Former Indonesian president Susilo Bambang Yudhoyono sparked an online storm when he challenged remarks by his successor Joko Widodo that the country is still indebted to the International Monetary Fund (IMF).
In a series of posts on Twitter and Facebook, SBY said Indonesia paid off all its debt to the IMF in 2006, two years after he took office.
“We owed a total of US$ 9.1 billion and all was paid in 2006, which is four years ahead of its due date,” the former president said.
“If I don’t correct Jokowi’s statement, people may accuse me of having lied,” he said.
SBY said at that time Indonesia was enjoying strong economic growth, a healthy fiscal position and ample foreign exchange reserves.
“We had to pay off the debt with the IMF, so that we would no longer be dictated to by them,” he said.
SBY said before the loans were paid off, Indonesia had to follow IMF prescriptions in budget spending.
“I still remember, when I was a Minister of Mines and Energy, I had to “report” to donor countries which were members of the CGI forum related to the policies and plans of the ministry that I led, especially concerning the state budget. The situation was uncomfortable,” SBY stated.
Jokowi’s Finance Minister Bambang Brojonegoro confirmed that Indonesia is no longer indebted to the IMF.
He said US$ 2.9 billion cited by Cabinet Secretary Andi Widjajanto as debt to the IMF is an international reserve asset, created by the financial institution to supplement its member countries’ official reserves.
Jokowi’s critics seized his seemingly erroneous statement as another example of him being out of his depth.
Indonesia’s relationship with the Washington-based IMF was politically sensitive, until the country managed to close the books on the institution during Yudhoyono’s presidency. Indonesia joined Brazil and Argentina, which also paid off their debts and is now a member of the G-20.
Between 1997 and 2003, the International Monetary Fund provided some $25 billion in loans to help Indonesia rescue its banking system, rehabilitate its economy by restructuring private and government debt, and strengthen its foreign exchange reserves.