Indonesia told not to sever relations with IMF

JAKARTA (JP): President Abdurrahman Wahid's foreign economic advisers urged the government on Saturday not to sever ties with the International Monetary Fund (IMF) despite complaints that the institution was pressing too hard for reform.

"We believe it is already a difficult process to have someone looking over your shoulder all the time," Paul Volcker, former U.S. Federal Reserve chairman, told a press conference after a two-hour meeting with Abdurrahman and Indonesia's top economic ministers at Bina Graha presidential office.

"But for the moment, Indonesia is in that situation where it needs to nurture confidence ... and cooperation with international institutions is an important factor in sustaining and encouraging that kind of confidence," added Volcker.

Volcker earlier said that "the confidence afforded here in Indonesia and in the international market is so fragile" and that "the external environment may be less favorable currently because of conditions in the U.S and elsewhere."

Nobuo Matsunaga, former Japanese ambassador to the United States, shared Volcker's opinion.

"We find today that there is some kind of suspicion or concern about the economic performance of this country, so in that in this respect, the relations with the IMF and also with other international institutions is extremely crucial and we certainly hope that solutions can be worked out for that" Matsunaga said.

"Japan, as one of the most friendly countries to Indonesia, would like to strongly encourage Indonesia to establish good relations with the U.S., the IMF and other countries that are vital to Indonesia's economy," he added.

The suspension of the latest disbursement of IMF's US$400 million loan over Jakarta's perceived foot-dragging on economic reforms prompted angry comments from chief economics minister Rizal Ramli earlier this week.

Rizal's charge that the Fund was bullying Jakarta and that Jakarta knew best what was good for it, raised fears that the government might be prepared to make a total break with the IMF.

Rizal is scheduled to travel to Washington next week for meetings with IMF first deputy managing director Stanley Fischer and new U.S. treasury secretary Paul O'Neill.

Also present on Saturday were Singapore's Senior Minister Lee Kuan Yew and Ulrich Cartellieri, a former member of Germany's central bank and now a member of the supervisory board of Deutsche Bank.

Lee said that they had "a very frank exchange" with Abdurrahman and Indonesia's top economic ministers, but he did not comment on the content of talks.

"We have expressed our views in our own way, given our different background and different perspectives of the same problem, but we came to the similar conclusion about the basic issues," Lee said.