President Suharto of Indonesia has been sworn in at the start of his seventh five-year term of office, following his re-election by the People's Consultative Assembly.

Suharto: sombre inauguration speech

Mr Suharto's choice of Vice President, BJ Habibie, was being sworn in separately later in the day.

A BBC Southeast Asia correspondent reports that, with Mr Suharto's re-endorsement safely secured, attention now switches to the deepening economic crisis gripping Indonesia.

In a short address to the Assembly's 1,000 members, President Suharto struck a sombre note.

Anti-government protests continue despite a ban

Indonesia was going through testing times, he said, but by staying united and by working hard the country could resume the path of its development.

In accepting the challenge of a seventh term of office, the President went on, he hoped he would not prove a disappointment to his people.

But many of his people are already more than disappointed - they are angry about soaring food prices and the political system as a whole.

BJ Habibie: heir apparent

Even though demonstrations have been banned for weeks, scuffles broke out and nine people were arrested on Tuesday when police broke up one anti-government protest in the capital, Jakarta.

Continuing row over IMF bail-out package

Suharto was re-elected unopposed for the presidency, as he has been in every selection process since taking power in 1966.

His five-year term begins immediately and his immediate priority is to resolve Indonesia's stand-off with the International Monetary Fund.

It has delayed the release of a second instalment of financial assistance because of Jakarta's failure to implement structural economic reforms.

Camdessus: plan to peg rupiah to the dollar is "surreal"

Each side in the row has been sending conflicting signals.

Suggestions by Indonesian officials that the IMF was trying to impose humiliating conditions on the country were matched by some equally tough language from the Fund's managing director, Michel Camdessus.

He described proposals being mooted in Jakarta to fix the value of the rupiah with a currency board as "surreal".

Now, Mr Camdessus's deputy, Stanley Fischer, has indicated a softer line, saying the IMF is willing to show flexibility with Indonesia.

Circumstances have changed, he said, and fiscal and monetary targets set by the IMF could be re-set.

A technical team is due to go to Washington for talks with Fund executives next week.
 

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