At that level the rupiah has lost nearly 80 percent of its value since the Asian financial meltdown began last July, making it impossible for most local firms and banks to repay their foreign debts, borrow new funds and carry on production. With an IMF supervisory team due to arrive back in Jakarta, Habibie emphasised that his administration was totally committed to the IMF plan. Habibie, who was educated as an engineer and corporate executive in Germany in the 1960s and 1970s, said an official from the Bundesbank, Germany's central bank, would be stationed in Jakarta for one year to advise on how to reform Indonesia's central bank in line with the IMF program. His coordinating economics minister Ginandjar Kartasasmita, another holdover from the last Suharto cabinet, indicated a target of 6,000 rupiah to the US dollar. But the prospects for the Indonesian economy for the next decade are so serious that the deal allows companies to repay their debts over eight years, starting with a three-year moratorium on the principal.
Indonesian banks have a total of four years for repayment.
However, many bankers and money market operators openly doubt that the agreement will reverse the downward spiral in the Indonesian economy, with wide predictions of an estimated fall in output of 20 percent this year. Some money market figures have insisted that Habibie can only save the country's banking system by nationalising it, before selling parts off to foreign investors. International ultimatums Major capitalist governments around the world are insisting that Habibie, backed by the military commanders, and the bourgeois opposition, led by figures such as Megawati and Islamic leader Amien Rais, stabilise the political situation so that severe economic measures can be implemented without igniting a social explosion. US Assistant Secretary of State Stanley Roth visited Jakarta last week. After meeting Habibie, Roth said Indonesia must resolve its political crisis before IMF measures could be fully effective.