RI can resist tough IMF terms: Analyst

RI can resist tough IMF terms: Analyst

JAKARTA (JP): Indonesia may well resist implementing some of
the tough economic reforms sought by the International Monetary
Fund (IMF) and the United States, a senior economist said
Saturday.

Indonesian technocrats could argue with the IMF team or with
the U.S. delegation, and pose the question: "Is it fair and wise
to insist on the IMF's prescribed budget surplus when the
situation is this bad?" Mohammad Sadli said.

Sadli, a former economic minister and now a lecturer at the
state University of Indonesia, is anticipating a keen debate
between the Indonesian government and the IMF team during their
emergency consultations in Jakarta this week.

The IMF, which organized a $40 billion rescue loan package for
Indonesia in October, announced Thursday it was sending the team
after the world's foreign currency markets gave the thumbs down
to the Indonesian government's 1998/1999 budget announced by
President Soeharto two days earlier.

U.S. President Bill Clinton has also dispatched Deputy
Treasury Secretary Lawrence Summers to Indonesia, with the chief
message that Jakarta should follow the IMF reform plans,
officials in Washington said.

Jeffrey Sachs, a senior economist from the Harvard Institute
of International Development who has advised the Indonesian
Ministry of Finance, is expected in Jakarta today, possibly to
act as a consultant for Indonesia, Sadli added.

"Prof. Sachs is very vocal in his criticism of the IMF
orthodoxy.

"In the debate on monetary and fiscal policies, Indonesia need
not give in to the IMF orthodoxy that easily," Sadli said.

One of the terms of the loans demanded by the IMF is for the
government to earn a surplus in its budget equivalent to one
percent of the country's gross domestic product.

Jeffrey Sachs on Saturday blamed the IMF for
aggravating Asia's financial crisis, but said regional economies
should begin to recover before long.

Sachs, director of the Harvard Institute of International
Development, told a business conference in Madras, India that the
crisis in East Asian economies had resulted from a "panic
withdrawal" of funds from their markets.

"My sense is that the IMF added to the panic," he said. He
said the Fund had erred by using the same rescue technique
employed in the past instead of specific remedies tailored to the
differing needs of Asian economies.

The IMF is scheduled to disburse the next $3 billion
installment of the loan for Indonesia in March, but is expected
to insist on more economic reforms before then.

The 1998/1999 budget plan, which envisages a 32 percent
increase in both spending and revenues to Rp 133.5 trillion,
failed to address the surplus issue although officials say that
the government would strive to fulfill that obligation.

Sadli said Indonesia would not be able to fulfill that
obligation if it continued its domestic fuel subsidy to the tune
of Rp 10 trillion in 1998/1999.

"This was a political decision made in December, and it is
understandable," Sadli said.

He said however that Indonesia could still fulfill the IMF's
budget surplus stipulation, "at least on paper" because the
budget does not start until April 1, under a new government.

"So why not sweeten it on paper?" he asked.

Another economist from New York State University, J.S. Uppal,
said Saturday that not all of the IMF prescriptions for Indonesia
would be efficacious in overcoming the economic crisis.

"Not all of the IMF terms should be met. The Indonesian people
know better (than outsiders) about their economic problems,"
Uppal was quoted by Antara as saying at a seminar in Yogyakarta.
(emb)

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