Learning from History: Deputy Finance Minister Outlines Three Global Crisis Sources

Jakarta, CNBC Indonesia - Deputy Finance Minister Juda Agung highlighted three sources of global crises based on historical experiences of various countries, noting Indonesia remains far from such conditions. “Some claim our economy is heading towards a crisis like 1997-1998, but looking at the figures, we are far from that situation. Historically, the crises experienced by countries worldwide stem from three sources,” Juda said during his speech at the National Conference on Regional Economic Development at Balai Kartini in South Jakarta on Monday, 25 May 2026.

He explained the first source is fiscal crisis, as seen in Latin American countries in the 1980s, where they could not pay public debt, leading to a debt crisis and expanding fiscal deficits. Governments were unable to finance the widening deficits as investors lost confidence and stopped buying bonds. “Fiscal deficits ballooned and governments could no longer secure financing because no one trusted them anymore—bonds went unsold. This led to a fiscal crisis in Latin America,” Juda said.

He added that Indonesia is far from this scenario, with fiscal deficit maintained below 3% and fiscal financing still trusted by domestic and foreign investors, reflected in SBN yields around 6.5%-6.7%. “Therefore, there are no signs of a fiscal crisis,” he stated.

The second source is balance of payments crisis, as in 1997-1998, when companies rushed to withdraw foreign funds, currency depreciated, and sudden stops in foreign capital flows occurred. “Many companies collapsed due to inability to repay foreign debts, and our balance of payments was severely weak at the time. Currently, our balance of payments figures are relatively healthy and balanced, so there are no signs of this crisis,” Juda explained.

Lastly, financial system crisis marked by excessive lending and economic bubbles, which collapse when they burst, as seen in the 2008 US crisis. “When the bubble bursts, the banking system collapses or a financial crisis occurs, like in 2008 in America. There are no such signs in our data to date,” he concluded.