Chapter 9 - Economic Overview

Summary

Introduction

On 31 October 2001 Jakarta's mass media were full of negative assessments about the performance of President Megawati in the first 100 days. An exception was Arief Budiman from Melbourne University (known to be somewhat left-of-centre), who recognized three achievements of Megawati. First, she restored normal relations with the International Monetary Fund (IMF); second, she cultivated good relations with the military; and third, she appeased the Muslim community with her statement opposing the war in Afghanistan.

Representing the economic Cabinet, Dorodjatun Kuntjoro-Jakti, Co-ordinating Minister of Economics, could probably make the complaint that the criticisms have not been completely fair to him as well as the rest of the Cabinet members, who were all inaugurated on 10 August 2001, after more than two weeks of pondering by Megawati over the formation of her Cabinet. For them, the first 100 days would have been on 19 November, although Megawati was inaugurated on 23 July 2001.

Would this brief interlude make much difference for the economic co-ordinating minister? Perhaps he might hope it could, or would. Because, within about two weeks of the Cabinet's inauguration, on 7–8 November 2001, there was to be the Consultative Group on Indonesia (CGI) donors’ conference in Jakarta. If that conference concluded well under the very difficult circumstances, including the perceived safety of visiting foreign diplomats, and the aid consortium accepted the progress reports of the Indonesian Government and pledged aid disbursement for 2002 according to the perceived needs of the government, it might have a positive impact on the government score card. Immediately after the CGI conference, the IMF would review the implementation of the third Letter of Intent (LoI), and the draft for a fourth, containing commitments for 2002; if that process went well, it might add to the confidence of the market and strengthen, or at least not further weaken, the rupiah.