DOCSLIB.ORG

Indonesia: Anatomy of a Banking Crisis Two Years of Living Dangerously 1997-99

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Indonesia: Anatomy of a Banking Crisis Two Years of Living Dangerously 1997-99 WP/01/52 IMFWorking Paper Indonesia: Anatomy of a Banking Crisis Two Years of Living Dangerously 1997-99 Charles Enoch, Barbara Baldwin, Olivier Frecaut, and Arto Kovanen INTERNATIONAL MONETARY FUND © 200 l InternationalMonetary Fund WP/01/52 IMF Working Paper Monetary and Exchange Affairs Department Indonesia: Anatomy of a Banking Crisis Two Years of Living Dangerously, 1997-99 Prepared by Charles Enoch, Barbara Baldwin, Olivier Frecaut, and Arto Kovanen May 2001 Abstract The views expressed in this WorkingPaper are those of the author(s)and do not necessarily representthose of the IMF or IMF policy. WorkingPapers describe research in progressby the authorfs~and are nublishedto elicit commentsand to furtherdebate. This study looks at the first two years of the banking crisis that erupted in Indonesia in late 1997. It finds that the banking sector was weak at the outset, and that governance problems intensified the crisis and seriously delayed its resolution. Although a strategy was put in place over the initial months, protracted delays in implementation led to an explosion in the costs ofresolution. By end-1999, the critical elements to reconstruct the banking system were in place, and the political transition seemed completed; but, in a continuing unsettled environment, the new authorities still faced daunting challenges. JEL Classification Numbers: G21; G28; G34; N25; 053 Keywords: banking crisis, bank restructuring, blanket guarantee, lender of last resort, banking supervision Author's E-Mail Address: [email protected]; [email protected]; [email protected]: [email protected] - 2 - Contents Page Acknowledgement .................................................................................................................. 5 List of Abbreviations .............................................................................................................. 6 I. lntroduction ......................................................................................................................... 8 II. Strategic Overview of the Banking Crisis ........................................................................... 9 III. Banking Sector Developments: !988-1999 ..................................................................... 23 A. Phase I-1988-August-l 997: An Unbalanced Financial Sector Liberalization .... 23 The 1988 liberalization measures .................................................................. 23 The Bank Summa incident. ............................................................................ 23 Problems in the state-owned banks ................................................................ 24 Pre-crisis financial position of banks and corporations .................................. 25 B. Phase II: October-November 1997: Macroeconomic Disturbances and Contained Banking Difficulties ............................................................................. 26 Sample of banks selected for review .............................................................. 26 Objective of the individual assessments ........................................................ 27 Results of the individual assessments ............................................................ 28 October 31, 1997, policy package .................................................................. 29 C. Phase III: December 1997: The Banking Situation Gets Out of Control.. ............. 30 D. Phase IV: January-February 1998-Laying the Ground for the Stabilization of the Banking System .......................................................................................... 32 E. Phase V: March-May 1998-First Resolution lnitiatives and New Shock ............ 33 F. Phase VI-June-September 1998: Design of a Comprehensive Resolution Strategy ................................................................................................................. 35 G. Phase VII-October 1998-December 1999: Slow and Uneven Implementation Leads to a Sharp lncrease in Costs ....................................................................... 38 Private banks ................................................................................................. 38 IBRA and the IBRA banks ............................................................................ 39 State banks ..................................................................................................... 40 IV. Selected Issues ................................................................................................................ 41 A. Blanket Guarantee and Lender of Last Resort (LOLR) ........................................ 41 The blanket guarantee .................................................................................... 42 The provision of central bank liquidity .......................................................... 4 7 B. Private Bank Recapitalization Scheme ................................................................. 50 Preparation of the plan ................................................................................... 51 Implementation of the plan ............................................................................ 54 C. Reform of the State Banks .................................................................................... 59 - 3 - D. Prudential and Supervisory Reforms: Strengthening the Financial Sector through Improved Oversight ................................................................................ 63 Introduction ................................................................................................... 63 The regulatory framework ............................................................................. 64 Classification and loan loss provisioning requirements ................................. 64 Off-balance-sheet activities ........................................................................... 72 Enhancing Bank Indonesia's supervisory capacity ........................................ 73 E. Indonesian Bank Restructuring Agency (!BRA) ................................................... 75 Operations of !BRA in 1998 .......................................................................... 75 The next stage: legal powers and shareholder settlements ............................. 77 Operations of !BRA in 1999 .......................................................................... 