LoI sets Nov. deadline for IBRA debtors<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The government promised the International Monetary Fund (IMF)
\nthat it would take legal action against former bankers who
\nmisused trillions of rupiah in state funds, under a loan
\nagreement it recently submitted to the IMF for approval.<\/p>\n
Known as the seventh Letter of Intent (LoI), the agreement
\ntargets \"legal and other enforcement actions by the end of
\nNovember against all remaining noncompliant shareholders.\"<\/p>\n
The shareholders are former bankers who allegedly absconded
\nwith some Rp 138 trillion (about $15.33 billion) in Bank
\nIndonesia emergency loans and whose banks the Indonesian Bank
\nRestructuring Agency (IBRA) was forced to take over.<\/p>\n
Payments have been minimal in the four years since the ex-
\nbankers agreed to repay the loans in return for not facing
\nprosecution.<\/p>\n
The November deadline marks the strongest threat against the
\nex-bankers following IBRA's plan to drop their criminal charges
\ndespite widespread doubt over their debt settlements.<\/p>\n
Binding the deadline to the LoI also meant that its compliance
\nwas mandatory to obtaining further IMF loans.<\/p>\n
The Washington-based IMF board of executives will meet early
\nnext month to review the LoI.<\/p>\n
\"A successful completion of the review will enable the next
\nIMF tranche to Indonesia of SDR 270 million (about US$340
\nmillion),\" said a statement from the office of the coordinating
\nministry for the economy on Wednesday. SDR or Special Drawing
\nRights is an account unit of the IMF, based on major national
\ncurrencies.<\/p>\n
If the LoI is approved, the IMF loans could be disbursed by
\nlate December, Finance Minister Boediono said on Thursday.<\/p>\n
The seventh LoI actually refers to the government's quarterly
\nreport to the IMF over progress made in meeting LoI targets.<\/p>\n
It is the third progress report since the fourth and last LoI
\nsigning in June. The government should have signed the report in
\nSeptember, however it was late on a number of targets.<\/p>\n
The LoI represents, for the most part, Indonesia's economic
\nreforms program, covering monetary and fiscal targets but also
\ntimetables on the sale of state companies and IBRA assets.<\/p>\n
Chairman of the People's Consultative Assembly, Amien Rais
\nrenewed his criticism against the IMF, in what is now becoming a
\ncommon response whenever the government signs an LoI.<\/p>\n
\"The IMF is a necessary evil but it is giving the wrong
\nmedicine,\" he was quoted as saying by AFP during a one-day visit
\nto Singapore on Wednesday.<\/p>\n
Highlights of LoI VII<\/p>\n
On Fiscal and Monetary Policy<\/p>\n
1. All June to September quantitative performance criteria and
\nindicative targets met.<\/p>\n
2. Fiscal policy remains on track with a deficit target of 2.5
\npercent to gross domestic product (GDP).<\/p>\n
3. The government remains committed to fiscal consolidation to
\nreduce public debt to sustainable levels.<\/p>\n
4. Growth in base money is within the target range, as are the
\nsteady drops in inflation and a stable rupiah exchange rate.<\/p>\n
On Privatization and Asset Divestment<\/p>\n
1. The government finalized the sale of Bank Niaga and delayed
\nthe sale of Bank Danamon. The legal merger of five banks under
\nIBRA was completed in October with an operational merger to
\nfollow next month.<\/p>\n
2. As for state banks, the government is improving the
\ntransparency of Bank Mandiri's financial statements ahead of the
\nbank's planned divestment. The government plans to announce the
\nsale of Bank Rakyat Indonesia (BRI) and Bank Negara Indonesia
\n(BNI) in the next few months.<\/p>\n
3. The government has launched the sale of its shares in
\ntelecommunications firm PT Indosat and pharmaceutical firm PT
\nIndofarma, both to be completed by the end of this year.<\/p>\n
On Public Debt Management<\/p>\n
1. The House of Representatives has approved the Sovereign Debt
\nSecurities Law to allow the auctioning of government bonds.<\/p>\n
2. House also approved plans to push back the maturity dates of
\ngovernment bonds in four state banks by up to 10 years under the
\nreprofiling scheme.<\/p>\n
3. Disagreement over the burden sharing between Bank Indonesia
\nand the government on central bank loans that had been abused, is
\nclose to a settlement.<\/p>\n
On the shareholder settlement program<\/p>\n
1. The government will initiate legal and other enforcement
\nactions by end of this month against all remaining noncompliant
\nformer shareholders of banks (ex-bankers) under IBRA.<\/p>\n
On Anti-Corruption Commission<\/p>\n
To push ahead with legal and judicial reforms, the government
\nwill propose to the House revised terms over the power of the
\nanti-corruption commission as outlined under a previous bill.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/loi-sets-nov-deadline-for-ibra-debtors-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}