Soeharto warns of plot to ruin economy

SUBANG, West Java (JP): President Soeharto warned the nation yesterday against groups plotting to destroy the country's economy by engineering a dramatic fall in the rupiah against the US dollar.

Without identifying the groups, the President said there were strong indications that the rupiah might be forced down to 20,000 against the greenback by the plotters. He did not elaborate.

"It means there is an intentional plot to destroy our economic foundations. We must find a way to face the challenge," Soeharto said in an off-the cuff-speech when inaugurating the Texmaco Group's Perkasa Heavy Engineering Estate.

The President said the government and people should be united in their fight against the campaign to ruin the hard-earned national unity.

"This is an ordeal for all of us, (a challenge) not to be careless, as many people have said that we will not be able to ride out this storm," he noted.

Despite the economy's strong fundamentals, the President acknowledged, the country's financial resilience was not yet strong enough to overcome the turmoil.

Indonesia is facing its worst economic crisis in the last 30 years. Inflation in January hit a 25-year monthly high of 6.88 percent.

The President warned that many companies would collapse in the current economic conditions and that this would be followed by massive lay-offs.

"We are facing a test from God. From our 30 years of development, our economic fundamentals are strong enough," Soeharto remarked.

Skyrocketing prices and severe shortages of basic needs like cooking oil and noodles can easily remind people of the similar situation 30 years ago, observers said.

"We must find a way to confront the challenges to return the rupiah to its natural exchange rate," Soeharto said.

The President disclosed Monday that he would soon announce strong measures to ease the rupiah's volatility.

The statement sparked speculation that the government might peg the rupiah at a fixed level against the greenback.

"I believe that we will find the best way to overcome all these problems," the President said. (prb)