IMF team due here for fresh talks

JAKARTA (JP): The government will not send a team to Washington next week but will instead hold talks with International Monetary Fund (IMF) officials due here soon to review the implementation of reforms, Indonesian and IMF sources said yesterday.

Director General of Taxes Fuad Bawazier, strongly rumored as the next finance minister, said the IMF team would arrive here soon after the announcement of the new cabinet slated for tomorrow.

"Since the beginning, there has never been any plan that Pak Widjojo (Nitisastro) would lead a delegation to Washington," added Fuad, who is also deputy secretary-general of the President's Economic and Monetary Resilience Council, after a meeting at Bank Indonesia yesterday.

Widjojo is the council's secretary-general.

Fuad said yesterday the IMF normally conducted the review of its bailout programs in the country receiving aid and not at its headquarters in Washington.

Fuad himself disclosed Tuesday a plan to send a technical team to Washington to negotiate with the IMF and the U.S. government.

An IMF source in Jakarta confirmed yesterday the imminent arrival of an IMF team here which would be headed by one of the institution's senior executives.

Flexibility

In Manila the World Bank's chief economist, Joseph Stiglitz, was quoted by Reuters as saying yesterday he expected the IMF to show flexibility over Indonesia's proposal to set up a currency board.

"All international institutions and economists realize that they have to adjust their programs as more information comes out," Stiglitz told a news conference in Manila.

But Stiglitz reemphasized that President Soeharto must move quickly to restore confidence in his troubled nation, warning social conditions could worsen and further unsettle the region.

He said the only way for Indonesia to end a standoff with the IMF over conditions tied to a multi-billion-dollar aid package was to implement the structural reforms required by the fund.

"I think obviously the logjam is most easily addressed by making sure that the reforms that have been agreed (on are) implemented," he said on the sidelines of a forum on the Asian crisis organized by the World Bank and Asian Development Bank (ADB).

Indonesia has repeatedly said it is preparing to set up a currency board, which would peg the rupiah to a hard currency.

The IMF, which strongly opposes the plan, threatened last month to delay releasing aid and announced last week that funds scheduled to be delivered in March would be delayed at least until April.

Stiglitz said Indonesia was reeling under the impact of sharp currency devaluation, falling oil prices and drought, which was forcing the troubled nation of 200 million to import foodgrains.

Oil prices have plunged worldwide in recent months. Indonesia, the only Asian member of the Organization of Petroleum Exporting Countries (OPEC), is entitled to produce 1.456 million barrels per day.

The rupiah has lost more than 70 percent of its value against the dollar since last July.

Indonesian economist Mari Pangestu earlier told the conference on East Asia in Manila that Indonesia was not in a position to undertake the dramatic political and economic reforms that South Korea and Thailand had implemented.

Pangestu, a senior economist at the Centre for Strategic and International Studies in Jakarta, said "the (short-term) answer is we have to bring back a lot of capital," but she noted that the dispute with the IMF and the Indonesian leader's insistence to peg the rupiah currency to the U.S. dollar were delaying the infusion of fresh funds.

"We have to find intermediate solutions," she said. "We cannot wait for the perfect solution before we start reforms."

One such intermediate solution would be to return to a band on the rupiah's fluctuations or to have the rupiah pegged at 5,000 to the dollar if it is used to import food and medicine. (08/rid)