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An examination of Indonesia's major economic issues and policy choices and some options open to U.S. programs and policies. Discussed are the public sector development budget and aid counterpart, credit policy and interest rates, foreign investments, agriculture, and marketing. U.S. options are considered in terms of how the "quality," or productivity, of aid can be enhanced and how this can contribute to more efficient policy choices for Indonesia. U.S. policy issues discussed are those (1) addressed in collaboration with the Intergovernmental Group of Indonesia; (2) on which the United States can act independently but that also involve other donors; and (3) requiring U.S. measures. Conclusions: Because of successful stabilization efforts, Indonesia can (1) focus on the equity with which benefits of development are shared; (2) relax controls on interest rates; (3) devote more effort to foreign investment; (4) review procedures that tie the development budget to its aid counterpart; and (5) promote greater efficiency in agriculture, distribution, and marketing. Donor countries should (1) reexamine measures of stabilization and quality of aid, and (2) emphasize efficient resource allocation and quality of aid. 82 pp.

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