Ex-economic ministers attack IMF role in Indonesia

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)