Biting the hands that help you get out of a crisis is completely unacceptable. The hands we are referring to are those of the International Monetary Fund (IMF), whose leader, Rodrigo de Rato, is visiting our country.
The question of whether the IMF did help Indonesia get out of the crisis, or whether it pushed the country deeper into crisis, is possibly overdue for examination. But it is important to judge the international lending agency fairly so that we can learn from our involvement with the IMF, and the IMF too can take lessons away from Indonesia.
To begin, let us examine the views of the IMF critics. They feel the IMF's Washington-style economic reform programs forced Indonesia to swallow bitter pills whose damaging side effects outweighed the benefits to the economy.
For example, the IMF's advocacy of the closure of commercial banks, coupled with the super-high interest rate policy, caused a loss of public trust in the banking system and cost tax payers tens of billions of dollars. We still bear the costs today.
Looking from the positive side, pills are often bitter, but we need them in order to recover. The reform programs prescribed by the IMF were the necessary pills for us to emerge from our crisis.
We cannot imagine how deep Indonesia would have plunged into the abyss if the IMF did not assemble US$25 billion in loans to save us. Without the help of the international community, spearheaded by the IMF, maybe we would not have economic growth today of more than 5 percent, along with single-digit inflation and a stable rupiah.
More importantly, we should thank the IMF for helping us topple Soeharto's authoritarian regime. The IMF economic reform package, including cutting off subsidies, resulted in widespread protests that eventually forced Soeharto to step down.
Now that we have adopted a vibrant democracy, are enjoying a more stable economy and have been able to repay all of our debt to the IMF -- until last year, we were one of the fund's biggest debtors -- we should at the least thank the IMF for its help.
For the IMF, its often problematic operations in Indonesia should teach it a lesson that it needs to review the Washington-style reform package for countries in crisis. After all, one size does not fit all.
The IMF should also conduct a study of why Indonesia has been so slow to recover from the Asian financial crisis, compared to other countries that suffered through it. The fund might need to consider local realities in each of its reform programs.
Such introspection on the part of the IMF might be useful for its current duties in crisis prevention. Although the nature of future crises may be different from those of the past, including the Asian financial crisis, experience is always useful in designing better crisis prevention programs, and better responses when misfortune strikes.
For us Indonesians, although we are now a regular member of the IMF because we are no longer a debtor, that does not mean we have to cut ties with the IMF as some nationalistic politicians are suggesting.
Working together with the IMF is necessary, especially for us to create mechanisms for good policies and strengthen our financial institutions so that we will be more resilient in the face of future troubles.
We also need to play a larger role within the IMF, which is currently pushing for internal governance reform. In this way, we will stand out as a better IMF graduate. In the future, when we are strong enough, we may be joining IMF programs not as a debtor, but as a lender extending aid to countries that need it.
