RI urged to take concrete steps to raise confidence

RI urged to take concrete steps to raise confidence

WASHINGTON (Reuters): Indonesia must take "constructive steps" to increase confidence and promote stability, U.S. Deputy Treasury Secretary Lawrence Summers said yesterday.

Summers told reporters after a seminar on Asia's economic problems that Indonesia's economic recovery was important for the Group of Seven industrialized countries and others.

"It is obviously very important that Indonesia take the kind of constructive steps that increase confidence in Indonesia and promote stability," he said.

"There is no question that the G-7 countries...want to see Indonesia succeed. That success has to be based on measures that can support sustained and sustainable growth."

Asked if he supported Australian led efforts to soften the terms of a reform program agreed between Indonesia and the International Monetary Fund, he noted that the IMF had always been ready to modify its programs when needed.

He added: "It serves no one to support policies that do not have a substantial prospect of restoring confidence."

An IMF team is currently in Indonesia to discuss what needs to be done in order to secure the release of a new $3 billion installment of the IMF's $10 billion loan to Indonesia. The loan forms part of a $40 billion international rescue deal.

Meanwhile, Australian Foreign Minister Alexander Downer said here Thursday progress was being made in talks to settle difference between Indonesia and the International Monetary Fund.

"They're certainly headed in the right direction. I feel quite positive," he told reporters after meetings with IMF and U.S. Treasury officials about the situation in Indonesia.

Australia has been urging more sensitivity to the social impact of economic reforms prescribed by the IMF. Downer said the IMF package should be flexible because conditions in Indonesia have changed.

"There is a wide measure of agreement between us and the IMF on this question of a package, which is both going to help restore confidence in the markets, and secondly, that is going to take into account the social fabric of Indonesia," he said.

Downer said Australia wanted to coordinate an international response to any food shortages in Indonesia, and that he found Washington keen to participate.

"We have been discussing the issue of food security in Indonesia and the extent to which there is a need for additional support for the people," he said. "We would like to see a coordinated international approach to that."

Downer would not say how much money Australia and other nations might contribute to the food program. He said he would discuss the issue with World Bank president James Wolfensohn before leaving Washington.