WB says Asia recovering, RI fragile
WB says Asia recovering, RI fragile
SYDNEY (Reuters): The World Bank said on Friday Asia was
showing early signs of economic recovery but the situation
remained fragile, with Indonesia's economic and political future
resting on free and fair elections in June.
"We are seeing early signs of economic recovery but it is
still a very fragile situation," World Bank East Asia and Pacific
vice president Jean-Michel Severino told reporters in Sydney.
"It is a medium-term endeavor, a lot of work still needs to be
done," said Severino, adding economic restructuring in Asia could
take years.
In Sydney to attend a conference on the Asian crisis, Severino
cited Indonesia as the country in the region which would need the
longest period to resolve its economic problems.
In contrast, he said South Korea, Thailand, and Malaysia were
at a more advanced stage of recovery.
"Indonesia is in a very deep crisis that has very important
political roots...and it is understandable that the recovery will
take quite a long time," Severino said.
Severino said Indonesia must not only maintain economic
reforms to avoid a complete collapse of the recovery process, but
must ensure national elections in June are free and fair.
"The reform process has to keep a minimum momentum, because if
it collapses completely then energies will be completely
mobilized out of economic policy," he said.
"It's absolutely critical the elections take place in a fair,
transparent, good way that allows for the building of a strong
and legitimate government," he added.
He said. "This is the core focus in Indonesia and it is right
that it is a core focus for everybody."
Indonesia was one of the last Asian nations to succumb to the
region's economic crisis, but once hit the archipelago of 200
million people erupted into political and social unrest and
riots, forcing then President Soeharto to quit in May 1998.
New President B.J. Habibie has promised political reforms, but
Indonesia remains racked by political and ethnic violence as it
undergoes fundamental economic, political and social change
following the end of Soeharto's 32-year reign.
Indonesia will have a general election on June 7 and
presidential election in November.
He said the World Bank was not concerned at Jakarta's delay in
deciding which of Indonesia's ailing banks would be closed and
which saved under a government bail-out scheme.
Indonesia has said at least 40 banks are likely to close
because they will be unable to submit satisfactory business plans
and meet the minimum capital standards as demanded under the
government's recapitalization program.
"Let's remember the quick closing of banks early in the
process was considered a big policy mistake," Severino said.
"What matters is the quality of the outcome and if they take a
couple of additional weeks to get there, that's fine."
The World Bank executive did not agree with commentators
predicting total social and economic collapse.
"It may be a complicated situation to manage but very few
think there will be a collapse," he said.
In February the World Bank approved US$400 million in aid to
Indonesia. The $400 million is the second and final tranche of a
$1.0 billion loan by the bank to support Indonesia's economic
reforms. The first $600 million was released when the bank agreed
to the loan in July 1998.