Jakarta reforms restoring confidence: IMF

Jakarta reforms restoring confidence: IMF

SINGAPORE (Reuters): Indonesia's economic reforms are a move
in the right direction and are restoring market confidence,
International Monetary Fund (IMF) director Kunio Saito said
yesterday.

He said that in November and December, the reforms the IMF
demanded as conditions for a $43 billion rescue package for
Indonesia proved inadequate.

"In January, more recently, the authorities revamped and
strengthened these measures and the markets are responding and
we're moving in the right direction," Saito told reporters on the
sidelines of a trade union conference in Singapore.

He said the idea of a currency board arrangement to help
stabilize Indonesia's rupiah, which has lost as much as 80
percent of its value against the dollar since July, was worth
looking into.

Under such a system, the rupiah would be pegged at fixed rate
to dollar and backed 100 percent by dollars equivalent to money
in circulation.

"I think it's an interesting proposal and worth exploring, but
it's important to explore all the pros and cons before finalizing
the policy," Saito said.

The most important thing right now was to stabilize the
markets. After that the currency board option could be explored,
he said.

Saito said the Indonesian government had already done a number
of important things, like adjusting reform measures.

This "is showing that the government is fully committed and
determined to implement all the reform measures. That's very
important to give assurance to the markets," he said.

It was also important to ensure Bank Indonesia, Jakarta's
central bank, had enough reserves and that the international
community helped with the IMF rescue package.

Saito said Indonesia also had to work out some roll-overs and
rescheduling of short-term debt with foreign creditors.