Toeing to IMF conditions

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