Summers still concerned about RI's situation

Summers still concerned about RI's situation

WASHINGTON (Reuters): U.S. Deputy Treasury Secretary Lawrence Summers said on Tuesday he was more encouraged by events in Asia now than a few months ago, but the situation in Indonesia remained "extraordinarily difficult."

"Thankfully we can talk in a much more encouraged way about the region than we could three months, even one month ago," Summers told a technology conference in San Francisco. A text of his remarks was released in Washington in advance.

Summers said Thailand and South Korea were "working with steadfastness" to implement the terms of reform packages agreed with the International Monetary Fund, and this was paying dividends in terms of stable currencies and rising reserves.

The situation in Indonesia was still difficult, although less so than it had been before.

"In Indonesia, though the situation is still extraordinarily difficult, we can see that it is at least more stable -- not just in terms of the currency but the broader political environment -- than we might have thought possible a few weeks back," he said.

The IMF has put together rescue packages for Indonesia, South Korea and Thailand. Its board will debate next Monday whether to release a new installment of the Indonesia loan.

Summers, repeating a line taken by Treasury Secretary Robert Rubin, said it was crucial for Japan to implement its new reform package effectively.

"Successful Japanese efforts at economic stimulus, financial restructuring and deregulation and market opening are important for Japan, Asia and the global economy, he said.

Summers said the U.S. economy remained strong -- employment, real wages, national savings and investment were up, while inflation, crime, welfare rolls and the budget deficit were down.

"These are good times for the American economy," he said. "It is now clear that America will grow faster in this decade than Japan and Europe. Their four-decade-long story of convergence has ended and America is pulling further ahead.