79 Some !BRA issues ......................................................................................... 80 F. Corporate Restructuring ........................................................................................ 83 G. The Proposal for a Currency Board Arrangement.. ............................................... 84 H. Establishing Monetary Control ............................................................................. 86 Developing market-based monetary instruments ........................................... 89 I. Interbank Market Segmentation and Liquidity Squeeze ......................................... 93 Market segmentation and the flow of funds in late 1997 ............................... 93 A key problem: lack of capacity to intermediate ........................................... 95 J. The Structure of Interest Rates ............................................................................... 97 Interest rate spreads ....................................................................................... 97 Early crisis phase: Explosion of intermediation spreads ................................ 98 Impact on lending ........................................................................................ I 03 K. Government Domestic Bond Market .................................................................. I 06 Developing a secondary market for government bonds ............................... I 06 The rise in domestic government debt.. ....................................................... I 06 Secondary market trading ............................................................................ I 07 Regulatory framework ................................................................................. I 08 L. Governance ......................................................................................................... I 08 Closure of the sixteen banks ........................................................................ I 09 Bank Indonesia ............................................................................................ I 09 IBRA ........................................................................................................... 110 Private bank recapitalization scheme ........................................................... 112 The state banks ............................................................................................ 112 Bank Bali ..................................................................................................... 113 V. Final Observations ......................................................................................................... 115 A. General ............................................................................................................... 115 B. Handling the Crisis ............................................................................................. 116 C. Moral Hazard ...................................................................................................... 118 D. Costs and Government Responsibility ................................................................ 118 E. Concluding
Load more

Recommended publications
  • INDONESIAN BANKS REVIVED Indonesia
    February 24, 2000 Asian Banks INDONESIAN BANKS REVIVED Indonesia Robert Zielinski IBRA REBOOTS THE SYSTEM Tokyo 813 5571 7463 [email protected] q System Crash: Indonesia’s financial system crashed during Asia’s financial Paul Sheehan crisis. The banking system was practically wiped out as non-performing loans Hong Kong (NPLs) for the industry soared above 75% of total loans and the credit extension 852 2869 3001 process ground to a halt. This was not an isolated event, but rather the result of [email protected] years of excessive and haphazard borrowing. Graham Parry Tokyo—Economics q System Reboot: Under the direction of the Indonesian Bank Restructuring Agency (IBRA), the Indonesian banking system is being given a fresh start. 813 5571 7481 IBRA has closed, taken over or recapitalized most of the major banks, resulting [email protected] in the number of banks falling from 239 prior to the crisis to 164 at present. Priscilla Yow Hong Kong q Banks Recapitalized: IBRA has assumed Rp234 trillion of mainly impaired 852 2869 3138 loans formerly on the books of the recapitalized banks, injecting government [email protected] bonds in exchange. This transfer has given the banks assets that generate interest income and reduced problem loans to around 50% of their remaining credits. IBRA is now in the process of restructuring these loans and selling them off to help defray the recapitalization costs. A q The Worst is Over: As a result of this credible effort, we believe that Indonesia is now through the worst of its crisis. A new democratic government is in power, interest rates have come down sharply and the exchange rate has stabilized.
    [Show full text]
  • Papa Minta Saham” in Online Media Merdeka.Com and Suarakary.Id
    ISSN 2549-5607 The 1st International Conference on Language, Literature and Teaching ANALYSIS OF PAN AND KOSICKI NEWS MODEL IN CASE “PAPA MINTA SAHAM” IN ONLINE MEDIA MERDEKA.COM AND SUARAKARY.ID Siswanta Slamet Riyadi University Surakarta [email protected] Abstract This paper aims to understand the news framing Setya Novanto (SN) in the case of “Papa Minta Saham” in the online media Suarakarya.id and Merdeka.com. By using the model of Pan and Kosicki framing analysis, some aspects highlighted by both editors was analyzed according to four structural analyses of syntax, script, thematic and rhetoric that have a better understanding about bias of reporting of both online media. Results of research conducted during November to December 2015 showed that Merdeka.com and Suarakarya.id built reality constructed that SN as ethics and authority incumbency offender, SN as a broker of high profile, as Chairman of the House of Representatives had embarrassed the nation of Indonesia, and SN do not deserve as role models by other officials. Because of news, framing process conducted both online media bias raises the mass media, especially bias by selection of sources and bias by placement. Merdeka. com less wise in implementing the principle of presumption of innocence against SN, on the other hand Suarakarya.id dismissed reports facts that lead to evidence of involvement of SN the legislative and ethics incumbency offender. Keywords: Framing, online media, construction, reality, bias. 1. INTRODUCTION “Papa minta saham” was an issue that became trending news topic mainstream conventional and online media for approximately one month, mid-November until mid-December 2015.
