ABSTRACT
In 1997 the devaluation of the Thai baht triggered off one of the worst financial crises of the 20th century, which caused ripples even as far away as Russia and Latin America. Indonesia was one of the worst hit countries: the crisis resulted in a near collapse of the financial system accompanied by political turmoil. As the country was grappling with its economic woes, a number of regions witnessed separatist and social conflicts fought along ethnic and sectarian lines, thus further compounding Indonesia’s problems. As a consequence of massive layoffs, bankruptcies and hyperinflation resulting from the financial crisis, the poverty rate in the country dramatically increased from 17.7 per cent of the population (around 34.5 million people) in 1996 to 24.2 per cent (49.5 million) in 1998.
