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Indonesian Creditors Open Meeting; Jakarta Warned - 2001-11-07

Indonesia's major creditors opened a meeting in Jakarta with a warning from the World Bank that the government has six months to restore the confidence of foreign investors. But Indonesian officials say prospects are gloomy for the economy.

The World Bank's senior official for East Asia, Jemal-ud-din Kassum, opened the meeting Wednesday warning that Indonesia has what he called a narrow window of opportunity over the coming six months to restore investor confidence.

Mr. Kassum says a weak global economy and low investor confidence have been worsened by the September 11 attacks in the United States. He urges Indonesia's leaders to seize what he calls this opportunity to lock in economic stability, restore momentum to economic reform and move decisively to reduce poverty.

Indonesia is seeking $3.5 billion in credit to help cover next year's budget deficit, estimated at nearly $4 billion.

However, Indonesia's chief economic minister, Dorodjatun Kuntjoro-Kajti, told donors the global slump and the September attacks will make it difficult for Indonesia to achieve its targets next year.

The minister says that while Indonesia's annualized growth rate during the first half of this year was more than three percent, it will decline in the second half. And he says the outlook for next year is poor because the global slump will depress commodity prices and demand for Indonesian exports.

Indonesian analysts say the government of President Megawati Sukarnoputri must reduce state-owned companies, streamline the government bureaucracy, reform the legal system and attack corruption. However, they say these efforts are frustrated by political infighting and an entrenched elite that amassed wealth and influence during three decades of authoritarian rule.

As the donor meeting opened at the central bank building, more than 100 protesters demonstrated outside the building. They called for aid for the poor and the cancellation of all foreign debts.