Protection from the IMF
Protection from the IMF
Jergen Kaiser writes in The Jakarta Post on Aug. 6 about the
need for another way when a country finds itself in a debt trap.
Rather than being thrown into the hands of its creditors, there
should be some neutral third party to arbitrate a solution.
I support this concept, however Kaiser's article only portrays
half the story, or rather half the solution. As with chapter 11
bankruptcy in the United States, when a private company files
with a court for protection from its creditors, a competent third
party is appointed by the court to administer the company.
The administrator not only renegotiates the company's loans
with its creditors, but also restructures the company and
attempts to rid it of the bad management and bad practices that
led to the crisis in the first place.
If Indonesia wants protection from its creditors it first has
to admit that it has failed to put its own house in order. Then
second, it has to be willing to let somebody else do the job for
them. This is not as crazy as it may sound, and there is a
precedent of sorts, when previously the Indonesian government in
effect subcontracted out a large part of the functions of its
customs department to the Swiss-based Sucofindo.
How can a country come complaining to its creditors about the
debt burden on its budget when 30 percent to 50 percent of the
money it does have is stolen or abused by greedy bureaucrats and
politicians, when city or regional councillors waste limited
resources on junkets, traveling to Europe or wherever on endless
"comparative studies", or allocate gifts of Rp 250,000,000 each
to provincial legislators? In circumstances such as these it is
simply too easy to just request a debt rollover when it's your
children who are going to have to foot the bill.
Indonesia is not a poor country but it is being impoverished
not by the IMF, but by those very same bureaucrats and
politicians, and by the bankers who stacked their Singapore and
Swiss bank accounts with liquidity support funds and by a
government which does nothing about it.
A solution is definitely needed to the heavy debt burden faced
by Indonesia, but one that is a balanced solution. One that
includes strenuous efforts to recover stolen assets and prosecute
the offenders.
Incidentally, I might have missed something, but why does
Indonesia need IMF money in the first place when it has about
US$29 billion in reserves of its own? Australia has been getting
along just fine for years with half as much.
DAVID SINCLAIR
Bantul, Yogyakarta