BANGLADESH INSTITUTE OF INTERNATIONAL AND STRATEGIC STUDIES


ECONOMIC CRISIS IN INDONESIA

Author: Ehsan Latif

DOI Link: https://www.doi.org/ BIISSj1999v20n3a4

ABSTRACT

The objective of this paper is to identify the causes of recent economic crisis in Indonesia. The economic fundamentals of Indonesia were quite strong before the onset of the crisis. There were however. some problems in the financial sector. Under the pressure of the IMF in the early 19905. Indonesia embarked on a hasty financial sector reform programme. This reform led to huge expansion of the financial sector in the country. The ratio of short term debt to foreign exchange crossed the critical marks and made the country vulnerable to any liquidity crisis. The financial crisis started from Thailand. Initially. Indonesia tackled the situation carefully. However. some policy mistakes by the government and wrong prescription of the 1MI' pushed the country into deep trouble. Political uncertainty and food shortage all aggravated the problem.