- The Washington Times - Thursday, February 27, 2003

SINGAPORE, Feb. 27 (UPI) — Based on its current economic situation, Indonesia appears well on its way to exit the International Monetary Fund program, said the man who headed the IMF Asia department during the 1997-98 Asian financial crisis.

Hubert Neiss, now chairman of Deutsche Bank AG, Asia, has no doubt Indonesia will exit the program, which he helped set up at the height of the financial crisis.

"It's a matter of timing," he said.

"There is currently a good debate in Jakarta, but the government has not made a decision yet. There is no doubt, they will and they should exit the program," Neiss told the Singapore Institute of International Affairs.

He added that the aim of the IMF was to have "graduating pupils" to save its resources for other members, "like in Latin America."

"The important part is that it has to be done when the economy has sufficiently strengthened and policies are well on tracks," he noted.

Reminiscing about the Asian crisis, Neiss admitted the IMF "would do things differently" if there were such a crisis now.

"The IMF has learnt a lot from the experience," he said.

But Neiss also said he believed that 60 percent to 80 percent of the advise it gave then, it would give again.

"I don't think the prescription was bad at the time," he said.

Looking at the current economic situation in Asia, Neiss believed the region was in much better shape to weather a downturn in global external demand or any possible crisis.

"Asia has relative strengths to mitigate the impact of a weakening of the global situation," he noted.

The region has now a greater resilience to external shocks, with strong balances of payments, and often large current account surplus, he noted. The levels of international reserves are also well above the conventional minimum of 3 months of imports, and most countries have flexible exchange rates, which would also help absorb shocks, Neiss said.

Strong growth in Asian intra-trade should also lessen with time the dependence of the region on trade with the United States and the European Union.

"Asia's fundamentals are strong and the economic potential are high," Neiss said.


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