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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