Tell the poor nothing but the whole truth<\/p>\n
Government officials are optimistic in the wake of encouraging
\nrecent economic data but economist Kwik Kian Gie sees harder
\nburdens ahead for the poor.<\/p>\n
JAKARTA (JP): State Minister of National Development Planning
\nBudiono is upbeat about Indonesia's economic outlook because the
\nrupiah has remained stable at about Rp 7,500 to the U.S. dollar
\nin spite of a series of riots in the capital and other cities.<\/p>\n
He said recently that the economy had bright prospects because
\nmacroeconomic parameters were improving. This would encourage
\nfactories to restart operations, offering job opportunities and
\npropping up people's purchasing power.<\/p>\n
In 1999, the rupiah is likely to remain stable in spite of
\nsocial and political upheavals, inflation will drop to about 10
\npercent from this year's estimate of about 80 percent and the
\ncontraction of the GDP to decrease to 2 percent from this year's
\n15 percent.<\/p>\n
We cannot blame Budiono, who is also chairman of the National
\nDevelopment Planning Board (Bappenas), because he, as an
\neconomist, will surely say that 2-percent contraction is better
\nthan 10-percent contraction even though the former figure will
\nstill mean increasing poverty and unemployment.<\/p>\n
So, there is a paradox between the language used by economists
\nand that used by the poor. When inflation, for example, is said
\nto decline from 80 percent in 1998 to 10 percent in 1999, that
\nmeans that the price of a product worth Rp 100 in early 1998 will
\nincrease to Rp 180 at the end of this year and rise again to Rp
\n198 at the end of 1999. Economists, who focus their attention on
\ntrends, will say that such a price development is good because
\nthe rate of the increase is smaller in the second year. But such
\nlogic neglects the fact that the poor, who make up the majority
\nof the population, will get even hungrier because their earnings
\nwill decline while prices are increasing.<\/p>\n
Actually, the improvement of the macroeconomic parameters has
\nnot been caused by an increase in production efficiency but by
\nthe inflow of official foreign loans. The government should have
\nused part of the money to finance programs aimed at supporting
\nproduction and trade, which will help the country improve its
\ncapability to repay the loans. But the government thus far has
\nnever talked about such programs.<\/p>\n
Government officials just express their pride that the
\nInternational Monetary Fund (IMF) has been disbursing its US$43
\nbillion bail-out aid to Indonesia as scheduled. They never
\nexplain how the money has been spent.<\/p>\n
A Cabinet minister has even expressed his joy that Indonesia
\nis currently categorized as a poor country, which means it is now
\neligible to apply for interest-free International Development
\nAssistance (IDA) , soft loans.<\/p>\n
Because the government has never explained whether the aid
\ndisbursement will help improve Indonesia's production capability,
\nit is unclear whether the country's capability to pay the new
\ndebt is improving.<\/p>\n
Apparently realizing that its current authority is temporary,
\nthe government is focusing its attention merely on short-term
\n(one-year) programs to improve its image at the expense of the
\ncountry's long-term interests. It does not seem to be concerned
\nwhether its routine budget will continue to be in deficit 12
\nmonths from now or whether the IMF will continue providing aid
\nfor Indonesia.<\/p>\n
The current government leaders are behaving just like
\nexecutives of a multinational company who have been assigned to
\nmanage its Indonesia branch for one year. They are doing whatever
\nthey can to improve the branch's performance during the year, in
\nthe hope that they will earn credit points and thus be promoted
\nand assigned to carry out another job in another country. They do
\nnot care whether the new executives in charge of the Indonesian
\nbranch will face difficulties in the longer term.<\/p>\n
So, during this era of supposed reform and transparency, the
\ngovernment should provide better information for the people.
\nMinisters, for example, must provide more explanations about
\ngovernment programs to improve the country's production, trading
\nand transportation sectors, and how such programs will help
\nimprove the country's affordability to pay its debts -- when the
\ncountry will be able to start paying its debts, how big its
\nannual debt services will be and when the debt services will
\ndecline to a sustainable level.<\/p>\n
The government should also avoid issuing illusive, misleading
\nstatements that encourage people to expect too much from the
\neconomy. As stated above, even though the declining figures for
\nnegative growth can be interpreted by economists as a good sign,
\nthe reality for the poor is different. People who have been
\nencouraged by such misleading statements might be disappointed
\nwhen they learn the reality the hard way. In the last month we
\nhave seen all too vividly what disappointed people can do.<\/p>",
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