MPR likely to recommend ending relations with IMF

Fitri Wulandari, The Jakarta Post, Jakarta

The People's Consultative Assembly (MPR) is likely to recommend the government to cut ties with international donor agencies, particularly the International Monetary Fund (IMF), by 2003.

"All factions have agreed that the government must review relations with international donor agencies," Syamsul Balda of the Reform Faction and a member of the drafting team at Commission B of the MPR Annual Session, said on Wednesday.

Syamsul said that a review of relations with donor agencies would include the possibility of ending ties with the IMF because they decided that it had contributed to the country's economic disasters.

The planned recommendation will be finalized during a plenary session on Thursday.

Syamsul said his faction would also push for a termination of ties with the IMF.

"We have been working with the IMF for years, and it has caused us a lot of disadvantages and few benefits. The IMF prescriptions were unsuitable for this country," Syamsul said.

The discussion on the IMF and other donor bodies was part of the deliberations to draft an economic recovery decree, which was still being discussed by Commission B. The commission's plenary session is expected to approve the draft.

The recommendation to end the country's ties with the IMF also received support from Commission C which is tasked with discussing the progress report by the President and the state's high institutions.

"We support the government moves to end dependence on the IMF," said Paskah Suzetta, a Commission C member.

Last year, the government decided to extend its loan commitment with the IMF until 2003. It was part of a US$5 billion loan package to Indonesia. So far, the government has only been issued $2.6 billion of the package, due mostly to weak compliance with IMF reforms.

The Fund's reform prescriptions to lift the country's economy center on cleaning up corruption and the restoration of the private sector, including reforming the banking system, corporate restructuring, privatizing state-owned enterprises (SOEs), as well as intensifying reform efforts in the judicial system.

These prescriptions have not worked well for Indonesia. The privatization of SOEs, for example, which it is hoped can raise Rp 6.5 trillion for this year's state budget, has only managed to secure Rp 2.15 trillion due to opposition from regions and legislators over what they claim is the sale of state assets to foreigners.

Both Syamsul and Paskah said that the commission would encourage the government to immediately set up an exit policy in anticipation of the endorsement of the recommendation.

"The government should prepare exit plans so as not to cause monetary disturbances," Paskah said.

Elsewhere, Syamsul said that the drafting team had narrowed its recommendation to accelerate economic recovery in the fiscal, monetary and real sectors.

While refusing to give details on the draft, Syamsul said that the draft was better than the initial one as it also included recommendations to reduce poverty and unemployment.

Meanwhile, the Reform Faction, in its statement, on Wednesday urged the government to focus on accelerating economic recovery in tourism and agriculture, saying that both industries only needed small investments to provide employment and yield results.