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.