bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

In a move to patch up relations with the International Monetary Fund, Indonesia's newly elected vice-president B.J. Habibie said the country was willing to consider alternatives to a currency board exchange rate system to stabilise the rupiah.

 He said President Suharto would work with the IMF, despite the country's standoff with the aid agency over reforms linked to the US$43 billion bailout package.

 'President Suharto still trusts the IMF,' Japan's Nihon Keizai Shimbun quoted Mr Habibie saying.

 'So long as there is no violation of our constitution, we will proceed [with the negotiations with the IMF].'  There had been fears Jakarta might retreat into isolation in response to the IMF, World Bank and Asian Development Bank threats to withhold funds.

 Now all sides seem willing to find a compromise.

 'If there is an alternative method [to stabilise the rupiah], we'd like to consider it,' Mr Habibie said.

 'There are positive sentiments brewing,' said ING Barings analyst Laksono Widodo.

 Indonesia had offered to send a top-level delegation for talks in Washington next week, but this has been cancelled. The IMF is instead sending a team to Indonesia at the weekend.

 The pace of reforms and Mr Suharto's currency board proposal, pegging the dollar to 5,000 rupiah, which the IMF says is doomed to fail in the present environment, are the contentious issues.

 Mr Suharto argues the IMF programme is not working quickly enough.

 He has been reluctant to break up the country's agriculture monopoly, saying it breaches the constitution. He says state subsidies of food and fuel are needed to help the poor.

 Under a barrage of criticism from some regional leaders, the IMF now says it is willing to reconsider some reform aspects.

 'It looks as if the IMF is going to be more sensitive to Indonesia's social situation,' said Andre Cita, associate director of Bahana Securities.

 Japanese Prime Minister Ryutaro Hashimoto will fly to Jakarta in the role of peacemaker for talks with Mr Suharto on Sunday.

 He is expected to stress the need for Indonesia to abide by the IMF's core demands to reform its banking and financial sector, and also discuss the currency board alternatives.

 Meanwhile, Steve Hanke, the architect of the currency board proposal and Suharto adviser, has rushed back to Indonesia amid talk that his plans are falling apart.

 Currency analyst Andy Tan, general manager of MMS International, said Mr Suharto had been keeping the currency board option to barter a better deal with the IMF.

 'It makes sense to keep the option open,' Mr Tan said.



Habibie moves to ease IMF tension