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Thursday, 15 August, 2002, 14:45 GMT 15:45 UK
IMF policies are "generic trash"
Aftermath of Jakarta riots
Riots started after fuel subsidies were cut
Indonesia's former finance minister has accused the International Monetary Fund (IMF) of mishandling the country's bailout five years ago and warned Argentina off accepting "generic trash" policies.

Rizal Ramli, who helped negotiate the deal with top IMF officials in 1998, told the BBC's World Business Report the lender was incompetent.


They pushed the Indonesian government to increase the oil price, which ended up in a major riot in Jakarta in which hundreds of people were killed

Rizal Ramli
"What they do is destabilise, the IMF does not have the professional competence," he said.

At the time, the Indonesian bail-out was one of the Fund's biggest projects.

The resulting economic policies that were implemented in exchange for aid caused widespread rioting in May 1998 that left scores dead.

"In Argentina, I see a repeat of what happened in 1998," he said.

The IMF has been coordinating over $5bn in foreign loans given to Indonesia since the 1997-1998 Asian financial crisis.

Questionable policies

Mr Ramli said IMF claims that it did not prescribe policies were rubbish because they "draft" the documents.

Indonesia's former finance minister Rizal Ramli
Ramli: IMF claims are "crap"

"They pushed the Indonesian government to increase the oil price, which ended up in a major riot in Jakarta in which hundreds of people were killed and thousands of buildings were destroyed," he said.

Mr Ramli warned Argentina and Brazil not to take the IMF's advice because of its lack of accountability and transparency.

"If a top IMF official makes the mistake here of destroying the Indonesian banking sector by pushing the closing of the banks, he will be promoted to advise another country," Mr Ramli said.

Banking collapse

The IMF, in its regular review of Jakarta's economic progress last week, said more reforms were needed including rebuilding its banking system and restoring investor confidence.

It was the near collapse of the banking sector during the economic crisis and its costly rescue that helped create some of Indonesia's current fiscal problems.

Argentina and Uruguay have both been forced to close their banks because of their countries' financial crises - although without IMF intervention.

"The one (official) that helped push Turkey and Russia down is going to try some other country with the same generic trash," he said.

Budget due

The Indonesian government will unveil its draft state budget for 2003 on Friday, which is expected to include further spending cuts to fund interest payments on its foreign debts.

The combined foreign and domestic debt stands at about $150bn, almost equal to gross domestic product.

Opposition to the IMF has been mounting in Indonesia, both within and outside the government, over its policies.

A week ago Indonesia's top legislative body recommended not to extend or replace the current IMF programme when it expires.

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Indonesia's former finance minister Rizal Ramli
"In Argentina, I see a repeat of what happen in 1998."
See also:

12 Jun 02 | Business
03 Jun 02 | Business
25 Apr 02 | Business
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