With a $43 billion bailout at stake, President Suharto sought to assure International Monetary Fund officials Thursday that Indonesia has no immediate plans to start a currency board.
The IMF - backed by the U.S. and European leaders - says Indonesia's economy is too fragile to support a currency board, which would try to stabilize the rupiah by pegging it to the U.S. dollar.The IMF has threatened to withdraw its multibillion-dollar bailout if Suharto insists on the board. International lenders say he must first take other steps to rescue the rupiah, which has lost more than 70 percent of its value since July.
At a meeting with Suharto at his home Thursday, IMF officials said they were told Indonesia is still studying the currency board plan and has not yet decided whether to adopt it.
IMF envoy Prabhakar Narvekar and his team are reviewing Indonesia's progress toward economic reform before the IMF disburses another $3 billion of its bailout package in mid-March.
The IMF wants Indonesia to impose austerity measures and strengthen its banking system. That would mean an end to many subsidies, tariffs and perks enjoyed for decades by Suharto, his family and their associates.
Indonesia says such reforms are too stringent at a time when food riots have broken out around the country because of soaring prices caused by the rupiah's decline.