Fuad gives his word RI won't backtrack
Fuad gives his word RI won't backtrack
By Yenni Djahidin
WASHINGTON D.C. (JP): The government reiterated here Friday
that it would carry out all the economic reform programs it had
worked out with the International Monetary Fund this month to
lift the country out of the present crisis.
"Indonesia is determined to regain the confidence of the
international community through a more open economic system,"
Minister of Finance Fuad Bawazier told reporters.
"Once fully implemented, the programs will greatly increase
transparency in all economic matters, substantially remove
monopolies and oligopolies and strengthen our financial system,"
Fuad said after attending a spring meeting at the World Bank.
The government would fully implement the IMF measures in a
timely manner, he said in response to questions of the
possibility of the government once again backtracking on its
pledge.
"You can have my words, but I would also like to ask that you
judge us on our actions," he said at the media conference also
attended by Bank Indonesia Governor Sjahril Sabirin and
Indonesian Ambassador to the United States Dorodjatun Kuntjoro-
Jakti.
Fuad said talks between Indonesian borrowers and international
lenders in New York had gone well.
"They basically have set up a framework but details certainly
need to be followed up in the next few weeks and months," he said
of the negotiations to resolve the $73 billion debt mountain that
Indonesian companies have not been able to repay.
He admitted that the stumbling block was the lack of an
effective and modern bankruptcy law in Indonesia. The law was now
being prepared and reviewed prior to submission to the House of
Representatives, he added.
When asked about the Currency Board System (CBS) of pegging
the rupiah to the dollar, Sjahril said the idea was no longer on
the agenda. "We are now implementing the IMF package," he said.
Consideration
The CBS, a concept proposed by American economics professor
Steve Hanke, was given serious consideration by the government
last month as it struggled to strengthen the rupiah, which at one
point lost more than 70 percent of its value since the crisis
began in July.
In February, Hanke was retained by President Soeharto as his
economics advisor to look into the proposal as an earlier IMF
reform package failed to arrest the rupiah's decline.
Sjahril declined to answer a question about Hanke's present
status with the Indonesian government.
"He (Hanke) was a counselor when we were considering various
alternatives."
"The stabilization of the rupiah is part of the IMF package
right now which was kind of neglected in the beginning," he said.
The IMF has organized a $43 billion rescue package for
Indonesia but insisted on more than 100 tough conditions,
including sweeping economic reforms.
It withheld the disbursement of the second $3 billion tranche,
originally due in March, pending a more convincing demonstration
of the government's commitment to implementing the reforms.
IMF Asia director Hubert Neiss was quoted by Reuters as saying
Friday that a decision on whether to release the next tranche of
its $10 billion loan to Indonesia was possible, but not likely,
in the next two weeks.
Neiss told reporters the loan would be released after an IMF
board meeting, but no date had yet been set for it.
Sabirin said the monetary authorities were ready to raise
interest rates further to keep reform efforts on track and
support Indonesia's currency.
"The exchange rate has been unrealistic ... this is truly out
of line," he said. "So it is our aim to reach an exchange rate
for the rupiah which is more in line with the basic strength of
the Indonesian economy."
"If it is necessary, we'll adjust interest rates. If there is
a need for a further increase, then we'll do so in order to
support the exchange rate," he added.