Indonesia: From Showcase to Basket Case

Jonathan Pincus and Rizal Ramli

Chapter 8 in Financial Liberalization and the Asian Crisis, 2001, pp 124-139 from Palgrave Macmillan

Abstract: Abstract In the year after the onset of the East Asian financial crisis a diverse set of national crises began to take shape. Among these, Indonesia’s is by far the most severe. National income was expected to contract in 1998 by between 10 and 15%, and the decline to extend into 1999.1 According to government estimates, the proportion of the population below the poverty line has risen to 40%, and 15 million workers have lost their jobs (Thoenes, 1998b).2 A severe drought has complicated matters, driving up food prices and causing shortages in some locations.3 The banking system is essentially defunct, suppressing exports and reducing whole industries to resort to barter as the last remaining source of working capital.4 The nation’s currency, the rupiah, was still trading in July 1998 at around 15,000 to the US dollar, levels at which it ceases tofunction as a meaningful store of economic value.

Keywords: Interest Rate; Monetary Policy; Banking System; Private Bank; Bank Credit (search for similar items in EconPapers)
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-51862-9_8

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DOI: 10.1057/9780230518629_8

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