Jakarta. Indonesia has fully repaid the remaining government bonds issued as part of its response to the 1997–98 Asian financial crisis, Finance Minister Suahasil Nazara said Sunday, closing a nearly three-decade chapter in the government's crisis-era debt obligations.

Suahasil, who has been in office for less than a week, said the final payment was completed in August and described the milestone as an achievement.

“The government bonds issued as part of the response to the 1997–98 crisis were fully settled in August. This is also an achievement for us,” Suahasil said, as quoted by Antara.

The repayment was funded using a Rp 58 trillion ($3.3 billion) surplus transferred by Bank Indonesia to the state treasury.

The transfer caused government revenue from separated state assets to surge to Rp 58 trillion as of August, far exceeding the Rp 1.8 trillion initially projected in the 2026 state budget. State-owned enterprise dividends no longer flow directly into the state budget following the establishment of sovereign wealth fund Danantara Indonesia.

Suahasil said regulations governing the Bank Indonesia surplus allowed the government to use the funds to settle its outstanding obligations, including bonds issued in response to the banking crisis.

“The use of the funds is regulated for the payment of obligations or the settlement of Indonesian government bonds that were issued at the time to address the 1997–98 crisis,” he said.

The August payment completed the settlement of several types of government bonds issued during the crisis.

“There were several types of bonds that we issued at the time. Some were fully repaid in July 2020, while others were only fully repaid this August,” Suahasil said.

Legacy of the Asian Financial Crisis
Indonesia was among the countries hardest hit by the 1997–98 Asian financial crisis, when a collapse in the rupiah and severe stress across the banking system prompted authorities to provide massive liquidity support to struggling lenders.

Bank Indonesia provided approximately Rp 144.5 trillion in emergency liquidity assistance, commonly known by its Indonesian acronym BLBI, to dozens of banks as authorities sought to prevent the financial system and payments network from collapsing. Finance Ministry records put the number of recipient banks at around 48.

The program subsequently became one of Indonesia's biggest financial scandals.

A government audit found widespread irregularities in the use of the emergency funds. World Bank records citing the audit found that a substantial portion was used for purposes including payments to related parties, foreign-exchange transactions and other activities inconsistent with the intended liquidity support.

The government subsequently assumed responsibility for stabilizing and restructuring the banking system, including through the issuance of bonds whose fiscal legacy extended for decades.

The settlement of those government bonds, however, is separate from the state's efforts to recover money and assets from former BLBI recipients and other parties deemed responsible for outstanding obligations.

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