JAKARTA - Senior economist and former Minister of Finance (Menkeu) of the Republic of Indonesia for the period 2013-2014, Chatib Basri, assessed that the current economic pressure and weakening of the rupiah will not make Indonesia fall into a monetary crisis like in 1998.
This was revealed by Chatib when delivering a presentation on the condition of the Indonesian economy recently at the Grab Business Forum 2026 entitled 'The Next Chapter: Scale Smarter, Execute Faster' in Jakarta, Tuesday, June 9.
"This is always the question asked to me, is it the same (economic conditions) in 1998 with 2026? My answer is no. Why? The biggest difference between 98 and 2026 is the flexible exchange rate," he said.
Chatib explained that in the upper middle class group, the depreciation of the rupiah had been anticipated for a long time. He gave an example, people whose children were studying abroad had put their rupiah in dollars.
"He has hedged (protected the value), the company has hedged. This is different from 1998. We were not used to flexible exchange rates at that time," he said.
"So when the rupiah falls, people (at that time) are still borrowing money in dollars, while the revenue is in rupiah, so that NPL (non-performing loans) rises. Now what is happening is that there is a different foreign exchange regime that allows people to make adjustments," he continued.
Therefore, Chatib is not too worried about the upper middle class. However, he is actually worried about the middle and lower middle income groups.
"Why? Because the effect of wheat flour may rise, so that (the price) of noodles will rise, the effect of soybeans that will make tahu/tempe (rise). This will take a long time. So, what really needs to be maintained is how to provide social protection to the lower middle income group to address this issue," he explained.
He also said that the weakening of the rupiah at this time would not make the domestic economy fall into a recession. He saw that the Indonesian economy was still growing positively.
"The question is whether this depreciation (of the rupiah) will cause a recession? I don't think so. People can argue that the figure (economic growth) is 5.6 percent, 5.1 percent or 4.7 percent. Whatever the figure, it is not negative growth. We talk about from the global standard, 5.5 percent to 5 percent is not bad at all in this world. So, I will also say that we will not have a recession," he added.
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