June 22, 1999. "IMF 1, Democracy 0," World Street Journal.
"Making the rounds in Jakarta this weekend, Deputy Managing Director Stanley Fischer announced that any deviation from the IMF's prescription will be punished by a delay in the disbursement of bailout funds. No matter that the $42.3 billion deal was made with a banished dictator; the albatross just landed on a new neck."
March 11, 1998. Political and Economic Risk Consultancy, Ltd. A risk report.
"Prospects for real economic reform under the present government are much dimmer than the optimistic statements of Cabinet technocrats over the last few weeks would suggest. Less than three months after the signing of the revised IMF agreement, key provisions, such as the dismantling of the plywood monopoly and monopolies on the import and distribution of basic foodstuffs are proving difficult to implement.
"Economic policymaking is becoming a free-for-all in which Cabinet technocrats vie with members of the presidential family to present contradictory formulas to Suharto for dealing with the nations economic problems. Regardless of whether or not the proposed currency board is implemented successfully (we very much doubt it will be), the current government appears incapable of formulating a systematic response to the problems facing the country.
"An attempt to restore confidence in the banking system by introducing a loan and deposit guarantee scheme could be undermined by lax enforcement of the conditions imposed on protected banks.
"The continued fall of the rupiah is severely restricting the government's freedom of maneuver, with the revised budget forced upon the country by the IMF becoming unworkable almost as soon as it was announced."
Mar 5, 1998. Seth Mydans. "Indonesia Chief Falls Short on Promised Economic Reforms," New York Times.
"As a decision nears over whether to infuse billions of dollars in international aid to Indonesia, a close look at the performance of President Suharto shows a pattern of evasions and half-measures on the economic reforms he agreed to six weeks ago.
"From cars to cloves to banks to plywood, the painful austerity measures Suharto promised in return for the aid made brief appearances here. But many have disappeared again in a haze of missed deadlines, quick name changes and fiscal shuffling, according to Indonesian and foreign businessmen and economists."
Feb 17, 1998. "Bailout is failing, Indonesia tells U.S.," Seattle Times.
"Despite a $43 billion international bailout, Indonesia's crisis has failed to abate. The nation's currency, the rupiah, has remained severely depressed. The rupiah fell another 14 percent yesterday against the U.S. dollar, closing at 9,800 rupiah per dollar. At that level, few Indonesian companies can afford to import the raw materials they need to continue operating, and most are technically bankrupt because they can't afford to repay the dollars they borrowed previously.
"The Indonesian president, having evidently concluded that his country is gaining little from the conventional market-oriented reforms prescribed by the IMF, is pushing ahead with a proposal to establish a "currency board" that would rigidly fix the exchange rate for the rupiah at about 5,000 per dollar."
Feb 16, 1998. Jim Rohwer, with Tony Paul and Neel Chowdhury reporting. "Asia's Meltdown: The Risks Are Rising," Fortune.
"In what must have been a humiliating public session for him, Indonesian President Suharto personally signed a new IMF agreement on Jan. 15 as Michel Camdessus, the IMF head, looked on with arms folded. The agreement--extracted in exchange for the next slice of a $43 billion aid package--was most remarkable for the toughness of its assault on what Camdessus bluntly called "an accumulation of rigidities and monopolies."
Many of them had been accumulated by President Suharto's family and friends. Out went tax, customs, and credit privileges for the Timor "national car" project of the President's youngest son, Hutomo Mandala Putera (known as Tommy), which had allowed the Timor to undercut its nearest competitor by 30% to 50%. Out went a wheat-flour monopoly, a power plant, and a $1.8 billion coal-fired power plant that were all in the pocket of Suharto's oldest daughter, plus billions in other subsidized projects or cartel privileges that benefited the President's cronies and key ministers.
It all sounded fine on paper. But the key to whether Indonesia does or does not topple into disaster in the next few months is the level of the rupiah, and that depends crucially on whether the IMF agreement in particular and the political situation in general inspire confidence among Indonesians and investors."
Jan 7, 1998. David E. Sanger, "Aid Programs for Thailand, Indonesia Show Signs of Faltering," New York Times.
"As the United States has focused on rescuing South Korea, the emergency programs to stabilize Thailand and Indonesia have begun to unravel, raising new fears about the effectiveness of the International Monetary Fund's prescriptions for stabilizing large regions of Asia.
"At the end of December, the IMF sent President Suharto, Asia's longest-serving leader, a strongly worded letter urging his government to carry out economic changes. Members of the Suharto family and close friends of the president, who hold huge financial stakes in the country's most lucrative businesses, have sought to dilute or evade such reforms.
Nov 24, 1997. Neel Chowdhury and Anthony Paul. "Where Asia Goes From Here," Fortune.
"On Oct. 31, after lengthy negotiations, the IMF, World Bank, and Asian Development Bank finally came forward with a $23 billion aid package for Indonesia. But right up until the last minute, there had been disturbing signs that Suharto, in order to preserve his political maneuvering room and family fortunes, was trying to avoid such strict discipline. Instead he appears to have hoped that rich neighbors like Singapore, Malaysia, and Aus-tralia would provide billions of dollars to bail out Indonesia--with few strings attached. Those hopes were dashed when Singapore declared that its minimum pledge of $5 billion in aid was firmly tied to the IMF plan, which, among other things, requires Indonesia to sharply cut fiscal spending and save money by eliminating various food subsidies and import controls covering wheat, flour, and soybeans."
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