Managing Director's Visit to Asia: Indonesia Adopts Revised Reform Program; Korean Situation Eases

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Continuing economic upheavals affecting east Asia in mid-January prompted another visit to the region by IMF Managing Director Michel Camdessus. A main objective of the trip-which included stops in Korea, Singapore, Indonesia, Malaysia, and China- was to obtain assurances from Indonesian President Suharto that his government would strengthen and reinforce the economic reform program agreed to under the country's three-year Stand-By Arrangement with the IMF, which was negotiated in November 1997 (see IMF Survey, November 17, 1997, and Indonesia story, below). Indonesian financial markets had declined sharply during the preceding week as investors expressed concern over the extent of the country's commitment to reform Page 18 Korea. Before arriving in Indonesia, Camdessus held discussions with Korean President-elect Kim Dae-jung, other senior government officials, and business community representatives on January 12 and 13. He also met with leaders of the country's main labor unions on January 13, at the request of President-elect Kim. It was subsequently announced that a tripartite labor reform council-consisting of representatives from unions, businesses, and government-would be established to consider the impact of the economic program on the country's labor force.

In a press briefing in Seoul on January 13, Camdessus said that Korea's financial situation had been improving since November and that support, including a willingness by banks to roll over short-term debt while working on a longer-term solution, was growing in the international financial community. He added that, along with funds already distributed from the IMF, the Asian Development Bank, and the World Bank, bilateral lenders were actively working on further assistance measures. Summing up, he said his overall impression of his two-day visit was "extremely encouraging," but he cautioned that Korea has "won its first battle, but not the whole war."

Indonesia. The Managing Director's visit to Jakarta on January 14-15 was preceded by that of First Deputy Managing Director Stanley Fischer, who met President Suharto on January 12 to discuss his country's economic program. Then, on January 15, President Suharto, in a meeting with Camdessus, signed a new letter of intent for Indonesia. This spelled out a revised reform program linked to the $43 billion financing program agreed with the IMF and other donors in November. The 15-minute signing ceremony was televised live from...