|
Indonesian President And IMF Express Concern Over Economy
by Kazi Mahmood
JAKARTA (IslamOnline) - President Abdurrahman Wahid and the International Monetary Fund (IMF) expressed their concern over the economy as the embattled Indonesian currency the Rupiah fell 9,400 to the U.S. dollar.
"According to the president, and according to me, we are very concerned over the fall of the rupiah," presidential spokesman Wimar Witoelar told the press following a meeting between Wahid and visiting IMF Asia Pacific director Yusuke Horiguchi at the presidential palace.
"Yusuke met with Wahid and expressed the IMF's concern about the weak market sentiment that has caused the value of the rupiah to fall against the dollar," Witoelar said.
Wahid agreed the government had not intervened to prop up the currency, while observers said the sluggish economy might suffer further without government intervention. The rupiah has fallen to its lowest in three months while the country's woes continue to deepen.
On the political front, the tacit support to Wahid by the rival party of former President Suharto did not help in boosting either the rupiah or the hope of recovery of the economy.
House of Representatives Speaker Akbar Tandjung yesterday joined Vice President Megawati Soekarnoptri in backing embattled President Aburrahman Wahid, who faces growing demands for his resignation.
Tandjung said his Golkar Party has strongly criticized Wahid, better known here as Gus Dur, and urged him to the resolve the nation's prolonged crises, but has never asked him to resign.
The House speaker said Wahid's government should carry out "the people's mandate" properly, so it will be able to complete its five-year term until 2004. In a separate statement, however, he agreed that the survival of the president would depend on the economic situation in the long run.
"If Gus Dur's government cannot improve its performance, it can possibly experience the situation like what happened in the past," he said.
Tandjung said that if the government's policies upset the people, the president will lose his legitimacy, making his administration ineffective.
Local financial analysts believe that the weakening of the rupiah is mainly due to the prolonged political and security woes and to Wahid himself. Many others see him as a source of the problem, thus little could be expected of a reversal of the economic performances of his government.
The President's comment that the government would not intervene in the market sent negative sentiments to the operators. Horiguchi warned the government of risks it is facing if it fails to boost the market.
"If market sentiment does not strengthen, your investment will be weakening, the growth will be weakening and the people of your country will be suffering," he told reporters.
Wahid admitted that political instability is also to be blame for the rupiah's slide.
"Various pressure [groups] calling for my resignation…this could also be perceived as political and security instability," Wahid was quoted as saying.
"To overcome this, we must strengthen our political economy across the board," he added.
Critics, however, fail to see how Wahid would strengthen the economy without any latest measures announced to do so. A barrage of politicians and economists has called for Wahid's resignation, citing his failure to improve the economy and deal with security concerns.
In a related development, acting Bank Indonesia Governor Anwar Nasution was quick to contradict Wahid's comments by saying the central bank would intervene to defend the rupiah if necessary.
"A floating exchange rate doesn't mean you stay away from the market, sometimes you need to intervene," Anwar.
Market operator's fear the currency will again fall to it's lowest and reach the 10,000 to one U.S. dollar mark. The bank governor gave the assurance that this might not happen very soon, saying "We will try our best to prevent that. We will do what we can. We are considering everything. This includes raising interest rates."
Indonesia is a major oil producer in the ASEAN region; it has strong economic and natural resources such as gold, human resources and wood, supporting the economy. However, the 1997 economic crash across Asia, and the paralysis caused by the reform movement, which led to the fall of Suharto, did not help the economy.
Suharto is accused of amassing billions of dollars, while his son and daughters are accused of having aided their father in the dilapidation of the country's resources and funds during his 35 years in power.
|
