Habibie warned of impending collapse<\/p>\n
JAKARTA (JP): A group of leading economists urged President
\nB.J. Habibie's administration yesterday to quickly abandon its
\npopulist economic crisis-handling policy and follow basic
\neconomic principles to prevent a total breakdown of the economy
\nand the state.<\/p>\n
The 15 economists asserted that the administration's economic
\ncrisis management had failed to produce positive developments and
\nhad instead led to rapid economic deterioration.<\/p>\n
\"This is because the 3-month-old administration, which is
\nbeing run under the same corrupt political system as that of ex-
\npresident Soeharto, has yet to gain any political legitimacy,\"
\nthe economists said in a joint statement.<\/p>\n
\"This (lack of legitimacy) is the main stumbling block to
\neconomic recovery. That's why we urge the government, or anyone
\nelse who will lead the country, to abide by basic economic
\nprinciples,\" said Sri Mulyani Indrawati, the group's spokeswoman,
\nin a news conference held to announce the declaration.<\/p>\n
The economists concluded that most of the government's major
\neconomic policies to date were merely populist measures that did
\nnot hold up to sound economic principles. They added that such
\npolicies could destroy the country's long-term economic
\nfoundations.<\/p>\n
The \"Declaration for Saving the Indonesian Economy\" was signed
\nby Anwar Nasution, Sjahrir, Mari Pangestu, Thee Kian Wie, Rizal
\nRamli, Faisal Basri, Didik J. Rachbini, Arief Arryman, Umar
\nJuoro, Rozy Munir, Revrisond Baswir, Anggito Abimanyu, Ari
\nKuncoro, Chatib Basri and Sri Mulyani.<\/p>\n
The statement said the massive bank bailout program, which had
\nseen more than Rp 140 trillion pumped into the banking sector,
\nshould be stopped and that legal action should immediately be
\ntaken against bank owners, managers, debtors and central bank
\nsupervisors responsible for the financially distressed industry.<\/p>\n
\"Security and business certainty must be guaranteed for all
\ncitizens irrespective of their race to restore a sound and strong
\neconomic foundation\" the two-page statement said.<\/p>\n
Sjahrir said that although subsidies and a budget deficit were
\ncurrently unavoidable, the government should be selective with
\nthe commodities it subsidized by targeting certain groups in
\nsociety.<\/p>\n
\"We totally disagree if the subsidy is provided at all costs.
\nThe 8.5 percent (of GDP) budget deficit this year is too big.
\nWe're greatly concerned that this could lead to uncontrollable
\ninflation,\" he said.<\/p>\n
The economists forecast that the inflation rate may reach 100
\npercent this year, helped along by the government's spending
\nspree.<\/p>\n
Sjahrir said that if the inflation rate broke the 100 percent
\nbarrier, it could quickly skyrocket to 700 percent.<\/p>\n
\"If this happens, our economy will totally disintegrate,\" he
\nwarned.<\/p>\n
\"In terms of economic principles, I agree with Sjahrir,
\nalthough in politics we may be in different camps,\" said Umar
\nJuoro, a senior economist at the Center for International and
\nDevelopment Studies (CIDES), a private think-tank linked to
\nHabibie.<\/p>\n
The government last month managed to procure more than US$14
\nbillion in foreign aid to finance its 1998\/1999 budget subsidies.<\/p>\n
\"The foreign aid pledge must not be seen as a restoration of
\nforeign confidence in our country,\" Sri Mulyani said.<\/p>\n
Sjahrir expressed apparent disgust at how the government had
\nnot shown any sense of crisis and that it had instead rejoiced
\nover the new aid commitments.<\/p>\n
Habibie proudly stated late last month that the multibillion
\ndollar aid commitment by Indonesia's official creditors in Paris
\nreflected a vote of international confidence in his
\nadministration.<\/p>\n
When asked how subsidies could be reduced and whether a
\ngeneral election should immediately be held to create a
\ngovernment with political legitimacy, Sri Mulyani said: \"These
\nare interesting questions which may make us, now sitting at the
\nsame table with the same view, to break apart.\"<\/p>\n
\"But Didik will answer the political question since he's now a
\nmember of the MPR,\" Sri Mulyani added, pointing to a startled
\nDidik J. Rachbini, who was recently appointed by Habibie as a
\nmember of the People's Consultative Assembly.<\/p>\n
\"A general election is needed to obtain new political
\nlegitimacy to implement the economic program,\" he answered
\nbriefly.<\/p>\n
Revrisond Baswir explained that the 15 economists were divided
\nover whether the Habibie administration had the ability to
\nimplement policies based on sound economic principles.<\/p>\n
\"But in order to be able to sit together at one table here we
\nfinally agreed that we all have doubts (about Habibie's
\ncapability),\" he said.<\/p>\n
Revrisond argued that an immediate general election or a
\nspecial session of the MPR would not guarantee a capable,
\nlegitimate government.<\/p>\n
\"That's why we stated in our declaration that any government
\n(not specifically Habibie's) which runs the country must hold
\nfirmly to economic principles,\" he said.<\/p>\n
Pointing out the dire economic situation, which is projected
\nto see an estimated 15 percent contraction this year and at least
\nsome 80 million people living below the poverty line (up from
\n22.5 million in 1996), Arief Arryman warned: \"We must quickly
\nsolve the political uncertainty because time is not on our side.\"<\/p>\n
Revrisond added: \"The only reason our nation is not bankrupt
\nnow is because the private sector and the government have stopped
\npaying their foreign debts.\"<\/p>\n
\"The critical situation prompted us to make this
\ndeclaration... hopefully, Umar Juoro will deliver this message
\nto Habibie and ask him to do what Amien Rais (a leading political
\nopposition figure) calls a \"Big Bang\" departure from the old
\nsystem of Soeharto. This would be the arresting of corrupt
\nofficials, including past untouchables and even those who are
\nclose to the President,\" Sjahrir said. (rei)<\/p>",
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