[Jakarta Post] Jubilant Crowd Congregates in Merdeka Square to Celebrate Landmark Agreement

IMF comes to Indonesia’s rescue

October 20th, 1998


Thousands of Indonesians gathered at Jakarta’s Merdeka Square as news came out of the International Monetary Fund, who has just pledged to support Indonesia’s economy with a loan of SDR 7 billion. This timely injection of funds into Indonesia’s economy provides some much-needed relief to the hundreds of thousands of Indonesians, who have been apprehensive towards the nation’s economic outlook. Also part of the package is a Foreign Direct Investment (FDI) plan that hopes to create more jobs for Indonesia’s growing youth population.

Ahmed, a 20-year old student, said, “This couldn’t have come at a better time. I’m hopeful that the government will hold through to its promises to use the funds in meaningful ways.” Ahmed also shared that the various frameworks proposed such as GRISPS and FINE would go a long way towards improving the tainted image of Indonesia’s financial institutions.

The Bank of Indonesia has made massive promises pertaining to banking reforms, and the jury is still out on whether it can deliver on such promises, alongside fiscal reforms. Regional economists have credited the calibrated approach that Indonesia has taken with regards to its exchange rate policy. 

Analysts have called this a landmark decision by the IMF, which would certainly have given hope for other countries turning to the IMF for financial assistance.


Comments

Post a Comment

Popular posts from this blog

[Financial Times] Thai Baht Loses its Peg, Value Plummets

The beginning of an exchange rate-induced crisis in what was a tiger economy  A shocking tragedy befalls the Kingdom of Thailand as the state proceeded to float its currency following its perceived inability to sustain its peg to the greenback. A series of speculative attacks amounted to a sharp depreciation of the Thai baht, sending ripples across interlinked financial systems in the Asia-Pacific region. Notably, huge current account deficits, growing real estate asset bubbles, lax regulations in the financial sector, and dwindling foreign exchange reserves diminished investor confidence in the currency and the economic strength of the country. Inevitably, compounded with rumours of a currency devaluation, speculative attacks largely undermined the Bank of Thailand’s ability to defend the baht, ultimately floating the currency. 
Read more

[Asia Times] Thai Imports at Record Low, Worry Brewing

Trade conditions worsen, exporters panic while domestic producers celebrate   With the further depreciation of the Thai baht, Thailand’s quantity demanded for imports has declined  due to a diminishing external value of the Baht (and hence more expensive foreign goods for Thai locals).  This has led to a fall in export demand for trade partners like Japan and Indonesia, with this impact being  the worst in South Korea. In the past month, South Korean exports of electronics, manufacturing materials,  and even basic construction materials like wood and cement have declined by 10.2% as these  export-oriented industries see their long-term profitability being threatened. Smaller enterprises have been  pushed to the brink of insolvency, with a few companies barely breaking even.  Thai manufacturers are ecstatic about such uncompetitive markets, however the general consumer does  seem to think differently. Prices are slowly rising as well, with the...
Read more