Clouds at Bali gathering
WHEN Indonesia offered idyllic Bali for this year’s meetings of the International Monetary Fund and World Bank, member states leapt at the chance.
The gathering – which is held this week – in one of Asia’s fastest-growing economies, would showcase its transformation from developing country to emerging market and authoritarian dictatorship to more democratic rule.
The boards of the IMF and World Bank, dominated by Western democracies, envisaged few problems.
Teams were dispatched to the upmarket resort area of Nusa Dua to check that the safety of finance ministers and central bankers would not be compromised in the five-star, manicured resort hotels overlooking the Indian Ocean. An enormous security operation was put in place to guard against terrorism (and protests) in the world’s most populous Islamic state.
What the executive directors of the IMF and World Bank reckoned without was an earthquake, tsunami and deadly mudslides some 1,000 miles away in the province of Sulawesi. The death toll is rising and currently placed around 1,800. The Indonesian government, embarrassingly, is coming under criticism both from local communities and aid organisations for a slow response which could have cost lives.
That is not the only problem. A supercharged American dollar, driven by rising US interest rates and bond yields, has sent the Indonesian currency, the rupiah, plunging. Indonesia, like other emerging markets, faces the threat of capital flight as investors repatriate funds to America in search of better and safer returns.
Potentially damaging optics did not escape notice at the Washington HQs of the IMF and World Bank. In the aftermath of the quake, the possibility of cutting back the scale and length of the gathering and moving it to the US capital was considered. But it was decided that the blow to Indonesia’s pride and economic loss would be too great, so the Bali meetings would proceed.
HOWEVER, plans by Indonesian president Joko Widodo to turn it into a festival of economic triumph and a launch pad for his re-election campaign might be going awry.
One of his ideas was to try to persuade financial leaders to abandon the normal City and Wall Street attire for clothing better adapted for the tropics.
Goodie bags on arrival will contain locally dyed, brightly coloured batik shirts, intended to be worn at official meetings, press conferences and other events. There is even a suggestion that Indonesian ambassadors were tasked with the delicate job of ascertaining vital statistics of top officials so there would be a bespoke fit. Whether the decorated shirts will be considered appropriate, given the horrendous images being relayed from Sulawesi, is in doubt.
Equally problematic could be the plushness of the convention centre, in the heart of the luxury hotel area, and that for the duration of the meetings the Westin resort Nusa Dua has been converted into offices, giving ministers, top financial figures and central bankers views of swimming pools, golden sands, the ocean and horizon beyond.
These may not be the ideal conditions to contemplate some of the items on a crowded agenda here. These include the impact of Trump’s trade war on global output, the high levels of corporate and official debt in some of the poorest countries of the world – putting them in danger of default – and the struggle of some emerging markets.
Then, of course, there is Brexit. It is not a subject likely to have huge traction on the tropical beaches.