Suharto flexible on meeting IMF terms

Sent by INDO-CHAOS's News-Hunter: "T.O" from Japan

Prime Minister Ryutaro Hashimoto may have scored a much-needed diplomatic point in extracting an assurance of IMF cooperation from the Indonesian leader.
JAKARTA--IndonesianPresident Suharto assured visiting Prime Minister Ryutaro Hashimoto Sunday he would be flexible in dealing with the terms of reform that are required by the International Monetary Fund in exchange for aid to its battered economy.

Despite uncertainty over whether any substantial results will actually come out of the bilateral talk, Hashimoto decided to push forward with it because diplomacy is the only area where he can make any achievement at the moment, according to a senior LDP official.

Hashimoto therefore has been focusing his energies ondiplomatic missions--including April's Asia-Europe Meeting, where leaders from Asian and European countries will discuss Asia's financial crisis, and the subsequent visit of Russian President Boris Yeltsin to Japan.

At Sunday's meeting, Suharto told Hashimoto he will not insist on his plan to peg the rupiah to the dollar, according to sources close to the Japanese and Indonesian governments. The idea has been opposed by the IMF and the international community as being premature.

Vice President Habibie told Liberal Democratic Party policymaker Taku Yamasaki and other legislators who accompanied Hashimoto that Indonesia will be able to implement 48 of the 50 conditions set forward by the IMF, according to Japanese officials.

But eight of those 48 items need to be revised before they are to be implemented, Habibie told the legislators.

Among the reforms Indonesia could not guarantee was an elimination of the monopoly on food supplies because the introduction of market competition would bring up food prices, making it impossible to provide food for the 60 million people living in remote areas, Habibie told the legislators, according to Japanese officials.

IMF is urging Indonesia to dismantle cartels and restructure its banking and legal systems.

Concerns were raised in the international community recently after Suharto said IMF reforms may be in violation of Indonesia's constitution, and hinted that the country might abandon the reform attempts. Habibie will visit Japan Wednesday to seek details of cooperation between the two countries.

Hashimoto pledged Japan will provide food, medicine and other aid supplies worth between 3 billion and 4 billion yen. He also promised trade guarantees to help promote imports from Indonesia to Japan.

Coordinating Minister for Economic and Finance Supervision Ginandjar Kartasasmita told the legislators that the two weeks following Saturday's appointment of new Cabinet members in Indonesia will be crucially important. It will be critical for the country to stabilize the currency before the start of a 5-year development plan, he told the legislators. He requested Japan's help in stabilizing the rupiah and dealing with the problems of banking and private-sector debt.

Although Habibie's visit Wednesday is expected to further the cooperation efforts, any problem in talks between the IMF and Indonesia, as well as between the United States and Indonesia, would make Japan unable to make any concrete steps toward resolving the Indonesian situation.