WB admits errors over RI economy

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)