Ex-economic ministers attack IMF role in Indonesia
JAKARTA (JP): Former coordinating minister for economy, finance and industry Kwik Kian Gie and former minister of finance Fuad Bawazier have attacked the International Monetary Fund's role in fixing the country's economy because, they said, it had failed to benefit the people.
But, Kwik said, if Indonesia wanted to pull out of the IMF program, the people must be ready to face possible adverse economy consequences, like being shunned by other international donors and foreign investors.
"We have two options. One is to go along with the IMF. The second is to stop (the IMF program) and suffer, but have our sovereignty in our hands," Kwik said during a dialog on economy, which was also participated in by Fuad.
"What we need is a charismatic leader who can ensure the people (accept the consequence). But, of course, the bad tycoons must be put behind bars," he added.
Fuad said that although the IMF program had allowed the country to see some "positive economic numbers", including strong exports, an estimated economic growth of 4 percent and a single- digit inflation level this year, the program had failed to revive the people's confidence because it had not tackled the fundamental problem of massive unemployment.
"Massive unemployment is a source of various social and security problems," he said.
"The IMF program has been wrong. It has not benefited the people," Fuad said.
Fuad suggested the government follow in the footsteps of Thailand, which ended recently its IMF program.
"Let's just tell them (IMF) that we are thankful of their help, but we want to stop the program now," he said.
The IMF organized a US$43 billion international rescue package for Indonesia in November 1997 to bail the country out of a financial and economic crisis that started in mid-1997.
The IMF approved $12 billion in loans for the country between 1997 and 1999.
But before the loans were wholly disbursed, the IMF signed early this year a new deal with the administration of the new democratically elected President Abdurrahman Wahid to provide $5 billion to help finance the country's three-year economic program.
The IMF has already channeled more than $700 million of the $5 billion loan package, and it approved on Thursday another $399 million loan.
IMF First Deputy Managing Director Stanley Fischer said the economic reform program was at a "crucial stage", pointing out that doubts about the government's commitment to reform meant market sentiment remained fragile.
"The emerging recovery could quickly stall if market confidence does not take root," Fisher said.
But Fuad said that the IMF program had not represented the interests of Indonesia.
"The IMF is only interested in ensuring that Indonesia hires a lot of costly foreign consultants," he said.
Fuad was finance minister for two months during the last years of former authoritarian president Soeharto. He is now active as an economic commentator and also a member of the People's Consultative Assembly, the country's highest legislative body.
Fuad has also been often rumored to be linked with the various demonstrations and social conflicts in several parts of Indonesia. He has dismissed the rumors.
Kwik conceded that the IMF had been pushing the government to hire many foreign consultants.
He cited as an example that the Indonesian Bank Restructuring Agency (IBRA) had hired 10 foreign consultant firms.
"One consultant was paid about $450,000 per month, but the firm actually hired four local staffers to do the job," he said.
"But during my term, I managed to get rid of two (consultant firms) from IBRA," he said.
Kwik was dismissed during a major Cabinet reshuffle last month. He is now a member of the House of Representatives commission IX on banking and state budget. Kwik represents the Indonesian Democratic Party of Struggle, the largest party in the legislature.
He recalled that when he was still the country's chief economic minister, he had initially rejected a World Bank $30 million loan offer primarily to help the Jakarta Initiative Task Force pay the costly foreign consultants hired to help restructure the country's corporate overseas debts.
"It's really ridiculous because we have to borrow a lot of money to finance the foreign consultants to get their money back from the local corporations ... They're actually the same people who bragged on CNN and CBN years ago about their decision to lend money to local (unscrupulous) conglomerate owners," he said.
"But when I raised my objection to the offer, the IMF was infuriated, and immediately sent its men from Washington," he said.
He also said that the IMF was angered when he disagreed with the its bank recapitalization program. "The concept is wrong," he said, pointing out that by injecting bonds instead of cash into the recapitalized banks, there was a likelihood the banks would start "bleeding" again.
Kwik also recalled that every time he attacked the IMF program, the fund would remind him of the consequences for not following the program.
"So what came to my mind was how many children would have to drop out of school and lack nutrition because if the IMF pull out other international donors and investors may follow suit," he said. (rei)