IMF urges govt to halt increase in rice prices

JAKARTA (JP): The Indonesian government needs to take immediate measures to stop further increases in the price of rice and to boost supplies, the International Monetary Fund (IMF) Asia Pacific Director Hubert Neiss said on Thursday.

Neiss told reporters after a meeting with President B.J. Habibie that rice shortages and rising prices were potentially highly sensitive in Indonesia, the world's fourth most populous country.

"The new letter of intent resulting from this monthly review of the IMF program in Indonesia is focused on rice policy and corporate debt restructuring," Neiss said.

He said that to curb the trend of rising rice prices it would be necessary to "put rice in the markets to avoid a further price increase, expand the distribution of subsidized rice to the needy, and make sure rice stocks remain adequate.

"The State Logistics Agency (Bulog) must ensure that there are rice supplies in the markets and that further price increases do not occur."

Neiss warned that Indonesia could not let its rice stocks fall too low and said that therefore "the contracting of new rice imports is a priority."

Mass looting recently broke out in several towns in Central Java and in Pontianak, West Kalimantan, after people were hit by a severe rice shortage and were unable to afford the high price of the commodity.

Indonesia imported 2.44 million metric tons of rice to the end of August. This year the government has said it will import 4.1 million tons to meet the shortfall that has resulted from poor harvests.

Neiss stressed that the government's program to provide the poor with "substantially" subsidized rice needed to be "rapidly expanded."

Fail

Separately, Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita admitted on Thursday that the government's program to provide cheap rice to the needy had "partially failed".

The minister said that many poor people entitled to buy subsidized rice at Rp 1,000 a kilogram under a government social safety net program had been unable to do so.

"The government has provided a significant amount of funds to finance the program. But the program has not been well run. So who is to blame?" Ginandjar said at a meeting between Bulog officials and deputy provincial governors.

Ginandjar strongly urged both Bulog and provincial officials to identify weakness in the existing program to provide the needy with cheap rice.

He said the failure in the current program might have resulted from poor supervision and a lack of coordination.

He added that other possibilities included malfeasance on the part of local officials, who he said might be channeling the subsidized rice away from its intended recipients and selling it to those who could afford to pay the market price.

Under a special program launched in July, the government, through Bulog, has been trying to provide the most needy families in the country with cheap rice.

Each family included in the scheme has been issued with a card which entitles them to buy 10 kg of medium-quality rice every month for Rp 1,000 per kg, a quarter of the prevailing price on the domestic market in recent weeks.

The program is scheduled to last until next March and is currently reaching out to 7.3 million poor families, according to the government.

Minister of Industry and Trade Rahardi Ramelan, who also attended yesterday's meeting, said he hoped the discussions with the deputy provincial governors would throw up new ideas to improve the system currently used to distribute cheap rice to the needy.

Rahardi, who is also acting chairman of Bulog, said the system of registering poor families included in the social safety net program should also be improved.

He said Bulog was still relying upon National Family Planning Board (BKKBN) data collected before the economic crisis began, and pointed out that many more people had subsequently slipped below the poverty line. (prb/gis)