APSN Banner

Abdurrahman 'needs to reassert control'

Source
Bloomberg News - July 22, 2000

Tokyo – President Abdurrahman Wahid needs to reassert control over his fractured government if the country is to address problems like the slide in the currency and violent protests, World Bank President James Wolfensohn said here.

"If you don't have strong leadership it makes it much more difficult to solve the problems in the country," he said in an interview. "I hope the President is able to reassert the leadership he needs to have if the country is going to pull through."

The rupiah has fallen more than 20 per cent this year, making it the world's second-worst performing currency. The main Jakarta Composite stock index is down more than 40 per cent in US dollar terms, the fourth-worst in the world.

Political squabbling and accusations of corruption in the nine-month-old government have exacerbated the problems. "We are fully supportive of Gus Dur and his efforts to try and make things better, but he has quite some problems," Mr Wolfensohn said.

Indonesia's economy grew just 3.2 per cent from a year ago in the first quarter, the slowest pace in Asia. Gross domestic product expanded just 0.2 per cent last year after shrinking 13 per cent in 1998, missing out on a revival that swept across most Asian countries.

The country, which has been promised a three-year US$5 billion loan from the International Monetary Fund, had the last tranche of money delayed by two months when Jakarta failed to implement reforms including pushing companies to reorganise US$81 billion in debt.

Indonesia is now counting on the approval for a US$400 million tranche from the IMF to win back investors concerned that Mr Abdurrahman's government had been too distracted by political squabbles to focus on economic recovery plans.

"Indonesia has been the slowest to restore its growth and its equilibrium," Mr Wolfensohn said. "We're trying to work on issues of financial reform and restructuring debt. The difficulties that are there now obviously makes our job more difficult."

Mr Shahreza Yusof, who helps manage about US$1.8 billion at Aberdeen Asset Management Asia Ltd, said in separate comments that since the departure of former President Suharto, "at the back of everybody's mind is whether the country stays together or not". "The same problems that were not solved before are coming back to haunt the present government," he said.

Country