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IMF reignites debate over Indonesia’s nickel export ban
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The seal of the International Monetary Fund (IMF) is seen outside of its headquarters in Washington, DC, on April 7, 2021.
(AFP/Mandel Ngan)
The International Monetary Fund has recommended that the Indonesian government phase out its policy of mineral export bans.
A statement published on Monday alongside the IMF’s latest Indonesia country report notes that policies should be based on "further analysis of costs and benefits and calls for considering phasing out export restrictions and not extending the restrictions to other commodities".
“The increasing use of trade measures and industrial policies may destabilize the multilateral trade system”, the international financial institution added.
The IMF directed its criticism not squarely at Indonesia but generally at countries throwing spanners into the works of the global economy when it noted that trade uncertainty had escalated to record levels since 2018 and was weighing down investment and growth in affected countries.
As a result, there was a “growing risk of the geoeconomic fragmentation” driven by unilateral trade measures, such as restrictions on the export of critical raw materials or technology.
The IMF, which promotes economic liberalization, also took issue with subsidies, noting that they may help to address market failures but warned of “a disorderly subsidy race” and “discriminatory trade provisions” that could lead to costly countermeasures and harm efficiency by driving a wedge between supply and demand.
Specifically, the statement notes that, “while some countries may derive strategic advantages in selected sectors, significant economic costs are very likely incurred on aggregate”.
