Uncertainty crippling economy

Uncertainty crippling economy

The Indonesian government once again demonstrated its
determination to cover up corruption in the highest levels by
invoking the banking secrecy law as a legal pretext for not fully
disclosing the results of the PricewaterhouseCoopers audit of the
transactions relating to the Bank Bali scandal. A similar excuse
was used in June to protect former attorney general Andi M.
Ghalib from prosecution on allegations of corruption.

The government's stubborn refusal to lay bare all the
pertinent facts of the Rp 546 billion (around US$80 million)
scandal, despite the relentless demand for full disclosure from
the House of Representatives, all those concerned by a seemingly
pervasive abuse of power and multilateral creditors, simply
reflects its total disregard of the principles of morality,
ethics, transparency and accountability.

This scandal negates all the official campaigns and new laws
against corruption, collusion and nepotism, and makes it
imperative to move forward the presidential election from mid-
November to early October in order to replace the Habibie
administration. The longer Habibie retains the presidency, the
greater the uncertainty and tension, which is already crippling
the economy, will grow.

One should not be so surprised by the highly orchestrated
attempt to cover up and reduce the magnitude of the scandal,
which, according to the findings of the independent auditor,
involved House members, senior public and political party
officials and members of President B.J. Habibie's inner circle.

But given the devastating impact of the high-profile case on
the economy and on investor and creditor confidence in the
country, it is alarming to see how Habibie has rashly employed
all the tricks at his disposal to cling to power, without
consideration to the damage done to the economy.

The refusal to fully disclose the audit results virtually
nullifies the government's widely hailed move to appoint an
independent auditor in the first place, admittedly a move it made
only after some pressure from the International Monetary Fund.
Indonesia may be the first country in the world willing to accept
the indignity of allowing a foreign auditor to poke its nose into
its central bank, the fortress of its monetary system. The nation
was forced to suffer this humiliation because its government has
such low credibility and integrity in the eyes of the
international community.

Now the great sacrifice of appointing a foreigner auditor, a
move aimed at regaining international confidence, is at risk of
being wasted by the government's refusal to fully make public the
findings of the audit.

The IMF has so far been true to its word that it would delay
disbursing further aid to the country as long as this scandal
remained unresolved, and the World Bank and the Asian Development
Bank will surely follow in the IMF's steps. Though economic
ministers attempted to play down the impact of the aid
suspension, this punishment will surely hurt the state budget
because the three multilateral agencies account for about half of
the $43 billion bailout of Indonesia.

And no amount of diplomacy will be effective in securing the
release of the $23 billion portion of this bailout which was
committed by government creditors. This money will be extended
only after the portion pledged by the three multilateral
institutions is disbursed.

The IMF and other multilateral institutions were not
exaggerating when they warned last month of a disaster for
Indonesia if the politically charged Bank Bali scandal was not
properly resolved. Nor are they attempting to intervene in the
country's internal affairs, for what really happened at Bank Bali
was the daylight robbery of a huge sum of taxpayers' money at a
time when millions of people have either lost their jobs or
plunged below the poverty line because of the economic crisis.
Corruption, collusion and nepotism, the underlying causes of the
economic, social and political crises here, are fully embodied in
the Bank Bali scandal.

It is therefore most urgent now for the major reformist
political parties to put aside their own interests and join
forces to save the nation by accelerating the process of forming
a credible government that values the principles of
accountability and transparency. The longer this current
uncertainty prevails, the greater the damage to the country's
economy and the more vulnerable the next government will be to
economic, social and political instability.