WORLD BANK LIKELY TO URGE CHANGES ON JAKARTA

  World Bank President Barber Conable is
  expected to press Indonesia, the Third World's sixth largest
  debtor, to maintain the momentum of economic policy changes to
  tackle the slump in its oil revenues, western diplomats said.
      Conable, who flew to Indonesia yesterday from Tokyo, will
  meet with President Suharto and senior economic ministers.
      He said on arrival that the economy of South-East Asia's
  largest nation was being managed well, but the slump in world
  oil prices called for major policy adjustments.
      Today the World Bank chief will visit Bank-funded projects
  in the eastern section of Java, Indonesia's most populous
  island. He will see Suharto on Tuesday after a day of detailed
  discussions with ministers tomorrow.
      Indonesia, the only Asian member of OPEC, has been severely
  hit by last year's crash in oil prices, which cut its oil and
  gas revenues in half.
      Japan's state Export-Import Bank last month agreed to
  provide around 900 mln dlrs in untied credits to help Indonesia
  pay for its share of 21 World Bank development projects.
      Indonesia, a country of 168 mln people, has responded to
  the oil slump by cutting spending, devaluing its currency by 31
  pct, and trying to boost exports, while using foreign loans to
  bridge its deficit.
      Diplomats said that Conable was expected to press Suharto
  and leading economic ministers to maintain the pace of policy
  change, particularly in dismantling Indonesia's high-cost
  protected economy.
      "Oil prices, the debt crisis, the world recession, all call
  for major policy adjustments and external support," Conable said
  in his arrival statement.
      But with Indonesia facing parliamentary elections next
  month, he is likely to avoid anything which would imply that
  the Bank is demanding specific changes.
      "We believe there has been wise leadership here and the
  economy is being very well managed," Conable told reporters at
  Jakarta airport.
      Indonesia has official and private overseas debts totalling
  37 billion dlrs, according to the Bank, which makes it the
  Third World's sixth biggest debtor. It has received 10.7
  billion dlrs from the World Bank since 1968.
      Conable did not spell out what further changes he would
  like to see. Last month the Bank endorsed economic changes
  already introduced by Indonesia, but implied it wanted more.
      Giving a 300 mln dlr loan in balance of payments support,
  the Bank said it will monitor progress on implementation of the
  government's trade reform measures, and supported its
  determination to promote efficiency and longer-term growth.
      Indonesia has introduced a series of measures since last
  May to boost non-oil exports, liberalise trade and encourage
  outside investment.
      Suharto has also ordered a government committee to look
  into which of Indonesia's 215 state-run companies could be
  sold.
      But in a report last month, the U.S. Embassy said the
  government appeared divided over how far to take its reforms.
      Western analysts say that in particular the government is
  unsure how far to go with dismantling Indonesia's high-cost
  monopolies, which control core areas of the economy.
      Central bank governor Arifin Siregar said this week that
  Indonesia faced very limited economic choices.
      It could not spend its way out of trouble because this
  would increase the balance of payments deficit and domestic
  inflation.
       He said the main objective was to raise exports outside
  the oil and natural gas sector.
      Indonesia's current account deficit is projected by the
  government to fall to 2.64 billion dlrs in the coming financial
  year which starts on April 1, from an estimated 4.1 billion in
  1986/87.
  

