New president Jusuf Habibie received a vote of confidence from the United States for his first steps toward revamping Indonesia's political landscape and government officials announced further moves to end benefits enjoyed by businessmen allied to former president Suharto.

IMF Asia-Pacific Director Hubert Neiss began discussions in earnest with Chief economic Minister Ginandjar Kartasasmita and was scheduled to meet other senior ministers during the day.

Indonesian officials said he would meet Moslem leader Amien Rais and Megawati Sukarnoputri, both opposition figures, and other critics of the Suharto regime on Thursday.

It would be the first time a senior IMF official meets with Indonesia's opposition. In the months of negotiations with the Suharto government before and afteragreeing to a $41.2 billion bail-out package last year, the agency restricted its meetings to government officials.

Habibie became president last Thursday when Suharto, who had ruled with an autocratic and sometimes ruthless grip for 32 years, stepped down after economic unrest sparked riots that killed 500 people.

The new president has said he will revamp electoral laws,release political prisoners and hold parliamentary elections within a few months.

The United States voiced its approval."We take it as an encouraging development that the leadership and the people are focused on ways they can deepen a transition toward democracy," White House Press Secretary Mike McCurry said.

But Indonesia's most pressing problem is its battered economy. Habibie's challenge over the next four days of talks with Neiss is to get the IMF to resume its rescue package while giving him the leeway not to impose demands on the population that could cause political unrest to boil over again.

Neiss's comments when he arrivedin Jakarta on Tuesday made clear there would be changes to the package because the past two weeks of political violence and uncertainty had caused additional damage to Indonesia's already crippled economy.

Indonesia's latest budget, agreed with the IMF in April,projected an economic contraction of four percent in the 1998/99 fiscal year, inflation of 17 percent and an average 1998 rupiah rate of 6,000 to the dollar.

But the rupiah is now below 10,000 to the dollar, inflation is nearing 50 per cent and most economists expect the economy to contract 10 per cent this year.

Economist Mari Pangestu said in a newspaper column on Wednesday that inflation could reach between 70 and 100 per cent in 1998 while the economy could contract by between 10 and 20 per cent.

What is immediately at stake is the delayed disbursement of the next tranche of a $10 billion balance-of-payments loan from the IMF, the central plank of the $41.2 billion rescue package.

Addressing complaints that conditions already imposed bythe IMF contributed to Indonesia's greatest political upheaval in 32 years, Neiss said it was not a time to look backwards.He said Indonesia's first priorities were to bring inflation under control and stop a banking collapse.Neiss, who meets Habibie on Thursday, said he did not know when payments could resume.

"It's too early to say," he said. "After making an assessment I will report back to Washington and then further decisions will be made on how to proceed."