Sell-Off in Indonesia

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There was panic selling in the streets of Indonesia Thursday as international officials reacted to the possibility that Indonesia may default on its IMF loans. The rupiah lost 26 percent of its value in one day and the Jakarta Composite sank 19 percent at one point before recovering modestly to end the day down 11.95 percent.

The renewed concerns came as Indonesia released its 1997-1998 budget, which economists described as a pipe dream and lacking the economic reforms necessary for Indonesia to recover from its financial troubles.

Meanwhile, critics including the World Bank continued to attack the IMF strategy for Asia as too harsh and likely to make the crisis worse. The IMF's austerity measures were defended by Clinton administration officials. "The approach that has been outlined, which starts with countries pursuing sound policies to create confidence ... is the appropriate framework for addressing these problems," Deputy Treasury Secretary Lawrence Summers told reporters.