Double or nothing

Article Abstract:

Indonesia's President Suharto is taking an unorthodox approach to managing the country's economic problems. He has attracted particular controversy with his currency-board system, under which the rupiah would be pegged to the US dollar. The International Monetary Fund has stated that it will withdraw its $33 million bailout package if Suharto goes ahead with the currency-board plan, but Suharto may be gambling on the fact that the US would not want to destabilize the whole of Asia by creating serious economic problems in Indonesia.

Administration of General Economic Programs, Foreign Economic & Financial Assistance, Economic assistance, Foreign economic assistance, Suharto

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Deficit worries

Article Abstract:

The Indonesian government is taking measures to shrink the current-account deficit and to slow inflation. In the year ending March 30, 1996 the current-account deficit may more than double. In response, President Suharto has allowed the government to remove levies on various domestic and exported products. The government has proposed an economic plan that involves cutting tariffs and stimulating competition by deregulating business. The central bank has also limited the investments banks can make and raised interest rates.

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Dangers persist

Article Abstract:

There are indications of growing social unrest in Indonesia. This could push down the value of the rupiah and make it even harder for the Indonesian economy to recover. There are widespread concerns about the possible impact of rioting on the International Monetary Fund's rescue plans. The main worry is whether social unrest and inflation can be kept under control for long enough to allow the financial crisis to be addressed and confidence in the economy to be revived.

International Affairs, Civil Conflict, Civil war, Riots

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