IMF aid<\/p>\n
It appears that the monetary crisis that is at present hitting
\nour country is regarded as truly serious. After a limited cabinet
\nmeeting on Wednesday, it was announced that the government would
\nbe seeking assistance from the International Monetary Fund (IMF)
\nand the World Bank in order to surmount the effects of the
\nmonetary upheaval.<\/p>\n
This decision is rather surprising. After the monetary crisis
\nbegan, and subsequently grew in intensity, the government
\nannounced several times that the situation was still sound. Our
\nforeign exchange reserves, for example, were sufficient. The same
\nassurances were made even when the government decided to broaden
\nthe rupiah intervention band and tighten liquidity. There were no
\nindications that we were looking towards the IMF. So if now we
\nare turning to the IMF, the question is, what is going on?<\/p>\n
At the end of last week, after a brief period of respite, the
\nrupiah abruptly dropped in value to around Rp 3,700 to the U.S.
\ndollar. The rupiah's value fluctuated for a while, and then
\ndropped again to bust the Rp 4,000 per dollar level. In
\nIndonesian monetary history, this was the biggest plunge the
\nrupiah had ever experienced.<\/p>\n
Considering the extent of the decline, it appears that the
\ndrop in value could not be ascribed merely to the workings of the
\nmarket mechanism. As economist Didik J. Rachbini observed, what
\nwe are seeing now are panic symptoms. So many people are
\npanicking and have lost their trust in the rupiah that a rush on
\nthe dollar has resulted.<\/p>\n
Assuming that we do not really need IMF assistance at this
\nstage, what the step the government is now taking may be viewed
\nas a precautionary measure, so as to be ready for any
\neventualities while at the same time waging a war of nerves
\n(against speculators).<\/p>\n
The question is, how capable are we of accepting this IMF aid,
\nmerely as a precautionary tool and to conduct a war of nerves?
\nObviously, that aid will not be without obligations on our part.
\nStringent requirements will be attached whose impact will be
\nwidely felt.<\/p>\n
What if, for instance, the IMF were to demand that we raise
\nour value-added taxes, further tighten our liquidity, or
\nreschedule even more projects? The ones to feel the impact are
\nthe people at large. This would mean that our people, who have
\nnever in their lives had anything to do with dollar speculation
\nor bad credit, will be forced to help bear the consequences of
\nthe present monetary crisis.<\/p>\n
-- Republika, Jakarta<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/imf-aid-1447899208", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }