For Greece’s embattled politicians, who must struggle to convince the public to swallow yet more bitter austerity measures, the intense pressure from rapacious lenders and unforgiving bond markets must seem unprecedented; but Sri Mulyani Indrawati, the most senior woman at the World Bank, has seen it all before.
As Indonesian finance minister from 2005 to 2010, and before that as an economic adviser to the Wahid regime that ran Indonesia from 1999 to 2001, she watched her country — one of the most populous in the world — struggle to emerge from decades of dictatorship and economic repression.
Indonesia was swept up in the last major financial crisis, in the late 1990s, when international markets fell out of love with the “Asian Tiger” economies that they had bankrolled for over a decade.
The resulting turmoil in Indonesia resulted in the overthrow of the notorious dictator former Indonesian president Suharto, who had borrowed heavily from the international community — including the World Bank — to fund his regime.
The strict conditions placed on a rescue package offered to Indonesia by the IMF were widely seen as making the situation worse. However, after more than a decade of reform and reconstruction, Indonesia is well on the road to recovery — it chalked up growth of more than 6 percent last year.
Mulyani says that Indonesia’s situation in the 1990s was actually much harder than that of Greece today, whose neighbors are rallying to its aid and where private lenders are expected to agree to a writedown, or “haircut,” on their Greek bond holdings.
“They are a little bit lucky, if I can say that, because they actually secured debt reduction through the haircut; in Indonesia, we didn’t have that luxury,” Mulyani said.
Asked whether she has sympathy with Greece’s fears about surrendering control over its domestic policies, her response is similarly unflinching.
“If you are allowing yourself to grow your debt to 200 percent [of GDP], then at some point the ones who are lending you the money are going to have a say about how you manage things,” she said.
In 2005, she was declared the world’s best finance minister by Euromoney magazine, and in 2008, the world’s 23rd most powerful woman by Forbes.
Today, she is in charge of operations in Asia and Africa, Europe, Latin America and the Middle East for the World Bank. As one of the bank’s three managing directors under World Bank President Robert Zoellick, Mulyani is the embodiment of the growing role that middle-income countries — such as Indonesia, but also China, India and Brazil — are playing in the international community, including in delivering overseas aid.
She says there are lessons for every country from the experience of these emerging economies. Even in the world’s richest countries, it has become increasingly clear that generating GDP growth alone is not enough.
“When you talk about inequality and disparity — here, in many advanced countries the bitterness is growing,” she said, adding that politicians must focus on “making sure that not only a few people can enjoy so excessively while the majority feel they have to work so hard.”
She also defends the bank’s continuing involvement in China, India and other middle-income countries against the skepticism of some critics — including British Conservatives who have questioned the need for aid to India.