Government doesn't need to 'recapitalize BI'<\/p>\n
JAKARTA (JP): Finance Minister Bambang Sudibyo revealed on
\nFriday that Bank Indonesia (BI) had massive profits accumulated
\nfrom its foreign exchange transactions, and that thereby, the
\ngovernment did not need to recapitalize the central bank after
\nall.<\/p>\n
But he said that the profits could not reverse Bank
\nIndonesia's poor financial position because they had not been put
\non the asset side of the central bank's balance sheet, but on the
\nliabilities side.<\/p>\n
\"I've been told by the IMF (International Monetary Fund) that
\nthere is an item called the stabilization fund in Bank Indonesia
\nwhich is put on the liabilities side.<\/p>\n
\"It is said that the total is Rp 100 trillion. If this is
\ntrue, Bank Indonesia is actually rich,\" Bambang told the House of
\nRepresentatives commission IX on banking and finance in a joint
\nhearing session with the central bank.<\/p>\n
\"Putting it on the liabilities side is wrong... It's actually
\na profit. I know it because I happen to be an accountant,\" said
\nBambang, who was a lecturer in accounting at the prestigious
\nGadjah Mada University before being appointed as minister.<\/p>\n
\"So it (the accounting system) must be revised,\" he added.<\/p>\n
\"Don't worry. Bank Indonesia doesn't have to be recapitalized.
\nWhat it needs is only an accounting adjustment,\" he said.<\/p>\n
Bambang was responding to concerns among legislators and
\neconomists that the government would have to spend huge amounts
\nof money to recapitalize BI following a controversial auditing
\nreport that the central bank was near insolvency because of the
\nmishandling of multibillion dollar liquidity support to ailing
\nbanks in 1997 and 1998.<\/p>\n
Bank Indonesia's Sjahril Sabirin confirmed this, but said that
\nhe had yet to calculate the exact figure.<\/p>\n
Sjahril said that keeping a stabilization fund was a normal
\nthing practiced by other central banks as a prudent measure
\nbecause much of the fund is unrealized profit used to anticipate
\na reverse in the forex market.<\/p>\n
But he said that he agreed with Bambang's suggestion.<\/p>\n
Sjahril said that BI was beginning to implement the so-called
\nnet currency position, which is a new method in counting the
\nprofits from its foreign exchange transaction.<\/p>\n
Under the new method, a gain from a foreign exchange
\ntransaction would be calculated based on the difference between
\nthe selling price of a hard currency and the average purchasing
\nprice of the currency.<\/p>\n
Previously, the counting method was based on the difference
\nbetween the selling price and the buying price.<\/p>\n
BI deputy governor Miranda S. Goeltom said that the
\nstabilization fund was around Rp 100 trillion before the
\nimplementation of the new net currency position but then dropped
\nto around Rp 48 trillion following the new counting method.<\/p>\n
Meanwhile, the House commission IX would summon all related
\ngovernment officials including ex-finance ministers and the Bank
\nIndonesia governor responsible for designing and implementing the
\ncontroversial BI liquidity support to help resolve allegations of
\npossible abuse.<\/p>\n
\"We'll summon the former top officials soon,\" head of the
\ncommission IX Sukowaluyo Mintoraharjo said.<\/p>\n
Names already listed for questioning included former finance
\nministers Mar'ie Muhammad, Fuad Bawazier, and Bambang Subianto,
\nand former Bank Indonesia governor Soedradjad Djiwandono.<\/p>\n
The Supreme Audit Agency (BPK) said in its general audit
\nreport on BI's May 17, 1999, balance sheet that more than Rp 80
\ntrillion of the liquidity support was inappropriately channeled
\nto the ailing banks.<\/p>\n
BPK said that the central bank violated its own criteria in
\nthe channeling of the liquidity support.<\/p>\n
The agency also questioned the channeling of more than Rp 9
\ntrillion in liquidity support.<\/p>\n
BI has channeled some Rp 164.5 trillion in liquidity support.
\nThe government has issued bonds to the central bank to cover the
\nliquidity support.<\/p>\n
But there have been growing demands from legislators that the
\ngovernment should not cover all the liquidity support following
\nthe BPK report.<\/p>\n
Bambang stressed that the government has no intention to
\nwithdraw the bonds already issued to BI.<\/p>\n
He said that if the bonds were withdrawn, the central bank
\nwould automatically debit the cash reserves of the recipient
\nbanks in BI.<\/p>\n
\"This would cause those banks to collapse. It would be much
\nmore costly,\" Bambang said.<\/p>\n
But he said that what the government wanted was to clarify
\nwhether there was a violation in the channeling of the liquidity
\nsupport by officials in the previous government.<\/p>\n
\"This is important so that there's a clear-cut between the
\nresponsibility of the previous government and the new
\ngovernment,\" he said. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/government-doesnt-need-to-recapitalize-bi-1447893297",
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