-term issues," he said.
Since Australia was Indonesia's next-door neighbor the stakes
were higher for it than for the United States and other countries
to see a resolution of the economic crisis, he said.
Indonesia is battling its worst economic crisis in decades and
reforms agreed with the International Monetary Fund in exchange
for a bail-out package of more than $43 billion have not been
effective amid perceptions that Jakarta is dragging its feet on
implementing the agreement.
Australia has pledged US$1 billion to the package.
"Our aim was not to capitalize on any of these countries'
difficulties in order to bring about a political transformation,"
Macfarlane said.
"Whatever the details that are finally worked out, there can
be little doubt that the overwhelming priority is to roll over,
reschedule, restructure existing debt or do whatever else is
necessary to prevent further capital outflow," he said.
The blunt warnings distanced Australia from most other western
economies which were demanding Indonesia stick to the strict
reform guidelines set by the IMF.
"It does seem the RBA is leaning toward the concept of an IMF-
plus package which Indonesia has floated, which puts
stabilization of the rupiah above everything," said Richard
Gibbs, an international economist at Macquarie Bank.
Rescue funds
Meanwhile, a spokeswoman for Treasurer Peter Costello said in
Canberra yesterday the Australian government would disburse its
US$1 billion in aid funds to Indonesia once the overall IMF
package was accepted by the government of President Soeharto.
The spokeswoman said reports on some wire services that
Australia was withholding the payment were incorrect as the
payment had always been linked to acceptance of the IMF package.
"This is a normal practice. He (Costello) has said
consistently that it's contingent on Indonesia implementing the
IMF package," she said.
In other development, a diplomatic source in London said on
Wednesday, Japan will urge Indonesian Soeharto this weekend to
adopt International Monetary Fund measures in effort to ensure
Asia's economic crisis does not turn into a political crisis,
Earlier on Wednesday Japan announced that Prime Minister
Ryutaro Hashimoto will travel to Indonesia this weekend for talks
with President Soeharto about the country's economic crisis.
"Mr Hashimoto will convey the expectation of the Japanese
government that Indonesia should implement the IMF program, and
at the same time make it clear that the Japanese government
continues to support reform efforts by Indonesia" the diplomatic
source said.
Meanwhile, Thailand's Prime Minister Chuan Leekpai said in New
York on Wednesday there is no alternative source of funding for
Indonesia but the IMF.
"There are no other alternative resources of funds able to
assist Indonesia, apart from that available to the IMF," Chuan
told the Council on Foreign Relations.
"It is essential for the IMF to assist Indonesia and, at the
same time, it is essential for Indonesia to receive and to
welcome IMF support," Chuan also said.