CBS, Indonesia and the IMF

CBS, Indonesia and the IMF

Almost everyday I read about the CBS. How good it is, how
risky it is, how dangerous it is, and many other different
comments, which make my head spin and creates more confusion.

For me, it is really strange how an American professor from
John Hopkins University suddenly appears in Indonesia's financial
community and, in no time, rises to prominence by introducing a
currency board system (CBS). Rumors abound that Prof Steve Hanke
was brought to Indonesia by Peter Gontha, but Gontha denied this
out of hand at his "meeting of minds" about the CBS organized by
RCTI on Feb. 20, 9:30 p.m. And this denial makes it more
mysterious.

I followed with great interest the "meeting of minds" and it
was a real meeting of great financial minds because we saw Peter
Gontha, Sugeng Suryadi, Kwik Kian Gie and Dr. Nasution, and the
discussions were really of high quality. I didn't hear
repetitions of known slogans and statements, but real arguments,
which made the moderator rather speechless.

One thing attracted me, and that was Kwik's explanation about
the necessity of having enough foreign reserves to really
stabilize the rupiah. He said that when the government announces
the fixed rate, then you must be prepared to see a rush in dollar
buying, and with the US$17 billion we have at this moment, this
could be disastrous, because in no time the foreign reserve will
be finished and the hands of the banks will be tied. So in my
mind (if my conclusion is correct) we should have adequate
foreign reserve first and then everything will run smoothly as
planned.

After hearing this remark, my mind goes to the IMF, which came
here to help Indonesia overcome its crisis. The IMF spirit is to
help and not to dictate how Indonesia should run its economy or
its affairs. After all, Indonesia is a free and sovereign country
and its sovereignty should be honored by all.

The IMF could say to Indonesia that the IMF has $43 billion to
help Indonesia and that Indonesia can use it any time it needs.
Then, I think, the problem of foreign reserve will cease to be a
problem.

After all, what we get from the IMF is a loan, and the sooner
Indonesia recovers, the sooner the debts will be repaid. But
again, this is only a simple contribution from a person who knows
next to nothing about finance and economics. With or without the
CBS, Indonesia must recover, not only for the sake of
Indonesians, but for the sake of the world community as well.

SOEGIH ARTO

Jakarta