Crawford School of Public Policy | Arndt-Corden Department of Economics | Indonesia Project
Indonesia Study Group
Date & time
Wednesday 19 May 2010
Coombs Seminar Room B, Coombs Building, Fellows Road, ANU
In November 2008, a committee headed by the finance minister, Sri Mulyani Indrawati, and which also included the then governor of the central bank, Boediono, decided to bail out Bank Century, at what turned out to be far greater cost to the general public than first expected. This was a logical consequence of measures taken in the wake of the Asian financial crisis in the late 1990s, when scores of banks failed at a cost of about half of annual GDP. These measures were intended to prevent a recurrence of such an episode, but I argue that they were ill-designed. Soon after the re-election of SBY’who had chosen the former governor as his running mate, and whose former coordinating minister for peoples’ welfare, Aburizal Bakrie, had by now become chairman of the Golkar Party’Golkar and several other parties that were supposedly partners in the newly reconstituted rainbow coalition cabinet rediscovered this bailout, and sought to turn it against the president, the vice president and the minister of finance. In this presentation I will address both economic and political aspects of the ensuing disruption to what had seemed a benign political environment.