Soeharto puzzled by rupiah fall

Soeharto puzzled by rupiah fall

JAKARTA (JP): President Soeharto found it extremely difficult
to understand why the rupiah had continued to fall against the
U.S. dollar, a senior minister said yesterday.

The President therefore ordered economic officials, assigned
to handle the monetary upheaval, to closely monitor the situation
and keep him posted of the latest developments, Minister/State
Secretary Moerdiono added.

"The Monetary Council and the President himself have found it
extremely difficult to understand why the rupiah dropped to such
a low level," Moerdiono said after meeting with Soeharto at his
residence on Jl. Cendana, Central Jakarta.

Asked about the government's measures to cope with the
financial chaos, Moerdiono said: "I think it's an important time
for introspection. We do not need to blame one another, but the
government will do its best to overcome the currency crisis. We
try to give people results, not just promises."

The rupiah fell to a historic low of 5,980 to the dollar on
Tuesday, but has since recovered to about 5,500 yesterday.

Despite mounting pressure, Moerdiono reaffirmed the
government's position that Indonesia would not reschedule its
foreign debt.

"We never think about a rescheduling. Indonesia will try as
hard as it can to fulfill its obligations," he said.

Minister of Finance Mar'ie Muhammad had said earlier that the
country's foreign debt totaled US$117 billion as of September,
including $65 billion owed by the private sector.

The state secretary rejected allegations from some analysts
that the International Monetary Fund's (IMF) prescription had
failed to cure the country's ailing economy.

"Indonesia sought help from the IMF, and it fully supports our
programs... Other countries are also facing similar problems like
us... This is a great turmoil and we need some time to solve the
problem," Moerdiono said.

Soeharto also summoned State Minister of National Development
Planning Ginandjar Kartasasmita and Minister of Industry and
Trade Tunky Ariwibowo to his residence yesterday.

Soeharto ordered Ginandjar last week to intensify relief
operations to drought-hit regencies in Irian Jaya. He was also
ordered to provide labor-intensive projects in big cities,
including Jakarta and Surabaya, to employ laborers.

Trade surplus

Tunky said after the meeting that Indonesia enjoyed an
international trade surplus of $7.7 billion in the first three
quarters of this year, resulting from total exports of $39.5
billion, compared to imports of $31.8 billion.

The exports represented a 9 percent increase over the same
period last year and imports were down 0.5 percent.

"Our non-oil and gas exports totaled $30.8 billion, or 10.3
percent higher than last year... while non-oil and gas imports
were about $28.8 billion, or 2 percent less," Tunky added.

Tunky said the country's imports declined due to the impact of
the financial crisis and the rupiah's sharp depreciation against
dollar.

"The surplus in our non-oil and natural gas trade was very
huge compared to the same period last year, which posted a trade
deficit of $1.98 billion," Tunky noted.

The government expects total exports to reach about $45
billion to $46 billion next year.

"We expect our total exports this year to be about $42
billion," Tunky said.

The minister also announced a government decision yesterday to
slap a surcharge on crude palm oil (CPO) exports to further
discourage exports in a bid to secure adequate supplies in the
domestic market.

The current export tax for CPO is 5 percent and for olein 2
percent.

The surcharge, Tunky said, would be determined by the finance
minister.

The government had earlier imposed a nationwide export quota
on CPO amounting to only 25 percent of total production to secure
adequate supplies for the domestic market.

However, an additional restrictive measure, in the form of an
export surcharge, was considered necessary because producers
still preferred exports due to rising prices in the international
market and the steady depreciation of the rupiah.

Tunky acknowledged that demand in the international market had
been increasing, but maintained that the government had to
prioritize domestic interests. (prb)

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