IMF sees three economic problems hampering recovery<\/p>\n
JAKARTA (JP): The International Monetary Fund (IMF) Jakarta
\nrepresentative John Dodsworth said on Tuesday that there are
\nthree structural problems hampering Indonesia's economy from
\nachieving a sustainable recovery.<\/p>\n
Dodsworth said that these include the huge amount of public
\ndebt, the large number of private assets under state control, and
\nthe massive amount of corporate overseas loans.<\/p>\n
\"If we can tackle these three issues then Indonesia can
\nrecover,\" he said at a seminar in celebrating the 35th
\nanniversary of Kompas, Indonesia's largest daily.<\/p>\n
He said the economic crisis had caused a huge amount of
\nprivate debt turning into public debt particularly due to the
\ncostly bank restructuring and recapitalization program, estimated
\nto reach some Rp 600 trillion (US$69.77 billion).<\/p>\n
He said that the huge public debt was straining the country's
\nbudget.<\/p>\n
Dodsworth said that the crisis also had transferred a lot of
\nassets from the private sector into the hands of the state
\nthrough the Indonesian Bank Restructuring Agency (IBRA).<\/p>\n
IBRA is currently controlling some Rp 600 trillion worth of
\nassets transferred from the banking sector.<\/p>\n
Dodsworth said that the agency must accelerate the
\nrestructuring and disposal of its assets to help finance the
\nstate budget as well as to help revive confidence in the economy.<\/p>\n
He admitted that the market condition might not be \"very good\"
\nat the moment for the sale of assets, and that some people were
\nusing this reasoning to delay asset disposal.<\/p>\n
\"But further delay will only deteriorate the assets ... And
\nthere's no guarantee that the longer you wait the better the
\nprice will be,\" he said.<\/p>\n
IBRA has long been criticized for its slow progress in the
\ndisposal of its assets.<\/p>\n
IBRA is charged with raising Rp 18.9 trillion this year to
\nhelp finance the state budget.<\/p>\n
So far IBRA has only raised around Rp 2.8 trillion.<\/p>\n
Dodsworth said that selling back the assets to the private
\nsector including foreign investors would help revive market
\nsentiment in the economy.<\/p>\n
\"It may not be the best solution, but to change market
\nsentiment there must be some assets sold,\" he said.<\/p>\n
Bambang<\/p>\n
Finance Minister Bambang Sudibyo said late on Monday at a
\nhearing with the House of Representatives commission IX on state
\nbudget and finance, the government is planning to divest a
\nmajority of its ownership in Bank Internasional Indonesia (BII),
\nBank Universal, Bank Central Asia (BCA) and Bank Niaga this year.<\/p>\n
The government become the largest shareholder of the four
\npublicly listed banks after it financed more than 80 percent of
\nthe recapitalization costs of the banks.<\/p>\n
IBRA has also said that it plans to sell between 14-20
\ncompanies this year including through initial public offerings.<\/p>\n
Dodsworth said that another important challenge that must be
\ntackled is the huge amount of corporate overseas loans, estimated
\nat about US$70 billion.<\/p>\n
He said that the loans, most of which have not been serviced
\nsince 1998, must be restructured to help revive the
\ncreditworthiness of the country's companies and to allow them to
\nobtain new foreign financing.<\/p>\n
\"If these structural problems are not addressed quickly, the
\ncurrent (economic) recovery will fall again,\" Dodsworth said.<\/p>\n
\"There has to be a national consensus to tackle the problems,\"
\nhe added.<\/p>\n
He said that Indonesia was now moving toward economic recovery
\nas showed by the latest statistics particularly economic growth,
\nand export performance.<\/p>\n
The IMF agreed in January to provide some $5 billion in
\nbailout cash to the administration of President Abdurrahman Wahid
\nto help finance the country's three-year economic reform program.<\/p>\n
So far, the Fund has disbursed more than $700 million, while
\nanother $380 million is expected to be disbursed in August after
\nthe government and the IMF agree a new letter of intent next
\nmonth.<\/p>\n
There is now increasing calls for Indonesia to quit the IMF
\nprogram on the basis of the country's stronger balance of
\npayments condition.<\/p>\n
But economist A. Tony Prasetiantono of the Gadjah Mada
\nUniversity said that although the IMF loans are not so
\nsignificant in terms of the amount, the role of the Fund is still
\nimportant to help revive market confidence in the economy.<\/p>\n
Economist Sri Mulyani conceded. \"If we quit now from the IMF,
\nwe'll surely be dead.\"<\/p>\n
She said that Indonesia could only abandon the IMF if it
\nalready had strong discipline to implement the economic reform
\nprogram.<\/p>\n
\"So the timing is very important,\" she added. (rei)<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/imf-sees-three-economic-problems-hampering-recovery-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }