The IMF's Camdessus On Suharto's Recalcitrance

By Bruce van Voorst/Washington

TIME: What happens if Suharto refuses to cooperate? Does he have the IMF over a barrel?

Camdessus: No. We have never hesitated to interrupt our financing when a country doesn't fulfill its commitment. Of course, we will have to do that with Suharto if--but I hope this will not be the case--he ignores his signature and his pledges. I have no leeway on this. There are conditions established by an executive board representing the entire world.

TIME: Could that trigger a larger crisis?

Camdessus: By not disbursing? I think I would be taking more risks for the world if I were to ignore an agreement signed with a country.

TIME: How serious would a default be?

Camdessus: It would be extremely serious, not only for the world but for the country itself. After all, what we have agreed with Indonesia was not some theoretical vision of the world. It was the well-thought-out program we agreed was in the best interests of Indonesia. To renounce this now would be to renounce an undertaking seen by the entire world as the best course for the country.

[However], we are dealing with a sovereign country. A country can decide to go it alone and renounce agreements it completed with us. But I trust the good sense of President Suharto and his people. They won't do that. They know the programs are good. But the program has not delivered all its potential because it has been either not implemented fully or was circumvented.

TIME: What is the most important lesson from the Asian crisis?

Camdessus: The Asian crisis is a formidable impetus for us to continue our efforts to achieve good governance, to make institutional changes, to fight against corruption. It's alleged that the IMF applies the same medicine in all countries. Look at the programs in Thailand, Korea and Indonesia. The medicine in each instance is very, very different. If you will take them, you will see how strongly centered they are on fighting chronic corruption, monopolies and bad procedures. If these programs end up making the countries stronger, it will be because they make a strong effort in correcting these governance issues.

--By Bruce van Voorst/Washington