Jakarta, March 1: Indonesian president Suharto said on Sunday that the country's economic lifeline had begun to be compromised by a financial crisis and that reforms prescribed by the International Monetary Fund had not eased the situation.He told the Peoples' Consultative Assembly (MPR), Indonesia's top policy-making body, that a more appropriate programme was needed to bring about a stabilisation in the rupiah currency, the key to the problem. Suharto, however, said he was committed to the reforms agreed with the IMF last year and revised in January in exchange for a bail-out package of around $40 billion.
``I have started, and will continue, to implement the economic and financial reforms and restructuring programmes which have the support of the IMF," he said. ``However. there are no signs of improvement yet. On the contrary, the people's life is becoming more difficult."
``The financial crisis...became eventually more serious, more wide-spread and more lasting than anyone could have imagined. Oureconomic lifeline (has) begun to be compromised.
``This is the reason why I have asked the IMF and otherheads of government to assist us to find a more appropriate alternative," Suharto said. "I refer to the more appropriate concept as IMF-Plus".
Suharto, 76, who will be named for a seventh five-year term as president by the assembly next week, said he was still considering implementing a currency board system to fix the rupiah to a single rate. The proposal has been criticised by the IMF and Western governments as inappropriate under the circumstances. They have said Indonesia's weak banking system and limited foreign exchange reserves will lead to an attack on the peg that will be difficult to withstand. ``I myself am carefully and cautiously contemplating the possible adoption of the currency board system," Suharto said.
But he added: "Whatever measure we shall take, we need the support of the IMF. (But) undoubtedly, in the end, our fate rests in our hands."
Indonesia, a nation of 200 millionpeople, has been struggling to cope with a raft of economic problems triggered to a large extent by the more than 70 per cent plunge in the value of the rupiah since July. Inflation has soared, trade has come to a near-standstill,most of the country's companies are technically bankrupt, and massive unemployment is likely. Riots have broken out in about two dozen towns as mobs angered by the rise in prices of food looted and set shops on fire. At least five people have been killed. Western governments have expressed concern that the unrestcould spread to other parts of Southeast Asia and have called on Suharto to quickly sort out the mess.
President Bill Clinton is sending a blunt message to Suharto through former vice president Walter Mondale this week, US administration officials said.``The trip reflects deep concerns about developments in Indonesia, the need for real change and our very great stake in the Indonesian government's success in making that change," said a White House spokesman travelling withClinton in Utah on Saturday. On Friday, a Clinton administration official, who asked not to be identified, said if Indonesia did not embark on economic reforms, the United States would oppose the release of the next instalment from the IMF bail-out package. The IMF must decide by March 15 whether to hand over the second $3 billion tranche from the bail-out package. A spokesman for the Indonesian foreign ministry dismissed the report as "speculation" and lacking substance because "it is quoting unidentified sources".
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
