JAKARTA - The resilience of the Indonesian economy has surprised many, especially those who overrate the role of the banking system in an economy driven by basic domestic needs and commodity exports.

Forecasts of 4 percent growth for the year and inflation of under 5 percent are more than just a statistic.

Capital may still be flowing out, the rupiah down 20 percent this year and investor morale low, but there is plenty of anecdotal evidence - as well as data - to show that production and consumption are on the rise.

The question now is whether this improvement can be maintained while credit remains scarce, government finances are in dire straits and Indonesia continues to rely on foreign aid for some 2 percent of its gross national product.

In the short run, many businesses have been able to generate enough credit to finance a pickup in activity. Distributors are financing some vehicle sales, and manufacturers are using offshore funds to back letters of credit needed to fund raw-material imports. The government itself has had a budget windfall from rising oil prices, which have more than offset slow progress in collecting taxes and reducing fuel and food subsidies.

Manufactured as well as mineral commodity exports have been strong, and the combination of buoyant global demand and the weaker rupiah should ensure that this continues for the rest of the year at least. Falling interest rates have led to a shift from saving to consumption.

All other things being equal, an Indonesia that solves none of its banking and fiscal problems might still be able to average 3 percent growth - from the low post-crisis base - simply by drawing on its expanding human and natural resources. But the revival of the modern economy needed to achieve the 5 percent-plus growth necessary for significant material progress still faces huge obstacles.

First, Indonesia at least needs to halt capital outflow. The current-account surplus is now running at around $6 billion. Only part of this is going to replenish foreign exchange reserves. Some may have been used to reduce private intercompany debt or borrowings by local affiliates of foreign companies; but much is being accumulated outside the country as export proceeds are not all remitted.

This is largely a political problem, but the need to bring interest rates down to reduce the burden of government debt has also played a part. Bank Indonesia paper now is yielding only 11 percent, so the risk premium over U.S. dollars is modest.

The continued drain of private money is also a problem. Including unpaid interest, this probably stands close to $60 billion. The official figure is $53 billion in 1999, but the data are unreliable. This is not as big a problem as it looks. Much of the debt has already been written off in the books of the foreign banks who were such eager lenders in the mid-1990s. Eventually, some will be renegotiated and the rest sold off at a fraction of face value or forgotten altogether.

Domestic debt is another matter. By the time rescues and recapitalizations are complete, government debt will hit 700 trillion rupiah ($81.14 billion), and interest will account for 35 percent or more of government spending. The only way to reduce it is to sell the trillions of rupiah of assets acquired by the Indonesian Bank Restructuring Agency but mostly being run by the original owners.

The government, prodded by the IMF and the restructuring agency itself, seems to be coming round to the idea that some quick disposals at fire-sale prices will be of more benefit to the economy than holding off hoping for a better price later. But cheap disposal, especially to foreigners or those associated with the past, will be subject to opposition in Parliament as well as, in some cases, obstruction by the original owners.

Speed in making sales is essential. Sales by the bank restructuring agency are supposed to contribute 19 trillion rupiah to the budget this fiscal year and double that next year. A high oil price may reduce the urgency, but not for long if foreign donors start to get restive. The IMF is too deeply committed to Indonesia to pull back. Nonetheless, its frequent reviews of Indonesian economic progress - another is imminent - and the drip-feeding of its $5 billion current loan commitment represent constant pressure on the government.