Soeharto will pursue reforms: IMF
Soeharto will pursue reforms: IMF
JAKARTA (JP): The International Monetary Fund (IMF) expressed
confidence yesterday that President Soeharto would accelerate
economic reforms to restore confidence in the economy.
IMF first deputy managing director Stanley Fischer said after
a 90-minute talk with Soeharto that he had a "very, very good"
meeting with the President on efforts to haul Indonesia out of
its financial crisis.
Fischer said the President was determined to intensify the
reforms agreed with the IMF in return for a US$40 billion
bailout.
"The President was very clear in his determination to stay
with the program and to strengthen and to accelerate it. There
was no ambiguity in anything he said," Fischer told journalists
after meeting with Soeharto at his residence on Jl. Cendana,
Central Jakarta.
Fischer arrived here Sunday as financial markets and
Indonesia's main creditors sought firm action rather than mere
promises that the government would stick to the terms of the IMF
bailout package.
Minister/State Secretary Moerdiono said Soeharto was very
satisfied with the results of the meeting.
Moerdiono said there were no basic differences of views
between the IMF and the government. The only difference was on
the timing of the reforms to be taken.
"The President is confident that his next meeting with IMF
Managing Director Michel Camdessus will also be fruitful," he
said.
Camdessus is expected to arrive here tomorrow.
Minister of Finance Mar'ie Muhammad also praised yesterday's
meeting as satisfactory.
"We will soon follow up the meeting with further negotiations
with IMF officials," Mar'ie said.
However, Fischer warned that one could never be absolutely
sure the government could turn confidence around in a short time.
"But I think the critical steps will be taken soon. That
should, or begin to, restore confidence," he said.
He said he would like to see the government show in a few days
its commitment to carry out the program and to undertake a
variety of measures that could restore confidence in the economy.
"The confidence of Indonesian people and the confidence of
outside investors in Indonesia depends on how the government of
Indonesia treats the economy, and that depends on what it does in
the budget and other commitments it has made," he said.
When asked about the draft state budget, Fischer said, "I
think it has to be made more specific, the assumptions have to be
spelled out."
The 1998/1999 State Budget is projected to balance at Rp
133.49 trillion ($15.5 billion), a 32 percent increase from the
current budget of Rp 101.08 trillion.
State Minister of National Development Planning Ginandjar
Kartasasmita defended yesterday the assumptions used by the
government in drafting the state budget.
The assumptions include the rupiah's exchange rate stabilizing
to 4,000 to the U.S. dollar, an economic growth rate of 4
percent, an inflation rate of 9 percent and average crude oil
price of $17 per barrel.
Ginandjar said that even though the 1998/1999 budget followed
the principle of a balanced budget, it opened the possibility for
the government to achieve a surplus equivalent to 1 percent of
the gross domestic product as required by the IMF.
The possibility of achieving the surplus would be from
removing the fuel subsidies of over Rp 10 trillion, increasing
revenue from taxes and reducing spending.
"However, it will still be discussed with the IMF whether it
is realistic to pursue the 1 percent surplus in this current
economic situation," Ginandjar said.
Many analysts have blamed the announcement of the draft state
budget, which they described as unrealistic, for worsening
Indonesia's financial crisis last week, when the rupiah plunged
to an all-time low of 10,000 to the dollar.
Bank Indonesia Governor J. Soedradjad Djiwandono criticized
analysts' view on the budget as unfair as they did not see the
real value of the budget in dollar terms.
He said although the budget would rise 32 percent in terms of
rupiah, it would not increase in terms of dollars. (prb/rid)
Kosgoro -- Page 2