IMF monitoring role still crucial: Kadin

A'an Suryana, The Jakarta Post, Jakarta

The Indonesian Chamber of Commerce and Industry (Kadin) said on Wednesday that Indonesia still needed the International Monetary Fund to play a monitoring role in the implementation of the country's economic reform program to help instill investor confidence.

Kadin chairman Aburizal Bakrie said that there was still doubt among investors and the financial market on whether the government had the necessary discipline to carry out tough reform measures without someone credible monitoring it.

Speaking on the sidelines of the Golkar Party's national convention, he also supported calls for the government not to extend the current IMF-sponsored program when it expires at the end of this year.

"But we still need someone to monitor the (reform) program ... It can be either the IMF or the World Bank," he said.

This is the first statement from Kadin over the debate on whether Indonesia should extend the existing IMF program introduced in 1999.

Critics have said that the current program provides IMF with a dominant role in designing what economic reforms should be carried out by the government in exchange for the disbursement of the fund's money. They also argue that the IMF programs had failed to fix the country's economic woes.

It appears probable that the government will heed a recent People's Consultative Assembly (MPR) decree instructing the government not to extend the program. Pressure from politicians against an extension is also mounting.

The issue now is whether the IMF can still play a role in helping maintain international support for the country's economy.

The government has set up a special team to explore the various options.

Analysts have said that without the IMF program, Indonesia will not be able to gain the approval of the Paris Club of creditor nations for debt restructuring loans, creating a threat to the country's fiscal system. The amount of debt maturing in 2004 alone is about US$3 billion.

A number of analysts have also proposed a post-program monitoring role for the IMF, arguing that without a credible international institution monitoring the government program, it would be hard to earn international investor confidence in the program, which is crucial both in attracting foreign investment and maintaining the stability of the rupiah.

Separately, Minister of Finance Boediono said that the decision on whether Indonesia would extend the current IMF program would be made by the Cabinet, not by an individual minister.

Former chief economics minister Rizal Ramli recently accused Boediono and Bank Indonesia Governor Sjahril Sabirin of telling the IMF at a recent meeting in Washington that Indonesia was ready to extend the current program to 2005.