RI faces obstacles after IMF exit<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The International Monetary Fund has concluded its high-profile
\nrole in designing the country's economic reform program over six
\nyears with the announcement late last week of its last loan
\ntranche.<\/p>\n
Graduating from the IMF program leaves the country with
\nenormous challenges ahead, notably due to pressure from
\nnationalist and populist politicians, which could put at risk the
\nsustainability of the government's economic reform agenda.<\/p>\n
Even when the IMF program -- with its strict economic targets
\nand tough measures -- was in force, the government had to
\nsometimes bow to the pressure, with delays in reducing the costly
\nfuel subsidy and slow progress in the privatization program as
\nexamples.<\/p>\n
The risk of a slowdown in the reform drive will be even
\ngreater next year, particularly with the general and presidential
\nelections, a protracted seven-month process. The continuity of
\nthe reform agenda is crucial to help revive investor confidence.<\/p>\n
\"Judging from the (election) participants, it's hard to say
\nthat there will be a single majority winner. And if that's the
\ncase, more compromises are likely to prevail,\" Pande Radja
\nSilalahi of the Centre for Strategic and International Studies
\n(CSIS) said.<\/p>\n
The IMF approved on Friday the final US$505 million tranche
\nfor Indonesia, the final portion of a $5.3 billion lending
\nprogram, which was an extension of a previous similar program
\nrequested by the government in the wake of the 1997-1998 regional
\nfinancial crisis.<\/p>\n
Without the presence of an IMF-sponsored reform program, the
\ncountry would have no longer been eligible for the Paris Club
\ndebt rescheduling facility, posing a greater burden on the state
\nbudget.<\/p>\n
Indonesia's relations with the IMF have not been smooth. Four
\ngovernments had to deal with strong public opposition to the
\nreform program prescribed by the fund. In fact, the country's
\nformer authoritarian leader Soeharto had to step down after 32
\nyears in power after he raised fuel prices and closed down banks
\nas recommended by the IMF.<\/p>\n
The country is now set to enter the first year of a dialog
\nprogram designed for those newly graduated from the IMF lending
\nprogram, called the post-program monitoring (PPM).<\/p>\n
The government has drawn up economic action targets in the
\nwhite paper, to support its decision not to extend the IMF's
\nspecial program. It covers three main goals; to retain and
\ncontinue pursuing macroeconomic and fiscal consolidation;
\ncontinue the finance sector reform drive; increase investment,
\nexport and employment opportunities -- all are drawn up into
\ncertain policies and targets to be met by until the end of next
\nyear.<\/p>\n
Experts have said that all the targets will remain just that
\nif the country fails to manage the elections in a democratic and
\npeaceful manner.<\/p>\n
While the elections will be closely watched to help measure
\ninvestor confidence, of more importance, however, is the economic
\ndirection the next government will take.<\/p>\n
\"Whoever wins, what's important is how to consistently pursue
\nthe reform program -- with or without the IMF program. So, it is
\nimportant for the government not to make too many compromises.<\/p>\n
\"Admittedly, that will be very difficult, but it should at
\nleast be at a minimum,\" Pande said.<\/p>\n
Meanwhile, Chatib Basri of the Institute for Economics and
\nFinancial Research, School of Economics, University of Indonesia
\n(LPEM-UI), highlighted the importance of strong leadership on the
\npart of the next government.<\/p>\n
\"It's very important to have strong coordination within the
\ngovernment, which would send positive signals to investors,\" he
\nsaid.<\/p>\n
Equally important, Chatib added, was clear-cut, time-bound
\neconomic policies as well as a clear measure to gauge the
\ngovernment's discipline in meeting the targets.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ri-faces-obstacles-after-imf-exit-1447893297",
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