The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site.

All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Capital Markets

Indonesia starts to set its own course

Indonesia has at last emerged from IMF intensive care to take its own first tentative steps towards full rehabilitation. Banks looks healthier and the country is preparing to return to the international capital markets. Early signs are encouraging, but key challenges lie ahead, including the roll-over of domestic recapitalization bonds. Chris Leahy reports.

Indonesia's president,
Megawati Sukarnoputri

NO-ONE WOULD DISPUTE the progress that Indonesia has made since the dark days of Asia's financial crisis, when president Suharto's power base crumbled and the country descended into political and economic chaos. In 1998, the economy shrank by 13.1% and annual inflation soared to 77.6%. In the same year, the average exchange rate was Rp10,088 to the dollar, compared with Rp2,205 between 1990 and 1997, and interbank overnight interest rates hit 41.42%.  Bolstered by an IMF bailout of some $40 billion, Indonesia has gradually clawed its way back. GDP growth in 2003 was 4%, inflation 6.4%, and interbank rates 6.44%. Only the exchange rate has stayed stubbornly weak at an average of Rp8,389 to the dollar.

Nothing demonstrates the scale of the comeback better than last year's $300 million IPO of Bank Mandiri, created from a restructuring of several hitherto bankrupt institutions under the auspices of the Indonesian Bank Restructuring Agency (IBRA). The deal would have been unthinkable just 12 months earlier.

Farewell to the IMF programme

In July 2003, as the macroeconomic picture improved, the Indonesian government took the locally popular decision to exit the IMF programme with effect from January 1 2004.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree