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East-West Debt october 2003 news, update : INDONESIA
Indonesia: an end to IMF dependence Indonesia may stop borrowing from the International Monetary Fund (IMF) when its current agreements expire at the end of this year. According to the Jakarta Post, the Indonesian government plans to end the program with the IMF after being mandated to do so by the People's Consultative Assembly. President Megawati Soekarnoputri said at a meeting of her economic advisory team, attended by one of the country's key donors Japan, that she was in favour of the move. The president said the relationship with the IMF had to be ended in a friendly fashion in order to ensure lasting support from other countries and institutions. Some government officials have been highly critical of Indonesia's $5bn five-year loan program with the IMF, claiming its policies threatened the nation. The Fund is currently reviewing its program with Indonesia, which if positive would allow the release of $1.8bn to the country this year. The Fund praised the country, adding that economic growth in 2004 could be more than the government's forecast of 4-5 percent. An end to lending from the Monetary Fund is expected to increase Indonesia's borrowing costs with other creditors. Indonesia made indications of its plans to free itself from the economic policies proposed by the international community earlier this year. Indonesia's decision to live without the IMF's help came after the country won $2.7bn of loans from the Consultative Group on Indonesia. The Fund launched its aid package for Indonesia amid the Asian financial crisis in 1997. The country has voiced its protests over the conditions the IMF attaches to its loans, arguing that it exposes the domestic market too heavily to inter-national competition. In 1998, riots over price rises speeded up the downfall of Indonesia's autocrat Suharto. Analysts said improved foreign exchange reserves and a more stable currency may have given Indonesia the confidence to give up the support coming from the IMF.
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