    [Show full text]
  • The Asian Financial Crisis: Crisis, Reform and Recovery
    A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Sharma, Shalendra D. Book — Published Version The Asian financial crisis: Crisis, reform and recovery Provided in Cooperation with: Manchester University Press Suggested Citation: Sharma, Shalendra D. (2003) : The Asian financial crisis: Crisis, reform and recovery, ISBN 0-7190-6603-4, Manchester University Press, Manchester, http://dx.doi.org/10.7765/9781526137685 This Version is available at: http://hdl.handle.net/10419/181916 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte. may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc-nd/4.0/ www.econstor.eu The Asian financial crisis i ii The Asian financial crisis Crisis, reform and recovery Shalendra D. Sharma Manchester University Press Manchester and New York distributed exclusively in the USA by Palgrave iii Copyright © Shalendra D.
    [Show full text]
  • Book 3: Foreign Aid, Business, and State Enterprise – Counting the Cost
    STEALING FROM THE PEOPLE 16 Studies on Corruption in Indonesia Book 3 Foreign Aid, Bussines, and State Enterprises: Counting the Cost Editor of English Edition Richard Holloway Stealing from the People 16 Studies of Corruption in Indonesia Book 3: Foreign Aid, Bussiness, and State Enterprises: Counting the Cost Editor of the English Edition Richard Holloway First Printing : January 2002 Published by the Aksara Foundation on behalf of the Partnership for Governance Reform in Indonesia Cover Design by the Aksara Foundation incorporating (with permission) Firman Ichsan’s photograph of Dolorosa Sinaga’s statue “Waiting for Godot” This book is published in both English and Bahasa Indonesia. The Indonesian title is “Mencuri Uang Rakyat”. The contents of both are largerly the same, except where adjustments were made in recognition of the different readership, language idioms, and editing styles. The Indonesian edition is the definitive edition. Publishing Data for the Indonesian National Library Stealing from the People – 16 Studies of Corruption in Indonesia/Editor, Richard Holloway - Jakarta: Aksara Foundation, 2002, 4 volumes, 18 cms. Contents: 1. Corruption - from top to bottom. 2. The Big Feast: soldier, judge, banker, civil servant. 3. Foreign Aid, Business, and State Enterprise: counting the cost. 4. The Clamp Down: in search of a new paradigm Book 1: Corruption - From Top to Bottom ISBN: (for complete set) 979-3093-05-6 ISBN: (for Book 1) 979-3093-06-4 ii “Stealing from the People” Foreward to the English Edition Stealing from the People is published by the Partnership for Government Reform in Indonesia. The Partnership’s aim is to promote and support a program of governance reform.
