It is highly unlikely that the Indonesian Opposition leader, Megawati Sukarnoputri, will unseat President Soeharto when the People's Consultative Assembly (MPR) convenes in March. Despite her background (she is the daughter of Indonesia's independence leader, President Sukarno), her nationwide public profile, and the general endorsement she has received from key Muslim leaders in the country, Ms Megawati does not even legally head a political party - making her ineligible for election by the MPR. Moreover the MPR has been largely handpicked by President Soeharto who, for the time being, also retains the crucial support of the military.

Thus it is unclear whether Ms Megawati's call for President Soeharto to stand down is intended as the curtain-raiser to a serious leadership challenge or merely an attempt to garner further popular support from the current disaffection for her longer-term political ambitions. What is clear is that Ms Megawati's statements will deepen the uncertainty about Indonesia's immediate political future and that this uncertainty will make it more difficult to restore confidence in the country's economic prospects.

Ms Megawati's intervention may have other, even more disturbing, consequences as well. Her support base is predominantly among less well-off Indonesians. These are the people who are feeling the pinch of the currency crisis most acutely as the economy contracts and prices for basic commodities such as rice and cooking oil rise. In years past these kinds of shocks could be absorbed by many poor Indonesians who were able to return to the countryside and tide themselves over by working the land. But even this option has become increasingly unavailable as the drought wreaks havoc on the rural economy. So far there has been no major unrest on the streets or in the marketplaces in the wake of last week's delivery of an austerity Budget. But the situation is obviously extremely volatile.

In this context Ms Megawati's decision to turn up the rhetoric against President Soeharto and his Government seems particularly risky. On Saturday she said that the middle classes and the poor were being asked to bear the burden of a crisis caused by "economic criminals". Ms Megawati then suggested that "striped prison uniforms" be sewn in preparation for a future reckoning with these "criminals". With comments over the weekend by the Governor of Jakarta, Mr Sutiyoso, that price rises were due to the wealthy hoarding goods, these kinds of statements have the potential to bring popular emotions that much closer to boiling point.

Mr Soeharto's belated decision to rethink more than a dozen big-ticket infrastructure projects is a welcome sign that the precariousness of his country's position is finally striking home. This is all the more so given that several of these projects, had they gone ahead, would have lined the pockets of Mr Soeharto's children along with his close friends and supporters.

But the real sign of how seriously Mr Soeharto is committed to reform awaits the outcome of this week's meetings with officials from the US and the International Monetary Fund (IMF). Mr Soeharto is under intense international pressure to demonstrate that the IMF's planned multi-billion dollar rescue package for Indonesia will lead to long overdue structural readjustment in the economy and not be used to further postpone it. If he cannot convince the US and the IMF that they should support his reform efforts, Mr Soeharto will be in a very weak position trying to win the argument with Ms Megawati's supporters in the streets.