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JANUARY 31, 2000 VOL. 155 NO. 4
Still, Indonesia desperately needs a degree of economic stability before it can hope to defuse its social tensions, and Wahid has made some positive moves in that direction. He secured a new loan from the International Monetary Fund and a commitment from the United States to help Indonesia reschedule payments on some $80 billion in sovereign debt. In the budget, Jakarta says the economy will grow 3.8% from April to December 2000, (up from no growth the previous year), inflation will be brought down to 4.8% and the rupiah will be stabilized at 7,000 to the U.S. dollar. To help make those things happen, the IMF has pledged to lend Indonesia up to $5 billion over three years. U.S. Treasury Secretary Lawrence Summers, on a one-day visit to Jakarta last week, hinted that billions more were in the pipeline from the Consultative Group for Indonesia--which comprises 32 donor nations and institutions--if progress is made in the critical areas of banking and corporate restructuring. But pushing through hard reforms could prove difficult with a cabinet that has yet to show signs of cohesive policy-making. Rifts between the Minister of Investment and State Enterprises Laksamana Sukardi and Finance Minister Bambang Sudibyo have broken out over the control of revenues from state-owned enterprises and in dealing with high-profile cases of corruption. "The government will have to overcome personal conflicts in the cabinet and solve many institutional problems," says University of Indonesia economist Sri Mulyani Indrawati. Hopes of recovery rest heavily on the performance of the Indonesian Bank Restructuring Agency (IBRA), which controls more than $70 billion in assets taken over from ailing banks and businesses. IBRA's first big test is set for the end of March, when it must raise $2.4 billion for the budget from the sale of assets. The question is whether daily reports of violence from the provinces will scare off potential buyers. TIME Asia home Quick Scroll: More stories from TIME, Asiaweek and CNN | |||||||||||||||||||||||||||||||||||
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