IMF comes under fire over RI reforms
IMF comes under fire over RI reforms
JAKARTA (JP): The International Monetary Fund's far reaching
involvement in the country's economic reform program is often
counterproductive to the overall efforts in lifting Indonesia out
of its worst ever crisis, economists have said.
An economist at the University of Indonesia, Anton Gunawan,
said on Wednesday that the fund's negative judgment of the reform
program, for example, often created more losses than benefits.
"The recent delay in the IMF's loan disbursement, for example,
created greater losses rather than benefits because the loss in
investors' confidence due to the delay not only hurt the market
but the overall economic activities," he said in a seminar held
by the Strategic Intelligence business consulting firm.
Anton regretted that the government failed to convince the IMF
that the country should not be confined to a tight schedule in
completing a certain set of reform programs in a situation where
social and political changes were still happening as a result of
the democratization process.
In a situation where so many things were changing, it was
normal that the decision making process slowed down, thus
delaying the completion of some parts of the restructuring
programs, according to Anton.
Anton said the IMF should resist from being too involved in
deciding the exact timeframe for all areas of the Indonesian
reform programs.
"It is now post crisis time for Indonesia, and the task of the
IMF is over," he said, adding that the main task of the fund to
improve the balance of payments was no longer relevant.
The improvement in the country's balance of payments over the
past number of months, with a turnaround from a deficit to a
surplus current account, indicated that the Indonesian economy
had passed the stage of emergency.
The country has booked an ample increase in exports, with
imports also beginning to rise. In addition, the sovereign debt
restructuring had also given a positive impact to the current
account, according to Anton.
He acknowledged that the capital account, however, did not
show as good a picture as the current account did.
"A huge amount of capital flowed out of the country in the
past, and not much of it has come back in. But it is not the task
of the IMF to bring back all that capital."
Anton said that the responsibility to lure back the funds laid
on the shoulders of the government and those in the circle of
elite politics.
He, however, pointed out that the political will of the
government and other members of the political elite should be
much greater than what it was now in order to enable the country
to reach a smooth process of restructuring.
"Restructuring programs have to be carried out with or without
the IMF," he said.
"With continuing bilateral support and political will in
place, Indonesia should continue its restructuring programs
without the IMF," he added.
Indonesia availed of the IMF's loan bail-out program in early
1998 to help cure the country's battered economy after being
affected by the then Asian economic crisis.
Speaking at the seminar, noted economist Mari Pangestu said
that the Indonesian government had no choice but to be consistent
with the IMF-sponsored reform program.
The poor coordination of the Indonesian government in having a
clear economic direction was another reason why the reform
programs were still extremely important to this country, Mari
added.
"How the IMF restructuring programs are implemented by
Indonesia is used as a measure by the market to arrive upon what
level of confidence people should have in Indonesia," Mari said.
The current policy makers were not giving enough commitment to
the IMF restructuring programs, however, because they had a
rather weak sense of ownership of such programs, according to
Mari.
"A stronger commitment and a better outcome is possible when
the policies are designed and carried out by the same parties,
but this should still not prompt Indonesia to ditch the IMF," she
added. (udi)