IMF confident latest plan will work
IMF confident latest plan will work
WASHINGTON (Reuters): International Monetary Fund chief Michel
Camdessus said on Tuesday he was confident the latest rescue
package for Indonesia would work and rejected criticism of the
IMF's approach to Jakarta's problems.
Indonesia agreed with the IMF on Friday to a 117-point reform
package in return for a bail-out package of $43 billion to end
the country's worst economic crisis in three decades.
The agreement, the third in six months, has been generally
welcomed, but analysts have said the key would be its
implementation, especially since Jakarta was seen as backsliding
on the first two IMF pacts.
Critics have said President Soeharto dithered on
implementation because some of the reforms would dismantle
lucrative monopolies controlled by his family and associates.
"I am confident that this will work," Camdessus told a news
conference.
Despite the reluctance of what he called "vested interests" to
embark on reforms like those prescribed by the IMF, Camdessus
said one of the main reasons for his assurance was that
Indonesian authorities had learned the high cost of rejecting the
IMF's advice.
"They know pretty well the cost of not accepting and adhering
to it earlier," Camdessus said.
"The cost for the country has been tremendous. Each time we
had to come back to the program, we had to strengthen it. This
time we have an excellent program," he said.
Camdessus, speaking at a news conference ahead of the IMF's
spring meeting in Washington, said the program agreed to last
week would address Indonesia's fundamental economic problems.
The new program finds "solutions that preserve the long-term
objectives, while taking due consideration of the immediate
social costs of the measures," he said.
Camdessus dismissed criticism that the IMF had not properly
addressed the mix of problems in Indonesia and he defended the
IMF's multi-pronged approach.
"We had no choice but to address simultaneously the major
macro-deficiencies of this economy and its major deficiencies
both in the banking and the structural domain," he said.
"It would have been nonsense to have the illusion that by
solving the macro imbalances, you would have Indonesia on a long
track of sustainable growth."
In its latest plan, the government promised a new anti-
monopoly law, moves to set up a bankruptcy law and a special
bankruptcy court and regulations for winding up companies,
mergers and acquisitions.
It also promised transparent and competitive bidding for
public infrastructure contracts, ministerial statements and
newspaper ads to explain official decisions, and procedures to
deal with public complaints.
A concrete plan for privatization of state enterprises and
faster restructuring of the banking sector were also detailed.