IMF satisfied with new timetable for bank debts<\/p>\n
JAKARTA (JP): The International Monetary Fund's (IMF) Asia
\nPacific director Hubert Neiss expressed satisfaction on Wednesday
\nover the new repayment scheme for a large proportion of more than
\nRp 141 trillion (US$18 billion) in government loans injected into
\ntroubled banks.<\/p>\n
Neiss said that the new format would allow the government to
\nget a maximum return on the loan, and at the same time preserve
\nthe companies surrendered as collateral by the owners of the
\nbanks.<\/p>\n
\"It's a good agreement. It allows the government to get a
\nmaximum value from the assets which the debtors are committed to
\npaying,\" he told reporters following a regular monthly review
\nmeeting with senior economic ministers.<\/p>\n
The government reached a new repayment deal on Tuesday with
\nowners of five troubled banks for Rp 96.53 trillion in liquidity
\nsupport injected by Bank Indonesia into the institutions since
\nearly this year.<\/p>\n
The bank owners would repay 27 percent of the loans in cash in
\nthe first year, and the balance in equal installments over the
\nnext three years.<\/p>\n
The repayment would come from the sale of fixed assets in the
\nform of shares in various companies surrendered by the bank
\nowners as collateral in September.<\/p>\n
The new format is a revision of the Oct. 1 scenario made by
\nPresident B.J. Habibie that demanded bank owners repay the loans
\nin cash in one year.<\/p>\n
The changes were made following an Oct. 18 letter from Neiss
\nto Habibie urging the government to be flexible with the
\nrepayment mechanism as a fire sale of assets under the current
\ndepressed economic conditions would result in lower than
\nrealistic prices.<\/p>\n
The government has yet to reach agreement with owners of seven
\nother banks on the new repayment terms.<\/p>\n
Neiss said that the bank owners who had reached agreements
\nwith the government were committed to making their best effort to
\npreserve the value of the collateral assets and to achieve the
\nbest sales to make payment as quickly as possible.<\/p>\n
\"But best efforts will depend on prevailing macro-economic
\nconditions,\" he added.<\/p>\n
Neiss arrived in Jakarta on Tuesday afternoon to conduct a
\nregular monthly review of the country's economic reform program.<\/p>\n
\"We've almost completed (the review)... and we may finalize it
\nbefore Ginandjar leaves for Kuala Lumpur,\" he said, referring to
\nCoordinating Minister for Economy, Finance and Industry Ginandjar
\nKartasmita who is scheduled to go to Malaysia for the APEC
\nsummit on Friday.<\/p>\n
Neiss said that the focus of the current review was efforts to
\naccelerate the bank restructuring program, and acceleration of
\nexpenditure on social programs.<\/p>\n
Asked by reporters about demands to postpone the country's
\nbank recapitalization program, he said: \"No, because the sooner
\nthat can be done the better.\"<\/p>\n
The government has required all of the country's more than 200
\ncommercial banks to have a minimum 4 percent capital adequacy
\nratio by the end of this year, which most bankers have deemed
\nimpossible to fulfill amid the current tight liquidity situation.<\/p>\n
The government on Wednesday moved ahead with its efforts to
\nexpand and accelerate the country's multibillion dollar social
\nsafety net program aimed to help the poor survive the current
\neconomic crisis.<\/p>\n
President B.J. Habibie has appointed former finance minister
\nMar'ie Muhammad to act as the head of the monitoring committee to
\nmake sure the program will not be corrupted by government
\nofficials.<\/p>\n
Mar'ie, who is regarded as Indonesia's \"Mr. Clean\", is
\ncurrently chairman of the Indonesian Transparency Society.<\/p>\n
\"It's an excellent appointment... it shows a real commitment
\non the part of the government for transparency and managing the
\nsocial safety net program effectively,\" said the World Bank's
\nIndonesia director Dennis de Tray.<\/p>\n
The World Bank has been putting pressure on the government to
\nmake sure the social safety net program, which is mostly financed
\nby the international community, is not abused.<\/p>\n
The government has been slow in implementing the social safety
\nnet program during the first semester of the current fiscal year
\ndue to worries over corruption possibilities. The government now
\nsays it is determined to accelerate the program. (rei)<\/p>",
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