Intelligence chief urges quick decision on debt extension plan<\/p>\n
Berni K. Moestafa, The Jakarta Post, Jakarta<\/p>\n
Chief of the State Intelligence Agency (BIN), Hendropriyono
\nurged the government to immediately finalize the revision of a
\ncontroversial debt payment extension plan, warning indecisiveness
\nwould trigger a backlash from the public.<\/p>\n
He said the present scheme to allow huge debtors of the state
\na longer payment period, had already provoked negative public
\nreactions.<\/p>\n
Hendropriyono did not say what the reactions were but warned
\nthat \"if the government doesn't do anything, that's bad.\"<\/p>\n
His statement comes amid lingering uncertainty over the review
\nof a debt extension plan, which has invited public criticism.<\/p>\n
\"When the government came out with the revised debt payment
\nscheme, it sparked public reaction. This, of course I reported to
\nthe President and the DPR (House of Representatives),\" he was
\nquoted as saying by Antara on Wednesday.<\/p>\n
Warnings of a \"public reaction\" adds pressure to scrap the
\ncurrent debt payment extension scheme, after signs that the
\ngovernment itself was divided over the issue. In addition the
\nInternational Monetary Fund (IMF) said legal certainty instead of
\na payment extension was the key here.<\/p>\n
Last December, the Financial Sector Policy Committee (FSPC)
\napproved a revised debt payment scheme for debtors of the
\nIndonesian Bank Restructuring Agency (IBRA).<\/p>\n
Proposed by IBRA, the plan extends the debt payment period to
\n10 years from four. It effectively lowers the interest rates to a
\nminimum of nine percent from around 16 percent, well under Bank
\nIndonesia's benchmark rates.<\/p>\n
The plan applies to several former bankers, whose banks the
\ngovernment bailed out after the impact of the 1997 financial
\ncrisis.<\/p>\n
The government had issued some Rp 630 billion (about US$63
\nbillion) worth of bonds to save the local banking sector from
\ntotal collapse.<\/p>\n
However, an audit later revealed that bankers abused Rp 138.4
\ntrillion of the funds. To escape prosecution, they surrendered
\ntheir banks to IBRA and agreed to settle their debts within a
\nfour-year period.<\/p>\n
Three years on however, IBRA was yet to see one rupiah of
\nthat. Resorting to legal action proved futile, since it turned
\nout that IBRA's contracts with debtors lacked legal power.<\/p>\n
As the deadline for most debtors drew near, IBRA offered late
\nlast year the controversial extension and softer interest rates.<\/p>\n
This drew fire from the public. Analysts and legislators
\ncriticized the government for siding with the wealthy debtors
\ninstead of the public, who effectively owns the money.<\/p>\n
The government revealed the debt extension plan at the same
\ntime that it raised fuel, electricity and telephone prices.<\/p>\n
Due to the price hikes, inflation soared last month and
\nworsened purchasing power for consumers.<\/p>\n
State Minister of National Development Planning, Kwik Kian Gie
\nfurther argued that the debt extension plan would not necessarily
\nensure payment.<\/p>\n
An interministerial team is now at work on the plan, however
\ncritics demanded that the government scrap the plan altogether.<\/p>\n
The small team was supposed to present its conclusions before
\na Cabinet meeting last Monday, but did not.<\/p>\n
\"One can do the right thing or the wrong thing, but to do
\nnothing is wrong for sure,\" Hendropriyono added.<\/p>\n
Elsewhere, the IMF ended its two-week review on Indonesia's
\nreform progress, reminding the government to do more to reclaim
\nits money from IBRA debtors.<\/p>\n
\"Discussions were held with the authorities on the need to
\nenhance recovery from the shareholder settlement agreements with
\nformer bank owners,\" it said in a statement.<\/p>\n
The IMF urged the government to form a clear strategy to cope
\nwith the debtors, reiterating that legal certainty was vital.<\/p>\n
\"Strengthening compliance as well as securing legal certainty
\nfor both the government and former bank owners must be integral
\nelements of the strategy,\" it said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/intelligence-chief-urges-quick-decision-on-debt-extension-plan-1447893297",
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