DPR clears way for use of 502 account<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The House of Representatives told Bank Indonesia on Friday to
\nreturn Rp 14.5 trillion to a government account known as the 502
\naccount, to make way for the payment of overseas obligations of
\nbanks that were closed down during the crisis.<\/p>\n
The decision was taken at a joint hearing between House
\nCommission IX on financial affairs and the Ministry of Finance,
\nBank Indonesia and the Indonesian Bank Restructuring Agency
\n(IBRA).<\/p>\n
"The payment to foreign creditors is important as it involves
\nnational pride and shows that we're willing to meet our
\nobligations," said Emir Muis, chairman of the commission, who
\npresided over the hearing.<\/p>\n
The central bank previously refused to inject the funds amid
\nfears that it might be faulted for irregularities, as it had been
\naccused of being irresponsible when disbursing some Rp 144.5
\ntrillion-worth of liquidity facility to bail out troubled banks
\nduring the late 1990s financial crisis (the bailout decision
\nbeing taken by the then cabinet).<\/p>\n
But according to an audit by the Supreme Audit Agency (BPK),
\nthe loan was mostly misused by the bankers, and the agency
\nlambasted Bank Indonesia for failing to carry out proper
\nassessment and supervision, leaving the government (ie.
\ntaxpayers) to cover the losses.<\/p>\n
However, Friday's decision leaves Bank Indonesia little choice
\nbut to follow.<\/p>\n
Lawmakers stressed the importance of the move, since there was
\nonly Rp 124 billion in funds currently stashed in the 502 account
\n(held at Bank Indonesia), while the government has to pay out
\nsome Rp 1.4 trillion in obligations of the closed banks. The
\nobligations to foreign creditors mature next month.<\/p>\n
Under the so-called blanket guarantee program, the government
\nhas to cover the financial obligations of all closed-down banks,
\nincluding those owed to foreign banks or creditors.<\/p>\n
The program was introduced in the late 1990s following the
\ncrisis, to help restore confidence in the nearly-bankrupt banking
\nindustry.<\/p>\n
The central bank injected hundreds of trillions-worth of funds
\nunder the program to prevent the banking sector from collapsing
\nafter being hit by the crisis.<\/p>\n
Bank Indonesia deputy governor Bun Bunan Hutapea said after
\nthe meeting that Indonesia has so far paid around Rp 5 trillion
\nof those obligations, all in the form of exchange offers, of
\naround Rp 10 trillion in total debts, both principal and
\ninterest.<\/p>\n
"Under the Frankfurt Agreement, we shall complete the payment
\nof the exchange offers by 2005. The interest is payable twice a
\nyear," Minister of Finance Boediono said, referring to an
\nagreement signed in 1998 between the government and the foreign
\ncreditors of the country's local banks regarding a scheme to pay
\nout on their obligations.<\/p>\n
Elsewhere, the House said that while it had agreed to use the
\nfunds in the account for this year's payments, the government
\nwould have to seek its consent to use the account again.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/dpr-clears-way-for-use-of-502-account-1447899208",
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"sponsor": "Okusi Associates",
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