Open letter to Mr. Camdessus<\/p>\n
When you gave your media conference in Jakarta on Jan. 15, you
\nexpressed great elation and satisfaction with the letter of
\nintent submitted by our government. Attaching great importance to
\nthe document, it was signed beyond normal international usage by
\nno less than the President of our country.<\/p>\n
Official clarifications and media releases gave the impression
\nthat the agreement's 50 points were jointly drafted and mutually
\nagreed upon by our government and the IMF, so that the public
\nunderstood the document to be a joint agreement. If one reads the
\ntext, however, it does not seem to be so.<\/p>\n
The signing of the agreement was followed up by the usual
\nbandwagon of enthusiastic support by the establishment comprising
\nmembers of the House of Representatives, business CEOs and the
\neconomic community in particular.<\/p>\n
If one examines the agreement's 50 points more closely,
\nhowever, one would be immediately struck by their lack of
\ncoherence. They are a far cry from being one integrated entity.
\nNeither does they convey any picture of an economic or monetary
\npolicy in terms of a series of properly coordinated measures and
\ninstruments aimed at the pursuit of clearly defined aims. The
\nagreement leads us nowhere with respect to the use of the
\npackage's US$43 billion loan and the envisaged reform of our
\nfinancial system. The very few concrete actions in the industrial
\nsector are like drops in the ocean. They do not represent
\nelements of a scheme for the restructure of industries.<\/p>\n
For 1998, the agreement seems to provide certain items from
\nout of the blue: In quantitative terms, a zero rate of growth for
\nthe economy is to be accompanied by a 20 percent inflation. An
\nexchange rate of Rp 5,000 to the dollar was also foreseen. No
\nclues whatever were provided as to how these targets were to be
\narrived at. No quantitative estimates were given concerning
\nbusiness failures and shutdowns which in turn would add to the
\nranks of the already huge army of the unemployed.<\/p>\n
The projected high rate of inflation would no doubt
\nsubstantially reduce the income of the work force and civil
\nservants who, for the last decade, have been paid an extremely
\nlow salary. Again, the cascading price increases would badly cut
\noverall consumer demand and would create a fall in output. All
\nthese downturns would be happening not due to faulty business
\npractices or recessionary tendencies from abroad, but solely from
\nthe faulty exchange rate of the rupiah.<\/p>\n
All in all, the letter of intent is nothing but verbiage
\nreflecting "the death of economics" in Indonesia. (This term was
\naptly suggested to me after having attended a debate in Jakarta
\non Jan. 15. The three participating debaters from the University
\nof Indonesia clearly attested to the country's dying economy. The
\ntopic of discussion pertained to The Death of Economics, a book
\nwritten by Prof. Dr. Paul Ormerod of the UK).<\/p>\n
Indeed economics together with economic policy is dead today
\nin Indonesia as may be seen by the complete paralysis of Bank
\nIndonesia. The central bank seems to run its affairs aimlessly:
\nIt does not know how to handle the money supply, the interest
\nrate and the exchange rate, and it does not exercise its
\nmanagement of the banking and financial system.<\/p>\n
The points I would like to submit are as follows:<\/p>\n
All along, our people have placed the IMF on a high pedestal
\nsince it is thought to have all the top experts in monetary and
\nforeign exchange affairs. Our actual experience so far has shown
\nthat the IMF office in Jakarta has been acting like it has had
\nits eyes closed, not being able to see BI's predicament of being
\nonly a lame duck -- a phenomenon too obvious to escape anybody's
\nobservation. There is no such thing as a contagious Asian
\nmonetary flu. The Indonesian monetary crisis stands on its own
\nand was made by Bank Indonesia.<\/p>\n
Why offer such a huge standby loan, if our monetary
\nauthorities would not possibly be able to utilize it. Surely, you
\nare not going to apply a "beg-thy-neighbor" policy to our
\ncountry, are you? Granting, therefore, that the IMF is genuinely
\ninterested in helping Indonesia out of its quagmire, it should
\nstudy the situation in depth in order to formulate the necessary
\napproach to be used by our monetary authorities to bring us back
\nto the road to recovery.<\/p>\n
HMT OPPUSUNGGU<\/p>\n
Jakarta<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/open-letter-to-mr-camdessus-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }