IMF loan and economic crisis<\/p>\n
In any country it is common for one or two companies or banks
\nto be closed down every year and at the same time be replaced by
\nsimilar establishments. In this context, Indonesia seems to have
\nhad the most extraordinary and painful experience, when since
\nAugust 1997 almost overnight thousands of enterprises closed down
\nand banks went bankrupt with all the attendant adverse effects on
\nincome, employment and use of capital equipment. The collapse
\nconcerned was due not to mismanagement or other causes on the
\npart of the enterprises, but solely due to the malpractice and
\nmonetary crime committed by Bank Indonesia (BI). Ironically, the
\ncrime was committed by BI under the guise of monetary reforms.<\/p>\n
What follows is confined only to the role played by the
\nInternational Monetary Fund (IMF), which appeared to be heavily
\ninvolved in the creation of the current banking and monetary
\ntragedy facing the country.<\/p>\n
IMF's culpability in the crime may be substantiated by the
\nkeynote address Indonesia -- the road ahead, delivered by IMF
\ndirector Hubert Neiss, to the Jakarta Financial Club on June 22,
\n1999. Neiss' paper condensed in clear terms the similarity of
\nassessment and approach as well as the closely knit collaboration
\nbeen established between BI and IMF in dealing with the
\nIndonesian monetary crisis. Suffice it, to make the following
\nsalient observations.
\n* The real devil that caused the economic and monetary
\ncatastrophe was not the Asian crisis, but solely BI itself when
\nit took the disastrous decision in August 1997 to shift from a
\nsystem of controlled foreign exchange rate of the rupiah into a
\nfree floating one. Things turned particularly worse when
\nsubsequently a sudden shock of substantial foreign exchange
\ndemand emerged emanating from the huge accumulation of unpaid
\noffshore loans. The upshot was that all of a sudden the exchange
\nrate for the whole of 1998 skyrocketed by 300 percent and
\noccasionally even 600 percent to 700 percent. It has brought in
\nits wake \"short-circuits\" in business everywhere, except the
\nexport and the tourist sectors.
\n* Just imagine, what has happened to the over US$10 billion in
\nIMF bailout funds released to date. I am sure that the IMF would
\nnot be surprised at all to know that not a single cent of it was
\never used for the domestic economy, let alone for the purpose of
\nrecovery. It was not even used -- though only seemingly -- to
\nstrengthen the country's foreign exchange position, since the
\nroutine reserves were adequate to cover all routine foreign
\nexchange expenditure.
\n* Right from the beginning the IMF was surreptitiously bent on
\nsafeguarding the interests of foreign creditors and at the same
\ntime alleviating -- not Indonesia's -- but conglomerates'
\ndefaults in repaying offshore debts. Where is the rationale then
\nfor burdening the population to pay off the IMF giant loan?
\nBecause of the IMF's blunders involved, the $10 billion so far
\nreleased should be forfeited entirely. That is also the reason as
\nto why the IMF was so reluctant to formulate a clear cut plan for
\nthe allocation of the loan and the future capacity of Indonesia
\nto pay it back. IMF's ulterior motive was, however, to subject
\nIndonesia to \"the beggar-thy-neighbor\" theory of yore and make it
\nthe greatest beggar among nations in spite of its greatest
\nrichness in the whole world.
\n* Neiss mentioned about \"financing the resulting fiscal deficit
\nwith external aid so as to maintain domestic financial
\nstability\". This is absurd. The fiscal deficit concerned cannot
\nbe financed at all by foreign exchange but only in terms of
\nrupiah and as such would necessarily aggravate and not alleviate
\ndomestic financial stability as expected by Neiss. More
\nimportantly, the repayment would be passed onto our people who do
\nnot benefit at all from the foreign loan concerned.<\/p>\n
HMT OPPUSUNGGU<\/p>\n
Jakarta<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/imf-loan-and-economic-crisis-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }