Excuses for IMF reforms failure

Excuses for IMF reforms failure

The International Monetary Fund (IMF) is again threatening not
to reschedule Indonesia's loans or disburse another tranche
already committed to Indonesia on the grounds that government
officials have failed to fulfill their commitments in its sixth
Letter of Intent (LoI).

For Indonesia, the tardiness in fulfilling its LoI commitments
is not without reason. In the case of privatization of state-
owned enterprises and divestment of banks controlled by the
Indonesian Bank Restructuring Agency (IBRA), the tardiness is
caused by weak coordination at the level of the bureaucracy and
the House of Representatives. In addition, the market conditions
are not yet conducive to a feasible divestment.

When divestment is forced, the government will sustain losses.
In the divestment of BCA, for example, the government earned Rp
5.597 trillion but now has to pay half that amount for the
interest on BCA recapitalization bonds. It also has to pay up on
bonds worth a total of Rp 60.8 trillion.

The question is, why do we have to obey the IMF? In fact, as
Kwik Kian Gie, head of the National Development Planning Board,
has written in Kompas daily, that since the first quarter of
2001, Indonesia has paid back large portions of IMF loans in
installments -- principle and interest -- and that amounts to
more than the country has received in total from the IMF.

Shall we continue to let the IMF fool us? Hopefully, the
government realizes this situation. -- Investor Indonesia,
Jakarta