IMF insists on good governance<\/p>\n
JAKARTA (JP): The International Monetary Fund's acting
\nmanaging director, Stanley Fischer, reassured Indonesia on Monday
\nof the IMF's strong commitment to supporting the country's
\neconomic recovery programs, but stressed that good governance was
\nessential to maintaining its assistance.<\/p>\n
Fischer said the IMF could be flexible in modifying the
\nprograms if circumstances changed, but it had no flexibility to
\ncompromise on the issue of good governance.<\/p>\n
\"The IMF-supported program has to insist on good governance.
\nThis is an issue where we have no flexibility,\" he told Kompas
\nand the Jakarta Post in a brief interview following successive
\nmeetings with President Abdurrahman Wahid and House of
\nRepresentatives Speaker Akbar Tandjung.<\/p>\n
Fischer arrived on Sunday for a two-day visit to Jakarta to
\nreassure the administration of President Abdurrahman of the IMF's
\nsupport to help resolve the country's economic crisis.<\/p>\n
There have been increasing concerns about the slow progress in
\nthe country's economic reform programs, due, among other things,
\nto malfeasance by government officials, politicians and powerful
\nbusinessmen.<\/p>\n
The IMF has expressed disappointment over the failure of the
\ncountry's bankruptcy court to force recalcitrant debtors to
\nsettle their debts.<\/p>\n
The IMF has also insisted upon the establishment of an
\nadditional independent body to oversee the Indonesian Bank
\nRestructuring Agency (IBRA) to ensure transparency and restore
\npublic confidence in the powerful economic agency.<\/p>\n
IBRA manages about Rp 600 trillion (US$77 billion) in equity
\nand bad loans taken over from closed, nationalized and
\nrecapitalized banks.<\/p>\n
While other crisis-hit countries such as Thailand and South
\nKorea have returned to a solid path of recovery, Indonesia's
\neconomy is still fragile, suffering from a crippled banking
\nindustry and moribund business sector.<\/p>\n
Economists say that this is partly due to deep political
\nintervention in the implementation of reform programs.<\/p>\n
Fischer claimed that during their short meeting he did not
\ntell Abdurrahman, commonly called Gus Dur, to fix this problem.<\/p>\n
\"I didn't tell Gus Dur. He told me (that) he didn't want
\npolitical intervention in his economic matters.\"<\/p>\n
\"And he wants to be sure that whoever is put in charge (of
\nstate) companies, the management is clean and there is no
\nquestion of corruption. He made that very clear. I didn't raise
\nthe issue,\" Fischer said, also in response to a question about
\ncorrupt practices at state companies.<\/p>\n
Elsewhere, Fischer praised the government for the progress
\nmade thus far in the economic reform programs.<\/p>\n
\"I would say there's real progress, but there's still a lot of
\nwork to be done,\" he said.<\/p>\n
He cited IBRA and the Jakarta Initiative Task Force (JITF) as
\nbodies where much work was still needed to be done.<\/p>\n
JITF is a debt restructuring body established by the
\ngovernment in early 1998 to help facilitate the restructuring of
\nthe country's massive corporate debt overhang.<\/p>\n
He also said that Attorney General Marzuki Darusman promised
\nto make efforts to speed up the assignment of the so-called ad
\nhoc judges to the commercial court to handle the bankruptcy
\nproceedings of recalcitrant debtors.<\/p>\n
Fischer's positive note of confidence helped the ailing rupiah
\nto strengthen against the U.S. dollar.<\/p>\n
The local unit closed at Rp 7,855 per dollar compared to Rp
\n8,005 on Thursday, which was the lowest level in six months.<\/p>\n
The rupiah has been under pressure since the government failed
\nto meet a March 31 deadline to implement the various economic
\nreform programs as pledged in the Jan. 20 letter of intent to the
\nIMF.<\/p>\n
But the government managed to implement most of the crucial
\nprograms by the new April deadline.<\/p>\n
\"I believe that if Indonesia carries out the programs, then
\nthere should be a stronger rupiah ... It will be stronger than Rp
\n8,000,\" he said.<\/p>\n
The government has targeted the rupiah to stabilize at about
\nthe Rp 7,000 level this year.<\/p>\n
Fischer said that an IMF team would start working today
\n(Tuesday) to review the country's economic reform programs.<\/p>\n
The team, he added, would need about 10 days to complete its
\nwork, and if everything went well the IMF board of directors
\nwould meet toward the end of May to decide on the second
\ndisbursement of $400 million from its bailout fund for Indonesia.<\/p>\n
The loan was supposed to have been disbursed earlier this
\nmonth but it was held up due to the government's failure to meet
\nmany of the reform deadlines.<\/p>\n
Asked about the recent suggestion made by Coordinating
\nMinister for the Economy, Finance and Industry Kwik Kian Gie to
\nchange the status of the IMF loan into a standby loan, Fischer
\nsaid: \"It has some advantages for Indonesia and there are also
\ndisadvantages.\"<\/p>\n
He pointed out that this (change in status) would reflect
\nIndonesia's stronger forex reserves, \"but on the other hand,
\nhaving the money is better than somebody else having it.\"<\/p>\n
Fischer said that the IMF would still need more time to
\ndiscuss the suggestion further with Indonesia.<\/p>\n
Under the current system, Indonesia must take the IMF loans
\nwhen they are disbursed.<\/p>\n
Fischer also said the IMF would work closely with Indonesia to
\nimplement the fiscal decentralization program correctly.
\n(rei\/prb)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/imf-insists-on-good-governance-1447893297",
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"sponsor_url": "https:\/\/okusiassociates.com"
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