RI may collapse unless IMF reforms realized: Analysts<\/p>\n
JAKARTA (JP): Analysts said here yesterday Indonesia might be
\ndriven to the brink of collapse if it did not consistently
\nimplement the International Monetary Fund (IMF) reform package to
\nimprove its battered economy.<\/p>\n
\"It's sad,\" chief economist of Danareksa Sekuritas Rino Agung
\nEffendi told The Jakarta Post yesterday.<\/p>\n
Rino argued that implementing the economic reforms tied to the
\nIMF-sponsored US$43 billion bailout package was the only way for
\nthe country to recover from its worst-hit crisis over the long
\nterm.<\/p>\n
The head of research at Socgen Crosby Securities Indonesia,
\nGoei Siauw Hong, shared Rino's view saying that the country's
\neconomy would experience a severe setback if it did not maintain
\nIMF support.<\/p>\n
\"Indonesia should not close itself off from the IMF because it
\nneeds fresh funds from the institution to heal its ailing
\neconomy,\" he said.<\/p>\n
Both were commenting on President Soeharto's latest statement
\nsaying Indonesia had to tread cautiously in implementing the IMF
\neconomic reforms because they were not in line with the country's
\n1945 Constitution.<\/p>\n
The President said the IMF reform program was based on liberal
\neconomic principles not in line with the constitution, which
\ncalls for an economy based on \"family principles\".<\/p>\n
Soeharto's comment was made in the wake of the IMF's decision
\nto delay the payment of about US$3 billion, part of the total
\nUS$43 billion rescue package for Indonesia, until April because
\nof Indonesia's pre-occupation with politics as it forms a new
\ngovernment.<\/p>\n
The IMF and finance markets have also rejected moves by
\nPresident Soeharto to introduce a currency board to peg the
\nfalling rupiah to a fixed exchange rate.<\/p>\n
Rino said the country had not shown strong political will to
\nfully implement the reform programs.<\/p>\n
\"Developments so far have shown that the implementation of
\nreforms has been below target due to a lack of political will
\nfrom the government,\" he said.<\/p>\n
He contended, however, that the IMF reform package signed by
\nSoeharto on Jan. 15 also had failed to address problems related
\nto the country's corporate foreign debts, social safety net
\nprograms and the banking system.<\/p>\n
\"The IMF package does not state any solution to the country's
\nmounting private debts and to the sufferings of the common
\npeople,\" he said, citing the soaring prices of basic necessities
\nand drugs.<\/p>\n
Bank Indonesia announced recently that the private sector
\nforeign debt totaled $68.31 billion as of February.<\/p>\n
Hong said Indonesia was not, however, in any position to
\nbargain with the IMF as the country itself did not have any
\nclear-cut measures to solve the economic crisis or stabilize the
\nailing rupiah.<\/p>\n
The rupiah has lost about 70 percent of its value against the
\nU.S. dollar from a 2,450 exchange rate last July.<\/p>\n
\"I don't see any clear measures from the government to heal
\nthe country's paralyzed economy,\" he said, reemphasizing the
\nurgent need to carry out the IMF reforms.<\/p>\n
\"Though the pills prescribed by the IMF are bitter, we have to
\nswallow them,\" Hong said.<\/p>\n
He said he was skeptical over the government's effort to seek
\nthe repatriation of Indonesian funds currently deposited
\noverseas.<\/p>\n
\"Who is going to repatriate their funds while they know the
\ncountry's economy is on the edge of collapse,\" he said.<\/p>\n
Analysts and economists shared one common view that Indonesia
\nwas suffering from a lack of confidence which was further
\nweakening the economy and the rupiah.<\/p>\n
\"Most companies in Indonesia will likely collapse by June if
\nthe government cannot come up with positive measures,\" Hong said.<\/p>\n
Hadi Soesastro, a senior economist at the Center for Strategic
\nand International Studies, said if the IMF stopped extending its
\nbailout funds, the impact on Indonesia would be devastating.<\/p>\n
\"The impact would not only affect the economy, it would also
\ncompletely destroy confidence in the country,\" he said.<\/p>\n
He expressed concern that without fresh funds from the IMF,
\nthe economy would suffer from hyperinflation and the production
\nsystem could break down.<\/p>\n
\"And I don't see any alternatives,\" he said.<\/p>\n
Hadi added that a bilateral government-to-government approach
\nto secure alternative external funding might not work due to the
\nloss of public confidence.<\/p>\n
\"Asking for Japanese money will be difficult since that
\ncountry is also in trouble,\" he said. (aly\/08)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ri-may-collapse-unless-imf-reforms-realized-analysts-1447893297",
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