Political stability a must for economic reform: Neiss

Political stability a must for economic reform: Neiss

JAKARTA (JP): The International Monetary Fund's Asia-Pacific
director Hubert Neiss began talks with Indonesia's new government
yesterday on setting the stage for possible disbursement of
delayed bailout funds.

Neiss, who arrived in the capital Tuesday evening, is planning
to have week-long marathon talks with new President B.J. Habibie
and economic ministers, as well as opposition leaders, foreign
ambassadors and economic experts, to get their views on the
recent political unrest in the country.

"The IMF is concerned about the economic side of the issue,
but political stability is essential to make economic reforms
successful," he told reporters yesterday following his meeting
with Coordinating Minister for Economy, Finance and Industry
Ginandjar Kartasasmita.

Earlier yesterday, he met with the World Bank Jakarta
representative Dennis de Tray.

The country experienced its worst political unrest, including
at least 500 deaths, in three decades in the middle of this
month.

The riots led to the resignation of president Soeharto and the
rise of his protege Habibie, who is now under pressure from
opposition leaders to hold general elections forthwith.

The turmoil also caused the delay in the disbursement of US$1
billion in IMF bailout funds scheduled for June 4. The agency had
earlier channeled $4 billion out of the $10 billion it had
already committed as part of the $43 billion bailout fund to cope
with Indonesia's economic crisis.

Neiss declined to go into detail about his talks with several
economic ministers yesterday or how soon the funding might be
released.

He said budget and banking issues were the main focus during
his hour-long discussion with new Minister of Finance Bambang
Subianto.

His organization would do its best to help lift the country
out of its economic crisis, he said.

"The IMF will provide a lot of technical assistance to help
the banking sector," he said following a meeting with Bank
Indonesia Governor Sjahril Sabirin.

The country's banking sector is in danger of collapse
following the rupiah's plunge to as low as Rp 17,000 to the U.S.
dollar in January, compared to Rp 2,450 in July. The currency
has been hovering around Rp 10,500 in the last couple of days,
after plunging below Rp 15,000 when the political turmoil
erupted.

The country's largest bank, Bank Central Asia, which is owned
by tycoon Liem Sioe Liong and Soeharto's children, has been hit
by a massive run on deposits for more than a week.

The run continued yesterday despite Sjahril's pledge to
provide liquidity assistance to help the bank.

Neiss also met with the new Minister of Trade and Industry
Rahardi Ramelan yesterday, in which the country's letter of
credit conundrum was among the topics of discussion.

"I want to have his view regarding the trade issues," he said.

He was also briefed by State Minister for the Empowerment of
State Enterprises Tanri Abeng on the country's privatization
schedule.

Neiss is expected to pay a courtesy call on President Habibie
this morning, and to meet with opposition leaders Amien Rais and
Megawati Soekarnoputri later in the afternoon. (rei)