IMF-World Bank Meeting, A Positive Occasion

REUTERS/MARCOS BRINDICCI

World Bank president Jim Yong Kim talks to U.S. Secretary of the Treasury Steven Mnuchin as International Monetary Fund (IMF) Managing Director Christine Lagarde walks behind them after the official photo at the G20 Meeting of Finance Ministers in Buenos Aires, Argentina, July 21, 2018.

A 2016 International Monetary Fund (IMF) study ranked Indonesia as the 8th economic power in the world with a total gross domestic product (GDP) of US$3.028 billion. The study, “The Long View: How Will The Global Economic Order Change by 2050?”, which PricewaterhouseCoopers (PwC) released, said Indonesia would rank 5th in 2030 with an estimated GDP of $5.424 billion and rank 4th in 2050 with estimated GDP of $10.502 billion, based on purchasing power parity (PPP).

PwC UK chief economist John Hawksworth said that China would become the world\'s greatest economic power, followed by India, the United States and then Indonesia. Technological advancements, international trade and investment influence GDP growth. The rankings of the countries that currently dominate the world economic order will drop dramatically. Germany is projected to fall from 5th (2016) to 9th (2050), and Japan from 4th to 8th.

The accuracy of PwC’s projection is strongly influenced by a country’s political dynamics, government regimes and natural disasters. It is also influenced by a country’s ability to take advantage of world politics and economy.

IMF-World Bank meeting

In October, Bali will host the IMF-World Bank Annual Meetings. Indonesia was selected to host this event through a long process, and it surpassed the two other strong candidates, Senegal and Egypt. This is an indication that the world is becoming more confident about Indonesia, so this occasion must be utilized properly.

The major event will see the attendance of finance ministers and central bank governors from 189 member countries, the CEOs of leading G-7 financial institutions and leading G-24 academics, as well as representatives of international institutions, NGOs and legislative bodies as observers.

The event will consist of about 2,000 meetings, making this the biggest financial conference in the world. The IMF-WB meetings expect an estimated 12,500-15,000 participants.

Considering that many stakeholders in the finance sector will attend this event, it will also hold many other meetings, such as international bilateral meetings and economics and financial discussions, organized by the IMF-WB as well as other top world financial institutions. The general agenda will deal with global economic prospects, financial system stability, poverty, development, employment, climate change and other global issues.

The main message that will be conveyed to the world in successfully organizing the IMF-WB Annual Meetings is: "Indonesia is a reformed, resilient and progressive country that supports sustainable and inclusive economic growth”. IMF managing director Christine Lagarde said that this meeting would highlight the economic conditions and economic potential in Indonesia, so that foreign investors would grow interested in investing in Indonesia.

The scale of the meeting, the massive number of participants and the importance of the agenda will greatly benefit the development of the Indonesian economy.

In the short term, the meeting – which will be held at a cost of Rp 800 billion – has resulted in accelerated infrastructure development in Bali, like an airport expansion, the construction of an underpass to ease traffic to and from Ngurah Rai International Airport, completion of the Garuda Wisnu Kencana statue, which is expected to become a tourist icon, and the Benoa passenger port.

Total participant spending is projected at around $100 million (Rp 1.35 trillion) on accommodation, flights, vehicle rentals, dinner packages, entertainment, souvenirs and tour packages.

The event’s organizing committee is also offering tour packages outside Bali to Lombok Island, Komodo Island, Yogyakarta, Lake Toba, Tana Toraja and Banyuwangi. This means that other regions will also enjoy wider benefits in the short term. The most valuable short-term benefit is likely publicity and promotion on Indonesia through the 1,000 or so media outlets that will be covering the event.

In comparison, the Oxford Business Group said the positive impact Peru gained in hosting the 2015 IMF-WB Annual Meetings was that the travel and tourism industry’s contribution to GDP grew 16.34 percent and its contribution to job creation grew 6.82 percent. With this year’s larger-scale meeting, the short-term benefits for Indonesia will be greater than Peru.

Long-term benefits

The first long-term benefit associated with the 2018 IMF-WB meetings concerns Indonesia\'s leadership in discussions on global issues: infrastructure development, financial system stability, managing inequality, human resource development, inclusive finance. Second, in terms of investment and trade, superior products will be introduced to the global market while investment and business opportunities in Indonesia will also be introduced.

Third, tourism promotions and activities will encourage an increase in tourists to key destinations in the country. Fourth, a transfer of knowledge will occur through the experience and expanded international networks gained through organizing and running a major international event.

The success of the IMF-WB Annual Meetings in Bali will drive for Indonesia\'s development in the short and long terms. In the future, Indonesia\'s voice will be increasingly heard at the global level. Successfully hosting this event, supported by the government’s infrastructure development projects in a number of areas, should be followed by real sector investment to create a greater multiplier effect.

YB Suhartoko, Lecturer, Development Economics, Financial Economics and Banking Studies, Atma Jaya University, Jakarta