WB admits errors over RI economy

JAKARTA (JP): World Bank chief James Wolfensohn admitted yesterday that his organization had "got it wrong" and been over- optimistic about Indonesia's economy before it sank into crisis last year.

But he said Indonesia's lack of confidence in its own future had contributed to the devastating extent of the crisis and that the country must address a raft of issues itself in order to recover.

"I think we got it wrong, along with a lot of people," Wolfensohn told prominent government critics and activists who said he had failed to anticipate the crisis which has crippled the country's economy.

In the rare meeting, the activists bombarded Wolfensohn with criticism over the way the World Bank had dealt with the Indonesian economy.

Former editor of the defunct Tempo magazine Goenawan Mohamad, economist Kwik Kian Gie, former environment minister Emil Salim, talk show host Wimar Witoelar, and social observer Mochtar Buchori were among the well-known figures who attended the meeting yesterday.

They chided the Bank's past argument that Indonesia's economic fundamentals were strong; arguing the rapid collapse of the "miraculous" achievement disproved the bank's theory.

The International NGO Forum on Indonesian Development issued a statement urging the World Bank to include dimensions such as politics, human rights and law enforcement in considering assistance to Indonesia.

"Now all those achievements that we gained through the hardship and sacrifice of our most vulnerable people have evaporated just in a few months," the statement said.

Wolfensohn said, "I was caught up in the enthusiasm of Indonesia. I am not alone in thinking 12 months ago that Indonesia was on a very good path.

"But there was no prediction then of an 80-percent drop in the currency or a reversion to poverty of the levels that could happen if this thing's not sorted out.

He said the issue facing the country now was "life and death," adding the best the World Bank could do in the situation was to "buy you time by coming in with intelligent programs."

The rupiah has lost some 80 percent of its value against the U.S. dollar during the crisis, which has sent prices soaring, caused massive layoffs and sparked riots.

It has also exposed the country's massive foreign debt burden, which the nation is now largely unable to service because of the currency devaluation. The non-bank private sector is alone estimated to owe up to US$65 billion.

"I had no idea when I was here that there was 65 billion, or whatever the number is, of unhedged dollar borrowings and I don't think the Indonesians knew," Wolfensohn said, adding the debt could possibly have been serviced at the exchange rate prevailing before the crisis but not at current levels.

However, other factors had contributed to the extent of the rupiah's slump.

"It's driven by Indonesians who have no confidence at this moment in their own future and in the currency," he said.

"At the moment, I think, we are looking at the worst moment. There is an unease which you all have to sort out which is exacerbating your problem.

Wolfensohn said Indonesians must also address corruption in their country and that the World Bank's role to that end was limited, though it had tried to help eliminate graft here through the easing of subsidies and monopolies.

"Corruption is an economic problem but what I can't do is reorganize every country, so I hope you'll solve the problem yourselves," he added.

The activists suggested the country would be better off without help from his organization as it had continually supported what they called a corrupt political structure.

But Wolfensohn said such a response would be unproductive, adding: "The alternative we could say is that we give you nothing'... but that would not be helpful..."

He added that the World Bank must avoid interfering in Indonesia's internal politics, saying such matters should be left to the Indonesian people.

There are increasing calls for political reform here, including demands that President Soeharto step aside, as the crisis deepens.

Some activists told The Jakarta Post that they had given Wolfensohn a clearer picture of the people's feeling toward the government.

"I think for the first time World Bank heard what the feeling is among the people regarding this regime," Mochtar Buchori said.

He said that the people really wanted to see a change in the government and that the World Bank should "distance itself" from the government.

Wimar said that the meeting was significant as the messages from the people had been able to get across.

"All these sixty people... all the top thinkers of the country got together and somehow had the same voice which is the voice of disenchantment of the people with the government," Wimar said. (byg)