Indonesia needs shock therapy whereby IMF, WB leave the country

Someone who holds rather extreme views of the IMF is economist Revrisond Baswir of Yogyakarta's Gadjah Mada University, who chairs the Institute of Development and Economic Analysis and is a member of an anti debt coalition comprising several nongovernmental organizations.

Question: Do you think the IMF has been too demanding of Indonesia?

Answer: The real issue is not whether they are too demanding or not. The main problem is that as an international institution assigned to stabilize Indonesia's finances, it has failed. The presence of the IMF in Indonesia has not helped to strengthen the rupiah at all. That's the problem.

Q: Why?

A: There has been no clear commitment from the government. It only partially upholds the law. The Cabinet isn't solid. It is constantly reshuffling. So, what policies can it adequately pursue?

Both (the government and IMF) have contributed equally (to this failure). While the government has no clear commitment ... the IMF always proposes things that are impossible to achieve.

For example, they know for sure that Indonesia is plagued with corruption. Even the World Bank acknowledges that 30 percent of its loan to Indonesia is corrupted. Yet, the IMF still asks (the Indonesian government) to do this and that.

Can't they see whom they can trust? Can't they see whether they have chosen the right person to do the job?

Q: What do you think the IMF should do now?

A: If they truly want to help Indonesia out of the crisis they should leave pretty quickly. There's nothing else they can do here. The situation here makes it no longer possible for them to be persuasive or demanding of anything. I think this republic, especially its leaders, need some kind of shock therapy.

That's why I demand that international institutions including the World Bank and IMF immediately leave Indonesia. We'll just have to wait and see. The fact that they continue to give them (the Indonesian government) money, suggests that they will never learn their lesson.

Q: Should the IMF leave, wouldn't it be people at grassroots level who will suffer the most?

A: Let me put it this way. Allowing the IMF to continue their work here would only prolong our suffering. Therefore it would be better off for us to suffer just once (because of the IMF's withdrawal from Indonesia and an end to loans), after which we would then eventually be able to recover from the crisis.

The logic is just the same as when former president Soeharto was forced to step down from the presidency. Rotten teeth had to be removed so that we would be able to eat comfortably again. Unfortunately, at that time we had too many rotten teeth ...

How can we talk about eradicating corruption and other violations if we cannot even get along together?

Q: So would the withdrawal of the IMF and World Bank from Indonesia help to reunite the country?

A: I think so. If necessary, we could even make IMF and World Bank our common enemies should they refuse to leave Indonesia.

Q: For what reasons?

A: First, they keep giving the government loans regardless of the fact that the government is not properly conducting its job. That means that they (WB and IMF) are only concerned about their own profit. They don't even care who gets the loan and who will pay it back. What matters for them is receiving interest from the loans. That's clearly immoral, isn't it?

Second, we have been in a heavily indebted situation for more than 30 years. Yet we keep piling on more and more debt. We have asked (international financial institutions) for a reduction in debt but they keep on refusing, saying that we still have the potential to pay off our debt. They say, if we work well, money will keep coming in and we can then pay our debt.

Third, we need a common enemy. That's why I tell fellow NGO friends to organize the community to get rid of IMF and World Bank from Indonesia. This is a kind of anti-debt movement.

What they (NGOs, community members) should do is refuse all debt-funded projects at a lower level. If, for example, we know that the government is planning to build a bridge using debt, we have to boycott it. It doesn't matter if we don't have the bridge as long as we don't have more debt.

Such a step would help reduce the burden of debt or debt abuse. We could also make (the movement) a tool to unify society.

Q: Are you sure that's the way to a better future?

A: I do believe so. There are many things that can help us if there is political reform. For example, if the fight against IMF and WB causes us a very bitter crisis, there will be a political settlement that will further lead to the emergence of a new authority.

Yet, the new authority cannot only be an anti-Soeharto one, or anti this or that. It should be a new authority capable of taking a more stern attitude towards the world ... not one which keeps asking for help from foreigners ...

Such an administration would try hard to reduce the country's debt to at least 30 percent of the total debt.

Even without chaos, Indonesia deserves debt reduction. We are already categorized as a heavily indebted poor country. Therefore if chaos occurs, and IMF and WB leave, Indonesia will meet requirements for debt reduction, which would be a great help.

Our debt has reached 110 percent of our gross domestic product. The government's debt alone has reached US$ 90 billion. A reduction of at least 30 percent will surely mean something.

Q: If IMF leaves wouldn't it be even harder to attract foreign investment?

A: I don't think so. A reduction of 30 percent in the nation's debt will lead to a healthy state budget. This alone would attract investors.

Q: Are there any other ways to recovery apart from getting rid of IMF and the World Bank?

A: As far as I know, both IMF and WB are applying the so-called principle of engagement. Therefore, no matter how bad the condition of a country they are assisting, they will never leave it because only by such engagement can they still monitor what is happening in the country.

Therefore, it would be great for us if the government would have the guts to just stop paying back the debt. There are a number of countries that have done so, including Brazil and Argentina. Of course there would be consequences for a while but this could be resettled through negotiation.

What is also important is the fact that the international community has improperly interpreted a state's debt. When a particular government of a country gets a loan, it is always the case that the state is regarded as the recipient.

Under such an interpretation a debt can always be inherited from one government to another, regardless of its abuse under the previous government.

In fact, a government's debt should only be considered as the debt of the state if there is strong proof to suggest that the debt has not been abused.

Therefore, we have all the more reason to urge international finance institutions to give us a 30 percent reduction of debt, as the World Bank itself has acknowledged that 30 percent of our foreign debts have been corrupted. (Sri Wahyuni)