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Indonesia mulls US$1b in boost to IMF
Publication Date : 29-06-2012
Indonesia will pledge up to US$1 billion to boost the resources of the International Monetary Fund (IMF), following moves from other emerging economies at the G20 meeting in Los Cabos, Mexico.
The government was currently discussing the plan internally, Finance Minister Agus Martowardojo said yesterday.
"This move is to show our commitment as part of the global community to strengthen world financial institutions, such as the IMF," Martowardojo said after a plenary session of the House of Representatives in Jakarta.
The plan reflected the nation’s financial stability and its ability to aid the Washington-based lender of last resort, as the IMF has been struggling to help other nations struck by the current global financial downturn, Martowardojo added.
Indonesia was a recipient of IMF loans in the aftermath of the Asian Financial Crisis in 1997-1998. The “structural adjustment” programmes that the IMF required Indonesia to implement to receive loans dramatically worsened the nation’s economy. Indonesia repaid its the loans in 2006.
At the IMF’s meeting in April, representatives of Southeast Asia’s economies, including those from Indonesia, were signalling support for efforts led by the Bretton Woods institutions to bail out ailing economies following the crises in the US and Europe.
The value of Indonesia’s contribution, however, was not made public until yesterday.
"We don’t have the exact figure yet, but I think it will not exceed US$1 billion … the funds will come from part of our foreign cash reserves," Martowardojo said.
Indonesia’s move follows those made by other emerging economies, such as the BRICS grouping, which pledged money to the IMF as it co-funds bailouts to debt-ridden Greece, Ireland and Portugal.
During the G20 meeting, China unveiled a commitment to contribute $43 billion to the IMF’s firewall against fallout from Europe’s debt crisis. Russia, India and nine other countries made similar commitments, bringing the IMF’s total funding commitments up to $456 billion, on top of lending reserves of $380 billion.
The leaders of the so-called Brics grouping of Brazil, Russia, India, China and South Africa said in a joint statement that the pledge was made as they were expecting that the IMF would fully comply with the reform agenda agreed to in 2010, which would give the grouping a bigger say in the IMF’s operations, such as an increase in voting rights commensurate with the size of their economies.
The reform agenda has been stymied since several nations, including the US, have yet to ratify it.
Emerging economies have been reluctant to commit to more funding for the IMF due to the delayed reforms, which are needed to give developing nations a greater voice in the organisation.
As a member of the IMF, Indonesia pays an annual subscription according to the size of its gross domestic product, which is adjusted every five years.