Indonesia urged to press on with restructuring

Indonesia urged to press on with restructuring

SINGAPORE (AFP): Indonesia must proceed immediately with bank
and corporate restructuring despite political uncertainty, top
International Monetary Fund (IMF) officials said.

There was reason for optimism over Indonesia's economic
fortunes following a return to positive growth in the first three
months of the year, "ahead of expectations," but the country had
to see two more quarters of growth before it could say it was on
an uptrend, IMF Asia Pacific director Hubert Neiss and deputy
director Anoop Singh told Singapore's Business Times on Monday.

"Now we have macro (economic) stability in Indonesia, it is
overwhelmingly important that we move on to bank and corporate
restructuring," the IMF officials said in the interview.

"The next six months will be crucial. The process must go
forward and should not wait until November when there is a new
government. There is a program in place and it should be
implemented. There is no time to waste," they added.

The recent strengthening of the rupiah would also facilitate
bank and corporate restructuring, the IMF said.

"It will help the cleaning up of balance sheets. Under an
overdepreciated exchange rate, corporates and banks tend to
postpone restructuring until the exchange rate is in a credible
range.

"A stronger exchange rate will also help to keep inflation
low," they added.

They also reiterated the commitment of major Indonesian
political leaders to the IMF program, following a meeting with
them in June, saying there "is widespread consensus" among the
leaders "that the program is working."

"The leaders explicitly voiced agreement with the program and
stressed that continuity will be assured," the IMF officials
said.

"Of course this does not mean every comma and fullstop in the
program will be as it is. There is room in the program to adapt
it and improve it," they added.

The IMF arranged a 46 billion-US dollar bailout for the
Indonesian economy, which was hardest hit by the Asian financial
crisis in 1997.

Indonesians on June 7 voted in the freest election in decades.
The opposition Indonesian Democracy Party-Struggle (PDIP) of
Megawati Sukarnoputri is rated as the front-runner to replace
former strongman Suharto's Golkar party, now led by President
B.J. Habibie.