EU backs IMF deal

EU backs IMF deal

EUROPEAN Union governments unanimously backed an IMF threat yesterday to pull out of a $43bn rescue package for Indonesia if President Suharto presses ahead with a plan to peg the rupiah to the dollar.

Jakarta's move would allow it to go on subsidising imports of rice milk and fuel and so avert further food riots. But the IMF and most western governments are opposed to IMF stand-by credits being used to back Indonesia's currency reserve. Without backing, a fixed exchange rate between the rupiah and the dollar would be "catastrophic", British officials said.

- Katherine Butler, Brussels