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Ali Wardhana, leader of RI economic management,dies
Ali Wardhana - JPAli Wardhana, who died on Monday afternoon at the age of 87, was surely the most outstanding architect of Indonesian economic development, apart from perhaps the late Widjojo Nitisastro, who led the countryâs economic team under former president Soeharto for more than two decades
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Ali Wardhana - JP
Ali Wardhana, who died on Monday afternoon at the age of 87, was surely the most outstanding architect of Indonesian economic development, apart from perhaps the late Widjojo Nitisastro, who led the country's economic team under former president Soeharto for more than two decades.
The two prominent economists, together with several other like-minded technocrats, who were mostly educated in the US, should be credited for their great achievements in raising Indonesia from almost bankruptcy and economic ruin.
It was a great tribute to Wardhana, who mastered macroeconomic and monetary theories, that he, as finance minister, was able to tame the hyperinflation from almost 660 percent in 1966 to 85 percent in 1968 and down to 10 percent in 1969, thereby laying a stable macroeconomic foundation for the launching of Indonesia's first Five Year Development Plan.
As part of a strong economic team that gained the full trust of Soeharto, Wardhana was internationally lauded as the first Indonesian finance minister to have introduced a balanced-budget system, using development assistance (soft loans) from developed countries and multilateral development banks to cover the fiscal deficit.
Like Widjojo, Wardhana got his PhD in economics at the University of California, Berkeley. Wardhana was the dean of the Jakarta School of Economics at the University of Indonesia from 1967 to 1978, the finance minister from 1968 to 1983 and the chief economic minister from 1983 to 1988.
The tight-knit team led by Widjojo designed the economic platforms of Soeharto's first Cabinet and later managed the implementation of the whole sequence of economic policies ' from the stabilization stage to the rehabilitation stage and then the development stage.
Anwar Nasution, a former senior deputy governor of Bank Indonesia and chief of the Supreme Audit Agency, who himself was one of Wardhana's students, hailed Wardhana's perseverance and patience in convincing Soeharto of the merits of a series of economic policies he and his team championed.
Wardhana's forward-looking policy of liberalizing Indonesia's capital accounts in the early 1970s was in contravention of conventional international economic theories. But it was the open capital regime and the 1967 Foreign Investment Law that regained market and investor confidence in Indonesia, triggering big official (foreign development aid) and private capital inflows to the economy.
Another quite strategic move was the prudent fiscal and monetary management (at that time Bank Indonesia was not yet politically independent) Wardhana implemented during the more than 10 years of the oil boom period, Anwar noted at a gathering to commemorate Wardhana's 86th birthday in June last year.
The government spent the oil windfall profits well on developing basic infrastructure, such as irrigation networks that helped Indonesia achieve rice self-sufficiency in 1984, as well as building thousands of elementary and secondary schools. (vin)
