World Bank encouraged by Soeharto's speech

World Bank encouraged by Soeharto's speech

TOKYO (Reuters): A senior World Bank official said yesterday
he was encouraged by statements from Indonesian President
Soeharto at his inauguration, but added that the bank's
structural assistance to the region depends on an International
Monetary Fund aid package remaining on track.

"I was very encouraged by Soeharto's speech," said World Bank
Vice President for External Affairs Mark Malloch Brown.

In a 15-minute acceptance speech earlier Wednesday, Soeharto
said: "We are being subjected to very hard economic and financial
turmoils... as a nation we must tighten our belts."

But he made no mention of Indonesia's stand-off with the IMF
nor of a controversial proposal he is considering for a fixed
exchange rate through a currency board system, which continues to
keep financial markets in a state of confusion.

Brown, speaking to Reuters Financial Television, added that
there are basically two elements to the Bank's lending:
"structural support, which is very much tied to the IMF package,"
as well as humanitarian aid.

The IMF has decided to postpone an additional bailout package
of $3 billion to April or later, on grounds that Indonesia had
failed to completely comply with the agreement.

Soeharto was quoted by a leader from the People's Consultative
Assembly on Monday as saying that reforms in line with an
agreement with the IMF to receive additional emergency funds were
not in accord with the Indonesian constitution.

Brown said that as a result of IMF decision, a planned $1
billion structural adjustment loan to Indonesia by the World Bank
is likely to remain on hold until the IMF package implementation
is on track.

But he added that, as concerned as it is with providing for
basic social needs, it is difficult for the World Bank to provide
aid without a pre-existing framework of economic stability.

"It appears as though we come at this from different
perspectives (from the IMF), but in fact these crises really hurt
the poor, and therefore we have a very clear common goal with the
IMF to guarantee their lives," he said.

"We're very solidly with the IMF on the issue of macroeconomic
stability," he added.

He added that, whatever measures are finally implemented, it
is essential that they restore market confidence, both domestic
and international.

The longer that confidence is lacking, the harder it will be
for the country to recover, he added.

In Washington, the United States said Tuesday it hoped
Soeharto would appoint a new economic team that would fully
implement the IMF's reform package and restore economic
confidence.

"The U.S. hopes President Soeharto will choose a cabinet that
includes a strong economic team that will signal its intention to
implement fully the IMF economic reform program," said State
Department spokesman James Foley.