Indonesian economy to expand: Kwik

Indonesian economy to expand: Kwik

SINGAPORE (AFP): Indonesia's economy should expand two percent next year after languishing in recession for two years, according to IMF and government calculations, a top Indonesian minister said Saturday.

Indonesian Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie also said that details for the resumption of frozen International Monetary Fund (IMF) aid to Indonesia would be finalized by mid-December.

Kwik was speaking at a business leaders' forum here where Indonesian President Abdurrahman Wahid explained his new administration's economic policies to bring Indonesia out of a financial and economic mess.

"Most probably, based on very accurate calculations by the experts of the IMF, with deficit spending of around eight percent ... economic growth of about two percent will be achieved," he said.

Indonesia's economy contracted by a massive 13.2 percent in 1998, a year after the regional financial crisis erupted and plunged most of Asia into recession.

Economists expect Indonesia to post growth of minus 1.0 to minus 0.1 percent this year.

Kwik, who replaced Ginandjar Kartasasmita as Indonesia's economic czar, said IMF Asia-Pacific director Hubert Neiss left Indonesia late Friday after talks with government leaders on the resumption of aid.

In September, the IMF, the World Bank and the Asian Development Bank blocked about US$4.6 billion in loans after the Bank Bali scandal erupted in July, implicating senior members of the previous government.

Kwik said he expected a detailed schedule for IMF aid resumption to be completed by December 15.

"In that sense full cooperation from the international community can be reassured," he said.

According to reports Saturday, the IMF said its experts would resume talks in Jakarta next week on Indonesia's economic plans, including a detailed letter of intent listing the policies Indonesia planned to adopt.

Indonesia received an international rescue package worth more than $45 billion in 1997, but lending was halted earlier this year because of the Bank Bali scandal.