IMF closely watching E. Timor situation
IMF closely watching E. Timor situation
HONG KONG (AP): Hubert Neiss, Asia-Pacific director of the International Monetary Fund, Thursday said the IMF is carefully watching the situation in East Timor and warned against the impact on Indonesia's currency.
"The events in East Timor are first of all a large human tragedy, and the international community including the IMF cannot be indifferent to that," Neiss told Cable News Network on a nightly news program.
"We haven't threatened to cut off funding, but we have to work under the right conditions," he said.
"What we are doing is to review the situation and decide the appropriate time when we can have the next renewed discussions" on a $43 billion international rescue loan package, Neiss said.
IMF has put on hold a scheduled mission to Indonesia to discuss the program. Neiss said officials haven't decided whether, or when, the talks would resume.
A delay for that review will automatically delay the disbursement of the next installment of IMF aid for Indonesia.
Violence in East Timor and political uncertainties have sent share prices and the local currency, the rupiah, plunging in recent days.
Share prices rebounded somewhat Thursday as investors scooped up cheap shares after days of price drops. The rupiah also rebounded somewhat after falling early Thursday to Rp 9,025 against the U.S, the lowest level since April. Late Thursday, the rupiah was trading at Rp 8,540.
Neiss warned that the rupiah's downward spiral could hurt the country's economic recovery.
"A drastic further depreciation of the rupiah would be a great risk for the economic situation and the recovery," he said.
Neiss declined to comment on widespread rumors that President B.J. Habibie might step down imminently, or on whether the Fund would withhold the rescue funds if he resigned. Jakarta is denying the rumors of Habibie's imminent resignation.
Habibie's resignation "again is speculation. We are of course concerned with the economy, with the implementation of the economic program. That should foster a further recovery of the Indonesian economy," Neiss said.