Robert Go, Jakarta – Indonesia should not extend its contract with the International Monetary Fund (IMF) when it expires, said National Development Planning Minister Kwik Kian Gie yesterday in a scathing attack that accused the lender of making policy demands that "complicate" matters and are "dangerous" to the country's recovery programme.
His comments once again placed the outspoken official at odds with his peers and highlighted potential cracks within President Megawati Sukarnoputri's Cabinet.
Given the other ministers' more diplomatic stances towards the Washington-based group, Mr Kwik is unlikely to spark fresh tension between Jakarta and the IMF.
But he echoed opinions held by many local economists and his accusations showed the level of domestic resistance against the IMF's loan programme and its preconditions.
The country's first economic czar under former President Abdurrahman Wahid told reporters: "Without the IMF, Indonesia could still fuel its economy. The IMF should engage in a dialogue aimed at ending its contract.
"Their contract will soon expire. If they can discuss things in a nice way, that will be fine. If they do not want to do so, there should be no effort to extend." The IMF contract with Indonesia ends next year. He added: "What is it doing here? Its policy prescriptions simply complicate the situation."
It was his second attack on the IMF in three days. During a speech given last Saturday, Mr Kwik – who is a close confidante of Ms Megawati and a deputy chairman of her Indonesian Democratic Party of Struggle – described the IMF as Indonesia's new colonial master, and added that the country has no control over its economic and political fates any more.
The IMF, and its rescue plan worth around US$43 billion, entered Indonesia at the beginning of its economic crisis in 1997. Mr Abdurrahman's government agreed to a US$5-billion, three-year loan scheme in 1999, and Ms Megawati's Cabinet secured a one-year extension.
When Mr Abdurrahman's government failed to achieve a number of pledged reform measures, the lender suspended its programme which damaged investor confidence. One of Ms Megawati's first moves after assuming office last July was to bring back the fund's loan scheme and to include "IMF-friendly" economists as ministers.
With Indonesia's economy showing some signs of recovery, other senior economic ministers seemed happy enough not rock the boat.
Mr Mahendra Siregar, a key aide to top economic minister Dorodjatun Kuntjoro-Jakti, told The Straits Times: "The IMF is always open to discussions with the government. I don't think the present situation would exist without IMF participation.
"The reality is that the IMF programme is seen as a benchmark by other lenders, countries and investors. Another reality is that the government has a successful, very business-like relationship with IMF officials."
Despite assurances that top officials accepted the need for IMF presence now, Mr Mahendra declined to say if Jakarta will seek another extension for the programme.
But in its most aggressive effort so far to clear its books of bad debt associated with the 1997-98 crisis, Indonesia yesterday announced a drive to sell US$17 billion of bad loan portfolios.
An AP report quoted Mr Syafruddin Temenggung, head of the Indonesian Bank Restructuring Agency, or IBRA, as saying that the agency was offering for sale a select group of 2,500 loans, many with attractive collateral such as companies or plantations. He said the government hopes to recoup about 20 per cent to 30 per cent of the loans' original value.