Moral Hazard in an Indonesian Farmer Credit

In 1998, Indonesian Government through the Ministry of Cooperative, Small and Medium Enterprise made an astonishing 2,117 % increase for a Small-Scale Farmer Credit scheme, Kredit Usaha Tani (hereon KUT). In the budgeting year of 1996/97, they distribute Rp. 231,333 billion. In 1997/1998, when the crisis depressed Indonesian currency, like other countries in the region, the scheme only rise up to Rp. 374,631 billion (85,05%). Next year, in 1998/1999, the number surprisingly shoots up to Rp. 8.336,329 billions. And finally fall to -79,98% for the year of 1999/2000, which is as much as, Rp. 1.108,226 billion. Judging from the mid term realization of the credit in July 2000, Rp. 5,904 billions, the number even potentially much lower.