IMF `wary' over new deal with Indonesia
Thursday 09 April 1998
"We have no assurance. We cannot have assurance, given history, that it will be done," Stanley Fischer, the IMF's first deputy managing director, said in Tokyo. "We have measures in place and if they are not implemented, the programme won't go ahead."
This will be the third time Jakarta has agreed to a set of reforms with the IMF, in return for financial assistance of more than $40bn (pounds 24bn) to restore its economy after the collapse of the Indonesian rupiah. The original deal, signed last November, was supplemented by another in January. In March, the two sides were in negotiations again after President Suharto said the programme violated Indonesia's constitution.
"The success of this agreement will be in the implementation, not in the signing," said Mr Fischer. "If the programme is not carried out we couldn't continue to disburse funds. It's not for us to go ahead `no matter what'."
The full details of the programme will be unveiled after its presentation to the IMF's executive board tomorrow but, IMF officials said, it will contain new measures for monitoring its implementation. Once the IMF's board has approved it, a balance of payments loan worth $3bn will be released.
In a retreat from its earlier position, the IMF has agreed to allow continuing subsidies of rice and soya beans, in response to Indonesian fears of social unrest caused by rising food prices. The price of fuel and electricity will be allowed to rise gradually and the government will stop granting monopoly privileges, a controversial practice which has greatly enriched members of President Suharto's family.
Meanwhile, the IMF added its voice to calls for large tax cuts in Japan, to stimulate domestic spending and thus revive the Japanese market for goods from struggling Asian economies. A fortnight ago, Japan announced the outlines of a 16 trillion yen stimulus package. Today Ryutaro Hashimoto, Japan's prime minister, is expected to convene a committee which will lay the ground for tax changes as part of that programme. "There is a good case for tax cuts, and they should be substantial, the greater part of any package," Mr Fischer said in Tokyo.
Mr Fischer's remarks come as Japan struggles to jump-start an economy that has seen consumer spending collapse after three tax hikes last year. Japanese business leaders, stock investors and now the IMF are calling for Mr Hashimoto to reconsider his commitment to slashing government spending.
If Japan does not get its economic house in order soon, its problems could worsen, and even stall a recovery in other Asian nations, Mr Fischer said.
- 1 Is Gideon Levy the most hated man in Israel or just the most heroic?
- 2 Students offered grants if they tweet pro-Israeli propaganda
- 4 Satellite full of sexually experimental geckos adrift in space, Russia loses control of mission
MH17 crash: Investigators discover more human remains and 'huge section of plane'
Susan Sarandon on David Bowie romance: 'He's worth idolising'
Students offered grants if they tweet pro-Israeli propaganda
A day in the life of Vladimir Putin: The dictator in his labyrinth
Exclusive: Cameron’s Big Society in tatters as charity watchdog launches investigation into claims of Government funding misuse
The 'scroungers’ fight back: The welfare claimants battling to alter stereotypes
Arizona execution lasts two hours as killer Joseph Wood left 'snorting and gasping' for air
Malaysia Airlines MH17 crash: Ukrainian military jet was flying close to passenger plane before it was shot down, says Russian officer
Malaysia Airlines MH17 crash: Massive rise in sale of British arms to Russia
Malaysia Airlines MH17 crash: victims’ bodies bundled in black bags and loaded onto trains
John Barrowman praised for Commonwealth Games opening ceremony gay kiss
iJobs Money & Business
£600 - £650 per day: Orgtel: Conduct Risk Liaison Manager - Banking - London -...
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£280 - £300 per day + competitive: Orgtel: Test Analyst, Edinburgh, Credit Ris...
£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...