Tokyo to monitor talks on IMF aid for RI

Tokyo to monitor talks on IMF aid for RI

TOKYO (AFP): Japanese Finance Minister Hiroshi Mitsuzuka said yesterday Tokyo would monitor discussions on a possible IMF-led international financial package for Indonesia as it wrestles with currency woes.

"Japan will maintain close collaboration with the International Monetary Fund (IMF) and the World Bank," Mitsuzuka told a news conference, referring to Indonesia's move on Wednesday to seek assistance the international bodies for its economic program.

But Mitsuzuka declined to clarify his stance toward the Indonesian move.

The Indonesian move put pressure on the stock price of Mitsubishi Materials Corp. as it raised uncertainty over the prospects for the company's seven billion dollar smelter project in the country, analysts said.

Mitsubishi Materials closed down 38 yen at 290 yen on the Tokyo Stock Exchange, a drop of 11.6 percent, after touching a low of 285 yen.

"It is still uncertain how -- and if -- the (Indonesian) government's move will affect long-term investment profitability, although it may have some impact on near-term prospects," Yamaichi Research Institute analyst Hiroaki Kawabe said of Mitsubishi Materials.

IMF managing director Michel Camdessus said Wednesday in Washington that his organization would support Indonesia's decision to put in place a new economic program in response to declines in the Indonesian rupiah.

"The IMF strongly supports the approach that has been followed by Indonesia, which sees this as an occasion to strengthen its economic policies even if fundamentals are basically sound," Camdessus said in a statement.

Camdessus said two Fund teams would arrive in Jakarta this week to begin discussions on an IMF-supported economic program and to provide technical assistance for financial sector reform.

Indonesia's President Soeharto said Jakarta was sounding out international agencies, including the IMF, as a "precautionary" measure for long-term financial assistance.

The government also said it remained committed to support its currency "to avoid excessive exchange rate volatility and depreciation."

Despite a fall of over 45 percent in the rupiah against the dollar since speculators attacked the currency in July, the government pledged to consistently implement the free foreign exchange system.