Chronology of the Crisis

In 1997, Indonesia was afflicted with a severe El Nino-induced drought, a plummeting exchange rate, and near paralysis of the banking sector. By early 1998, Indonesia was experiencing rising inflation, growing unemployment, revelations of foreign commercial indebtedness, and declining GDP growth. In March 1998, the People's Consultative Assembly (MPR, Indonesia's supreme government body) selected President Soeharto for a seventh five-year term with former Minister of Research and Technology B. J. Habibie as Vice President. In May 1998, after violence rocked the capital city, President Soeharto resigned and President Habibie was sworn in. In November 1998, a Special Session of the MPR approved advancing the date of the next elections. Parliamentary elections were held on June 7, 1999. The MPR convened on October 1, 1999. It selected Abdurrahman Wahid as President and Megawati Sukarnoputri as Vice President for 1999-2004. In late October, President Wahid's new cabinet was inducted. In August 2000, after the first annual MPR session, President Wahid reshuffled his cabinet.

In late October 1997, the Soeharto government concluded an agreement with the IMF, which underwent regular modifications. The Habibie government concluded a new agreement with the IMF about a month after taking office and also amended it periodically. By the fourth quarter of 1998, the exchange rate had begun to stabilize and inflationary pressures had abated. Despite some incidents of exchange rate instability, the rupiah remained below Rp10,000/USD, inflation continued to be low or negative, and initiatives were launched to address pressing financial and corporate sector problems. In July 1999, the Bank Bali scandal broke. In September 1999, after a successful ballot consultation in East Timor (through which the majority of East Timorese voters opted for separation from Indonesia), violence erupted there and a multinational force was introduced under UN auspices.

President Wahid and Vice President Megawati accepted the outcome of the East Timor ballot. In their earliest statements, they and senior cabinet members expressed their intention of working with the international community on economic policy reform and growth issues. They stated that they welcomed continued foreign investment. The President highlighted this point during his trips to several countries, including the United States. On January 20, 2000, the GOI concluded a new Memorandum of Economic and Financial Policies with the IMF. On July 31, 2000, the economic team signed its second revision of the Memorandum of Economic and Financial Policies to the IMF. In early September, the economic team that took office in August negotiated some revisions to the July 31 document. This revised document was approved by the IMF board in mid-September.

August 14, 1997	Rupiah was floated
September 3, 1997	The GOI announced budget tightening. To conserve budgetary funds and reduce pressure on the balance of payments, the GOI suspended major Projects undertaken by or in conjunction with government agencies and state-owned enterprises and financed with offshore commercial borrowing.
October 8, 1997	The GOI announced that it had requested IMF assistance.
October 31, 1997	The GOI concluded negotiations with the IMF
November 1, 1997	The GOI closed 16 ailing banks.
	The IMF board approved a stand-by arrangement. The program had four basic elements: monetary policy; fiscal policy; financial sector restructuring; and structural reforms. Financial support for the package included: $10 billion stand-by loan from the IMF; $4.5 billion from the World Bank; $3.5 billion from the Asian Development Bank; and contingency second line of defense from several bilateral sources including the United States, Japan, Singapore, Malaysia, and Australia.
November 8, 1997	The GOI issued a decree restoring 15 of the projects suspended in September to active status.
Early January	Rising prices and fears of shortages led to panic buying of food.
January 10, 1998	The GOI issued a decree suspending again the 15 projects affected by the September and November decrees.
January 15, 1998	President Soeharto signed and released a Memorandum of Economic and Financial Policies (revised letter of intent) with the IMF. This letter significantly increased structural reform commitments. Commitments included: eliminating preferential treatment for the "national car" program; eliminating budget and off-budget support for the national aircraft industry; eliminating the clove monopoly; reducing import tariffs; eliminating forest product marketing monopolies; and reforming export taxes. The GOI stated that it had "canceled" 12 of the 15 infrastructure projects affected by the September, November, and January decrees (projects yet to be identified).
January 21, 1998	The GOI issued decrees to implement many of the trade and investment reforms described in the January 15 letter of intent.
January 27, 1998	The GOI announced measures to address the financial crisis, including extension of a government guarantee to Indonesian banks’ obligations to depositors and creditors and establishment of the Indonesian Bank Restructuring Agency (IBRA or its Indonesian acronym BPPN).
