NGOs File Civil Lawsuit Against Govt’s Pro-IMF Policies

1 March 2004 by Urip Hudiono

Three non-governmental organizations filed a lawsuit against President Megawati Soekarnoputri on Thursday at the Central Jakarta District Court for issuing Presidential Instruction No. 5/2003 on an economic policy package with International Monetary Fund IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
(IMF) monitoring.

In their suit, the plaintiffs — the Indonesian Debt Watch Foundation (DWI), the Indonesian Independent Network of Civil Society for Development Transparency and Accountability (JARI) and the Jakarta Citizens Forum (Fakta) — argued that by issuing the presidential instruction, Megawati had violated the People’s Consultative Assembly Decree No. VI/2002, which mandates the government to end all agreements with the IMF by the end of 2003.

“The instruction can also be considered deception of the public as it is essentially another agreement with the IMF without consent from the House of Representatives,” said head of DWI, Arimbi Heroepoetri.

She said their main concern was that because of the presidential instruction, providing the legal basis for Indonesia’s post-IMF monitoring program with the Fund, the government had neglected the people’s welfare and handed over the country’s economy to “neoliberal forces” by continuing its relationship with the IMF.

According to the plaintiffs, the IMF’s structural adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

programs, which include strict budgeting policies, good governance, anticorruption measures, liberalization of the monetary and trade sector and privatization of several ailing, inefficient state companies had worsened the country’s economic
condition and social welfare, as evidenced by the increase in state debt, the increased unemployment and further destitution of farmers and other workers.

The plaintiffs also said the economic recovery programs hurt the general public. They said the people have seen their subsidies cut in order to pay off the country’s debts to foreign governments and agencies.

“Is it fair to the public when the debts of mismanaged private companies become state debts?” Arimbi added.

In their primary plea for the case, the plaintiffs requested the court to declare Megawati guilty of violating the law by issuing the presidential instruction.

They also demanded the court to annul the instruction and order her to comply with the Assembly’s decree in drafting economic policies favoring public social welfare in accordance with the Constitution without the involvement of the IMF.

Megawati must also publicly apologize to the Indonesian people and pay compensation of Rp 166.75 million (US$19,851) for the plaintiffs’ expenses in filing the suit as well as the court’s administrative fees, if found guilty.

In their subsidiary plea, the plaintiffs said that if the court had a different legal opinion about the case, it should still consider the public’s sense of justice, known by the Latin legal terms ex aequo et bono.

A member of the plaintiffs’ legal counsel team, Tubagus Haryo Karbyanto, said that after filing the lawsuit, it usually took three to four weeks before the court finally announced whether the case would go to trial or not.

“The court has to legally verify the suit and appoint a panel of judges for the case first,” he said.

Source: The Jakarta Post. February 6, 2004.



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