Indonesia will consult IMF on recapitalization<\/p>\n
JAKARTA (JP): The government will seek the International
\nMonetary Fund's (IMF) backing before the disputed bank
\nrestructuring program begins, Coordinating Minister for Economy,
\nFinance and Industry Ginandjar Kartasasmita said on Tuesday.<\/p>\n
\"We need all the international support we can to get this
\nprogram to work,\" he said after attending a limited Cabinet
\nmeeting on economy, finance and industry.<\/p>\n
He said he invited the IMF director for Asia Pacific, Hubert
\nNeiss, to consult on the program to recapitalize ailing banks and
\nclose insolvent ones.<\/p>\n
Neiss arrived here on Tuesday afternoon and is scheduled to
\nstay in the country through Monday.<\/p>\n
\"The recapitalization program gets financial assistance from
\nthe IMF, the World Bank and the Asian Development Bank. So I
\nfigure, why don't we invite the IMF's top executive,\" Ginandjar
\nsaid.<\/p>\n
He recalled the negative international response to the
\ngovernment's move in late 1997 to close 16 ailing private banks.<\/p>\n
\"When one of the closed banks, Bank Andromeda, was reopened as
\nBank Alfa, the international community condemned the move and the
\nrupiah collapsed.\" Andromeda was owned by former president
\nSoeharto's son Bambang Trihatmodjo.<\/p>\n
Ginandjar said Neiss would also help the government review the
\nnew letter of intent which must be approved by the fund before it
\ncould disburse its next loan package.<\/p>\n
The IMF, which pledged to broker a US$43 million loan package
\nto help Indonesia cope with its worst crisis in recent history,
\nreviewed the country's economic reform program last month and
\ninitially planned to approve the letter of intent at the end of
\nFebruary.<\/p>\n
It delayed the signing due to the government's decision to
\npostpone the recapitalization program.<\/p>\n
A scheduled Feb. 27 disclosure of the names of banks to be
\nrecapitalized and ones to be liquidated was postponed
\nunexpectedly to this weekend.<\/p>\n
The move aroused suspicions the government was pressured by
\nbankers with strong political backing at the last minute.<\/p>\n
The postponement also prompted senior IMF officials, including
\nNeiss and first deputy managing director Stanley Fischer, to
\nexpress disappointment.<\/p>\n
They urged the government to speed up bank restructuring.<\/p>\n
Fischer criticized Indonesia for what he called a lack of
\nclarity in reporting on its banking reforms.<\/p>\n
The government defended its decision by saying it was designed
\nto ensure a fair, transparent and accountable decision.<\/p>\n
It said it was giving banks the chance to revise their
\nbusiness plans and raise fresh funding to meet the
\nrecapitalization requirement.<\/p>\n
The government will fund 80 percent needed to recapitalize
\nprivate banks with a capital adequacy ratio (CAR) of between
\nminus 25 and plus 4, while banks owners have to finance the
\nremaining 20 percent.<\/p>\n
CAR is the ratio of equity capital to average-weighted assets.<\/p>\n
Banks with CAR lower than minus 25 will be closed down. (das)<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/indonesia-will-consult-imf-on-recapitalization-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }