Financial crisis

Financial crisis

In response to the financial crisis generated by a sharp 30% depreciation in the value of the currency, the rupiah, it was announced in September 1997 that major construction projects, including roads, power stations, and oil refineries, would be postponed until the economy improved. In the province of Irian Jaya it was reported in October 1997 that more than 460 people had died from famine caused by prolonged drought.Also in October, Singapore and Malaysia pledged US$10 billion and US$1 billion respectively in financial assistance to help the battered Indonesian economy, and in November an International Monetary Fund (IMF)-led rescue worth over US$43 billion was agreed. The associated restructuring reforms included closure of 16 banks, including some controlled by relatives of President Suharto, but matters failed to improve. It was estimated that the country's level of external debt exceeded annual GDP at the reduced exchange rate, and the rate of unemployment jumped to over 10%.