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Indonesian Group Slams IMF, World Bank

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Agence France Presse
August 31, 1999

Jakarta - An Indonesian group Tuesday slammed world bodies including the International Monetary Fund (IMF) for failing to sound the alarm over an 80-million-dollar bank scam, despite closely monitoring the Indonesian economy. The IMF, World Bank and the Manila-based Asia Development Bank "must bear some of the responsibility for the Bank Bali scandal," said the International NGO (non-governmental organisation) Forum on Indonesian Development. The scandal revolves around Bank Bali's payment of 80 million dollars as a "commission" to a company owned by the then deputy treasurer of the ruling Golkar party.


The massive sweetener was designed to ensure the recovery of loans owed to Bank Bali by three banks closed down by the government. Golkar has denied it was used to party bankroll President B.J. Habibie's re-election bid. "This scandal occured during the bank's recapitalization (programme) which is part of the IMF bailout package," the NGO group said in a letter to executives of the three bodies, whose loans are saving Indonesia from financial collapse. "Clearly, the WB, IMF and ADB have failed to properly supervise the use of the loan."

The IMF and other donors gave a 44-billion-dollar aid package to salvage Indonesia's battered economy in December 1997, a large portion of which goes towards funding a costly banking recapitalization programme. The NGO organization demanded the three bodies immediately delay or halt further aid disbursements until a new Indonesian government is formed following June's parliamentary election. Bank Bali's disgraced former president Rudi Ramly has claimed the "commission" was necessary as he had spent a fruitless nine months trying to retrieve the loans, worth some 133 million dollars, from the Indonesian Banking Restructuring Agency (IBRA).

Three officials at IBRA, which was set up under the IMF-led bailout programme, are under police investigation over their alleged involvement. The World Bank's deputy Asia-Pacific president, Jean-Michel Severino, and resident country representative Mark Baird said Saturday they had only learned of Bank Bali's problems with the IBRA on July 31. Baird warned last week the World Bank might suspend its support for the Indonesian economy unless the Bank Bali case was resolved rapidly.

The IMF's Asia-Pacific director, Hubert Neiss, said on Saturday: "This scandal has to be cleared up as quickly as possible ... it shouldn't take weeks and weeks, it should take maybe two or three (weeks)." And Shoji Nishimoto, the Asian Development Bank's director of programmes, said the scandal was "very disappointing," echoing calls by Baird and Neiss for a thorough inquiry. "It affects all of us because the IMF, the World Bank and the ADB have been supporting the difficulties of the (Indonesian) government," he told CNN Monday. But the NGO forum accused the three multilateral bodies of failing to live up to their rhetoric on the case. "Baird even said that his earlier threat was only meant to push the government to resolve the case swiftly and satisfactorily," Binny Buchori, one of the NGO forum's leaders, was quoted as saying by Monday's Jakarta Post.


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FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.