Indonesian MPs: write-off IMF loans

24 July 2002

On 5 July, one hundred members of the Indonesian parliament wrote to the heads of the IMF and World Bank to complain about these organisations’ role in their country. The MPs complained that “macro-economic shocks in avalanche proportions had hard hit the Indonesian economy, particularly since 1997”. “The question as to who should be made accountable for the whole disastrous situation needs to be determined”.

The MPs made clear their feelings: “It was principally due to the obsequious support of the IMF to an extremely corrupt and incompetent economic regime which made that regime viable and powerful. The IMF has been fully cognizant and therefore condoning the extensive plundering of the loans provided under the auspices of IMF as reported in your internal documents and acknowledgements”.

“The IMF forcefully implemented disastrous orthodox macroeconomic policies against its consistent threat to delay schedules of funding for its conditional balance of payments and budget loans. These policies triggered deeper economic recession and monetary collapse by advising Bank Indonesia to raise the interest rates to extreme heights at times even exceeding 60 per cent per annum and requiring adoption of complete free foreign exchange regime and floating exchange rate system. The consequence was a definite huge outward flow and draining of capital and ultimately causing complete collapse of the banks in the country”.

They concluded: “IMF has exploited the seeming ignorance shown by the Indonesian Parliament as if in violation of the Indonesia Constitution, it would not require ratification of all the loans provided under the auspices of IMF“. Thus the parliamentarians request that “to safeguard the interest of our people and the economy, and to uphold our Economic Sovereignty, we cannot do otherwise but to beseech IMF to write-off all the loans provided so far under its auspices”.

Full letter