Press Briefing: Fischer Emphasizes Success of Indonesian Program Depends on Rigorous Implementation

• Pages: 142-143

Page 142

FISCHER: The Board had a very thorough discussion of the revised Indonesian letter of intent and program. They agreed to disburse $1 billion as the first of three tranches covering the $3 billion that could originally have been disbursed on completion of the first review on March 15, if it had happened then. The Board review for disbursement of the next $ 1 billion will be June 4, and the one after that will be July 6.

The Board supported the revised program, which it said is a strong one, but emphasized the need to implement it rigorously. The Board particularly supported the strengthening of monetary policy and also emphasized the importance attached to those provisions, including subsidies, that are designed to soften the impact of the economic crisis on the poorer people in Indonesia.

This decision to disburse this first $1 billion is to be followed by the submission of loan proposals by the managements of the World Bank and the Asian Development Bank to their respective boards. The boards are likely to act within the next few weeks. In addition, Japan, Australia, and Malaysia have agreed to disburse to Indonesia significant amounts of the second line of defense financing that they had earlier indicated a willingness to provide. Japan will provide $ 1 billion; Australia, $300 million; and Malaysia will lend $250 million.

In addition, a number of countries have agreed to make financing available in the coming weeks to support exports through export credit agencies and via the financing scheme proposed by Singapore. We can interpret this as a signal of the international community's willingness to provide assistance to Indonesia-with the expectation and on the condition that it continues to implement the agreed-upon program.

But we are under no illusions that everything will be smooth sailing from now on. We have had full cooperation from the [Indonesian] economic cabinet, with which we have been negotiating, and we will continue to follow this program on a daily basis. In that way, we can-together with the Indonesians-seek to keep it on track and get the Indonesian economy back on the road to recovery.

Question: Indonesia announced today [May 4] that the government was going to raise fuel prices, sparking concerns that this would lead to riots and hurt the poor. What provisions, if any, are you taking to protect the people who might get hurt, given the removal of subsidies? FISCHER: The structure of the subsidies is designed to...