Jakarta – Multilateral lenders including the International Monetary Fund (IMF), the World Bank (WB) and the Asian Development Bank (ADB) have vowed to support the new Cabinet, particularly the new economic ministers, in their effort to accelerate the country's economic recovery.
The IMF's Jakarta representative, Mr John Dodsworth, said that the Fund expected to be able to discuss immediately the overall economic reform programme with the new economic team.
"We extended our support to the new economic team and indicated to them that the IMF is there to serve its members and we would like to work in harmony," he said in a joint press conference with the new economic team, WB, ADB and Bank Indonesia.
The WB and ADB have financed in large part the current 2000 state budget while the IMF has pledged to provide the current administration with some US$5 billion in loans to help finance the country's three-year economic reform programme. The Fund has so far disbursed a loan of some US$730 million and it is expected to disburse another US$400 million later this month. But when asked whether the Fund remains committed to the schedule, Mr Dodsworth said: "We still have to discuss it again."
The markets reacted negatively on Wednesday to the new cabinet of President Abdurrahman Wahid and particularly to his choice of economic ministers.
The focus of controversy was the appointment of Mr Priyadi Praptosuhardjo as the new finance minister. Mr Priyadi, a close friend of the President and former director of Bank Rakyat Indonesia, was initially chosen to lead the bank but did not make the mark due to past mistakes he had made in the industry.
The appointment of Mr Rizal Ramli as the new Coordinating Minister for Economic Affairs, Cacuk Sudarijanto as Junior Minister for Restructuring of the National Economy, and Luhut Pandjaitan as Trade and Industry Minister has also created concern because the three are known as Abdurrahman loyalists.
The rupiah immediately dropped by around 5 per cent late on Wednesday to Rp 8,365 to the US dollar following the announcement of the new Cabinet. But Mr Rizal reiterated his earlier statement that the negative sentiment would disappear once the economic team proved they were a solid team.