After a meeting Tuesday with International Monetary Fund (IMF) chief
Christine Lagarde, Indonesia confirmed a $1 billion loan to the
international financial body. With a troubled relationship in the past,
the loan is symbolic of how far the economic tables have turned.
Addressing the ASEAN Latin American business forum in Jakarta Tuesday,
IMF chief Christine Lagarde described the economic recovery of advanced
nations as "tepid" and the general global economic outlook as
"worrisome."
Referring to a recent report from the Word Trade Organization, Lagarde
noted that recent signs of protectionism are fueling broader concerns
about the global economy.
“There are parts of the world where we clearly see downside risks that
should be of concern not just to those parts of the world but to pretty
much everybody, because in our extremely interconnected world there is
no immune country," Lagarde said. "There is no part of the world that is
totally protected from hardship going on somewhere else in the world.”
But it was expectations about a proposed loan to the IMF that had people
talking.
Following recent discussions at the G20 meeting in Mexico, the
Indonesian finance minister announced last week the country would loan
the IMF up to $1 billion.
Given
their troubled relationship in the past, the proposed loan has
encountered some resistance. Critics say the IMF’s conditional loans
during the country's financial crisis in 1998 further crippled
Indonesia.
It might explain why Lagarde was somewhat coy about the loan, choosing
not to mention it in her forum address and why the Indonesian government
has moved to de-politicize the issue by funding the loan through the
central bank.
The IMF has said it needs $430 billion to support countries in financial
trouble.
The pledged loan from a developing country such as Indonesia is an
indication of the changing economic fortunes around the world.
