Camdessus hopes for solid agreement
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)
Related stories -- Page 10, 12
Photo -- Page 12