Manila, Mar 12: The World Bank's chief economist said on Thursday he expected the International Monetary Fund to show flexibility over Indonesia's proposal to set up a currency board."All international institutions and economists realise that they have to adjust their programmes as more information comes out," Joseph Stiglitz told a news conference in Manila.
Stiglitz was responding to a question on whether he agreed with IMF first deputy managing director Stanley Fischer who said on Tuesday that the fund was prepared to be flexible over releasing money to Indonesia, one of the countries worst hit by Asia's economic crisis.
Indonesia has repeatedly said it is preparing to set up a currency board, which would peg the rupiah to a hard currency.
The IMF, which strongly opposes the plan, threatened last month to delay releasing aid and announced last week that funds scheduled to be delivered in March would be delayed at least until April. Stiglitz said Indonesia was reeling under the impact of sharp currency devaluation, falling oil prices and drought, which was forcing the troubled nation of 200 million to import foodgrains.
Oil prices have plunged worldwide in recent months. Indonesia, the only Asian member of the Organisation of Petroleum Exporting Countries (OPEC), is entitled to produce 1.456 million barrels per day.
The rupiah has lost more than 70 per cent of its value against the dollar since last July.
Stiglitz said countries ravaged by the currency turmoil that erupted in southeast Asia last July would need to strengthen their economies, win back international confidence and maintain political and economic stability.Asked whether the IMF-led $40-billion-plus bail-out programme for Indonesia was further weakening the badly shaken economy with its stringent requirements, Stiglitz said: "Reasonable people can have different judgments on what can restore confidence.
"There is a multiplicity of factors going into a decision and I guess different people can have different views on that." Indonesian economist Mari Pangetsu earlier told a conference on east Asia the country was not in a position to undertake the dramatic political and economic reforms that South Korea and Thailand had implemented.
Pangetsu, who works at the Centre for Strategic and International Studies, said the IMF's decision to hurriedly close ailing banks was a mistake."The closure... was done very hurriedly, without announcing criteria for which they were closed, so everyone was guessing which would be closed next. We had a deposit run to state and foreign banks, which was compounded by political uncertainty," she said.
President Suharto was sworn in on Wednesday for his seventh five-year term. The 76-year-old leader has no clear successor. When Jusuf Habibie, now vice president, was seen as preferred candidate for the post in January, the rupiah plunged to a historic low of 17,000 to the dollar.
In an interview with a Japanese newspaper published on Thursday, Habibie said Indonesia was willing to consider an alternative to the currency board.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
