Camdessus hopes for solid agreement

Thu, 15 Jan 1998, 00:00 WIB | Source: JP

JAKARTA (JP): IMF Managing Director Michel Camdessus said
yesterday he was hopeful for a solid agreement with Indonesia on
stronger and accelerated reforms after he meets with President
Soeharto today.

"I am very hopeful that tomorrow (today), after meeting with
the President, I will be able to announce a very solid
agreement," he told reporters after arriving here from Singapore.

No information was immediately available about his agenda
yesterday afternoon, but Camdessus was seen with former
Australian prime minister Paul Keating at Hotel Borobudur Inter-
Continental yesterday evening.

In a related development, State Minister of National
Development Planning Ginandjar Kartasasmita and economic
officials continued their meeting at the Ministry of Finance
yesterday evening to review the draft state budget.

"I've just had consultations with (Minister of Finance Mar'ie
Muhammad) about the draft 1998/1999 budget," Ginandjar told
journalists after he emerged from the meeting.

Ginandjar said, "We will do whatever necessary, but I don't
want to be specific as to whether we will revise the draft
budget."

Camdessus was quoted by Reuters as saying in Singapore earlier
yesterday before departing to Jakarta that his visit to Indonesia
was designed to "arrest and turn around the tremendous loss of
confidence".

He said he intended to ensure the stabilization of the markets
through "monetary discipline and dramatic acceleration of the
long overdue structural reforms".

"What I hope we will achieve is a new letter of intent we
could sign tomorrow (today)," Camdessus said.

Under an IMF reform program linked to a bailout costing more
than US$40 billion, Indonesia vowed to dismantle trading
monopolies, overhaul the financial sector, and scrap or suspend
costly infrastructure projects, including some affecting the
Soeharto family's vast business interests.

Indonesia was seen by some countries as reneging on its pledge
to impose the reforms recently, triggering a massive sell-off in
Asian financial markets last week that eventually spread to the
United States and Europe as well.

Camdessus said there was "a better perception now in Indonesia
of the magnitude of the problem to be solved" and that it could
not afford to waver or delay reforms.

"The Indonesians have certainly realized we are in a situation
that does not allow the luxury of this kind of easygoing
implementation of the program," he said.

"This new letter of intent will certainly be structured in a
way that will give a high incentive to early implementation," he
added.

Camdessus also denied knowledge of a confidential IMF report
which appeared in the International Herald Tribune yesterday
saying the IMF measures played a role in the crumbling of
Indonesia's economy, even after it had prescribed them for the
country's rescue package in November.

The Paris-based newspaper said the IMF document noted that the
closure of 16 insolvent Indonesian banks, "far from improving
public confidence in the banking system, has instead set off a
renewed 'flight to safety'".

"It must be that confidential since I have no knowledge of
this report. I'm not ready, I must tell you, to plead guilty for
having closed 16 banks in Indonesia," Camdessus said, referring
to the document Indonesia Standby Agreement: Review Under the
Emergency Financing Procedures.

The report criticized Soeharto's government for failing to
enact reforms promised to the IMF, pointing out that the
political paralysis in Indonesia was compounded by a key
misjudgment by the IMF. (rid)