Indonesia suffered its worst financial crisis in 1997 to 1998. The Asian Financial Crisis that hit the nation severely affected its economy, with some reports indicating a 13.7 percent contraction in growth.
In one year, the Rupiah weakened from 2,500 against the U.S. dollar, to 10,000 Rupiah — with the pair peaking at 17,000.
Twenty years on, the decline that triggered poverty, political instability, and mass unemployment has taught policymakers important lessons about maintaining healthy debt levels, according to Chatib Basri, Indonesia’s finance minister from 2013 to 2014.
Speaking with CNBC’s “Capital Connection” on Monday Basri suggested that Indonesia has already learned from its mistakes, which could be seen during the Global Financial Crisis when the government’s economic stimulus limited the negative impact.
Still, the government’s efforts to deregulate the economy do not always translate to the local level, as municipal governments often refuse to comply with the state’s laws. Due to decentralization, the central government doesn’t have total control over, which impedes the full implementation of any new policies.