It needs the money to cover a budget deficit inflated by the need to pay for essential food and medical imports, for fuel and food subsidies for the poor, for programs to provide jobs and basic medical care and to help keep children in school. The IMF-controlled loan package to Indonesia was suspended in May amid the political and economic chaos that surrounded the resignation of President Suharto. Some foreign officials say they are hopeful that donors will come up with the needed amount and that the IMF will approve a resumption of lending to Indonesia this week. He said that the government was determined to restructure and strengthen the operations of the debt-laden banking system, and to curb inflation, which is already at an annual rate of 60 percent and rising. But Mr. Ginandjar said that it was also essential to establish a social safety net for the estimated 80 million Indonesians who live in poverty because of the economic breakdown of the last year.
Many workers are hungry.
The government said that the economy would contract by close to 14 percent this year, in Indonesia's first recession since 1963. Recovery is likely to be slow. Mr. Ginandjar said he did not expect growth to resume for about two years. The cost of repaying Indonesian government debt, about two-thirds of which is denominated in dollars, has leapt because the value of the Indonesian currency has fallen about 80 percent against the dollar in the past year. He said that with leading members of the government, including Mr. Habibie and Mr. Ginandjar, positioning themselves for elections due by the end of 1999, cutting expenditure further would work against their political ambitions.