Originally created 07/11/98

Indonesia seeking billions more in aid

WASHINGTON -- Indonesia is asking the United States for help in securing an additional $4 billion to $6 billion in international aid to combat the Asian nation's worst financial crisis in 30 years.

Ginandjar Kartasasmita, Indonesia's senior economics minister, said he had discussed with Treasury Secretary Robert Rubin a U.S. contribution to a possible package the International Monetary Fund is arranging for Indonesia. Kartasasmita would not mention any figures, however.

"The United States has been very supportive" of Indonesia, Ginandjar said. "Of course, we would like to see it translated into concrete terms. ... The United States plays a major role in the IMF."

Pressed by reporters to provide specifics, Ginandjar said, "The IMF is coordinating the effort to get the sources together. I was reassured they were developing in the right direction."

Ginandjar said he expected the IMF to release $1 billion more in aid to the country next week and to announce details of the supplementary $4 billion to $6 billion package. Indonesia, the world's fourth most populous nation, already has obtained a $43 billion IMF bailout.

He also said disputed reports from Jakarta that the IMF release of the $1 billion installment was contingent on an ally of Indonesian President B.J. Habibie being elected chairman of the ruling Golkar party. The party is expected to elect a new leader this weekend.

Ginandjar spoke to reporters after two days of meetings with high-level U.S., IMF and World Bank officials. He also held talks this week with bankers in New York about rescheduling a portion of $64 billion to $66 billion in private debt owed by Indonesian corporations.

Ginandjar said similar repackaging talks would take place next week in Frankfurt, Paris, Tokyo, Singapore and Seoul, South Korea.

The Indonesian government also has $50 billion in debt and Ginandjar said rescheduling that burden might help resolve Indonesia's financial difficulties.

"It is an option," he said. "It could be part of a solution."

Ginandjar said the government has had no problems in meeting its debt obligation, which has always been a priority.

Indonesia expects its economy to contract by 13 percent to 15 percent this year, the first time the economy has shrunk since 1963. The country's currency, the rupiah, has lost 80 percent of its value against the dollar.

Ginandjar said he expected the economy to post a zero growth rate in 1999 and "modest growth" in 2000.

He said 80 million people, or 40 percent of the population, are expected to slip below the poverty line, compared with to the 22 million, or 11 percent, before the crisis began. To alleviate suffering, he said, the government was placing emphasis on social programs such as food subsidies.


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