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)