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Down to Earth IFIs Update

No. 8, September 2000

Few Changes in New Ramli deal with IMF

The IMF Board in Washington, USA, approved on September 7 the disbursement of another US$400 million, following the re-negotiation of the IMF deal with new Economic Minister, Dr. Rizal Ramli.

However, IMF Representative in Jakarta, John Dodsworth noted that the new Letter of Intent (LoI) would essentially be the same as the one signed by the government on July 31, except for the stipulation of a 10-point economic program. The money is due to be released the third week of September, but the West Timor situation (see below) may affect this.
(Antara, September 7; Dow Jones Newswires, September 7)

The main changes to the July 31 deal are:

  1. PRIORITIES - Inclusion of Dr. Ramli's 10 point list of economic priorities;
  2. MORE DEBT - Pledge to INCREASE (!) the support from multilateral organizations, such as the IMF, World Bank, Asian Development Bank;
  3. REDUCING SUBSIDIES - Commitment to reducing fuel and electricity subsidies in October 2000;
  4. FASTER PRIVATISATION - Agreement to accelerate privatization of state-owned enterprises; (See LoI for full list)
  5. NO CAPITAL CONTROLS - The Indonesian Government (GoI) will abide by the law on foreign exchange management and keep an open capital account - allow free movement of investment, capital flight and currency in and out of Indonesia;
  6. AGRICULTURE IN HANDS OF WORLD BANK AND ADB - World Bank and ADB will now take the lead in the discussions on agriculture issues;
  7. DEBT CONCERN - The GoI is concerned over the country's high level of debt and will be examining ways to reduce the high debt burden;
  8. NATURAL RESOURCES - Agreement to ensure sustainable development of natural resources;
  9. LONGER REVIEW PERIOD - The agreement will be reviewed after three months, rather than the previous two-month cycle, and will run for a total of six months rather than 4 months previously.
It would seem there are a number of potential contradictions in the agreement. For example point two - the pledge to increase support for IFIs heavily conflicts with point seven - the commitment to be 'concerned' about Indonesia's debt burden. Further point 8, contradicts with the entire agreement and could be difficult to reconcile with the present GoI developmental strategy. The new deal is also unlikely to bring any optimism to the 50% of Indonesia's population that have an even chance of falling into poverty this year according to the World Bank in Jakarta.
The new IMF Agreement is available at:

World Bank Shaken by Bomb

The Jakarta Stock Exchange bomb that killed 15, rocked the World Bank offices in Jakarta. The Bank officies are on the 12th Floor of the same building. The Bank has made no public statement.

World Bank Chief warns Indonesia on militias as GoI seeks extra US$ 1.2bn in loans

The October 16-18th CGI Donor meeting on Indonesia was thrown into question when the Chair, the World Bank, wrote to Indonesian President Abdurrahman Wahid warning that continued financial support may be linked to the success of its efforts to quell militia groups in West Timor. The letter came direct from WB President James D. Wolfensohn. In a related development, Indonesia's chief economics minister, Dr. Rizal Ramli, has said the government would seek $1.2 billion in loans from the World Bank's IDA. This is a significant increase from the US$1.5bn lent to Indonesia in the whole of 2000. Ramli said he would meet with the World Bank at the end of September to discuss possible new loans.
(World Bank Development News, 11 September; Washington Post, September 12, 2000)

Czech Police And Army Get Ready For IMF-World Bank Annual Meeting

The Czech Interior Ministry will have 11,000 police officers on duty for the IMF/World Bank Annual Meetings at the end of September, with several thousand troops in reserve. Schools and theatres will close. The 10-day meeting is expected to attract up to 16,000 officials and delegates and 20-50,000 protestors. On the official agenda are IMF evaluation; follow-up to the G8 discussions on financial architecture; the role of the IMF; the role of the World Bank in middle-income countries (including Indonesia) and a review of the Comprehensive Development Framework. There will also be a programme of seminars titled 'Making the Global Economy Work for Everyone'.
(New York Times and the International Herald Tribune, 12 September)

This is an opportunity to protest and/or lobby IFIs see factsheet 7

See also:

NEW World Bank Website for Indonesia

The World Bank in Jakarta has a new site with a List of Ongoing Projects and Projects in Pipeline
as well as Project Documents

Much-criticised IMF sees watchdog office by April

A watchdog office for the much-criticised International Monetary Fund will be up and running by next April, but the Fund wants tough restrictions on what the new evaluation agency will be allowed to do. IMF documents said the new Independent Evaluation Office should not investigate active IMF lending programmes to member states or look at policies under active discussion by the IMF board. The World Bank, the IMF's sister organisation, already has an independent assessment unit, which earlier this year accused the Bank of ignoring its own guidelines when it approved a controversial resettlement loan to China. China refused to accept new conditions and announced it would fund the project without World Bank help. The IMF said it was also asking members of the public to comment by e-mail on its proposals for an evaluations office.
(Reuters, August 20)

Comments to IMF, Jakarta, Josh Felman

New report slams Bank/Fund corruption agendas

The World Bank and IMF are urged to rethink their approaches to anti-corruption work in a new briefing. Published by the Corner House, a UK-based research and solidarity group, the briefing states that: "corruption is increasingly cited as a reason for withholding foreign aid or debt relief.' The 24-page report marshals many disturbing statistics about corruption, and the roles of the World Bank and IMF in fostering or abetting it. Privatisation processes have often "been accompanied by widespread corruption". Privatisation is a component of 70 per cent of World Bank adjustment loans and 40 per cent of sectoral adjustment loans. Despite the fact that the Bank uses International Competitive Bidding for most contracts, the briefing argues that transnational companies and borrower governments are able to distort the system to their advantage. One means is using the specialised lobbying and consultancy firms often employing ex-Bank staff that have grown up around the Bank and Fund.

The report also urges the World Bank to:


Committees to review selection of IFI heads

The Boards of the IMF and World Bank have each established working groups to review the processes for selecting the Managing Director and President of their respective institutions. The process has come under criticism in recent years over a lack of transparency and for the fact that the G7 always chose the Presidents of IFIs. The Executive Boards will report to their Boards of Governors at the September Annual Meetings. The Boards are not likely to seek external input into the process. Details of directors in the working groups are on the Fund website:

New 'News and Notices for IMF and World Bank Watchers'

Globalization Challenge Initiative has started a quarterly publication which provides timely and in-depth analysis of the organisational structure, the policies and the lending operations of the IMF and the World Bank. News and Notices aims to demystify the role of the two institutions in the globalization process. To subscribe, e-mail a blank message to
You can reach the list owner at

New collaborative Web plan

The Bretton Woods Project and other organisations have been discussing a new collaborative website to assemble documents and links on World Bank related policy issues. It will focus in particular on the roles of the World Bank as a "knowledge bank" - a focus point or gateway to research related to poverty and development issues. The site will contain original material discussing the knowledge bank, video clips of activists questioning the Bank's role, and up-to -date links to specific pages and documents on key NGO and research sites. To function well, the initial site will need feedback and co-operation from a wide range of organisations. Contributions from Indonesian NGOs are very welcome.

WB Thematic Paper on Natural Resources Management

As part of the World Bank Environment Strategy Consultation a new thematic paper on natural resource management has been released.

NGO Forum on the ADB

For further information on the NGO Forum on the ADB contact: Takahario Nanri.

This IFI update is published by Down to Earth, the International Campaign for Ecological Justice in Indonesia.

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