Lindsay Murdoch, Jakarta – As Abdurrahman Wahid prepares to face a second parliamentary censure of his presidency on Monday, concern is growing in Jakarta that Indonesia's economic recovery is in peril.
Observers are warning that the country's budget deficit is likely to blow out to a whopping 6 per cent of gross domestic product this year unless urgent action is taken to address dire economic problems.
In a closed-door meeting of international aid donors in Jakarta this week, Mr Anoop Singh, a representative of the International Monetary Fund, warned that "bold initiatives are needed and will take some time to be formulated".
But IMF officials left Jakarta without agreeing to release a crucial $US400 million loan frozen since December until the parliament agrees to new proposals aimed at preventing a budget blowout this year.
The delay is a severe setback for Mr Wahid's besieged government, which had hoped that a week of meetings with visiting IMF officials from Washington would see the loan approved and signal a turning point in the country's political and social problems.
With political tensions in the capital rising before Monday's resumption of parliament and a mass rally planned for tomorrow by Mr Wahid's supporters, the rupiah this week dropped below 12,000 to the US dollar.
This is the lowest level since the riots in 1998 that led to the downfall of the corrupt dictator, Soeharto. The rupiah's collapse has derailed calculations for this year's budget because it is predicated on an exchange rate of 7,800 to the US dollar.
Observers say the patience of international donors towards the government, whose decision-making process has been paralysed by the crisis facing Mr Wahid, has reached breaking point. "The time has come for concrete action, not just words," said a Western diplomat.
Among the main issues of concern raised by donors was a breakdown in law and order in some parts of the country, which has affected the confidence of foreign investors.
According to a World Bank briefing paper, the "talks focused on the urgency of legal and judicial reforms to win back investor confidence, to ensure adequate deterrence to corruption and to restore public confidence in the reform process".
Other problems raised during the meeting included Indonesia's inability to protect some of the world's largest tropical rainforests which environmentalists say is threatening the future of the country's vital timber industry.
The bitter struggle for power between Mr Wahid and the parliament is almost certain to drag on for several more months, further damaging the economy, say observers.
Last-minute conciliatory gestures by Mr Wahid do not appear to have headed off the second censure – another step in a long and complicated process towards his possible impeachment at a July or August session of the 700-seat People's Consultative Assembly (MPR), the highest legislature.
If the censure is passed on Monday, Mr Wahid has 30 days to reply. Should MPs consider his response unsatisfactory, parliament can request impeachment proceedings in the MPR.
Analysts say with most major parliamentary factions now plotting to unseat Mr Wahid, his days in office appear to be numbered. Political analyst Andi Mallarangeng said if the second censure is passed as expected "there is almost close to a 100 per cent possibility that impeachment will come". "It's a vote of no confidence," he said.
Vice-President Megawati Sukarnoputri appears to be distancing herself from Mr Wahid before Monday's vote, indicating she is prepared for her party MPs to support the censure.
Mr Wahid's fate lies largely in Ms Megawati's hands because under Indonesia's 1945 Constitution, only a vice-president can replace a president mid-term.
He is adamant that he will not resign. His spokesman, Wimar Witoelar, said: "His [Wahid's] resignation would mean the avoidance of responsibility and would mean betraying the trust of his constituents and in fact would be against the interests of the country." Officials of Mr Wahid's National Awakening Party say they expect up to 200,000 of Mr Wahid's supporters to attend tomorrow's mass prayer rally at a sports stadium in central Jakarta.
While he has repeatedly urged calm, anti-Wahid groups have vowed to take to the streets at the weekend, and more than 40,000 armed security forces have been deployed around the city.