Toeing to IMF conditions

The new agreement between the Indonesian government and the International Monetary Fund is an improvement on the previous two. But is that enough to ensure compliance by the Indonesian government where it was lacking before?

The new agreement's provisions to allow continued fuel, rice and soybean subsidies, and so help protect the poorest Indonesians from the shock of economic restructuring, are worthwhile. ...But these provisions never were the stumbling block to Indonesian compliance.

This time the pressure on President Soeharto's government to comply will be greater. The Indonesian economy has deteriorated further. The IMF has withheld its second US$ 3 billion installment of aid because of Indonesia's failure to meet earlier agreed conditions, including dismantling cartels and reforming the banking and legal systems.

Already there are signs that delay in reforming the banks has made a bad situation worse, giving majority shareholders time to cash out before being held responsible for the banks' debts. The delayed IMF payment will not now be made until there are clear signs of compliance with the latest agreement.

--The Sydney Morning Herald