The Politics of Economic Liberalisation in Indonesia from mid-1997 to October 1999
This chapter describes a dramatic increase in the pace and extent of liberal market reform in Indonesia. Massive student demonstrations occurred, culminating in the capture of the Indonesian parliament by student groups in May 1998. Eventually in May 1998, Suharto was forced to resign. In other words, he made it clear that the International Monetary Fund (IMF) assistance was conditional upon a fundamental change in the structure of power and interest in Indonesia. In the absence of such preconditions, IMF officials argued, the impact of a currency board on the Indonesian economy would be disastrous particularly irritating for the IMF was the fact that the main beneficiaries of the policy reversal were members of the Suharto family. The Indonesian government was also able to avoid implementing the fiscal provisions of the IMF package. By mid-1997, therefore, the process of economic liberalisation in Indonesia appeared to be running out of steam.