IMF urges govt to halt increase in rice prices

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)