Jakarta – Indonesian legislators have asked the International Monetary Fund (IMF) to write off the country's foreign debts, including those to other donors recommended by the Fund.

The Indonesian government has a foreign debt of around US$67 billion. The debts have caused damage to the country's economy rather than helping it develop, said the legislators at a meeting with Coordinating Minister for Economy Burhanuddin Abdullah Wednesday. Burhanuddin said, "We are aware of the criticism directed to the IMF and personally I know IMF has failed in its program in various countries." He added that the IMF's failure in the 1990s caused suffering, environmental damage and social uprising.

Burhanuddin also said many of the prerequisites set by the Fund were not suitable for the conditions of the countries it was seeking to help. Based on its statute, the IMF may be involved only in macro economic and financial affairs of a country and it may not interfere in details in corporate management, he said. However, he assured the lawmakers he would see that the new Letter of Intent (LoI), expected to be completed in the next two days, would better reflect the interest of the country.

Finance Minister Rizal Ramli, who was also present at the meeting, said the IMF had made wrong diagnose in the case of Indonesia, which has to pay a heavy price by adopting high interest rate that worsened the liquidity problem for banks. "They might not do it on purpose but some said it has been their adopted method, that IMF's success ratio in developing nations is only 40 percent," Ramli said.

He added that the next LoI should focus only on macro economy and finance and it may not touch on micro economic affairs, which IMF would not understand. The IMF should not fix a time table for asset sales, and set the prices and methods of selling the assets, he said.

Legislator Permadi said the government should not go halfway in opposing the IMF and the malpractices committed by the Fund in Indonesia, which has cost the country heavily. "We can follow the example taken by Malaysia who dare to say 'go to Hell' with IMF'," Permadi said.

Earlier in the day day 50 legislators signed a statement demanding the IMF cancel the entire debts of the country.

However, Indonesia's credibility abroad depends on the IMF's disbursal of a long-delayed $400 million loan tranche, says one analyst. "So long as the IMF has not disbursed its loan, Indonesia's credibility will not improve," Umar Djuoro of the Center for Information and Development Studies (CIDES) said on Wednesday.

Earlier on Tuesday, Dipo Alam, chairman of the Indonesian team negotiating with the IMF, said the government is optimistic the IMF would disburse its loan by August as both sides have found no hurdle in their discussion on a new LOI – a precondition for the disbursement of the loan. Djuoro said the disbursement of the IMF loan is important not only because it has something to do with other IMF programs, such as the Consultative Group on Indonesia, but it will also augment the country's foreign exchange reserves.

As such, the government needs to review its policies, particularly on macroeconomy and banking to make them compatible with the IMF measures, such as on the planned acquisition of publicly listed Bank International Indonesia by state-owned Bank Mandiri, Alam said.

He added that if the government has already signed a new LOI with the IMF, it is duty-bound to implement it consistently. "So far, the government is not serious in implementing it," he said.

Alam said he fully supports the postponement until August of the loan disbursement pending developments in the wake of the special session of the People's Consultative Assembly (MPR), the country's supreme law- and policy-making body. A new president and new government are expected to emerge from the special session of the MPR early next month that is widely expected to go ahead with its motion to impeach President Abdurrahman Wahid.

"The IMF appears [to be delaying the disbursement of the loan intentionally until August] so as not to leave an impression that it is siding with the next government. This is because what the IMF will do next is a kind of its support to the government," he said. The IMF held up the $400 million loan package to Indonesia last December after the government missed several of its reform targets as stipulated in the LOI signed in September last year.