Guy  J.  Pauker
IN MACRO-ECONOMIC TERMS 1980  was  a good year for Indonesia. Foreign  exchange  reserves  amounted  to  at least  $7.2  billion. The Indonesian  government  could  obtain  commercial  loans  on  the  international  market  at  a  rate  of  interest  only  0.5%  above  the London interbank rate.  Following  the  Bali  meeting of  OPEC,  held  in  mid December, the  base price of Indonesia's most popular grade  of oil,  Minas crude, was increased  to $35 a barrel, to which surcharges  are being  added for  part of  the  volume  sold.  Ten  years  ago  the  same oil  sold  for  $1.70  a barrel.  Although  Indonesia remains  the  world's  major  rice  importer because per capita consumption continues to increase, in 1980 production reached a record 20  million  tons  of  husked  rice,  about  10% more than in the previous year. After  considerable  hesitation and  internal debate, the  Indonesian government  raised substantially  the highly subsidized  price of domestic fuels  without  suffering  the  adverse  political effects  some internal  security  agencies had  feared.

The next few years promise to favor sustained economic development, although Resources transfers from abroad will still be needed, especially if net oil export earnings decline Rafter 1985 because of reduced production and increased domestic consumption. A World Bank mission reported in February 1980 that, according to its projections, Indonesia's foreign exchange revenue from oil and LNG will amount to $17 billion in 1985 and earnings from other exports to an additional $14 billion, estimates which are probably low in view of recent and  future price increases for oil and gas.

Unlike other exporters of petroleum who have been using their unexpected affluence to finance economically unsound development schemes and to buy sophisticated weapons in excess of their security needs and their technological capabilities, the Indonesian government.........