BPK says BLBI settlement `unjust'<\/p>\n
M. Taufiqurrahman, The Jakarta Post, Jakarta<\/p>\n
Chairman of the Supreme Audit Agency (BPK) Satrio B. Joedono
\nsaid that the latest agreement between the Ministry of Finance
\nand Bank Indonesia to recover the huge loss resulting from the
\ncentral bank emergency loan scheme was \"unjust\" because it
\nshifted the burden to the taxpayer.<\/p>\n
\"I've read (about the agreement) from the papers. I am
\ndisgusted,\" Joedono told a press conference on Friday.<\/p>\n
\"Such a political compromise makes people who have not
\nreceived a single cent of the loan also bear the burden.\"<\/p>\n
He said that the authorities should have forced the actual
\nborrowers to repay the money in full, and if they failed to do so
\nthey must be put behind bars.<\/p>\n
After years of lengthy negotiations, the House of
\nRepresentatives finally approved on Thursday a proposed mechanism
\nfor the central bank to recover the money lost through the loan
\nin order to avoid bankruptcy.<\/p>\n
Under this proposal, the finance ministry would issue
\npromissory notes to Bank Indonesia. The notes would have no
\nmaturity period and do not carry an interest rate. But the
\nfinance ministry would have to inject cash to the central bank
\nwhenever the latter's capital adequacy ratio (CAR) drops below 5
\npercent. However, if the CAR rises beyond 8 percent, the excess
\nwould be deducted from the government's liability.<\/p>\n
According to an initial estimate, the government would have to
\ncome up with around Rp 12 trillion in cash as Bank Indonesia's
\nCAR is likely to be less than 5 percent over the next two years.<\/p>\n
But this mechanism is not yet final, as the Ministry of
\nFinance and Bank Indonesia still plan to make small revisions,
\naccording to officials from the two sides.<\/p>\n
The Bank Indonesia emergency loan facility (known as the BLBI
\nloan) was dispersed by the central bank in the wake of the 1990s
\nfinancial crisis to help banks deal with massive runs. The loans
\ndistributed amounted to Rp 144.5 trillion (US$17.6 billion). The
\ngovernment was supposed to repay the central bank, but a
\nrevelation by BPK in 2000 that most of the loans had been abused
\nby the recipient banks (the agency faulted Bank Indonesia for
\nthis) prompted the government to demand that the central bank
\nalso share the burden. Since then, the two sides had been locked
\nin lengthy debate. Bank Indonesia later agreed that it could only
\ncover around Rp 24.5 trillion.<\/p>\n
So far, only three former Bank Indonesia directors and 10
\nformer bank owners and executives have been convicted, while
\nothers have either been acquitted or have not been taken to
\ncourt. The government has also seized some assets but many of
\nthem have low market value.<\/p>\n
Meanwhile, economist Dradjat Wibowo said that there was no
\nother option other than to accept the burden-sharing agreement as
\nit would help create confidence in the central bank and the
\noverall economy.<\/p>\n
Indeed, the settlement of the BLBI loan dispute would allow
\nBank Indonesia to obtain a clean bill of health from its auditor,
\na crucial factor to ensure market confidence in the bank.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/bpk-says-blbi-settlement-unjust-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}