IMF team here to help defuse crisis

JAKARTA (JP): A team from the International Monetary Fund (IMF) began talks with Indonesian economic ministers yesterday shortly after arriving here to help defuse the country's economic crisis.

The delegation, led by First Deputy Managing Director Stanley Fischer, indicated there was some way to go in resolving the country's financial crisis.

"We are making progress...it's starting fine," Fischer told journalists after a three-hour meeting with Indonesian ministers at the Ministry of Finance.

"We are discussing the entire reform program and how to move ahead with it," he added.

Fischer, however, refused to give specific details, saying: "the IMF mission is here for a few days, and today (yesterday) is just a beginning."

The IMF managing director Michel Camdessus is expected here Wednesday and according to Fischer, their negotiations with the government may continue until Thursday.

Minister of Finance Mar'ie Muhammad said it was too early to provide details of the substance of yesterday's discussions with the IMF team.

"It's still too premature for me to comment on the progress. But I would say that the discussions were fruitful, productive and quite impressive," Mar'ie said.

Asked about the outlook for Indonesia's battered financial markets today, Mar'ie said: "I am always optimistic with the market."

International investors watched in horror as Indonesia slid into financial chaos last week.

The rupiah collapsed to an all-time low of 10,000 against the U.S. dollar Thursday on international concerns that the government might be backsliding out of its commitments to economic reforms attached to the IMF rescue package of US$43 billion.

The rupiah recovered to 7,600 on Friday, but it still was less than half its value against the dollar in July.

The Jakarta stock market has similarly nose-dived. Its main price index closed Friday at 340 points, compared to a level of 740 on July 8.

The currency's free fall has led to panic buying of staple goods in the stores of some cities.

The financial chaos prompted U.S. President Bill Clinton to telephone President Soeharto to discuss the crisis last Friday.

Clinton announced he would send Deputy Treasury Secretary Lawrence Summers to Indonesia. Summers is expected here this afternoon from Singapore.

In a related development, Australian Prime Minister John Howard yesterday interrupted his New Year holiday to call Soeharto to express concern about Indonesia's deepening crisis.

"The prime minister said Australia was concerned for Indonesia as a near neighbor and concerned in particular about the IMF package. He said Australia strongly supported the IMF package while recognizing the difficulties involved for Indonesia," Howard's spokesman was quoted by AFP as saying.

"He (Soeharto) understood the need for Indonesia to get its house in order and restore confidence in it," the spokesman said.

There is also increasing discontent among Indonesians as various rumors spread in the market, ranging from government plans to liquidate more banks, freeze bank deposits in U.S. dollars, convert rupiah bank deposits into government bonds or even slash the nominal value of the rupiah.

Bank Indonesia governor J. Soedradjad Djiwandono said last night that all such rumors were baseless and had been intentionally spread by irresponsible people to worsen the situation.

He called on the public to trust the government and not be easily incited by wild rumors. (rid)

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