Renegotiation is required<\/p>\n
I was very pleased to read Sunday's Jakarta Post article (Jan.
\n11, 1998), Harvard economist slams IMF for Asian crisis. In this
\narticle Jeffrey Sachs, director of the Harvard Institute of
\nInternational Development is quoted as being critical of the off-
\nthe-shelf IMF remedies that have been applied in the current
\nAsian crisis. The article also quotes Henry Kissinger as being
\nconcerned about a potential anti-American backlash developing as
\na consequence of the stringent conditions imposed by the IMF
\nbailout. I'm pleased that important western figures are beginning
\nto call into question the approach the IMF has taken in this
\ncrisis.<\/p>\n
All Asian recipients of IMF help are calling for renegotiation
\nof bailout terms. Western commentators and investors are
\nconcerned that this is a signal the recipient countries are
\nunwilling to implement the changes that will get them out of the
\ncrisis. I disagree. Renegotiation is definitely required, and is
\nnot a sign that the recipient nations are uncommitted to change.<\/p>\n
Renegotiation is required because our understanding of the
\ndepth and nature of the crisis has changed substantially since
\nthe IMF agreements were made. The IMF agreement with Indonesia
\nwas made in early October. At that time it might have made sense
\nfor the IMF to demand a budget surplus, it no longer does. I hope
\nthe IMF recognizes this and backs off from this demand.<\/p>\n
In October the IMF cannot have expected the exchange rate to
\nget anywhere near the Rp 10,000\/dollar that was reached last
\nweek. It is doubtful they expected two million people to lose
\ntheir jobs before the end of this year. In October, commentators
\nwere expecting a 1998 economic growth rate of two to three
\npercent. It would be hard to be that optimistic now, any positive
\ngrowth at all is probably wishful thinking. It seems crazy to
\nexacerbate these problems further by demanding a budget surplus,
\nespecially since government overspending was not responsible for
\nthe problem in the first place.<\/p>\n
Renegotiation is required because the situation has changed
\nradically since the agreement was implemented in October.
\nRenegotiation is required because no one understood then, and
\nprobably do not understand now, why the crisis is so virulent. An
\napproach of ongoing reconsideration and negotiation is required
\nhere. Let the IMF work with, not against, these sovereign
\nnations. It is clearly wrong to simply \"draw a line in the sand\"
\nand dare the recipient nations to cross it. The IMF wishes to
\nhelp reestablish investor confidence? Then they should not make
\nimpossible demands that will shake investor confidence when the
\ndemands are not met.<\/p>\n
VAUGHN BALL<\/p>\n
Jakarta<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/renegotiation-is-required-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }