Subsidized BANK burdensome

image-517Since Suharto in power until the mid-year 1997, the development of the Indonesian economy as a whole looks impressive. In general, macroeconomic indicators show growth rates and current conditions are very good. There was no sign of a worry for many people, especially for the government and monetary authorities. Macroeconomic indicators are intended include: economic growth, inflation rate, exchange rate, foreign exchange reserves and balance of payments.
The situation then changed dramatically in just one year, starting mid-year 1997 to 1998. The development of macroeconomic indicators turn, became very bad. The rupiah fell very sharply, economic growth becomes negative, very high inflation, balance of payments deficit is large, and depleted reserves running low. All the new party became aware that there was a crisis, financial crisis and the economic crisis. The crisis meets almost all criteria, or characteristics of a crisis which is known in economic discourse. These events can be regarded as the exchange rate crisis, banking crisis, financial crisis or economic crisis. In addition to a very broad scope that hit almost all sectors of the economy, events and conditions, take place in a prolonged period.

After a decade passed, a series of dramatic events that still retain a theoretical issue. Still there are differences of views on the main causes of the crisis, especially with regard to the weight of each factor identified. For example, if external shocks, particularly the effects of contagion from the regional crisis, which became the most important causative factor. Or, another question which is more internal, the fragility of economic fundamentals. If both are put forward together, then the debate leading to how the proportion of each. Another controversy is about crisis management efforts are not appropriate. Starting from about the delays, errors of action, up to cost too much.

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