RI asks Japan to help fill budget shortfall

RI asks Japan to help fill budget shortfall

TOKYO (Agencies): Indonesia's top economic minister called on Japan Tuesday to join international institutions in forming a rescue package to help fill Indonesia's budget shortfall.

Ginandjar Kartasasmita, the coordinating minister for economy, finance and industry, made the request when he met International Trade and Industry Minister Kaoru Yosano in Tokyo.

During the talks, Ginandjar asked Japan to cooperate with the World Bank and the Asian Development Bank in financing US$5 billion of Indonesia's estimated revenue shortfall of some $9 billion fiscal 1999, officials said.

Ginandjar's request was part of Indonesia's campaign to win Japanese funds set aside under the nation's 30 billion dollar aid scheme for troubled Asian nations announced last October.

Yosano made no clear reply to the request, only advising Ginandjar to provide information about economic data such as projections for balance-of-payments data before obtaining financial assistance.

As for his Tokyo meetings, which included talks with Prime Minister Keizo Obuchi and Finance Minister Kiichi Miyazawa, Ginandjar said that he was "very encouraged."

"I was very encouraged by their very positive attitude, their understanding of Indonesia and their commitment to support our economic programs," he said.

Ginandjar later told reporters he couldn't expect market interest rates to fall until the rupiah stabilizes.

Ginandjar said he expected the Indonesian rupiah to trade on average around Rp 7,500 to the dollar during the next fiscal year beginning April 1.

Asked about his expectations for interest rates, Ginandjar said, "we need to maintain current interest rates for some time, until the rupiah stabilizes."

He added that "logically" he didn't expect interest rates to "fall dramatically" because of the recent fluctuations of the rupiah.

While the figure he cited for the average rupiah rate next year is the official number cited in the budget, Ginandjar said the rupiah could be stronger next fiscal year.

He said that the budget numbers are "conservative" projections. He said he estimates that the average rate this fiscal year will likely be stronger than the IDR10,000/dollar stated in the current budget.

The minister said that Jakarta needed to follow developments in Brazil, after financial turmoil there pushed the rupiah back down to nearly Rp 9,000/dollar, but couldn't say what the longer- term impact on the nation's currency and economy would be.

"In the short-term there was some negative impact on the rupiah, but it's too early to see the medium- to long-term impact," he said, saying there's uncertainty over the effects on the rest of Latin America and the U.S.

Ginandjar reiterated his expectation that the economy would bottom out in the second half of the next fiscal year.