IMF head hopes Indonesia avoids return to chaos
IMF head hopes Indonesia avoids return to chaos
TOKYO (Reuters): Expressing concern about conditions in
Indonesia, IMF Managing Director Horst Koehler urged Jakarta in
an interview published on Thursday to implement a raft of policy
changes to boost confidence in its shattered economy.
Koehler, speaking in Singapore to the local Business Times
newspaper and to the International Herald Tribune (IHT), said the
Indonesian government needed to be more decisive in its efforts
to tackle a situation he described as very difficult and complex.
"The IMF will stay engaged in Indonesia if they want us to
stay engaged," the IHT quoted Koehler as saying. "We still have
to hope that order comes and that it will not fall back into
chaos."
His comments were a measure of the tense relations between the
International Monetary Fund (IMF) and Indonesia, which is still
struggling with the legacy of a financial crisis in 1997 that
devastated its economy and its banking system.
The IMF has provided a series of loans to help Jakarta back on
its feet, but last month it withheld a US$400 million installment
of a $5 billion credit line after the government failed to
implement a number of agreed economic reforms.
The IHT said Fund officials would hold talks with the
government in Jakarta on Friday to try to unblock the loan, but
Chief Economics Minister Rizal Ramli said no meeting was planned.
"A team will be here, maybe in end of January or early
February," Ramli told Reuters in Jakarta. He said he had recently
exchanged views with Koehler but declined to go into detail.
One of the sticking points concerns the impact of
controversial new regional autonomy laws that Indonesia is
implementing to help calm separatist tension and animosity over
Jakarta's grip on the state's coffers.
Ramli on Tuesday chided the IMF for making a fuss over an
issue on which it had previously kept silent.
Some analysts and businessmen have criticized the hastily
prepared autonomy laws, fearing they may add to Indonesia's
instability and create new layers of bureaucracy and corruption
across Indonesia's 30 provinces and more than 300 districts.
The Business Times quoted Koehler as saying decentralization
should be managed in such a way that Indonesia's budget does not
get out of control.
He also called on the government to accept the need for an
independent central bank, which he said would be "important for
stabilizing the confidence of private markets".
The independence of the bank is guaranteed by law, but
President Abdurrahman Wahid wants to replace the board because
some of its members were linked to the discredited regime of
former president Soeharto.
The Business Times said Koehler also urged the Indonesian Bank
Restructuring Agency to speed up the recovery of assets and to
take a tough line against recalcitrant corporate debtors.