Though it may be tempting to apply the narrow tools of conservative economics to crisis affected Asian countries such as Indonesia, policy makers must pay considerable attention to their suitability for South East Asia. In the past, policy prescriptions have been evaluated in the context of orthodox macroeconomic variables. There is scant attention paid to issues of poverty, income distribution and the plight of the people as a whole. Hence, it is the central contention of this study that the IMF stabilisation program in Indonesia was inadequate because social and political factors were largely ignored.
Many critics would answer this claim with the point that, it is not the role of the IMF to behave as social architects. It must be realised that the effects of IMF conditionality and fund programs enforced on recipient nations ultimately effect the political and social stability of that nation.
Current assessment of the IMF's involvement in Indonesia has held a somewhat narrow focus on short-term measures of economic stability and growth. To date, most methods of evaluating Fund programs in Indonesia have centered on domestic and external balance, inflation and GDP growth. Accordingly, it is the objective of this thesis to assess the efficacy of IMF involvement in Indonesia utilising more socio-economic yardsticks in restoring economic and social stability.
In 1997, when the crisis began, Indonesia's external debt totaled 60% of GDP, social unrest plagued both major cities and rural areas and government instability and corruption became increasingly exposed. The IMF relatively ignored these indicators, hence, prima facie evidence suggests that in terms of socio-economic indices, the IMF failed in terms of poverty and income levels. This has resulted in a slide of nine positions within the United Nations Human Development Index, placing Indonesia equal with Bangladesh and at the same socio level of 1966.