New legislators say credible government key to aid resumption

JAKARTA (JP): Newly installed legislators said on Saturday that Indonesia must immediately create a new credible government in order for foreign donors to resume lending the badly needed aid.

Theo F. Toemeon, a legislator representing the Indonesian Democratic Party of Struggle (PDI Perjuangan), said a new credible government would restore confidence in the country.

"What's more important is that with the installment of a new credible government, the US$80 billion parked overseas will return home," he said, referring to overseas deposits of local businesspeople, who fear domestic political unrest.

Theo was speaking on the sidelines of the second day of the General Session of the People's Consultative Assembly (MPR), the country's highest legislative body, which will elect the next president on Oct. 20.

Theo, a savvy currency analyst, said that if the country failed to form a new credible government, confidence and the rupiah would tumble, which would bring the country into another round of crises.

Theo was responding to reports that Indonesia risks losing some $4.7 billion in loans until March 2000, the end of the current 1999/2000 fiscal year.

According to a World Bank document, the loans include budgetary support from the bank and other donor countries including Japan. Also in jeopardy are loans from the International Monetary Fund (IMF).

The report said that by the end of September, a total of $1.37 billion in loans from the IMF, the World Bank and the Asian Development Bank had been put on hold.

The three multilateral institutions have demanded a swift and satisfactory resolution to the Bank Bali affair, which allegedly involved the inner circle of President B.J. Habibie.

The IMF and the World Bank have expressed disappointment over the government's decision not to disclose the full PricewaterhouseCoopers audit report on the bank scandal.

The suspension of the foreign aid comes on top of statements from government officials that the $1.5 billion privatization proceeds and the Rp 17 trillion bank assets sale target to help finance the current state budget might not be accomplished amid the current political uncertainty.

Several analysts have said suspension in the aid disbursement is an indication from the fund and the World Bank for Habibie to step down.

"That's absolutely not true," said Priyo Budi Santoso, a legislator from the Golkar Party.

"I warn the IMF and the World Bank not to enter into the political arena.

"If they do, Habibie and the whole nation will come together to fight foreign intervention," said Priyo, a Habibie loyalist.

But Marzuki Darusman, chairman of the Golkar faction at the MPR, dismissed the claim.

"Don't be trapped by such a narrow nationalism," he said.

"It's their money, so it's just logical for them (donors) to wait until a credible government has been formed."

Marzuki, who is known to be a strong opponent of the Habibie Golkar camp, said the existing government was no longer functioning.

"The ministers have resigned ... where's their responsibility?," he said.

Several senior ministers, including Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita, recently resigned in order to take their places at the MPR and vote for the next president.

Golkar chairman Akbar Tandjung said on Saturday that the 700- member MPR would hold the presidential election on October 20, a date much earlier than the initial schedule of Nov. 10 set by the election committee.

Habibie and chairwoman of PDI Perjuangan Megawati Soekarnoputri are the strongest contenders in the presidential race.

Megawati is the most popular presidential candidate.

Habibie's chances of reelection appear increasingly dimmer, due to the East Timor problem and the Bank Bali scandal.

The Bank Bali scandal revolves around the "illegal" transfer of Rp 546 billion from the bank to PT Era Giat Prima (EGP), a private firm linked to the Habibie camp. The funds were a commission fee to help the bank recoup interbank loans on a closed-down bank which is guaranteed by the government.

There have been allegations that several senior government officials and other people close to Habibie have abused their positions to help EGP raise money for political purposes ahead of the presidential election. (rei)