JAKARTA — 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.