(31 Oct 1997) English/Nat
== AUDIO AS INCOMING ==
The International Monetary Fund (I-M-F) on Friday officially announced a 23 (b) billion U-S dollars rescue package for Indonesia.
The United States, Australia, China, Hong Kong, Japan, Malaysia and Singapore agreed to provide back-up.
I-M-F intervention came amid a crisis of confidence across Southeast Asia that triggered big falls on global stock markets earlier this week.
Indonesia had called for I-M-F help a few weeks ago after months of speculative attacks against its currency.
Aside from I-M-F loans, the package will be supported by aid pledges from the World Bank, the Asian Development Bank and several donor nations.
The rescue package was greeted with cautious optimism by the Indonesian stock market.
But there were warnings the organisation's intervention wouldn't offer easy or instant cures for the country's economic troubles.
SOUNDBITE: (English)
"The I-M-F is not a fairy godmother, the I-M-F does not offer easy solutions because the problems of Indonesia are mostly long term and structural. Now they're not deeply severe structural problems but they do tend to be long term in nature so an I-M-F package will help to manage the economy but it won't offer a quick fix."
SUPER CAPTION: William Keeling, Kleinwort Benson Securities
The sharp drop-off in the value of the Indonesian rupiah in recent months had evaporated investor confidence and sent stocks plummeting.
But within minutes of the announcement the rupiah rose sharply from 3,650 rupiah for one U-S dollar to 3,575 rupiah.
The rescue package calls for a series of reforms, intended to stabilise Indonesia's besieged financial sector and to strengthen economic competitiveness through structural changes.
It has been reported that up to 20 banks could be liquidated under the provisions of the I-M-F package.
SOUNDBITE: (English)
"Based on what I've heard from the government to date, you will see some bankruptcies because the government has clearly stated that those companies that have not managed themselves responsibly and efficiently will be allowed to fail."
SUPER CAPTION: Brian O'Conner, Lehman Brothers
One of the losers under the agreement will probably prove to be the national car programme, Timor Putra Nasional.
At the moment the company, owned by President Suharto's youngest son, receives substantial tax exemptions from the Indonesian government.
But it hit trouble after its partner, the Kia motor company of South Korea, went into receivership.
The government has now said it will defer to the World Trade Organisation over the car maker's future.
The construction industry, however, is likely to benefit.
It has been one of the sectors hardest hit by the recent fall in Indonesia's currency.
Other measures included are the gradual reduction of tariffs for many imports and trade deregulation on basic food commodities.
SOUNDBITE: (English)
"Certainly the growing middle class here that has got used to cheap foreign products will certainly feel it from a lifestyle perspective. Even your middle low and lower class which comprises the majority of the country will feel it as well, as rice prices go up, basic goods prices in general go up. People will feel the pinch."
SUPER CAPTION: Brian O'Conner, Lehman Brothers
Petrol prices are also expected to rise.
The 23 (b) billion dollar package surpasses the 17 point two (b) billion dollars I-M-F-led rescue package agreed for Thailand in August.
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