Suharto set to tighten grip as IMF cuts cash

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The Independent Online
AS President Suharto prepared to assume sweeping emergency powers, Indonesia's stricken economy suffered a further blow yesterday when the International Monetary Fund announced it was delaying the next installment in a $43bn emergency bailout plan.

The IMF said the $3bn payment, due on 15 March, cannot now be made before April. Although the IMF sought to play down the delay, it is clear that it arises from serious disagreements over President Suharto's implementation of economic reforms. The country has been racked by riots in recent weeks over food prices, with the Muslim majority singling out the more prosperous Chinese merchant class for attacks.

The decision to delay the payment will add to the atmosphere of crisis in Jakarta, where large numbers of soldiers are patrolling the street in advance on Suharto's anticipated re-election next week for a seventh five-year term as president. In the next few days the People's Consultative Assembly (MPR), all of whose members are appointed or screened by Mr Suharto, is expected to grant the president new powers which will give him almost unlimited powers to ignore or dissolve Indonesia's already enfeebled civil institutions.

In the latest incidents in what appears to be a crackdown on dissenters, a Dutch TV journalist was yesterday asked to leave Indonesia after filming at the MPR.

The decision to delay the bailout payment is the latest round in an increasingly tense standoff between the IMF and President Suharto, who has publicly stated that the Fund's plans for economic reform are not helping his country. On Friday, Mar'ie Muhammad, Indonesia's Finance Minister, said he was confident there would be no delay in making the payment, and warned that if it were not made this could "have a negative impact on efforts to strengthen and to stabilise currencies in south-east Asia".

It is understood that the United States has led the opposition to making further payments, because of fears that President Suharto's government will neither implement the tough austerity measures demanded by the IMF nor accept the reforms, which would be damaging to the business interests of the Suharto family. Pushed on one side by the IMF, international banks and Western governments, and on the other by growing civil unrest against austerity measures, Mr Suharto appears to have given way to pressures at home.