G7 urges RI to stick to reform program

G7 urges RI to stick to reform program

WASHINGTON (Reuters): The Group of Seven rich industrialized nations on Wednesday welcomed Indonesia's latest package of reforms and said Jakarta had to keep its economic promises to win back market confidence.

"We urged the Indonesian government to implement its program fully and vigorously as this is necessary to restore confidence," the G7 -- Britain, Canada, France, Germany, Italy, Japan and the United States -- said in a communique released after a meeting in Washington.

The brief statement sent a strong message to Indonesian President Suharto, who has come under fire for dithering on two previous reform agreements with the IMF.

The communique was issued as Indonesian officials met in New York with lenders to work out how to restructure a $67 billion mountain of corporate debt.

IMF chief economist Michael Mussa told Reuters that the fund was not directly involved in the negotiations, but was watching closely to ensure that a result was in line with the terms of the IMF-sponsored reform plan.

"It's not something where...we are going to be the authors or underwriters of the plan," Mussa said. "We want to make sure that the plan that's put in place is consistent with the fund program and satisfies certain other important criteria."

Mussa said the framework of Indonesia's corporate debt rescheduling could be ready within weeks, although "individual arrangements" could take months.

The IMF masterminded a $40 billion rescue package for Indonesia last year, but it suspended payments in March amid doubts about Indonesia's commitment to reform.

The 117-point revised reform program sets target dates for implementing key reforms. If it is fully implemented the reforms will overhaul the way business is done in Indonesia.

"We welcomed Indonesia's renewed commitment to economic and structural reforms and its agreement with the IMF on a new reform program," the G7 communique said.

IMF Managing Director Michel Camdessus has already said he is confident the new package will work. "This time we have an excellent program," he told a news conference on Tuesday, noting that Indonesia was well aware of the heavy price it would pay if it again fell behind on reforms.