Suharto requests Australia to issue export credit guarantees
FINANCIAL TURMOIL
* DEEPENING CRISIS ——————
PRESIDENT Suharto yesterday asked the Australian government to issue export credit guarantees so that Indonesia could continue importing from Australia.
Australian Foreign Minister Alexander Downer disclosed this to reporters after a 45-minute meeting with Mr Suharto.
Mr Downer, who is here on a two-day official visit, said that Canberra would consider the request for government cover as Indonesia plunged deeper into economic crisis.
The rupiah was trading yesterday at 12,800 to 13,500 to the US dollar, compared to some 2,450 in July last year.
Observers said that many exporters have been reluctant to sell goods to Indonesian importers fearing payment default, and believe that government guarantees on lines of credit could rectify the problem.
Australia has given a similar guarantee worth up to A$300 million (S$360 million) to exporters to troubled South Korea.
Much of Australia’s exports to Indonesia are raw materials and manufacturing items that factories here re-export.
Mr Downer also announced that Australia would commit several advisers to Indonesian agencies dealing with economic and social reform programmes.
He noted that up to three Australian consultants would be attached to a World Bank panel on Indonesia.
Australia has pledged US$1 billion (S$1.77 billion) to the multibillion-dollar package led by the International Monetary Fund (IMF) to help Indonesia overcome the economic malaise.
Mr Downer stressed that Indonesia had to press ahead with IMF-backed economic reforms to avoid social unrest and to recover from the monetary crisis. He said: “I think that’s a message the Indonesian government understands and understands very well.”
He warned that there would be a lot more pain for Jakarta if it did not go ahead with the reforms demanded by the IMF.
“This is a difficult time for Indonesia,” he said.
“The Indonesian government and country are going to have to work through the difficulties that it is confronted with.”
He said that unrest would be expected in the current crisis but added: “I don’t think it would be appropriate for us to be alarmist. The quicker the IMF measures are implemented, the less the risk of any political problems here in Indonesia.”
He expressed confidence in Mr Suharto, saying that the president was “in good health and he is clearly on top of the details of the financial crisis confronting the country”.
Mr Downer added: “He is clearly on top of the details of the economic crisis confronting Indonesia.”
