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U.S. Defends IMF Plan for Indonesia

February 18, 1998

WASHINGTON (AP) _ The Clinton administration went out of its way Tuesday to defend an International Monetary Fund plan for rescuing Indonesia’s economy after Indonesian President Suharto fired the head of his country’s central bank and one of the plan’s authors.

``We don’t comment on the way in which other governments populate their senior ranks,″ said White House spokesman Mike McCurry. ``But I think I ’m making it quite clear that the president stressed to President Suharto the importance of making a sustained effort that would lend credibility to the work the IMF is doing in the country.″

Clinton spoke to Suharto Friday night by phone to add his voice to the chorus of IMF and other international opposition to a Hong-Kong style currency board for the rupiah, fearing it would send Indonesia’s economy into a tailspin.

But on Tuesday, Suharto dismissed Soedradjad Djiwandono as head of Indonesia’s central bank and replaced him with Sjahril Sabirin, a currency board advocate. The IMF believes Indonesia lacks both the economic and political credibility to create a currency board, a point Clinton reinforced in his phone call, McCurry said.

``The president did discuss the currency board, among other topics, ″ McCurry said. ``There are a lot of complexities and technical issues that have to be addressed before we think a currency board would be feasible.

Respected in financial circles, Soedradjad played a key role in negotiating a $40 billion package the IMF put together last November to try to solve the country’s economic crisis. He also angered some of Suharto’s relatives by closing down insolvent commercial banks they were associated with.

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