Louise Williams, Jakarta – The president of the World Bank, Mr James Wolfensohn, has conceded that the bank "got it wrong" in Indonesia, failing to predict the country's economic collapse and to prevent the growth of monopolies and corrupt practices.
Indonesian economists and community representatives confronted Mr Wolfensohn at his five-star hotel in Jakarta yesterday, accusing the World Bank of concealing the weaknesses in the Indonesian economy, manipulating poverty figures and tolerating the "routine" misappropriation of bank funds.
In a heated meeting, a group of independent economists blamed the World Bank for encouraging overconfidence by foreign and domestic investors, and challenged Mr Wolfensohn to acknowledge the bank's role in perpetuating the economic policies which contributed to the crisis.
"There is no doubt we got it wrong; the current changes have taken us surprise," Mr Wolfensohn said, before leaving for a tour of slum areas to demonstrate his support for the millions of Indonesians who have lost their jobs.
"The issue is now human, it is life and death," he said.
His visit came as one of Indonesia's largest wholesalers warned that the price of basic commodities such as rice and cooking oil would increase by 10 to 15 per cent next week, detergent and soap prices would jump by 75 per cent and imported groceries by as much as 300 per cent.
Mr Richardo Gelael, head of the Goro Batara Sakti group, said major food chains had agreed to keep prices stable for 10 days to cover the recent holiday marking the end of the Muslim fasting month. But when the period expired next Wednesday, prices would "definitely jump".
Ten towns in Java and Sulawesi have been hit by riots over the past week as angry mobs attacked shops in protest over price rises.
Mr Wolfensohn rejected claims by the economists and critics of the Soeharto Government that they had warned about growing problems in Indonesia, such as the gap between the rich and poor, corruption and monopolies.
"We were caught up in the enthusiasm of Indonesia. I am not alone in thinking that 12 months ago Indonesia was on a very good path," he said. "One thing we should have done was to try to suppress the monopolies and unfair practices."
One of the economists, Mr Rizal Ramli, accused the World Bank of manipulating poverty figures in 1990 to present favourable statistics, and of continuing to lend money to Indonesia for sub-standard development projects in which misappropriation of funds "is routine".
Forty community groups presented a statement saying the economic crisis had pushed per capita income down from $US1,100 ($1,640) in 1996 to $US600 in 1997, and the sharp currency depreciation last month meant income levels could fall to $US300 this year. The number of people living in poverty would increase by 60 to 90 per cent, close to the level of 30 years ago.
Mr Wolfensohn refused to discuss Indonesia's political system, saying he was here to examine the economy alone: "I think there is an unease you will all have to sort out that is exacerbating the problem."
But he said the 80 per cent devaluation in the rupiah, and the depreciation of shares to about 15 to 20 per cent of their pre-crisis worth was overdone.
The rupiah made gains yesterday on news that the Singapore Government would assist Indonesian banks in guaranteeing credits, but shares suffered early losses.