    [Show full text]
  • Corruption and Central Banks Dissertation
    Corruption and Central Banks Dissertation zur Erlangung des Grades eines Doktors der Wirtschaftswissenschaften der Wirtschaftwissenschaftlichen Fakultät der Universität Passau Eingereicht von Michael Schinke Dezember 2005 Table of Content FIGURES IV TABLES V LIST OF VARIABLES AND ABBREVIATIONS VI LATIN ALPHABET VI GREEK ALPHABET VIII ZUSAMMENFASSUNG (GERMAN SUMMARY) IX I. INTRODUCTION: WHY STUDY CORRUPTION IN CENTRAL BANKS? 1 II. A CORRUPTION CASE IN THE CENTRAL BANK OF INDONESIA 5 II.1. INTRODUCTION 5 II.2. THE INDONESIAN SITUATION: THE CRISIS UNFOLDS 5 II.3. THE BANK BALI MATTER 11 II.3.1. HOW THE SCANDAL BROKE AND ITS POLITICAL REVERBERATIONS 11 II.3.2. THE PROBLEMS OF BANK BALI 15 II.3.3. THE BANK BALI DEAL 18 II.4. BANK BALI SCANDAL—A CASE OF CENTRAL BANK CORRUPTION? 25 II.5. CIRCUMSTANCES FAVORING CORRUPTION 27 I III. CENTRAL BANKS IN A CORRUPT ENVIRONMENT: HOW CORRUPTION DRIVES INFLATION 31 III.1. INTRODUCTION 31 III.2. THE BASIC MACROECONOMIC MODEL 34 III.3. CORRUPTION AND SEIGNIORAGE 41 III.4. MONETARY POLICY OF AN INCORRUPTIBLE CENTRAL BANK 46 III.5. CORRUPT MONETARY POLICY 53 III.6. AN EXTENSION OF THE MODEL: THE CORRUPT CENTRAL BANKER REVISITED 59 III.7. CONCLUSIONS AND POLICY RECOMMENDATIONS 61 IV. INSIDER TRADING AMONG CENTRAL BANKERS: SHOULD ONE CONDONE CORRUPTION AMONG CENTRAL BANKERS? 65 IV.1. INTRODUCTION 65 IV.2. A BASIC MODEL OF STOCHASTIC SUPPLY SHOCKS IN A NATURAL RATE MODEL 65 IV.3. SHOCK TREATMENT BY AN INCORRUPTIBLE CENTRAL BANK 68 IV.4. CORRUPT CENTRAL BANKS—SOME EVIDENCE FROM THE MEDIA 75 IV.5. CORRUPT CENTRAL BANKERS IN A STOCHASTIC WORLD 82 IV.6.
    [Show full text]
  • Asia Report, Nr. 15: Bad Debt
    BAD DEBT: THE POLITICS OF FINANCIAL REFORM IN INDONESIA 13 March 2001 ICG Asia Report N° 15 Jakarta/Brussels Table of Contents EXECUTIVE SUMMARY AND RECOMMENDATIONS............................................. i I. THE PUBLIC DEBT DEFINED....................................................................... 1 II. EXTERNAL PUBLIC DEBT............................................................................ 3 A. The International Monetary Fund....................................................... 4 B. The Development Banks ..................................................................... 6 C. The Consultative Group for Indonesia................................................ 7 D. External Debt as a Political Tool......................................................... 8 E. Indonesian Attitudes to External Debt............................................... 9 III. REDUCING EXTERNAL DEBT .................................................................... 10 A. Cutting Subsidies.............................................................................. 10 B. Increasing Tax Income..................................................................... 10 C. Privatisation ..................................................................................... 11 IV. DOMESTIC DEBT ...................................................................................... 12 A. Bank Restructuring........................................................................... 12 B. The Outlook for Banks .....................................................................
    [Show full text]
  • REORGANISING POWER in INDONESIA: the POLITICS of OLIGARCHY in an AGE of MARKETS Richard Robison and Vedi R
    ‘Russia and the other transition economies have taught us that policy change involves a struggle over assets and that market-oriented reform can be hijacked to sustain, or even generate, new structures of power and corruption. In this powerful and historically rich book, Robison and Hadiz make the same point for the Indonesian oligarchy, showing its tremendous resilience in the face of a variety of external and internal pressures, from the IMF to the democratic opposition.’ Stephan Haggard, University of California San Diego, USA ‘[This] is the first study to spell out the nature of the relationship between a national oligarchy and the global market place. As such it is not only an important empirical study, it also represents a major critique of the neo-classical understanding of development that prevailed throughout the late 20th century.’ Richard Higgott, Editor, The Pacific Review ‘Vedi Hadiz and Richard Robison argue that what is taking place in Indonesia is the reorganization of the power relations incubated within the Soeharto regime rather than their fundamental transfor- mation, and that democratizing was instituted for the survival of the interests nurtured under Soeharto's rule as the institutional structures of the New Order became unviable. A must read for anyone inter- ested in Indonesia and “third world” transformations.’ Takashi Shiraishi, Kyoto University, Japan REORGANISING POWER IN INDONESIA Reorganising Power in Indonesia is a new and distinctive analysis of the dramatic fall of Soeharto, the last of the great Cold-War capitalist dictators, and of the struggles that are reshaping the institutions and systems of power and wealth in Indonesia.
