Asian Development Bank's Crisis Management Interventions in Indonesia

Evaluation Document | 31 August 2001
This special evaluation study reviews the experience and performance of the Crisis Management Intervention with reference to the crisis-related objectives in Indonesia.

ADB's response to the financial crisis that engulfed Indonesia and several other Asian countries beginning in July 1997 was prompt and comprehensive. The lending support comprised five largely quick-disbursing loans totaling $2.8 billion during 1998-1999, which formed a part of the initial crisis assistance package of $18 billion put together by the International Monetary Fund.

This evaluation study concludes that the flexibility and vigor displayed during the processing of these emergency loans was not sustained by ADB and the Indonesian government, and particularly the Ministry of Finance, during post-approval phases.

But a key lesson emerging from the crisis support loans and nonlending support confirm that in its capacity as the region's leading development institution, ADB has a clear role and responsibility in helping developing countries in the region overcome crises.

"However, crisis assistance needs to be distinguished from normal development assistance," says the study. "It should focus on restoring investor confidence as quickly as possible, rather than on building development capacity over [the] medium to long term." Lending support during crisis needs to be mostly quick-disbursing, and "provided with urgency." Crisis assistance should also be supportive of reforms to remove structural weaknesses and policy distortions that have a direct causal relationship with the crisis.

The main recommendations for ADB's future crisis response include the need to refine the framework for its assistance, such as further adapting the special program loan modality. The study says that "flexible application of standard procedures" are needed during a crisis, and that ADB should be selective in the elements of reform agendas attached to crisis assistance to be able to deliver emergency assistance rapidly. In addition, ADB needs to address the question of internal capacity building to be better prepared for analyzing and intervening in future crises.

Contents 

  • Executive Summary
  • Introduction
  • Interim Evaluation
  • Overall Assessment
  • Lessons, Issues, and Recommendations
  • Appendixes