'Cabinet cracks the last thing business community needs'
Dadan Wijaksana, The Jakarta Post, Jakarta
Apparent cracks between economic ministers over whether Indonesia should maintain policies sponsored by the International Monetary Fund (IMF) could prove costly to efforts to speed up economic recovery, an economist said.
"It impacts the economy in a negative way. When a government official publicly criticizes a government policy, that will eventually create uncertainty, which is bad for the economy," Centre for Strategic and International Studies (CSIS) economist Pande told The Jakarta Post on Thursday.
Pande was commenting on signs that the Cabinet, particularly economic ministers, is becoming increasingly divided over the role of the IMF and its economic prescriptions.
On one side is Coordinating Minister for the Economy Dorodjatun Kuntjoro-Tjakti, who insists that the country still needs the IMF until the end of next year. On the other side is State Minister of National Development Planning Kwik Kian Gie, who has launched a campaign to persuade the government to discontinue the IMF-sponsored economic program after it ends in November 2002.
The two sides have been trading barbs in the newspapers. Appeals by President Megawati Soekarnoputri for her ministers not to go public with their differences seem to have gone unheeded.
Pande said it was important for the economic ministers to cooperate in designing and implementing policies to help the economy recover quickly.
Despite growing opposition to the IMF, Dorodjatun, Minister of Finance Boediono and Bank Indonesia Governor Sjahril Sabirin signed late on Tuesday a new economic reform plan with the IMF, in exchange for the disbursement of the fund's next US$340 million loan tranche. The IMF is arranging a three-year $5 billion loan package for the country.
Kwik, a former chief economic minister in the administration of Abdurrahman Wahid, has repeatedly and openly attacked some of the key economic policies agreed to by the government and the IMF, saying they will only push the country deeper into crisis.
Among other things, Kwik has criticized the policy of selling local banks before replacing the recapitalization bonds held by them. He says the proceeds the government stands to receive from the sale of the banks is much less than the amount it will have to allocate for the bonds' interest payments.
Kwik points to the sale of BCA as an example. He says that because the bank holds close to Rp 60 trillion worth of recap bonds, the government has to pay the bank more than Rp 5 trillion each year in interest payments, almost the same amount it received from the sale of the bank.
Kwik has questioned the need for the country's continued dependence on the fund, saying Indonesia's economy would be growing even without the IMF.
Standing firmly on the other side of the argument are the remaining economic ministers, led by Dorodjatun. They insist that Indonesia continues to require the assistance of the IMF in guiding the country out of the prolonged crisis.
As arguments among the country's top economic officials intensify, there is concern that economic recovery will suffer.
Pande is of this opinion, saying that uncertainty is the last thing the business community needs.
"The business community will feel this uncertainty as a threat to their businesses. This will affect our economy, this is dangerous," Pande said.
Umar Juoro, an economist at the Center for Information and Development Studies (CIDES), also noted that differences between the two sides were wide enough to create problems in the future.
He suggested the President Megawati Soekarnoputri address the situation to avoid any more confusion.
"The President should come forward and bravely say what the country should do about the IMF. I think this would cool the tension a bit," Umar told the Post.
However, when asked whether it was necessary for the President to dismiss Kwik from the Cabinet, Pande and Umar were quick to say that this would be way out of proportion and would create new uncertainty.