`Govt could face impeachment if it extends deal with IMF'

The Jakarta Post, Jakarta

A senior legislator warned the government against extending its agreement with the International Monetary Fund (IMF) when it expires later this year, saying this would violate a People's Consultative Assembly (MPR) decree.

A violation of an MPR decree would provide the country's highest legislative body reason to call a special session to seek clarification or to launch impeachment proceedings against the President, said Faisal Baasyir, deputy chairman of House of Representatives Commission IX for financial affairs.

"If the government insists on (extending the current contract), it would have to bear all the consequences for violating an MPR decree.

"Unless there is an (MPR) session annulling the decree -- which I am sure would not be the case -- the program with the IMF must be ended as scheduled," Faisal said.

MPR Decree VI/2002 says the government must not extend the current IMF program when it expires at the end of 2003. The decree also orders the government to prepare the necessary exit strategies to avoid any monetary disturbances when the program ends.

The House of Representatives, which forms the majority of the MPR, can propose a special session at any time to seek answers from the government on crucial issues.

Faisal's remarks will no doubt add to the already considerable pressure on the government not to extend the IMF program.

Those opposing any program extension have repeatedly and publicly attacked the IMF's role in drawing up key economic policies for Indonesia as part of its economic reform program.

Critics of the world body say some of these policies, rather than lifting the country out of crisis, have instead pushed Indonesia deeper into trouble.

Included among the critics are MPR Speaker Amien Rais, a large number of legislators, State Minister for National Development Planning Kwik Kian Gie and a number of prominent economists, including former economics minister Rizal Ramli, Didik J. Rachbini and Revrisond Baswir.

Indonesia is entering the final year of a four-year US$5 billion IMF bailout program. Signed in 1999, the program was to have ended in December last year, but it was extended for another year.

In return for financial aid, the IMF required the country to sign so-called letters of intent, which contained the country's key reform programs and several time-bound targets, which the government had to meet on a quarterly basis.

It was some of those targets, notably the privatization and divestment programs, that were blamed by critics for having pushed the country deeper into crisis.

The government has yet to reveal its official stance on the issue. However, a special team has been set up to explore whether Indonesia is financially able to stand on its own without support from the international community.

The team also will assess whether the country still needs an "economic umbrella" to maintain investor confidence.

After the 1997 financial crisis struck Indonesia, the IMF became involved to help the country's economy get back on track. The fund's assistance has benefited the country not only in terms of financial aid, but also in terms of gaining support from other foreign countries and institutions, whose assessments of Indonesia's economy are often based on the IMF's view.

Parting ways with the IMF would mean that Indonesia would lose up to $3 billion worth of debt restructuring facilities from the Paris Club in 2004.