Japan is joining the United States in stepping up pressure on Indonesia to act swiftly to avoid economic collapse and the possibility of serious political upheaval.

The BBC's Jonathan Head reports from Jakarta (Dur: 1-14)

The Deputy Chief Cabinet Secretary, Fukushira Nukaga, said after talks in Washington that he was asking his Prime Minister, Ryutaro Hashimoto, to speak by phone to President Suharto and urge him to implement reforms recommended by the International Monetary Fund.

President Suharto has vowed to implement IMF measures

President Suharto has said the austerity measures recommended by the IMF in return for a $43bn package agreed in October will be carried out.

But analysts say the budget announced this week in Jakarta apparently does not include the IMF proposals.

President Clinton spoke earlier by phone to Mr Suharto and is sending a high-level United States delegation to accompany IMF top officials going to Jakarta.

Food reassurances

There has been a wave of panic buying with people flocking to supermarkets for the second day on Friday, snapping up food stocks to beat feared price rises.

Diplomats and political analysts say a food shortage, especially during the fasting month of Ramadan, could trigger social unrest.

The military, which plays a leading role in the multi-ethnic country, vowed to crush any disturbances.

And it said it would delay the purchase of 12 Russian fighter planes to help conserve funds.

The government reassured people on Saturday that the country has enough food for everyone.

"We are asking people to remain calm, the government is working hard to take care of the needs of the people for basic consumer goods across the country," the Jakarta Post newspaper quoted the Production and Distribution Minister as saying.

Emphasising the message, the front page headline read: "We have more than enough rice."

"We are asking people to remain calm, the government is working hard to take care of the needs of the people for basic consumer goods across the country," Production and Distribution Minister Hartarto was quoted in Saturday's Jakarta Post newpaper as saying.

"We have more than enough rice" said the front page headline of the paper, emphasizing Hartarto's message.

Trouble on the streets

Indonesia's future has not been so bleak since the 1960s, when then Lieutenant-General Suharto took power from founding president Sukarno with the country verging on bankruptcy.

Students call for President Suharto to resign

Students held a brief demonstration calling on Suharto to quit on Friday, but otherwise Jakarta was calm.

The rupiah surged some 25% in Asian markets before weakening in European trade, while the Jakarta stock market index closed down more than 1% following a dive of almost 12% on Thursday.

South Korea's stock market rose 6.5% on Saturday, strengthened by a string of good news that investors hoped will help South Korea through its financial quagmire.

The benchmark Korea Composite Stock Price Index rose 26.78 points to finish Saturday's half-day session at 440.61.

The market rally came one day after major international banks meeting in New York reportedly agreed in principle to repackage South Korea's estimated $35bn in short-term loans coming due by the end of March.

The BBC's Charles Scanlon reports from Seoul (Dur: 1-22)

Meanwhile, people in South Korea have been queuing in their hundreds to hand over pieces of gold in response to an appeal on state television for help to ease the country's economic troubles.

Love the Rupiah

There have been unusual attempts to bolster confidence in the currency.

Stock market traders have seen values plummet

The president's eldest daughter, Tutut, is leading a love-the-rupiah campaign and is promising to exchange all her dollars for local currency.

Patriotic Indonesians are also converting their gold jewellery into currency in an attempt to help shore it up.

With hundreds of companies going out of business and laying off workers, the minister for manpower is reported to have announced 70,000 foreign employees will be sent home in an attempt to preserve jobs for Indonesians.

Mr Suharto's promises may help calm nerves on the financial markets but he has still not spelled out exactly what reforms he intends to implement or when.

Financial analysts say investor sentiment towards Indonesia is still overwhelmingly negative. Investors are now waiting to see what comes out of the IMF talks.

Back to top | BBC News Home | BBC Homepage	©