The Indonesian President has signed a new letter of intent with the International Monetary Fund, stepping up efforts to repair the country's damaged economy.

BBC Correspondent David Willis reports from Jakarta (2'17'')

The ceremony on Thursday was shown on live television and witnessed by the IMF's Managing Director, Michel Camdessus.

President Suharto said the coming financial year would bring zero economic growth and 20% inflation to Indonesia.

In addition, he promised a number of monopolies, including the one in cloves controlled by his youngest son, would come to an end.

President Suharto said the budget for this year would assume an exchange rate of 5,000 rupiah to the dollar, up from 4,000 forecast previously.

"If necessary we will have a deficit budget," he said. "This will be a budget which is truly realistic."

But in Singapore, the regional foreign exchange centre, the rupiah continued to trade around 7,000 to the dollar.

The Indonesian currency has lost around 70% of its value in the past six months.

Jakarta secured a $43bn rescue package from the IMF in October around the time the scale of the south-east Asian financial crisis was realised.

Mr Camdessus welcomed the fresh commitment from Indonesia.

Michael Camdessus calls on the international community to support Indonesia's programme (0' 27").

He said: "It is my conviction that stability can be maintained particularly in the structural domain.

"I am full of confidence on the success of this programme."

Michel Camdessus expects swifter measures

Under the IMF deal, Indonesia is committed to restructuring its economy and overhauling its financial sector.

President Suharto told Mr Camdessus: "I personally, the government and the people of Indonesia sincerely appreciate the co-operation and hard work you have presented to us."

Indonesia's ruler of 32 years also thanked the IMF's officials for "their hard work that has produced the documents that I have just signed".

Mr Camdessus returned the compliment to the man who rules the world's fourth most populous nation.

"All these achievements were made possible by President Suharto's good leadership," he said.

But behind the scenes it is clear pressure has been put on the the Indonesian government to implement the IMF package faster.

The Indonesian rupiah fell to a record low against the dollar last week.

On Wednesday a number of leading government and business figures lent their weight to a campaign called "Love Rupiah".

They were seen exchanging US dollars for rupiah at banks in Jakarta in a move designed to bolster confidence in the national currency.
 

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