Bank Restructuring and its Implication on Indonesian Macro Economy and Agricultural Sector

The impacts of bank restructuring on the Indonesian macro economy, and itsvarious sectors, especially the agricultural industries, are assessed and analyzed using anIndonesian Forecasting Model. The model is more detailed sector-wise than existingIndonesian CGE models and incorporates flexibility to capture alternative assumptionsregarding land and investment behavior. The impacts are assessed under severalalternative settings including various scenarios on capital augmenting technical changeand rate of return to capital on all industries. The failure of bank restructuring will have abad impact on the Indonesian macroeconomic performance. It will reduce the GDP fromboth income side and expenditure side. The impact become worst if it will reduce theefficiency of using capital in all sector. The high effort of internal and external bankingsystem should be done to make a successful of bank restructuring. The successful of bankrestructuring will increase the output bigger than the failed of bank restructuring or willminimize the negative percentage change. Paddy is one example have a positivepercentage change. The government policy is still needed to encourage banking sector togive a soft loan to the agricultural sector.