[Antara] The Christmas Gift

Indonesia is in a BOP crisis

Rapid capital outflows following the Christmas Scandal threw financial markets in Jakarta into utter chaos. The withdrawal of funds en masse triggered a sharp devaluation of the rupiah, placing a larger strain on companies that borrowed from foreign creditors. Many companies that could not meet their debt obligations filed for bankruptcy. Meanwhile, the Bank of Indonesia, in an attempt to defend the rupiah from further devaluations, exhausted its foreign reserves to artificially increase the demand for rupiah. With foreign reserves dwindling rapidly, the BI now calls for international assistance. All eyes are on the IMF.

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