Kwik calls for unilateral moratorium on debts<\/p>\n
The Jakarta Post, Malang, East Java<\/p>\n
State Minister of National Development Planning Kwik Kian Gie
\ncontinued his attacks on the International Monetary Fund and
\nlambasted other multilateral and sovereign creditors for what he
\ncalled collaboration to plunge Indonesia into a debt trap.<\/p>\n
Kwik accused the international creditors of nurturing a
\nborrowing culture within the Indonesian government and ganging up
\nto make \"us a beggar nation that is now being forced to sell our
\nassets at throw-away prices\".<\/p>\n
\"It is high time that we stand up and say enough is enough and
\nunilaterally declare a moratorium on our foreign debts even at
\nthe risk of being isolated by international creditors,\" Kwik said
\nin a paper distributed at the 15th congress of the Indonesian
\nEconomists Association.<\/p>\n
Kwik was scheduled to deliver a speech during a lunch session
\nat the conference on Tuesday, but he was on an overseas visit.<\/p>\n
\"The government is now flat broke with over US$75 billion in
\nforeign debts and Rp 600 trillion in domestic debts. It is now
\nunable to adequately provide public services and has to succumb
\nto policies dictated by international creditors.\"<\/p>\n
He reiterated his demand that Indonesia totally disengage
\nitself from any arrangement with the IMF so that the government
\ncan act as a truly sovereign entity that is responsible for
\ncleaning up its own house.<\/p>\n
\"We should have the courage to regain our national dignity
\neven at the risk of being isolated by international creditors.
\nAfter all, the majority of our people in the rural areas do not
\ngain any benefit from foreign capital and remain untouched by the
\nglobalization process.\"<\/p>\n
Kwik blamed much of the economic debacle Indonesia is now
\nmired in on the erroneous policies international creditors and
\nthe IMF have dictated to the government.<\/p>\n
\"International creditors should bear part of the losses caused
\nby our default because, like banks, they should have assessed
\nIndonesia's debt-servicing ability before approving their loans\".<\/p>\n
He said the World Bank and IMF always preach that banks should
\nmake adequate provisions for their loans and write off bad
\ncredits. \"Why don't they treat Indonesia like that.\"<\/p>\n
Rizal Ramli, former chief economics minister, another leader
\nof the camp staunchly opposed to a renewal of the IMF program in
\nIndonesia, reiterated his arguments on Monday as to why Indonesia
\nshould totally disengage from any IMF arrangement later this
\nyear.<\/p>\n
Rizal told the congress session on Indonesian strategy after
\nexiting the IMF arrangement, that the success rate of the IMF
\nprograms had so far been very low or only around 30 percent and
\neven this poor record had been made mostly in small countries in
\ntheir early stages of development.<\/p>\n
\"Indonesia does have internal weaknesses of its own. But the
\nIMF policy blunders have been responsible for aggravating these
\nweaknesses and plunging Indonesia into a graver economic crisis,\"
\nhe pointed out.<\/p>\n
Rizal said the macroeconomic stability was driven mainly by
\nexternal factors such as the weakening dollar and the steady
\ndecline in American interest rates.<\/p>\n
\"The strengthening rupiah, declining inflation and interest
\nrates are only intermediate targets that do not mean much without
\nthe creation of jobs. This financial stability is meaningless if
\nthe unemployment rate remains very high as it is now.\"<\/p>\n
According to him, what is really needed is a strong export
\nexpansion, higher capacity utilization within the manufacturing
\nindustry and a more vigorous investment climate.<\/p>\n
\"All this should be the focus of debates about Indonesia's
\nstrategy regarding the termination of the current IMF program.
\nThe real issue is not about what kind of IMF arrangement
\nIndonesia should enter into after the program ends later this
\nyear,\" he asserted.<\/p>\n
If Indonesia remains under IMF supervision, its growth will
\nlanguish at around 4 percent, far from sufficient to absorb the
\nhuge pool of the unemployed and new job seekers, he said.<\/p>\n
\"However, if we become the boss of our own policy-making and
\nimplementation, we can accelerate the growth to at least 6
\npercent by stepping up structural measures in tax administration,
\nbetter fiscal and domestic debt management and optimization of
\nrevenue from natural gas,\"<\/p>\n
Rizal hastily added, however, that all these measures depend
\non a number of preconditions, especially strong national
\nleadership, security, political stability, secure property rights
\nand effective rule of law.<\/p>\n
But while almost all the structural measures he proposed have
\nbeen stipulated in the government's reform program with the IMF,
\nRizal failed to explain how the termination of the relationship
\nwith the IMF would contribute to the acceleration of the reforms.<\/p>\n
He could not explain either how total disengagement from the
\nIMF program would create the preconditions needed for the success
\nof the policy recommendations, which he suggested as an
\nalternative course to the IMF program.<\/p>\n
The low credibility of the government's policy-making and
\nimplementing capacity has been the main concern of those who have
\nsuggested that Indonesia only gradually disengage itself from the
\nIMF.<\/p>\n
Supporters of continuing IMF supervision of Indonesia's reform
\nprogram, at least until the election of a new government later
\nnext year, have argued that it is unwise to take the risk of
\nrocking the \"boat of market confidence\", especially in view of
\nthe risks of political turbulence during the 2004 election year.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/kwik-calls-for-unilateral-moratorium-on-debts-1447893297",
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