Ridwan Max Sijabat, Jakarta – The World Bank and IMF should review their financial aid to Indonesia to show a serious commitment to fighting corruption and poverty; otherwise they must stop making new loans to the country, say anti-globalization activists.
The International NGO on Indonesian Development (INFID) said a review was badly needed because the majority of the foreign loan money was embezzled or used to finance projects that infringed on human rights.
"If the World Bank and IMF are committed to the proposed internal reform, they have to review all the credit given to Indonesia. They know their loans have been partly misappropriated. They should come up with new mechanisms to ensure the money reaches the people," INFID executive director Donatus K. Marut told a media conference here Wednesday.
He urged the United States to use its veto power to block fresh credit to Indonesia and promote transparent investigations into irregularities in the use of World Bank and International Monetary Fund money.
The United States has 15 percent of the votes in the IMF, allowing it to veto any decision, while 45 sub-Saharan countries have only two members on the Fund's board and 2.1 percent of the votes.
"To help Indonesia focus on poverty alleviation, the United States should take the initiative to persuade other stakeholders in the two institutions to write off Indonesia's foreign loans, which have reached US$135 billion," Marut said.
He said the two international institutions' commitment to carrying out internal reforms was an "illusion" because changes to their decision-making processes had failed to produce any significant progress.
In his opening address to the World Bank-IMF meetings in Singapore, World Bank president Paul Wolfowitz said his institution was committed to creating good governance and fighting corruption in disbursing loans to recipients, so as to help alleviate poverty.
Kunibert Raffer, an INFID board member and a professor at Vienna University, said Indonesia should have used the meetings to ask for a cut-off of its loans. He said Indonesia had once been cut off by the WB and IMF, which later resumed disbursing new loans to the country.
INFID also lashed out at Finance Minister Sri Mulyani Indrawati's address to the World Bank board, saying her speech did not touch on the main problem.
In her speech Tuesday, the minister criticized the World Bank for lacking transparency in its operations and called on it to be a "partner, not a preacher" in eradicating corruption in Indonesia and other developing countries.
Marut said Sri Mulyani's address expressed her personal point of view as an economist, and not Indonesia's stance on its troubled loans from the World Bank and IMF.
"The minister should have spoken not only about the 'preaching' but mainly about the troubling debts that have caused widespread poverty in Indonesia. On behalf of the government, she should have asked the two international institutions to write off their loans, or a part of them, as they did with Algeria last year," he said.