Indonesia not in state of crisis: Finance Minister
Despite the exodus of foreign capital from Indonesia that has sent its currency tumbling in the recent weeks, Finance Minister Chatib Basri says Southeast Asia's largest economy is not in a state of crisis.
Basri told CNBC on Thursday that the country "has no intention" of implementing capital controls to stem the plunge in its currency, and is "not at all" in need of a bailout package as seen in 1997.
"We do not have any intention to use capital controls," he said. When asked whether the country has been in talks with the International Monetary Fund regarding a possible bailout, he said, "Not at all. The budget deficit will come in at about 2.4 percent of GDP, but the realization of the deficit until July was only 1 percent. There's still fiscal space."
(Read more: Bank Indonesia seen raising rates as rupiah wilts)
During the 1997-1998 Asian Financial Crisis, Indonesia received a $43 billion IMF bailout to help stabilize its economy after the rupiah fell by more than 60 percent over a period of six months from July 1997 to January 1998.
While the currency has also been under pressure in the recent months - declining 11.5 percent against the dollar since fears of the Federal Reserve winding down its monetary stimulus began to escalate in late-May - the fall has been more contained compared to 1997-1998.
Basri said the country has a $5.5 billion in emergency reserves, known as the deferred drawdown option, to help stabilize the rupiah, but it does not have plans to deploy it yet.
(Read more: Indonesia is latest emerging market whipping boy)
"We do have the deferred draw down option, if the bond yield reaches a certain level," he said. Indonesia's 10-year government bond yield has risen to 8.85 percent, from 5.95 percent just three months ago.
At an emergency meeting on Thursday, the country's central bank hiked its benchmark interest rate by 50 basis points to 7 percent in an effort to stabilize the currency.
Basri said the government's main objective is improving the country's current account deficit - which has been a large driver behind the selloff in currencies like the rupiah and India's rupee.
Last week, the Indonesian government unveiled during a package of policy measures to reduce imports and lift investment in labor intensive industries.
(Read more: First India, then Indonesia... who is next?)
Helped by the recent steps, he expects the current account deficit to fall to around 3 percent of GDP by year-end, from 4.4 percent in the second quarter.
—By CNBC's Ansuya Harjani; Follow her on Twitter @Ansuya_H