Investors, donors still watching new economic team<\/p>\n
After the presentation of the complete audit of Bank Bali to
\nthe IMF, donors and investors are still cautiously watching the
\nnew ministers and their handling of corruption, economist Sri
\nAdiningsih of the Yogyakarta-based Gadjah Mada University, who
\njoined recent talks with the IMF, told The Jakarta Post.<\/p>\n
Question: The International Monetary Fund (IMF) has said it is
\nnow willing to negotiate again with the government after it
\nreceived the PricewaterhouseCoopers long form report. Would you
\nagree this is a good start for the economy?<\/p>\n
Answer: The IMF has a high commitment in Indonesia's continued
\neconomic reform and it seems it considers the new government is
\nserious in its economic reform program. Gus Dur's statement,
\nrequesting his ministers to resign if they were implicated in any
\ncases like Bank Bali, reflects the government's seriousness. I
\nthink there are now no more constraints regarding Indonesia's
\nrelations with IMF and other multilateral agencies.<\/p>\n
Q: The IMF has promised continued negotiations, without waiting
\nfor the results of legal proceedings on Bank Bali...<\/p>\n
A: The impression that the IMF has promised to immediately
\ncontinue negotiations and release the remainder of funds is not
\ncompletely true; they are sending a technical team next week who
\nwill, among others things, evaluate and draw up the framework of
\nthe new Letter of Intent.<\/p>\n
Q: So the IMF's willingness to renegotiate is more because of its
\ntrust in the new government rather than the investigation into
\nBaligate?<\/p>\n
A: There is some truth in that. At least until now the government
\nhas shown clear signals of its stance on the Bank Bali scandal
\nand other reform programs.<\/p>\n
Q: Will there be fundamental changes in the new Letter of Intent?<\/p>\n
A: There should be because of the changes in our State
\nGuidelines, and because of the new people in the economic team.
\nIn its meeting last month the IMF also admitted the failure of
\nits structural adjustment program in many countries. Its new
\nprogram -- poverty reduction and growth strategy -- will
\ninfluence its approach in assisting countries affected by
\nmonetary crises.<\/p>\n
Q: So where will the stress likely lie in the new Letter?<\/p>\n
A: It will emphasize poverty reduction with more defined
\nsubsidies... on how to reduce constraints on the middle and
\nlower classes from benefiting from economic growth, and it will
\nalso stress transparency. Other points could be on how to use
\nfiscal policy to reduce poverty, sound monitoring and of course
\nmacroeconomic sustainability and stability. Our new State
\nGuidelines also clearly emphasize the empowerment of the poor.
\nThe drawing up of the new Letter is likely to be smooth because
\nof the changes from both parties.<\/p>\n
Q: Once the new Letter is signed how much would the remainder of
\nIMF funds amount to?<\/p>\n
A: The government has never mentioned the actual figure, only
\nsaying it will be around $2 billion.<\/p>\n
Q: Would capital through new investments be stimulated once the
\nnew Letter is signed and the remaining funds from the IMF are
\nliquidated?<\/p>\n
A: Capital inflow will indeed be greatly influenced by the
\nrelease of more IMF funds or when the two parties sign an
\nagreement. But it will also be affected by other factors such as
\nthe thorough settlement of the Bank Bali case, the government's
\neconomic policies to get the economy moving again and completing
\nthe banking and corporation restructuring program.<\/p>\n
Another factor will be the seriousness of the government in
\nwiping out corruption, collusion and nepotism and upholding law
\nenforcement to enable the establishment of a healthy and
\nconducive business environment in the country. Investors seem to
\nhave been convinced by one factor -- the resumption of social and
\npolitical stability.<\/p>\n
Q: Which factor will be the heaviest constraint to creating a
\nconducive climate for investment?<\/p>\n
A: If the Bank Bali case is settled, this will hit many targets.
\nThe government's willingness to thoroughly investigate the
\nscandal would also give signals to the market that the government
\nis serious both in wiping out corruption, collusion and nepotism
\nand upholding the law. The settlement of the scandal would build
\na large amount of trust from domestic and international investors
\nin the performance of the government, particularly its economic
\nteam.<\/p>\n
Q: The market has not positively responded to the publication of
\nthe complete report of the PricewaterhouseCoopers audit...<\/p>\n
A: The rupiah actually strengthened when the new government was
\nformed but the market was indeed still unsure of the performance
\nof the new economic team. They were unfamiliar names to the
\nmarket. There are still waiting to see the actions of the new
\nofficials. I think the main question reflecting anxiety in the
\nmarket is whether the coordination of the team can work well,
\ngiven that this Cabinet resembles gado-gado (a dish consisting of
\na variety of vegetables). There were contradicting policies among
\nprevious ministers. Economic policies (need) solid teamwork.<\/p>\n
The audit's long form is indeed still unclear regarding the
\nflow of funds, but its publication will at least lead to clarity
\nand make it difficult for those implicated, including
\ninvestigators, to cover up (their actions). What is unclear can
\nbe made quite clear once the government is willing to do so. The
\npublication of the long form means there is no turning back for
\nthe government. It must continue a thorough investigation into
\nthe scandal. The publication also means that the big fish in the
\ncase have been revealed. The government only need reveal the
\nnames of those whose accounts are mentioned in the long form.<\/p>\n
Q: Will the attitude of the IMF in the future still depend on the
\nlegal process of Baligate?<\/p>\n
A: In general, yes. Perhaps the negotiation of the first
\nagreement letter and the liquidation of remaining funds from the
\nearlier package does not depend too much on the legal settlement
\nof Bank Bali. But there will be other Letters of Intent... and I
\nthink its legal settlement will be a determining factor. (Asip A.
\nHasani).<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/investors-donors-still-watching-new-economic-team-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}