    [Show full text]
  • Soldier, Judge, Banker, Civil Servant
    STEALING FROM THE PEOPLE 16 Studies of Corruption in Indonesia Book 2 The Big Feast - Soldier, Judge, Banker, Civil Servant Editor of the English Edition Richard Holloway THE BIG FEAST - SOLDIER, JUDGE, BANKER, CIVIL SERVANT - BOOK 2 Stealing from the People 16 Studies of Corruption in Indonesia Book 2: The Big Feast – Soldier, Judge, Banker, Civil Servant Editor of the English Edition Richard Holloway First Printing : January 2002 Published by the Aksara Foundation on behalf of the Partnership for Governance Reform in Indonesia Cover Design by the Aksara Foundation incorporating (with permission) Firman Ichsan’s photograph of Dolorosa Sinaga’s statue “Waiting for Godot” This book is published in both English and Bahasa Indonesia. The Indonesian title is “Mencuri Uang Rakyat”. The contents of both are largerly the same, except where adjustments were made in recognition of the different readership, language idioms, and editing styles. The Indonesian edition is the definitive edition. Publishing Data for the Indonesian National Library Stealing from the People – 16 Studies of Corruption in Indonesia/Editor, Richard Holloway - Jakarta: Aksara Foundation, 2002. 4 volumes, 18 cms. Contents: 1. Corruption from top to bottom. 2. The Big Feast: soldier, judge, banker, civil servant. 3. Foreign Aid, Business, and State Enterprise: counting the cost. 4. The Clamp Down: in search of a new paradigm Book 2: The Big Feast – Soldier, Judge, Banker, Civil Servant ISBN (for complete set) 979-3093-05-6 ISBN (for Book 2) 979 3093 07-2 ii Foreword “Stealing from the People” Foreward to the English Edition Stealing from the People is published by the Partnership for Government Reform in Indo- nesia.
    [Show full text]
  • Media-Elite Interactions in Post-Authoritarian Indonesia
    Media-elite interactions in post-authoritarian Indonesia Nicole Andres Magister Artium (M.A.) in Southeast Asian Studies (Humboldt-Universität zu Berlin, Germany) This thesis is presented for the degree of Doctor of Philosophy Murdoch University 2016 I declare that this thesis is my own account of my research. It contains as its main content work which has not previously been submitted for a degree at any tertiary education institution. Nicole Andres Perth, 19 August 2016 i Für Oma, Opa & Ibu Yenny ii Abstract This thesis analyses media-elite interactions in post-authoritarian Indonesia. The introduction of legally guaranteed press freedom and democracy following President Suharto’s fall in 1998 changed the relationship between the media on the one hand and the political and business elite on the other. But what has been the significance of press freedom for elite politics? The argument of this thesis is that the politico-business elites have, to differing degrees, harnessed the concept of press freedom by incorporating the media as a political weapon in their power struggles over key positions in political institutions and over political resources. Crucially, the heterogeneous and mostly privately owned media companies positioned themselves as actors in the intra-elite contestations. Through a set of case studies on intra-elite power struggles that escalated into scandals, this thesis examines the ways in which the elite has integrated the media into those struggles, and analyses the vested interests of the owners and practitioners of the media in those struggles. Ultimately, it establishes two key points. First, the elite has employed scandal as a an opportunity to change the composition of a democratically elected government; and second, during those political scandals the owners or prominent editors of particular media organisations, either consciously or otherwise, have formed temporary coalitions with particular elite factions based on shared interests defined by structural conditions and personal relations.
