Reform or go bust<\/p>\n
International donors have reaffirmed strong support for
\nIndonesia at this extremely difficult time by pledging US$2.7
\nbillion in new soft loans and grants to help plug the state
\nbudget deficit, but again urged a faster pace of reform to lift
\nthe economy out of its five-year-old crisis.<\/p>\n
The World Bank-coordinated creditor consortium (Consultative
\nGroup on Indonesia) meeting in Bali once again warned that the
\nnew aid package would simply be wasted if the government did not
\nmake faster progress with its reform measures to improve
\nmacroeconomic efficiency and minimize the state losses caused by
\ncorruption.<\/p>\n
The critics of foreign loans who claim to be championing the
\ncommon people's interests need to realize that it is the new loan
\ncommitments that have enabled the government to allocate Rp 4.4
\ntrillion ($490 million) to the social safety net, continue
\nsubsidies for utilities and expand poverty-alleviation programs.<\/p>\n
Without the new loans, the Rp 34.4 trillion hole in the state
\nbudget this year would have to be plugged either by further
\nincreasing fuel and power prices or unilaterally declaring a
\nmoratorium on our foreign and domestic debt servicing.<\/p>\n
The first alternative is politically unacceptable, as can be
\nseen from the street protests over the past three weeks that
\nforced the government to roll back the utility price hikes.<\/p>\n
The second alternative also spells disaster as Indonesia would
\nbe isolated by the international community. Yet even more
\ndevastating would be the fact that all of the largest national
\nbanks would go bankrupt as they still depend largely on the
\ninterest revenues from the government bonds they hold on their
\nbalance sheets as capital.<\/p>\n
It is only the sovereign and multilateral creditors of the CGI
\nthat are still willing to extend grants and provide soft loans to
\nthe government. New borrowing from the international financial
\nmarket is simply out of the question as the government is already
\nburdened with $73 billion in foreign debts and Rp 650 trillion in
\ndomestic debts.<\/p>\n
It is futile now to argue that the economic crisis that caused
\nthis huge debt burden is of the government's own making and that
\nthe government would not have to beg for new loans if it could
\nstop the corruption that costs the state an estimated $28.5
\nbillion a year, as development planning minister Kwik Kian Gie
\nargued at the CGI meeting.<\/p>\n
True, the economic debacle is largely the legacy of the
\nprevious Soeharto government. Kwik's point of view is also
\nlegitimate, but where else in the world could a government wipe
\nout within less than two years the sort of corruption that has
\nbecome deep-rooted in the national body politic for more than 30
\nyears.<\/p>\n
Having said that, we don't mean to defend the record of
\nPresident Megawati Soekarnoputri's government. Its performance in
\nbuilding good governance is utterly disappointing and Megawati's
\nleadership in the effort to bring about reform and ensure justice
\nhas been very weak.<\/p>\n
It is therefore most imperative to continue promoting the
\nnational drive against corruption, and all regulatory and
\nbureaucratic barriers to sound economic activities and law
\nenforcement so as to ensure justice for all. We should pressure
\nthe entire government to speed up the pace of reform. This is
\nalso the main message conveyed by the CGI creditors who have been
\nsupportive and sympathetic to our plight.<\/p>\n
Campaigning against foreign creditors would by no means solve
\nour problems. Where is our national dignity and probity if we can
\nso easily blame others for our own mistakes. Likewise, going all
\nout to topple the present government will only plunge us into a
\npolitical and economic abyss.<\/p>\n
However, while increasing pressure on all branches of
\ngovernment to build good governance and ensure justice, we also
\nneed to realize that our overall reform movement involves
\nchanging many minds, systems, ways of being and doing, education
\nand a wholesale reshaping of institutions on a grand scale.<\/p>\n
Any progress we or the government might be able to make can
\nonly be incremental at best, given the multi-dimensional crisis
\nwe now find ourselves in during the current transition from a
\ncentralized, authoritarian government to a democratic,
\ndecentralized one.<\/p>\n
The problem, though, is that our economy has been bleeding
\nsince the onset of the crisis five years ago. It urgently needs
\nblood transfusions, which is where the annual loans and grants
\nprovided by the CGI creditors come in.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/reform-or-go-bust-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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