	Former Minister Radius Prawiro and private sector representatives launched a proposal for dealing with private sector foreign commercial debt. The proposal specifically excluded the possibility of the GOI’s assuming responsibility for private sector obligations.
February 1998	Domestic economic debate focused on proposals for a currency board.
February 1998	Responsibility for 54 banks transferred to IBRA
March 1998	The People’s Consultative Assembly (MPR) selected President Soeharto for a seventh five-year term. It selected long-time Minister of Research and Technology B. J. Habibie as Vice President.
	The "Seventh Development Cabinet" was sworn in. Members included President Soeharto’s daughter as Minister of Social Affairs and timber mogul Bob Hasan as Minister of Industry and Trade.
April 4, 1998	The GOI announced fuel price hikes. Riots ensued, particularly in North Sumatra. The fuel price hikes were quickly rolled back.
April 8, 1998	The GOI and IMF reached agreement on the second revision of the stand-by arrangement
April 22, 1998	The GOI announced economic reform initiatives, including: amended bankruptcy law (scheduled to enter into force on August 20, 1998); identification of state-owned enterprises to be completely or partially privatized during FY 1998/99; and further steps on corporate external debt.
May 4, 1998	The GOI announced fuel price hikes. Riots ensued, particularly in North Sumatra. The fuel price hikes were quickly rolled back.
May 12, 1998	Four students were killed at Trisakti University in Jakarta.
May 13-15, 1998	Rioting, arson, looting, and rape rocked Jakarta and other Indonesian cities.. The U.S. State Department ordered the departure of all USG dependents and non- essential personnel and recommended that all U.S. citizens depart Indonesia either via commercial means or on USG-organized evacuation flights.
May 21, 1998	President Soeharto resigned and was succeeded by Vice President Habibie.
May 22, 1998	President Habibie named his new cabinet, the "First Development Reform Cabinet."
June 8, 1998	The private foreign commercial debt steering and contact committees announced a three-part arrangement to deal with trade credit, interbank obligations, and corporate external debt (the "Frankfurt Agreement").
June 24, 1998	The GOI and IMF reached agreement on the third amendment to the stand-by arrangement.
June 30, 1998	GOI committed to pay trade credit arrears by this date as part of the Frankfurt Agreement on private external debt.
July 29, 1998	The GOI and IMF agreed to the fourth amendment to the stand-by arrangement. The IMF approved converting the stand-by to an Extended Fund Facility program. IMF disbursements resumed.
July 29-30, 1998	The Consultative Group on Indonesia (CGI) met in Paris under World Bank chairmanship. Donors pledged $7.9 billion in assistance for Indonesian fiscal year 1998/99 (April-March), largely to alleviate hardship esulting from the severe economic downturn. This in addition to extraordinary measures (including rescheduling of some sovereign obligations) was designed to cover the fiscal gap that had been exacerbated by declining revenues and rising subsidies for basic goods. The total in financial support mobilized for FY 1998/99 was $13.9 billion.
August 1998	Glenn Yusuf takes over as head of bank restructuring agency IBRA.
August 3, 1998	The Indonesian Debt Restructuring Agency (INDRA) for dealing with corporate external debt was launched. It offers a foreign exchange swap facility to Indonesian firms needing dollars to repay offshore debts.
August 20, 1998	The newly amended bankruptcy law entered into force
August 21, 1998	The GOI announced its plans for dealing with banks that had been closed, frozen, or taken-over. Banks were given one month to repay or come up with a plan to repay central bank liquidity support. Police investigations of bank operations ensued.
September 1, 1998	The special commercial court established under the newly amended bankruptcy law began accepting bankruptcy filings.
September 9, 1998	The "Jakarta Initiative" was launched. It provided a set of principles for out-of-court discussions between debtors and creditors.
September 11, 1998	The IMF announced that Indonesia was in compliance with its economic stabilization and reform program. The GOI and IMF agreed to the fifth amendment of the Memorandum of Economic and Financial Policies.
September 21, 1998	Deadline for owners of frozen and taken-over banks to repay central bank liquidity support and other obligations, per August 21 announcement. The repayment plan was subsequently revised, calling for repayment over four years, with 27 percent due in cash the first year. Details pending.
September 29, 1998	GOI announced key elements of a program to recapitalize potentially viable banks. The GOI offered to fund 80 percent of the recapitalization costs for banks with capital adequacy ratios between negative 25 % and plus 4 %.