    [Show full text]
  • Scandal and Democracy
    Scandal and Democracy Mary E. McCoy Scandal and Democracy Media Politics in Indonesia Southeast Asia Program Publications an imprint of Cornell University Press Ithaca and London Southeast Asia Program Publications Editorial Board Mahinder Kingra (ex o icio) Thak Chaloemtiarana Chiara Formichi Tamara Loos Kaja McGowan Copyright © 2019 by Cornell University The text of this book is licensed under a Creative Commons Attribution-NonCommercial- NoDerivatives 4.0 International License: https://creativecommons.org/licenses/by-nc-nd/4.0/. To use this book, or parts of this book, in any way not covered by the license, please contact Cornell University Press, Sage House, 512 East State Street, Ithaca, New York 14850. Visit our website at cornellpress.cornell.edu. First published 2019 by Cornell University Press Printed in the United States of America Library of Congress Cataloging-in-Publication Data Names: McCoy, Mary E., 1968– author. Title: Scandal and democracy : media politics in Indonesia / Mary E. McCoy. Description: Ithaca : Southeast Asia Program Publications, an imprint of Cornell University Press, 2019. | Includes bibliographical references and index. Identifiers: LCCN 2018029443 (print) | LCCN 2018032259 (ebook) | ISBN 9781501731051 (pdf) | ISBN 9781501731068 (epub/mobi) | ISBN 9781501731037 (cloth : alk. paper) | ISBN 9781501731044 (pbk. : alk. paper) Subjects: LCSH: Mass media—Political aspects—Indonesia. | Press and politics— Indonesia. | Press—Indonesia—Influence. | Democratization—Indonesia. | Political corruption—Indonesia. | Indonesia—Politics and government—1998– Classification: LCC P95.82.I5 (ebook) | LCC P95.82.I5 M43 2019 (print) | DDC 302.2309598—dc23 LC record available at https://lccn.loc.gov/2018029443 Cover image by Hengki Irawan, illustrator for the Jogja Daily newspaper. To my mother, Kathryn E.
    [Show full text]
  • Indonesia: Crisis, Reform and Recovery 3 Indonesia: Crisis, Reform and Recovery
    Indonesia: crisis, reform and recovery 3 Indonesia: crisis, reform and recovery In Indonesia, state-owned banking gave way to a system where anyone with $1 million or so could open a bank (Little 1997, 10). In mid-1998, a World Bank study (1998) grimly noted that “Indonesia is in deep economic crisis. A country that achieved decades of rapid growth, stability, and poverty reduction is now near economic collapse . no coun- try in recent history, let alone one the size of Indonesia, has ever suffered such a dramatic reversal of fortune.” There is bitter irony in Indonesia’s fall from grace. Long hailed as a model of successful economic development, it was widely expected to escape the fate of Thailand.1 Between June and August 1997, as Thailand’s economy unraveled and the virulent Asian flu sent shock waves through the region, the Indonesian economy remained relatively stable – seemingly a veritable rock in the stormy sea. Even the World Bank (1997) remained upbeat about the short-term outlook, believ- ing that a modest widening of the intervention band (from 8 per cent to 12 per cent) within which the rupiah was allowed to be traded would be suffi- cient to ward off contagion. The Indonesian government, which received much praise for its swift and decisive response to the crisis, went to great lengths to assure jittery investors “that Indonesia was not Thailand.” Then the unthinkable happened. Indonesia suddenly succumbed to the contagion, and measured by the magnitude of currency depreciation and contraction of economic activity, it emerged as the most serious casualty of Asia’s financial crisis.
    [Show full text]
  • World Bank Document
    January 31, 2000 INDONESIA dollar on July 1 to 8,260 on September 10 (a fall of 18 MACROECONOMIC UPDATE percent). Following the Presidential election and the Public Disclosure Authorized selection of the Cabinet, it appreciated again to below 7000 per US$ in November, 1999, before easing back to Rp Current Development 7,250/US$ by January. 18, 2000. The stock exchange also fell in September (from 673 at the start of July 1999 to 563 IndonesiaÕs macroeconomic performance in recent months in September (a fall of 16 percent)) but then clawed its way shows continued gradual recovery despite continued social back to 686 by January 18, 2000. unrest on outer islands and slow progress with corporate and bank restructuring. Production continues its gradual Index of GDP recovery. Manufacturing and services are inching their way 125 up; agricultureÕs performance, however, has been below expectations. GDP rose again in the third quarter of 1999 120 (1 percent compared to the previous quarter) and the 115 Government forecasts GDP growth for the FY1999/00 Real inde fiscal year to be about 2 percent. External demand appears 110 to be helping (in part due to higher oil prices). Exports 105 Public Disclosure Authorized have climbed for four months now, contributing to a steadily growing trade surplus. 100 moving average index (four quar Recovery in output of some industries 95 160 90 I III I III I III I * III * I * III * Cement 140 Electricity 1995 1996 1997 1998 1999 * preliminary figures 120 100 Real effective exchange rate index 80 Motorcycle 110 60 Public Disclosure Authorized 100 40 Cars 90 20 80 70 0 Nov Nov Mar Mar Mar May Sep May Sep May Sep July July July 60 Jan-97 Jan-98 Jan-99 50 Indonesia This tentative recovery continues to be accompanied by 40 very low inflation.
    [Show full text]