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Indonesia: Austerity Hurts


International Outlook: GLOBAL WRAPUP

INDONESIA: AUSTERITY HURTS

After six months of evasive bobbing and weaving, Indonesian President Suharto is implementing the terms of the International Monetary Fund's $43 billion rescue package. The experience is painful. A May 4 notice of the imminent end of government subsidies on oil products sparked three days of rioting and caused long lines at gas stations in the capital, Jakarta. But price hikes ranging from 25% to 71% on gas and kerosene failed to revive investor confidence in the Indonesian economy. Instead, news of the riots, coupled with reports that inflation has reached 30%, sent the rupiah into a tailspin. It lost 10% of its value in a day.EDITED BY JOHN TEMPLEMAN


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