Indonesia Meets First IMF Deadline
By Cindy Shiner
"All targets that had to be fulfilled by April 22 and some by April 24 have been implemented," said Ginandjar Kartasasmita, the country's top economics minister, in a statement issued after a meeting chaired by Suharto.
The new measures followed a sharp rise in interest rates this week -- also mandated by the IMF -- aimed at lifting Indonesia's ailing currency, the rupiah, by making investments in the country more attractive. Today's measures include lifting restrictions on foreign participation in wholesale business, easing a ban on palm oil exports and announcing a presidential decree aimed at strengthening the nation's bankruptcy law.
Analysts welcomed the government's announcement but said Indonesia has a long way to go before it restores confidence in its battered economy. The rupiah fell slightly against the dollar, and although it has risen by more than 25 percent over the past month, it remains so deeply depressed that most companies are unable to afford imported raw materials or pay their foreign debts.
"They can announce and say whatever they do but until the rubber meets the road I don't think anyone's going to be overly enthusiastic," said Dave Solin of Foreign Exchange Analytics in Essex, Conn. "Talk is cheap."
The IMF is keeping a close eye on Indonesia's progress in implementing the reforms that were hammered out in negotiations last month. The government failed to carry out its pledges in two previous agreements, prompting the fund to withhold a $3 billion installment on Indonesia's $43-billion bailout. The IMF board is to meet May 4 to decide whether to release the loan installment.
But while Suharto appears to be making amends on the international economic front, he faces mounting political trouble at home, which analysts say could cause the rupiah to weaken anew. Student protests have heated up in recent weeks on at least 20 campuses across the nation. Clashes with security forces have become frequent as students try to take their protests off campus and into the streets in the hopes of drawing in the general population.
In an effort to keep a lid on unrest in the wake of price increases and millions of layoffs, the government -- with the IMF's blessing -- has delayed lifting subsidies on staple commodities such as rice and fuel.
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