However, the new IMF agreement, signed on April 9, is still the best program the country can have to eventually recover from its deep slump. Seen from the domestic side, import prices have risen three times. That means sky-high interest rates, and many businesses will not be able to borrow , pay back and still make money. Small and medium scale businesses will be exempted from this fate as a social policy with support from IMF, the World Bank, the Asian Development Bank and some bilateral donors. A t the moment, however, there is no sign as yet of such trend taking shape.
Confidence is still fragile.
In November 1997, after the first IMF agreement, goodwill was great and they made great haste. First, the resumption of normal trade financing, i.e., the matter of acceptance of LCs issued by Indonesian banks. A third factor awaited is the rescheduling of private debts, but even if a general formula can be agreed upon, implementation will take many months. L astly, political stability has become more questionable, with the students' movement continuing unabated. This political unrest can be aggravated by dents in the price stability caused by policy induced price and tariff escalations of domestic fuels, electricity, public transport, etc.