Time is running out for President Abdurrahman Wahid to spur his squabbling cabinet into action and deliver promised economic reforms – or risk unravelling Indonesia's precarious recovery.
Good intentions are no longer enough. The International Monetary Fund has demanded concrete action within days if Indonesia is to secure a crucial US$2.1 billion Paris Club debt restructuring and win its next US$400 million IMF loan tranche.
But even senior ministers and top government advisers say the cabinet remains divided, with disagreements threatening to throw the reform schedule further off track.
"When the government signed the letter of intent with the IMF they had not realised the real burden of implementing it," said Sri Mulyani Indrawati, a senior government economic adviser.
She said a lack of co-ordination and expertise in the cabinet, as well as distrust of the IMF, was hampering progress. "Because they come from different parties, good co-ordination and mutual trust are not automatically there, and that creates much hard work to achieve real co-ordination," she said. "Also, I sense there is still built-in scepticism among some ministers, who do not really believe the IMF package is the right one."
Mr Wahid last week publicly castigated his economic ministers for foot-dragging, cancelled all overseas travel, and called a weekend cabinet meeting to try to put policy back on track. But a senior source said cabinet dissent remained with some ministers deliberately hampering progress.
Indonesia had been due to receive its next tranche of a US$5 billion three-year IMF loan package any day now. But a concerned IMF has postponed this to May at the earliest.
The delay threw into doubt government plans to meet the Paris Club on April 12 to ask for the rescheduling of US$2.1 billion in debt. Failure to strike a deal will cast Indonesia's budget into disarray and send its deficit soaring.
The country sent a revised set of promises to the IMF last week, pledging some reforms by April 12 and others by April 30. But a letter on Friday to Chief Economics Minister Kwik Kian Gie from IMF country representative John Dodsworth, said progress had to be even faster. "In order for the authorities to be able to present a stronger case to the Paris Club on April 12, it would be better if the measures dated April 12 could be advanced to April 8," said the letter.
The IMF also wants measures promised by the end of April to be accelerated to April 21, to minimise further loan delays. Foreign loans are crucial in propping up the rupiah currency and plugging the country's hefty budget deficit.
The main action the IMF wants by Saturday is the setting up of a credible body with the power to force a breakthrough in the country's US$65 billion corporate debt deadlock. Indonesia has promised to give the Jakarta Initiative Task Force, a body set up to promote private debt restructuring, the teeth to force debtors to the negotiating table.
Indonesia's private-sector debt burden remains one of the main obstacles to economic progress, and resolving the stalemate is a key element of the country's January pledges to the IMF. But little progress has been made – Indonesia's debtors include powerful corporate figures with a vested interest in keeping foreign creditors at bay and preserving the status quo.
By Saturday, the IMF wants to see a decree giving the Jakarta Initiative the powers it needs to tackle debtors. A full-time chief and key staff members must be appointed, and restructuring talks begun with key firms. But Ms Indrawati said that while proposals would be ready in time, implementing them would be less easy.
Fighting corruption is another area where Indonesia has promised much and delivered little. Indonesia's notorious legal system is widely perceived to be as corrupt as ever. The country's credibility has been battered by several controversial court decisions – most recently a ruling on scandal-hit Bank Bali – that dealt a further blow to efforts to salvage the battered banking sector. Bankruptcy court decisions often have been farcical, hampering efforts to encourage debt restructuring.
Attorney-general Marzuki Darusman has promised to set up a special team the IMF wants by April 21 to investigate and prosecute corruption in the legal system. But with every step Indonesia takes towards placating the IMF, it seems to take another two backwards.
On Friday, it announced the last-minute postponement of plans to cut fuel subsidies – a key element of its deal with the IMF. Asked whether she was optimistic Indonesia could resolve the problems, Ms Indrawati found it hard to be enthusiastic. "I am involved in teamwork and it would be difficult for me to say I have no optimism," she said. "We are doing our best, and hopefully we can deliver. I am not that optimistic, but there is still hope, I guess."