IMF package 'not in line' with the constitution

IMF package 'not in line' with the constitution

JAKARTA (JP): President Soeharto said yesterday he had to
tread cautiously in implementing the International Monetary
Fund's sweeping economic reforms because they were not in line
with the country's 1945 Constitution.

The President was quoted by a political party leader as saying
that the IMF's bailout program, which Soeharto himself signed on
Jan. 15, was based on liberal economic principles which were not
in tune with the constitution.

"The President asserted that a liberal economy is not in line
with Article 33 of the constitution which stipulates that
Indonesia's economy shall be based on family principles," said
Jusuf Syakir, the chairman of the Moslem-oriented United
Development Party faction.

The President's remarks came only less than two days after the
IMF announced a delay until April of its decision whether to
disburse the second tranche, worth US$3 billion, of the bailout
funds to Indonesia. The payment was originally to be made on
March 15.

"As regards the IMF's rescue package, he (Soeharto) is firm in
his oath as the president to implement the constitution to the
letter, including Article 33," added Jusuf after emerging from a
meeting with the President at his private residence on Jl.
Cendana, Central Jakarta.

The President met yesterday with the leaders of the five
factions in the People's Consultative Assembly who formally asked
him for his willingness to be renominated as president for his
seventh five-year term (1998/2003).

Article 33 of the constitution stipulates that "the economy
shall be organized as a common endeavor based upon the principle
of the family system. Branches of production which are important
for the state and which affect the life of most people shall be
controlled by the state. Land and water and the natural riches
contained therein shall be controlled by the state and shall be
made use of for the people".

The 50-point reform package, signed by Soeharto as a condition
to for the $43 billion bailout, calls for, among other things,
the abolition of monopolies and other forms of market
distortions, strengthening of the financial sector, transparency
in fiscal policy and stronger autonomy for the central bank.

"He (the President) described how the IMF's package and
conditions will eventually lead us into a liberal economy," Jusuf
remarked.

The President has repeatedly reaffirmed that he would follow
the IMF's program. However he also indicated that he might peg
the rupiah to a fixed rate against the dollar under a currency
board system (CBS).

But Soeharto has been facing mounting pressure from the IMF
and industrialized countries to abandon the CBS plan. They say
Indonesia is too weak to adopt such a fixed rate regime at this
point in time.

The dominant Golkar faction in the Assembly immediately came
out in full support of Soeharto's firm stance against the IMF
program.

"We fully support the President's stance to carry out an
economic policy based on the 1945 Constitution," Golkar faction's
deputy chief Akbar Tandjung said yesterday.

"It is impossible for us to reform the economy by making
people suffer. We must carry out development for people's
welfare," Antara quoted Akbar as saying. (prb)