WORLD BANK LIKELY TO URGE CHANGES ON JAKARTA
World Bank President Barber Conable is
expected to press Indonesia, the Third World's sixth largest
debtor, to maintain the momentum of economic policy changes to
tackle the slump in its oil revenues, western diplomats said.
    Conable, who flew to Indonesia yesterday from Tokyo, will
meet with President Suharto and senior economic ministers.
    He said on arrival that the economy of South-East Asia's
largest nation was being managed well, but the slump in world
oil prices called for major policy adjustments.
    Today the World Bank chief will visit Bank-funded projects
in the eastern section of Java, Indonesia's most populous
island. He will see Suharto on Tuesday after a day of detailed
discussions with ministers tomorrow.
    Indonesia, the only Asian member of OPEC, has been severely
hit by last year's crash in oil prices, which cut its oil and
gas revenues in half.
    Japan's state Export-Import Bank last month agreed to
provide around 900 mln dlrs in untied credits to help Indonesia
pay for its share of 21 World Bank development projects.
    Indonesia, a country of 168 mln people, has responded to
the oil slump by cutting spending, devaluing its currency by 31
pct, and trying to boost exports, while using foreign loans to
bridge its deficit.
    Diplomats said that Conable was expected to press Suharto
and leading economic ministers to maintain the pace of policy
change, particularly in dismantling Indonesia's high-cost
protected economy.
    "Oil prices, the debt crisis, the world recession, all call
for major policy adjustments and external support," Conable said
in his arrival statement.
    But with Indonesia facing parliamentary elections next
month, he is likely to avoid anything which would imply that
the Bank is demanding specific changes.
    "We believe there has been wise leadership here and the
economy is being very well managed," Conable told reporters at
Jakarta airport.
    Indonesia has official and private overseas debts totalling
37 billion dlrs, according to the Bank, which makes it the
Third World's sixth biggest debtor. It has received 10.7
billion dlrs from the World Bank since 1968.
    Conable did not spell out what further changes he would
like to see. Last month the Bank endorsed economic changes
already introduced by Indonesia, but implied it wanted more.
    Giving a 300 mln dlr loan in balance of payments support,
the Bank said it will monitor progress on implementation of the
government's trade reform measures, and supported its
determination to promote efficiency and longer-term growth.
    Indonesia has introduced a series of measures since last
May to boost non-oil exports, liberalise trade and encourage
outside investment.
    Suharto has also ordered a government committee to look
into which of Indonesia's 215 state-run companies could be
sold.
    But in a report last month, the U.S. Embassy said the
government appeared divided over how far to take its reforms.
    Western analysts say that in particular the government is
unsure how far to go with dismantling Indonesia's high-cost
monopolies, which control core areas of the economy.
    Central bank governor Arifin Siregar said this week that
Indonesia faced very limited economic choices.
    It could not spend its way out of trouble because this
would increase the balance of payments deficit and domestic
inflation.
     He said the main objective was to raise exports outside
the oil and natural gas sector.
    Indonesia's current account deficit is projected by the
government to fall to 2.64 billion dlrs in the coming financial
year which starts on April 1, from an estimated 4.1 billion in
1986/87.
 REUTER
