---------------------------------------------------------- Visit Indonesia Daily News Online HomePage: http://www.indo-news.com/ Please Visit Our Sponsor http://www.indo-news.com/cgi-bin/ads1 ---------------------------------------------------------- also: Rupiah breaks 7,000 on politics,Greenspan comments FOCUS-Jakarta sees growth up, no political woes By Muklis Ali JAKARTA, July 23 (Reuters) - Indonesia on Friday upgraded its economic outlook, saying growing consumer demand, renewed market confidence and the lack of violence in the June election were spurring faster than expected growth. In its latest letter of intent to the International Monetary Fund, Jakarta boosted its growth forecast for 1999/00 to 1.5-2.5 percent from zero to two percent previously. ``Market sentiment has improved markedly since the last review, helped by the peaceful completion of the June 7 parliamentary election,'' the government said. ``Growth prospects are benefitting from improving market sentiment, higher agricultural incomes and recovering consumer demand.'' With falling prices and a strengthening rupiah, the government said it was confident single-digit inflation could be locked in during 1999. It forecast year-on-year inflation falling to between four and five percent by the end of the fiscal year to end-March and averaging 10-12 percent for the year. In its January budget, the government forecast average inflation at 17 percent. Year-on-year inflation was 24.3 percent in June. The latest letter increased the forecast current account surplus to $2.5 billion from $1.3 billion. ``The macroeconomic policy mix is becoming much more supportive of recovery,'' said the letter, Jakarta's regular report to the IMF on its economic outlook and progress in implementing IMF-mandated reforms in return for a more than $45 billion international bail-out. But the rosy outlook has drawn some scepticism. ``Given the growing uncertainty on the political front, players are questioning how the government would achieve the economic targets and whether they are just too optimistic,'' a foreign exchange dealer said. The release of the letter had little impact on financial markets, which had largely expected the details anounced. The upbeat reassessment comes as Jakarta prepares to meet its main international donors next week to ask for up to $6 billion to help fund its budget shortfall. Achieving a deficit of 5.8 percent of GDP, about $9.8 billion, remains the government's main aim. But creditors are being asked to pledge more money with no clear idea of who is going to be running the country. No party won a majority in the parliamentary election and the outcome of November's presidential election is unclear. However, the letter of intent sought to allay political concerns. ``No loss of momentum is envisaged during the transition to a new government,'' it said. ``There remains a strong consensus for the economic programme.'' The government also said it was forging ahead with banking and corporate restructuring vital to underpinning recovery. It said bad debtors could be hauled before bankruptcy courts -- to be reinforced with special part time judges -- in September if they refuse to formally pledge to honour their commitments. Special audits of government companies are being continued to help stamp out corruption and inefficiency. And the privatisation programme is on track, with preparations well underway to sell palm plantations, gold and nickel companies, regional airport and container concession companies, fertiliser operations and steel companies. -------- Rupiah breaks 7,000 on politics,Greenspan comments JAKARTA, July 23 (Reuters) - The Indonesian rupiah fell through the 7,000 barrier against the dollar around noon (0500 GMT) on Friday on domestic political concerns and worries of a U.S. interest rate hike. The rupiah was quoted at 7,020/7,070 against the dollar by 0530 GMT compared with around 6,845/6,880 in early trade and 6,760/6,775 at the close of local trade on Thursday. Dealers said news on details of Indonesia's latest letter of intent with the IMF did not have much impact on the market as its contents had largely been expected. ``Overseas players, particularly from Singapore, are driving the rupiah down. They seem to be buying dollar at whatever levels,'' one foreign bank dealer said. ``The dollar buying may have been driven by worries of a possible hike in U.S. interest rates, but there are also rumours that Suharto's cronies are buying lots of dollars through Singapore banks,'' the dealer said. U.S. Federal Reserve Chairman Alan Greenspan has said the Fed will act ``promptly and forcefully'' if it saw evidence of rising domestic inflation. Dealers said it was not clear why the buying accelerated several days after the former strongman was admitted to hospital, not on Tuesday when he was admitted to hospital. ``It's not clear why the buying accelerated today, but it could be because of week-end factors, with players squaring positions,'' one dealer said. Dealers said political concerns returned to the fore over the past several days, with players questioning whether the country's official economic forecasts were just too optimistic given the uncertainties on the political front. ``Given the growing uncertainty on the political front, players are questioning how the government would achieve the economic targets and whether they are just too optimistic,'' another dealer said. The Indonesian Democratic Party-Struggle (PDI-P) won the largest number of votes in the June parliamentary election, but failed to secure a majority, making a coalition necessary. And despite the party's commanding lead in the parliamentary vote, it is not clear if leader Megawati Sukarnoputri will be able to win the presidential election. Despite being unpopular and seeing his Golkar party lose votes in the election, President B.J. Habibie still has a strong chance of staying in office. ++++++++++++++++++++++++++++++++++++++++++++++++++++ Didistribusikan tgl. 24 Jul 1999 jam 04:42:23 GMT+1 oleh: Indonesia Daily News Online <[EMAIL PROTECTED]> http://www.Indo-News.com/ ++++++++++++++++++++++++++++++++++++++++++++++++++++
