Neiss Press Conference: As Indonesian Economy Continues to Weaken, IMF to Consider Easing Program Deadlines

• Pages: 173-175

Page 173

At the conclusion of a five-day visit to Indonesia, Hubert Neiss, Director of the IMF's Asia and Pacific Department, said in a news conference in Jakarta on May 30 that the Indonesian economy could contract by 10 percent-possibly even more-in 1998, twice the IMF's estimate earlier this year. Inflation would be higher than previously forecast, he said, and it was not clear how the currency would behave in coming months, as this depended on a return of confidence. Neiss was in Indonesia to assess the economic situation and to compile a report for consideration by the IMF's Executive Board on how to proceed with the next program review that would lead to the next $1 billion disbursement of the country's $10 billion stand-by loan.

Because of the worsening economic situation, Neiss said during the press conference, which was held jointly with Indonesian Coordinating Page 175 Minister for Economy, Finance, and Industry Ginandjar Kartasasmita, the IMF would consider easing some of the deadlines Indonesia had earlier agreed to in implementing its economic program. "Since the economy is now much weaker than it was when the program was discussed with the government, we will have to revise the macroeconomic barometers," Neiss said. "We want to build the program on realistic assumptions, and when it does not make sense to stick with certain deadlines, we have to be pragmatic and relax the deadlines," he added. Neiss said he was confident the IMF...