'Change in leadership effective medicine for economic malaise'

'Change in leadership effective medicine for economic malaise'

JAKARTA (JP): Former top economic ministers stressed once
again on Wednesday that a resolution of the country's political
problems would be the most effective medicine to the current
economic ills.

They suggested that this could either be in the form of the
resignation of President Abdurrahman Wahid or a massive reshuffle
in the current cabinet.

"The root of the (economic) problem is in the political
field," said former coordinating minister for the economy Kwik
Kian Gie during a discussion, which was also participated in by
former finance ministers Bambang Sudibyo and Frans Seda.

Kwik said that whoever the president would be, he or she must
accommodate the powerful factions at the House of Representatives
by forming a coalition cabinet. This would secure the support of
the House due to the non-existence of a single majority political
party.

"If the president and cabinet are credible, then the economic
problems (can be) settled ... Because the concept is already
clear," he said, pointing to the economic reform measures
proposed by the International Monetary Fund.

The discussion was held after Gus Dur, as Abdurrahman is
popularly called, was issued a second memorandum of censure on
Monday by the House over two financial scandals, which may lead
to the impeachment of the country's first democratically-elected
president.

The intensifying political rift has created new pressure on
the domestic economy which is still recovering from the 1997
crisis.

The rupiah dropped to a 31-month low of around Rp 12,300 per
U.S. dollar last week in the run-up to the second censure. Bank
Indonesia's benchmark interest rate soared to an alarming level
of more than 16 percent, threatening the current state budget to
suffer a dangerous deficit level of up to 6 percent of gross
domestic product (GDP), compared to the initial projection of 3.7
percent.

"The political problems must be resolved first," said Bambang.

Bambang said that the country needed a new credible president
and cabinet team to be able to create macroeconomic stability,
which he said was the crux of the economic problem as reflected
in rising inflation, weakening currency, and higher interest
rates.

"The economy will stabilize when we have a credible leader ...
If not, people will have no confidence," Bambang said, adding
that Gus Dur and his cabinet team no longer had the necessary
credibility.

Kwik and Bambang were part of Abdurrahman's first cabinet
team. Kwik resigned last year after 10 months in office, while
Bambang was among the top ministers dismissed by the President in
a much-criticized cabinet reshuffle last year, that led to the
current political fighting between Gus Dur and the House.

Kwik is a senior official of Vice President Megawati
Soekarnoputri's Indonesian Democratic Party of Struggle (PDI-P),
the largest party in the House, while Bambang is from the
National Mandate Party (PAN), which helped sponsor Gus Dur to the
presidency.

Calls have been mounting for President Abdurrahman to step
down to allow Megawati to lead the country, which is now facing
the threat of disintegration amid religious and ethnic clashes in
certain regions and separatist demands from resource-rich
provinces.

Bambang said that Gus Dur had failed to resolve the country's
social and security problems.

"Megawati performs better in this field ... compared to her
boss," he said.

"If a president in Indonesia can resolve the issue of national
unity, he or she has actually resolved 80 percent of the
country's problems," he added.

Bambang said change in the country's leadership was also
crucial to maintain the support of international donors.

"The prospects of obtaining the CGI loan are now getting
slimmer due to domestic political uncertainty," he said,
referring to the Consultative Group on Indonesia, which groups
Indonesia's international lenders, which last year pledged some
US$4.8 billion in loans to help finance the current budget
deficit.

Meanwhile, Seda said that the country was now facing a
multidimensional crisis that could only be overcome by resolving
first the political, social and security problems.

"We need strong leadership now," he said, adding that this
could only exist if the House supported the government.

Seda said that if the current "political impasse" continued,
economic problems would deepen. "The rupiah can tumble to as low
as Rp 20,000 per dollar," he cautioned. (rei)