The International Monetary Fund and Social Safety Net Construction Failure in Indonesia 1997-1998

Abstract

Throughout the International Monetary Fund's history it has been criticized for failing to address the negative impact its adjustment programs have on the poor in borrowing countries. This study examines the Fund's declared intention and actions regarding the construction of a social safety net in Indonesia from October 1997 until May 1998. A historical narrative using Constructivism as a theoretical framework is used to explain the relationship between the IMF, Suharto and the effect their interaction had on social safety net construction. This historical perspective reveals that rather than working towards building a social safety net, the Fund's main priority was the decentralization of Indonesian political and economic structures.