Singapore offers $10b in aid: Soeharto

Singapore offers $10b in aid: Soeharto

JAKARTA (JP): President Soeharto disclosed yesterday that
Singapore had offered US$10 billion in assistance to help restore
confidence in the Indonesian economy.

Out of the $10 billion, Soeharto said, $5 billion would be
standby loans to strengthen the country's foreign exchange
reserves.

"The $5 billion could be used whenever our foreign exchange
reserves decrease," Soeharto was quoted by Antara as telling
dozens of youths attending a National Youth Pledge Day
celebration in Pasuruan, East Java.

Soeharto said the remaining $5 billion would be used for
purchasing rupiah when needed to prevent it from falling further.

"Because it has been difficult for Indonesia to restore
confidence, Singapore has also offered $5 billion to purchase
rupiah," he added.

Soeharto said rupiah bought by Singapore would remain in
control of Bank Indonesia, the central bank, to extend credit
facilities.

The offer was made by Singaporean Prime Minister Goh Chok Tong
during his visit here on Oct. 21. No figures were given then on
the amount of aid.

The Singaporean pledge was followed by Malaysia with Deputy
Prime Minister Anwar Ibrahim committing $1 billion Monday in
standby loans to help Indonesia.

Meanwhile, informed sources at the State Secretariat said
yesterday that Japanese Prime Minister Ryutaro Hashimoto would
hold telephone discussions with President Soeharto today on the
current crisis in the region.

Earlier this month, the Indonesian government decided to ask
for financial assistance from international financial
institutions, including the International Monetary Fund, the
World Bank and the Asian Development Bank.

But Soeharto surprised the market yesterday, saying that
Indonesia was not seeking financial aid from the IMF, but only
advice on some economic reform packages already prepared by the
government.

"Don't misunderstand, we're not asking for money. We've
already set up our own (reform) programs, and we've asked the IMF
to look at them because of their experience," Soeharto said.

Soeharto also asserted that IMF did not insist on any
conditionality to restore confidence in the rupiah.

In Singapore, regional economists reacted with disbelief
yesterday to Soeharto's remarks that Singapore had offered
Indonesia funds totaling $10 billion to help it overcome its
financial crisis.

"It's incredible. I'm surprised by the sum of money," said an
economist with a foreign financial firm in Singapore.

"Ten billion dollars is higher than expected, even though we
know Singapore can well afford it," the economist added.

Another regional economist said the move could rattle
financial markets today on top of the ongoing turmoil triggered
by the severe drop in the Hong Kong and U.S. stock markets.

"This is not very good because it suggests that they
(Indonesia) cannot stomach IMF's conditions, that they are not
ready for financial discipline," the economist said.

A foreign ministry spokesperson in Singapore was quoted by
Reuters as saying that ministers of both Indonesia and Singapore
planned to meet soon to work out details of the aid package.
(rid)

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Standby fund -- Page 10