Currency board 'an option' for RI
Currency board 'an option' for RI
NEW YORK (AFP): Setting up a currency board linking the rupiah to the dollar could help stabilize Indonesia's currency, though this is not the only option, IMF Managing Director Michel Camdessus said Friday.
"It's an option available but it's not the only one," the International Monetary Fund chief was quoted by as saying.
A currency board would be responsible for maintaining a fixed exchange rate between the rupiah and the dollar and guarantee full convertibility.
Camdessus warned that such a board would not work if a reform program pushed by the IMF were not fully implemented.
"If the program fails to restore the rupiah because of the lack of cooperation from the government, then a currency board would not be the solution," he said.
"I am not pessimistic about Indonesia provided the program is applied," he said at a news conference here.
Camdessus stressed that uncertainty remained over the political future of Indonesia and the economic policies that will be adopted after the next elections.
Japan's ruling Liberal Democratic Party (LDP) also said Saturday it would send a mission to Indonesia, Singapore, Thailand and Hong Kong to meet the countries' finance ministers and central bankers.
The LDP officials, headed by former foreign minister Taro Nakayama, is scheduled to leave here Sunday for a week-long tour, Kyodo News agency quoted party officials as saying.
They are expected to look into the state of economies and finances in the countries, the officials said.
The Japanese government said it would study a Singapore proposal for Indonesia's Asian neighbors to guarantee letters of credit for imports to the cash-strapped nation, Prime Minister Goh Chok Tong's office, the Associated Press reported.
While visiting Indonesia's President Soeharto on Tuesday, Goh had proposed that multilateral or bilateral guarantees.
In a phone conversation with Goh on Friday, Japanese Prime Minister Ryutaro Hashimoto said he would study the idea.
Also, Japan's Finance Ministry will send a high-level delegation to Indonesia in the coming week to assess that country's economic difficulties and determine whether Japan should provide further support.
After hearing the delegation's report, Hashimoto and Finance Minister Hikaru Matsunaga will decide whether any additional support for Indonesia should be announced before the Feb. 21 meeting in England of finance ministers and central bankers from the Group of Seven nations.