Economists hail IMF plan to stabilize rupiah

Economists hail IMF plan to stabilize rupiah

JAKARTA (JP): Economists and analysts hailed yesterday the
government's plan to seek support from the International Monetary
Fund (IMF), saying it should help tackle the current currency
crisis.

Economists Christianto Wibisono, I Nyoman Moena and Raden
Pardede agreed that the decision was the best alternative in view
of the crisis.

"There is no other choice but to seek IMF help. It's a matter
of survival," said Christianto, head of the Indonesian Business
Data Center.

The crisis, if not dealt with properly and quickly, could lead
to political instability, dangerous to the convening of the
People's Consultative Assembly next March, he said.

Nevertheless, he continued, he saw no political motive behind
the decision, but a pure "technical" measure to heal the
country's ailing economy.

President Soeharto endorsed a decision yesterday to seek
outside help, including from the IMF, to restore confidence in
the battered rupiah.

But no details were given on how much assistance would be
sought or in what form.

But analysts said any package would be far less than the
US$17.2 billion received by Thailand, the first Southeast Asian
nation to turn to multilateral agencies after its currency was
browbeaten.

Danareksa Sekuritas economist Raden Pardede said the
government's newest move would help restore confidence,
especially among local companies which had rushed for U.S.
dollars over the past few weeks.

"The move is good. Otherwise, Indonesia will run into trouble
if it does not seek assistance from such an international
institute," he told The Jakarta Post.

Both Raden and Christianto predicted that the IMF would impose
tough measures on Indonesia like fiscal tightening, including
expenditure cuts and the removal of oil and electricity
subsidies.

Christianto said it would be rather encouraging for
Indonesia's future if the move brought about much-needed
structural reform in the economic front.

He predicted that the IMF might demand for the elimination of
monopolies and other economic distortions in return for its
financial help.

But Nyoman Moena, chairman of the supervisory board of the
National Private Banks Association, said that the IMF would not
impose many conditions on Indonesia, considering that Indonesia's
economy was not as bad as Thailand's.

"Unlike Thailand, Indonesia is not actually in dire need of
such help. Therefore, it has some bargaining position not to
accept all IMF conditions, if there are any," he said.

And there would be no reason for the IMF not to help Indonesia
considering that the Indonesian government had implemented all
prudent macroeconomic management as required by IMF.

"We have had a balanced budget and free foreign exchange
regime, managed to achieve low inflation and high growth and met
all international obligations on time for 30 years," Moena said.

Nevertheless, it was Indonesia's right, as an IMF member, to
seek its help, and it was IMF's obligation to help Indonesia to
deal with the current problem, he added.

He said a persistent weakening of the rupiah over the past few
weeks was largely attributed to the increasing demand by local
corporations to purchase dollars to refinance their dollar debts.

The rupiah reached a historic low of 3,850 against the U.S.
dollar on Monday, and some analysts forecast it could easily drop
to the 4,000 level if the government did nothing to shore it up."
said a local bank dealer. (aly/jsk/rid)

IMF -- Page 10

Rupiah -- Page 11