Hold the jingoism

Hold the jingoism

Political, government and military leaders should refrain from
further jingoistic outbursts in response to the IMF's decision
over the weekend to delay by at least two weeks the disbursement
of its second tranche of US$3 billion in bailout funds to
Indonesia. Chauvinistic assertions are not doing ourselves any
good with regard to market confidence, the most precious
commodity that we need desperately now to get out of the crisis.

The government should instead undertake a more honest
assessment as to why the crisis is deteriorating or draw lessons
from Thailand and South Korea, which both have suffered similar
crises and have been subject to similar medicinal prescriptions
by the IMF but have begun to stabilize. Or from the Philippines,
whose economy has recovered after a full dose of IMF-initiated
reforms, and Malaysia, which succeeded in preventing its crisis
from becoming full blown. Even though Malaysia refused to call in
the IMF for assistance, it has been implementing reform measures
similar to the IMF's standard prescription.

We have become worried by the tendency among a number of
political, military, government and business leaders to react in
an increasingly jingoistic manner to the worsening crisis.
Remarks such as: other countries have no right to interfere in
our internal affairs; market sentiment has nothing to do with our
political decisions; the IMF cannot dictate our policies; and the
IMF reforms are not compatible with the basic principle of our
economic system, do not help develop our dialog with the IMF and
our efforts to restimulate international confidence.

Whether we like it or not, a confrontation with the IMF would
only prolong the process of regaining public confidence in the
government and the economy and might deprive us of badly needed
international assistance to help solve the crisis. True, our fate
ultimately rests in our own hands. But our economy has been so
intertwined with the global economy that simply discarding
international market sentiment would leave us facing the risk of
courting disaster.

We should remember that other institutional contributors to
the US$43-billion bailout fund, such as the World Bank and Asian
Development Bank and sovereign donors such as the United States,
Japan, Singapore, Malaysia and Australia tie their contributions
to the implementation of the IMF-arranged reform package. This
means that rejecting the IMF reform package would also risk
losing valuable assistance from our previously loyal sovereign
donors, including our neighbors.

The IMF and other donors taking part in the bailout program
are obliged to follow set procedures for disbursing funds,
especially because their contributions are funded by taxpayers'
money. The IMF obviously does not want to risk damaging its
reputation and its ability to maintain market discipline in other
countries under its aid program by bending its rules simply to
meet Indonesia's needs.

It is futile for the government to keep asserting its self-
righteousness, claiming that it has fully implemented the reforms
as scheduled. It previously backtracked on agreed reforms and can
ill-afford any more policy flip-flops right now. Our currency has
fallen more than 75 percent since July, inflation is at its
highest in over three decades, most companies are already
technically bankrupt, trade is at a virtual standstill and
massive unemployment is looming.

Asserting now that the reform package is not in line with the
basic principle of our economic system could be seen as another
blatantly capricious excuse on the part of the government. It was
not for nothing that the multilateral development institutions
and sovereign donors tied their aid pledges to the implementation
of the IMF-arranged 50-point reform.

Anybody could easily conclude that the IMF-arranged package is
little more than a broader and accelerated version of the series
of economic and bureaucratic reforms which the government started
in the mid-1980s and which were responsible for the steady,
robust growth of our economy until last year and for the dramatic
reduction of absolute poverty.

The only slight changes needed in the IMF package seem to be
related to the urgent need for rescheduling the measures that
will directly affect the lives of the common people such as the
reduction of subsidies on basic staples and fuel oil. The
establishment of social safety nets through massive labor-
intensive works also needs to be speeded up.