Budiono cautions against CGI meeting postponement

Budiono cautions against CGI meeting postponement

JAKARTA (JP): Chairman of the National Development Planning
Board (Bappenas) Budiono warned on Tuesday that a delay in the
upcoming Consultative Group on Indonesia (CGI) donors meeting
would damage confidence in the country's economy.

He said the annual CGI meeting should proceed as scheduled to
allow the government to secure loan financing for the 1999/2000
budget gap.

"(If the CGI meeting is delayed) the market would be
apprehensive of the likely impact of a hole in the current
budget. This could create another roller-coaster (in the exchange
rate of the rupiah against the U.S. dollar)," Budiono told
members at a hearing of the House of Representatives Commission
VIII for the state budget and finance.

The meeting is to be held on July 27 and July 28 in Paris. The
CGI donors grouping is led by the World Bank, with members
including the Asian Development Bank, the Islamic Development
Bank and bilateral donors such as Japan, the United States,
Canada, South Korea, Germany, France, Spain, Italy, New Zealand,
Denmark and Australia.

Several opposition political parties, including the National
Mandate Party (PAN) and the National Awakening Party (PKB), as
well as non-governmental organizations, have demanded the World
Bank and the government postpone the meeting. They have asserted
that the country's new government, to be formed later this year,
must be included in the crucial talks.

Opponents of the meeting have also insisted that President
B.J. Habibie's administration should no longer be authorized to
seek new foreign loans because it had failed to combat
corruption.

Indonesia held legislative elections on June 7. The elected
legislative body, together with regional and interest group
representatives, will vote for the next president later this
year.

Budiono said the next administration would be very busy during
its first days in office and would not have time to negotiate
overseas loans to finance the gap in the current budget ending in
March 2000.

"It will take three to four months after the pledges before
the donors disburse their loan commitments."

He said the current government would not seek loan pledges for
the 2000/2001 budget.

"We understand this is the authority of the new government.
But we will hold general discussions to sound out commitments for
the 2000/2001 budget.

"I hope that all parties will support the CGI meeting plan
because this is truly in the interests of this country.

"Don't let the political transition jeopardize the economic
recovery program," he said.

Budiono declined to say how much money Indonesia was seeking
from the CGI, which last year provided the country with US$7.9
billion.

A government official said earlier that several donors had
indicated they were ready to provide some $5 billion in new
loans.

Indonesia has been badly hit by the economic crisis, which
started in August 1997, forcing the government to rely heavily on
overseas financial support.

The 1999/2000 budget needs some $10.3 billion in overseas
loans.

Minister of Finance Bambang Subianto said earlier this year
that the government had yet to secure approximately $1.9 billion
of that amount.

But Budiono said the final amount of the new loans would only
be decided in Paris after the donors made up-to-date
calculations, which took into account recent developments in the
economy, including oil prices.

Indonesia's economy has started to recover with various key
indicators displaying positive signs. The rupiah has stabilized
to about Rp 6,700 per U.S. dollar, compared to Rp 17,000 last
year. Inflation and domestic interest rates have also shown
significant improvement.

Separately, the Asian Development Bank said on Tuesday it
planned to hold a high-level dialog in Jakarta with the
government on July 22 to discuss and agree on concrete steps to
combat corruption.

"The ADB accords high priority to fighting corruption and has
adopted an anticorruption policy to guide its anticorruption
efforts," the bank said in a statement.

ADB said the dialog would be followed by an open forum on the
same day, to which non-governmental organizations and members of
the public would be invited.(rei)