IMF ready to work with whoever wins elections

IMF ready to work with whoever wins elections

HONG KONG (AFP): The International Monetary Fund (IMF) is ready to work with whoever wins Indonesia's election to help nurse the country's crippled economy back to health, a top official said on Thursday.

The IMF has arranged a US$46 billion bailout for the Indonesian economy, which was brought to its knees by the Asian financial crisis in 1997.

Stanley Fischer, the IMF's deputy managing director, said here that the likely winners of Indonesia's election earlier this month were all committed to adhering to IMF tutelage.

"We work with policies and not people and we'll work with any Indonesian government that is willing to continue the program," he told an economic forum in Hong Kong organized by the Far Eastern Economic Review.

"What is more important, I believe, is that the relevant parties in Indonesia have said that they intend to continue with the program supported by the IMF so I don't think there's an issue of who will be the next president," he said.

"The policies are likely to continue for some time and we're very happy with any elected president in Indonesia," Fischer added.

But a top Indonesian commentator warned the conference earlier that the IMF was likely to face trouble from the new government.

"The IMF will not get such comfortable cooperation as they have before," said Sri Mulyani Indrawati, director of the University of Indonesia's Institute of Social and Economic Research.

She said that President B.J. Habibie had been "abusing" IMF- mandated reforms "to gain credibility from the people".

"But the new government will get the trust and confidence of the people and you will not expect to get such a comfortable relationship with the IMF," she said.

Aides of Megawati Soekarnoputri and Amien Rais, whose parties seem poised to play a leading role in the new government, had made it clear that they intended to stand up to demands from IMF officials, she said.

Sri Mulyani also warned that the new government would get only a short honeymoon before it confronts its own administrative inexperience and a welter of problems facing the country.

She said the leading parties had so far failed to spell out how they intend to repair the shattered economy.

Political instability and ethnic clashes have contributed to a foreign investors' exodus from Indonesia, but there are a host of less high-profile economic problems facing a new administration, which will be struggling to overcome its lack of experience in power, she said.

"Most important for the investor maybe is whether the new government have a certainty in their policy direction," she told the conference.

Sri Mulyani said she doubted whether any of the parties realized "how deep and structural the problem" is facing the Indonesian economy.

The new government will be facing a learning process, "which will give us another delaying process (in gaining) stability."

Economic problems facing the incoming Indonesian government include reforming a corrupt bureaucracy, recapitalizing the country's crippled banks, ensuring an adequate social safety net and addressing local administrations' calls for greater autonomy and control over their finances, she said.

"Politics is only one element, the economic issue itself has many complications, many technical difficulties that certainly will need a degree of competence, a degree of professionalism.

"The question is whether the new government, the new president, will establish a cabinet that will consist of people who are really capable of doing the job, or if this is a coalition cabinet (which) is a matter of compromising (which) will consist of more politicians rather than technocrats," she added.