October 16, 1998	Indonesian Parliament (DPR) passed amendments to the Banking Law. President Habibie signed into law in early November. Allows 100 % foreign ownership of Indonesian banks.
October 19, 1998	GOI and IMF agreed on seventh revision of the memorandum on Economic and Financial policies
October, 1998	Rupiah strengthens from Rp 11,000/US$ to 7,000-range
November 2-3, 1998	Jakarta Initiative conference draws over one thousand participants.
November 3, 1998	Presidential decree established a ministerial task force and monitoring team for the social safety net.
November 13, 1998	GOI and IMF agreed on seventh revision of the Memorandum on Economic and Financial Policies.
December 10-13, 1998	The People’s Consultative Assembly (MPR, the supreme body of Indonesia’s government) met to reset the date of the next elections from 2002 to 1999.
November 13, 1998	Violent clashes between student demonstrators and security forces near the MPR building.
December 9, 1998	Further details on bank recapitalization announced
December 16, 1998	IMF agrees to disburse approximately US$ 1 billion to GOI, bringing total disbursements to approximately US$ 9 billion since November 1997.
February 27, 1999	GOI scheduled to announce which banks would be closed and which qualified for recapitalization. However, it announced the day before that the announcement had been postponed for two weeks. Completion of the GOI’s next letter to the IMF similarly postponed, which delayed IMF Board review of Indonesia’s program for release of the next tranche.
March 13, 1999	Rescheduled date for bank closure/recapitalization announcement. The authorities announced the closure of 38 banks. It announced that nine private banks had qualified for participation in the GOI's bank recapitalization program and that a further seven banks would be taken over. According to the Memorandum of Economic and Financial Policies to the IMF released that day, the target date for completing recapitalization of the nine private banks was the end of June.
April 1999	The nine private banks to be recapitalized signed investment contracts with the GOI. Eight of them subsequently placed funds in escrow. Standard Chartered Bank entered Bank Bali as an investor and placed the funds in escrow for that bank. Bank Niaga declined to place funds in escrow and was taken over (GOI spokesman predicted that the take-over was likely to be temporary because foreign investors were interested in that bank as well.
May 19-June 4, 1999	Parliamentary election campaign period.
May 14, 1999	Indonesia issues the next revision of its economic program with the IMF.
June 7, 1999	Parliamentary elections
June 1999	IMF Board approves disbursement of loan tranche
July 22, 1999	GOI issues the next supplemental Memorandum of Economic and Financial Policies, agreed to with the IMF.
August 30, 1999	East Timor consultation ballot scheduled.
End-August 1999	Following public listing of largest debtors to IBRA in June and ensuing discussions with them, GOI publicized names of non-cooperative debtors.
Early September 1999	East Timor ballot resulted announced: 78.5 percent voted against enhanced autonomy. Violence erupted. A multinational force under UN auspices was introduced.
October 1, 1999	People's Consultative Assembly (MPR) session opened
October 14, 1999	President Habibie's accountability speech to MPR (rejected).
October 20, 1999	People’s Consultative Assembly (MPR) selected Abdurrahman Wahid (PKB party) as president.
October 21, 1999	The MPR selected Megawati Sukarnoputri (PDI-P party) as vice president.
October 26, 1999	New cabinet announced. Ministers with economic portfolios:
	Coordinating Minister for Economics, Finance, and Industry: Kwik Kian Gie
	Minister of Finance: Bambang Sudibyo
	Minister of Mines and Energy: Susilo Bambang Yudhoyono
	Minister of Industry and Trade: Jusuf Kalla (October 1999 to April 2000) Luhut Pandjaitan (April 2000 - present)
	Minister of Agriculture: Muhammad Prakosa
	Minister of Forestry and Plantations: Nurmahmudi Ismail
	Minister of Communications: Agum Gumelar
	Minister of Maritime Exploration: Sarwono Kusumaatmadja
	Minister of Manpower: Bomer Pasaribu
	Minister of Health: Ahmad Suyudi
	Minister of Settlement and Regional Development: Erna Witoelar
	State Minister for Research and Technology: A.S. Hikam
	State Minister of Cooperatives and Small and Medium Business: Zarkasih Noer
	State Minister for the Environment: Sonny Keraf
	State Minister for Regional Autonomy: Ryaas Rasyid
	State Minister for Tourism and the Arts: Djaelani Hidayat
	State Minister for Investment and State-Owned Enterprises: Laksamana Sukardi (October 1999- April 2000) Rozy Munir (April 2000 - present)
	State Minister for Public Works: Rozik Boedioro Soetjipto
November 2, 1999	The Government conveyed the "long-form" PriceWaterhouseCoopers report on Bank Bali to visiting IMF Asia Pacific Director Hubert Neiss.
