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Word Count: 737
The Impacts of Economics Crisis in Indonesia The economic crisis which hit Indonesia began in Thailand in June 1997 It rapidly spread causing stocks to tumble and many Asian currencies to fall the worst of all the Indonesian Rupiah Indonesias worsening economic situation is mainly due to the sharp depreciation of Rupiah against the US dollar Being out of our governments control the Rupiah keeps on sliding further and at its lowest point touched a level of Rp 17000 against the US dollar Realizing that the economy will not recover overnight it takes time and serious effort to bring back the economy on the right track In order to cover the budget deficit the Indonesian government asked the assistance from the International Monetary Fund As for the revival of the economic crisis Indonesia needs massive aid The crisis has caused the banking sector to collapse dramatically The large number of banks in my country might be one of the main problems as there are more than 265 units The recent economic crisis has put more burdens on the banking sector so the government decided to close down 16 ailing private banks without a full guarantee on the return of their deposit funds This has forced depositors to draw their savings and moved to foreign and government banks which resulted in a big rush for several private banks Due to this The Central Bank has to print new money for injection and bailing out the insolvent banks caused by the rush By printing money the government unintentionally prompted the outbreak of hyperinflation Panicked by this the Central Bank decided to raise interest rates As a result companies that were highly dependent on loans are forced to close down Many Indonesian factories are facing financial difficulties due to the huge and extensive overseas debts and a tremendous dependence on importing raw material and supplies We know that most factories have been too dependent
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