INFID's sweeping criticisms<\/p>\n
Rejecting the Indonesian government's reform agenda as
\ngenerally useless seems to be a pointless criticism that doesn't
\ndeserve any attention from the economics ministers, especially
\nbecause the critics didn't come up with alternative policy
\nrecommendations.<\/p>\n
Yet we see it necessary to comment on the sweeping criticisms
\nmade by International NGO Forum on Indonesian Development (INFID)
\nlast week, which demanded the government drop the reform programs
\nit announced in a White Paper last September.<\/p>\n
The reform agenda, which will replace the International
\nMonetary Fund (IMF) program later this year, is by no means the
\nbest way of improving the welfare of the people, alleviating
\npoverty.<\/p>\n
But what is the point for INFID to attack as useless the
\nreform measures that have gone through a national political
\nconsensus in the House of Representatives if it simply stopped
\nshort of suggesting better, more realistic, alternative programs.<\/p>\n
Given the fragile economic condition and in anticipation of
\nheightened political emotions next year, the government doesn't
\nhave much choice but to continue to push through the big backlog
\nof reform measures designed to strengthen macroeconomic
\nstability, further restructure the financial service industry and
\nstimulate investment, exports and job creation.<\/p>\n
These programs certainly do not directly reduce poverty, nor
\nwill they immediately cut down the stocks of government debts.
\nBut how could we talk about poverty alleviation and reducing
\ngovernment debts if the economy did not grow. The economy will be
\nable to grow only if there is a minimum degree of macroeconomic
\nstability with the inflation and exchange rates fairly stable to
\nallow for reasonable calculation of business risks.<\/p>\n
Credit interest rates will not go down if inflation is not
\ncontrolled, and banks will remain highly averse to new lending if
\nthe business risks are persistently very high. These are some of
\nthe issues that are being addressed by the reforms stipulated in
\nthe White Paper.<\/p>\n
Other measures include reforms in customs and tax services,
\nlegal sector, licensing system, improvements in basic
\ninfrastructures, regional regulations and anti-corruption
\nmeasures and in other trade-facilitation and business-support
\nservices, all designed to stimulate investment, export and job
\ncreation.<\/p>\n
All these measures are needed to maintain macroeconomic
\nstability and to fuel a stronger recovery in order to generate a
\nlarger number of jobs to absorb the huge number of unemployed and
\nnew entrants on the labor market.<\/p>\n
If most of these measures will be useless, as INFID claims,
\nare there better, alternative measures that are workable under
\nthe current conditions?<\/p>\n
True, high growth will not automatically reduce poverty if the
\ngovernment does not enhance a more equitable distribution of
\nincome and implement better targeted poverty alleviation
\nprograms.<\/p>\n
But nothing else will happen if there is no macroeconomic
\nstability and a fairly high economic growth. One must also
\nremember that what the government is doing and will do in the
\neconomic sector next year is still very much crisis management.<\/p>\n
INFID lambasted the government for allocating more than US$8.1
\nbillion on foreign debt principal and interest payments next
\nyear, thereby leaving meager sums for operating and development
\nbudgets and for financing social safety-net programs.<\/p>\n
Is INFID so naive that it does not realize that the heavy debt
\nservice burden was caused by the national political consensus not
\nto renew the IMF program?<\/p>\n
Since Indonesia decided not to renew its program with the IMF,
\nthe country will be deprived of access to debt-rescheduling
\nfacilities from the Paris Club of sovereign creditors and will
\nautomatically enter the IMF Post-Program Monitoring (PPM)
\nmechanism because its debts to the multilateral agency are far in
\nexcess of its borrowing quota.<\/p>\n
But this PPM does not mean that Indonesia remains under IMF
\nspecial arrangements and is therefore still eligible to another
\ndebt-rescheduling facility from the Paris Club, as INFID claims.<\/p>\n
Every member that owes the IMF more than 100 percent of its
\nquota but decides to end its IMF program automatically falls
\nunder the PPM. This simply makes sense since a big borrower
\nindeed requires special supervision.<\/p>\n
That is why both Thailand and S. Korea, which had earlier
\ngraduated from the IMF programs, did not abruptly terminate their
\nspecial arrangements with the IMF but instead made a gradual
\nexit, first by opting for a precautionary arrangement, then
\nentering the PPM, before finally paying up all their debts to the
\nIMF.<\/p>\n
Also contrary to INFID claims, Indonesia is not entitled to
\nthe heavily-indebted poor countries (HIPC) initiative of the
\nGroup of 8 (G-8) developed countries. Even though this initiative
\nwas improved at the G-8 summit in Evian, France, last June,
\nthis scheme is open only to low-income countries, which have
\ncompleted their poverty-reduction strategy papers. Indonesia is
\nalready classified as a middle-income country and is still
\nworking on its poverty-reduction strategy paper.<\/p>\n
_________<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/infids-sweeping-criticisms-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }