Govt, IMF meet to salvage economic pact
JAKARTA (JP): The government and International Monetary Fund officials will start their meeting here today to get a massive economic rescue plan back on track.
IMF Asia-Pacific director Hubert Neiss, who arrived here yesterday, said he would meet President B.J. Habibie, economic ministers and opposition figures.
The chairman of the National Development Planning Board, Boediono, said economic ministers led by Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita would have a meeting with Neiss today.
"Indonesia will present its macroeconomic policies and the results amid the uncertainty following the recent political unrest," Boediono said.
Neiss told journalists upon his arrival at Soekarno-Hatta Airport that some of the macroeconomic assumptions underlying the IMF's agreements with Indonesia would have to be revised because of the effects of recent political turmoil.
The last assessment made by the IMF and the government forecast an inflation rate of 45 percent this year, a rupiah-U.S. dollar exchange rate of Rp 6,000 and gross domestic product of minus 5 percent.
Some economists have projected that inflation could near 100 percent this year and economic growth could shrink by 10 percent. The rupiah is currently above 10,000 against the U.S. dollar.
"The macroeconomic part and various assumptions will have to be changed and revised," Neiss said.
Asked when IMF loan payments would be resumed to Indonesia, Neiss replied: "It's too early to say. After making an assessment I will report back to Washington and then further decisions will be made on how to proceed."
Neiss said Indonesia's immediate priorities were to get the economy moving as quickly as possible, prevent hyperinflation and save the banking system from collapse.
Earlier this month, the capital was rocked by a wave of student protests and mass rioting which left at least 500 dead and 56 missing. The violence helped force the resignation of then president Soeharto and derailed a US$43 billion IMF package.
"We have to recognize that the economic measures will only work if there is also political stability," Neiss told AP.
Indonesia has been hardest hit in an Asian financial meltdown that has affected nations including South Korea, Malaysia and Thailand.
The rupiah has plummeted while inflation and unemployment have soared in Indonesia, adding to the resentment of Soeharto that helped oust him.
The new government under President Habibie has said it is committed to making big changes to accommodate IMF demands.
Habibie has also committed himself to major political reform, including the release of political prisoners and early elections.
"It is important that the trust of the Indonesian people (in the new government) is being restored, and support from foreign governments is obtained and that the confidence of the market returns," Neiss said.
Under Soeharto, several attempts by the IMF to bail out the economy stalled because of the former leader's reluctance to carry out tough reforms that would cut across the business empires of his multimillionaire children.
Soeharto's six children and a small clique of associates made fortunes under his patronage through a web of government contracts, state-approved monopolies and subsidies. (rei/rid)