Soeharto tells Prodi RI can deal with crisis

JAKARTA (JP): President Soeharto told visiting Italian Prime Minister Romano Prodi yesterday that the Indonesian government was confident that it would be able to cope with the currency upheaval.

Soeharto also said Indonesian economic fundamentals were strong enough to cope with the crisis and restore public confidence.

"The most important step is to restore confidence in our strong economic fundamentals, especially confidence in the rupiah, and the government is doing its best to regain it," Minister/State Secretary Moerdiono quoted Soeharto as telling Prodi in their bilateral talks.

Southeast Asian currencies and their stock exchanges have been under pressure following the de facto devaluation of the Thai baht on July 2.

The rupiah has since dropped by about 35 percent against the U.S. dollar, the Philippine peso by 26 percent and the Malaysian ringgit by 21 percent. The usually robust Singaporean dollar has not been spared from the upheaval either.

The Indonesian government was forced last month to delay or review 156 government and state-related projects worth up to $38 billion as part of retrenchment measures to cope with the rupiah's sharp depreciation.

"The President also briefed Prodi on development of the regional currency crisis," Moerdiono said.

Soeharto decided early this month to seek long-term support funding from international agencies, including the International Monetary Fund, to help regain market confidence in the rupiah and the country's economy.

On bilateral relations, Moerdiono said the two leaders agreed to boost two-way trade which was still in favor of Italy.

"The trade value of the two countries is about $2 billion, and Italy wants to make us one of its trade and economic partners," Moerdiono said.

Indonesia exported goods worth $743.57 million in 1996. Its imports totaled $1.21 billion.

Italy pledged $6.5 million to Indonesia through the World Bank-led Consultative Group on Indonesia for the 1997/1998 fiscal year.

Italian investment grew steadily in the last three years, mainly in telecommunications, energy, oil, metallurgy and food processing.

Prodi and his entourage arrived here yesterday for a two-day state visit. He will leave Jakarta today. (prb)