January 20, 2000	GOI signs new Memorandum of Economic and Financial Policies to the IMF.
January 20, 2000	GOI presents FY 2000 budget to the DPR (nine-month budget for April-December 2000 as Indonesia shifts to a calendar-year fiscal year starting in 2001).
February 1-2, 2000	Consultative Group on Indonesia (CGI) meets in Jakarta, pledges $4.7 billion in assistance for FY 2000.
February 4, 2000	IMF board approves program.
February 8, 2000	As part of the process of selling its shares in Astra International, IBRA convenes an extraordinary shareholders meeting at which senior management was changed.
March 2, 2000	DPR approves FY 2000 budget, with some important changes from the government's January 20 budget request.
end-March 2000	Completion of the first review of the IMF-supported economic program delayed.
April 2000	Second Paris Club rescheduling.
April 2000	President Wahid replaces Investment and Trade Minister Kalla (Golkar party) and State Minister for Investment and State-Owned Enterprises Laksamana Sukardi (PDI-P party)
May 17, 2000	Amended Memorandum of Economic and Financial Policies to the IMF issued.
June 2, 2000	IMF Board approves completion of the first (since January 2000) review of the program.
July 31, 2000	Amended Memorandum of Economic and Financial Policies to the IMF issued.
August 1-18, 2000	People's Consultative Assembly (MPR) meeting
August 23, 2000	President Wahid names new cabinet. Key ministers with economic and related portfolios are:
	Coordinating Minister for Economics Dr. Rizal Ramli
	Minister of Finance: Drs. Prijadi Praptoshuhardjo
	Minister of Agriculture and Forestry Dr. Bungaran Saragih
	Minister of Communications and Telecommunications Lt.Gen. (ret) Agum Gumelar
	Minister of Manpower and Transmigration Ir. Alhilal Hamdi
	Minister of Industry and Trade Lt.Gen. (ret) Luhut Panjaitan
	Minister of Energy and Mineral Resources Dr. Purnomo Yusgiantoro
	Minister of Settlement and Regional Infrastructure Ir. Erna Witular
	Minister of Maritime Affairs and Fisheries : Ir. Sarwono Kusumaatmadja
	Non-Departmental Minister for State Apparatus Dr. Ryaas Rasyid
	Non-Departmental Minister for Cooperatives and Small and Medium Enterprises Drs. Zarkasih Noer
	Non-Departmental Minister for the Environment Dr. Sonny Keraf
	Non-Departmental Minister for Research and Technology: Dr. Muh. A.S. Hikam
	Junior Minister of Forestry (attached to the Department of Agriculture and Forestry) Dr. Nurmahmudi Ismail
	Junior Minister for the Acceleration of Eastern Indonesia Development Manuel Kaisiepo
	Junior Minister for National Economic Restructuring Ir. Cacuk Sudarijanto
September 7, 2000	Revised Memorandum of Economic and Financial Policies to the IMF signed
September 13, 2000	Bomb explodes in underground parking garage of Jakarta Stock Exchange building; multiple casualties.
September 14, 2000	IMF Board approves completing the second review (since January 2000) of the program
Early October 2000	FY 2001 budget to be presented to Parliament; this will be first budget to incorporate fiscal decentralization scheduled for implementation starting January 1, 2001
October 17-18, 2000	Consultative Group on Indonesia (CGI) meeting scheduled to be held in Tokyo
November 17, 2000	Several members of the Bank Indonesia Board of Governors resign. GOI and Parliament subsequently decide to amend the Bank Indonesia Law of 1999. The resigning members agree to serve until the new board members are named.
December 6, 2000	Bank Indonesia Governor Sabirin returns to the office after several months in non-active status related to the Attorney General's investigation of the Bank Bali campaign finance scandal.
December 2000	Parliament approves FY 2001 budget. GOI issues decrees to implement Law No. 25 of 1999 on fiscal decentralization
January 1, 2001	Scheduled commencement of implementation of Law No. 22 of 1999 on political autonomy and Law No. 25 of 1999 on fiscal decentralization

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