[stop-imf] Indon's US$80B Debt: IMF Urged to Swallow Its Own Medicine (fwd)

[Robert Weissman]

Asia Times, June 25, 2001
IMF urged to swallow its own medicine

JAKARTA - The International Monetary Fund (IMF) should take over the
Indonesia's US$80 billion debt that was incurred as a result of its bad
advice on economic recovery measures, according to Jubilee International.

The IMF played a bigger role in ruining the Indonesian economy than former
president Suharto and his children, Ann Pettifor of Jubilee International,
told the press. Jubilee International is an organization campaigning for
the reduction of poor countries' debts.

Indonesia's economic crisis worsened mainly because the Washington-based
financial body mistreated the country's banking sector, she said.
Indonesia's economic crisis was triggered by the advice IMF officials gave
the Indonesian government on November 1, 1997, she said.

At the time, the Indonesian government was instructed to close down 16
banks on short notice without proper preparations. As a result, the
monetary crisis deepened and the country's total debt swelled to $150
billion, she said. Moreover, according to Pettifor, the IMF played its
role in Indonesia in violation of the principles of the rule of law
because it acted as "witness, plaintiff, judge, and jury in its own
court". The Fund also made its decisions at its own descretion.

Pettifor said the IMF always wanted the countries that had sought its help
to carry out free-market principles such as abolishing all forms of
protection

and government subsidies while the Fund itself was at the same time
enjoying protection everywhere.

Therefore, she said, the Indonesian government should follow the example
of

Nigerian President Obasanjo who had called for an end to his country's
trial by "a Kangaroo court". The Nigerian leader was referring to a
situation in which the IMF was always acting as the innocent party while
the blame for anything that went wrong in a country's economic recovery
effort was always

put on the government concerned. Obasanjo's attitude roused the sympathy
of

many countries in the world and as a result Nigeria won debt forgivennes
from its creditors, she said.

Pettifor also said expenditures in Indonesia's annual state budget were
unfair in composition as about $9 billion was spent on the servicing of
the

government's overseas and domestic debts. The amount meant each Indonesian
citizen had to pay $45 a year, while they each were receiving only $2
worth

of health services, she said.

Meanwhile, Indonesia's Coordinating Minister for Economic Affairs
Burhanuddin Abdullah has said legislators will continue to discuss the
amendment of the

law governing Bank Indonesia, based on the government's new agreement with
the IMF. "The amendment will proceed. The IMF did not ask that it be
cancelled. It only proposed a postponement," Burhan said on the weekend.

The amendment will accommodate the government's new agreement with the
IMF, he said.

Senior economic observer Muhammad Sadli said the IMF has asked the
government to postpone the amendment of the central bank law by six
months, promising that its review team would immediately come to Jakarta
to continue talks with the government. "From a reliable source, I heard
that the IMF had offered a new compromise by proposing [the six-month
postponement]'," he said.

Burhan earlier said the government had likewise offered the IMF four
options on the amendment of the central bank law. The IMF has made the
issue a requirement in the review of the IMF Letter of Intent, upon which
the disbursement of a $2.8 billion loan to Indonesia is hinged.

"We are still discussing the four options. The IMF also needs time to
evaluate them. I don't know when it will give a response," Burhan said.
However, he admitted that the government has yet to discuss the issue with
lawmakers.

The closed-door meeting was also attended by Finance Minister Rizal Ramli,
senior officials of the Indonesian Bank Restructuring Agency (IBRA), and
Bank Indonesia senior deputy governor Anwar Nasution.

(Asia Pulse)