RI, creditors strike private debt deal<\/p>\n
FRANKFURT (Reuters): The Indonesian debt negotiation team and
\nthe country's creditor banks said yesterday they had reached
\nagreement on a comprehensive program to address Indonesia's
\nexternal debt problems.<\/p>\n
The program comprises three initiatives relating to private
\nsector corporate debt, external credit to the Indonesian banking
\nsystem and trade finance, the two sides said in a statement.<\/p>\n
They said the corporate debt arrangements envisaged the
\ncreation of an Indonesian Debt Restructuring Agency (INDRA),
\nfully backed by the Indonesian government and administered by the
\ncentral bank, Bank Indonesia.<\/p>\n
INDRA will provide exchange rate risk protection and assurance
\nas to the availability of foreign exchange to private debtors
\nthat agree with their creditors to restructure their external
\ndebt for a period of eight years, with three years of grace
\nduring which no principle will be payable.<\/p>\n
Participants in INDRA will be entitled to buy U.S. dollars at
\nthe best real 20-day average market exchange rates occurring from
\nthe date the program becomes operational until June 30, 1999.<\/p>\n
They also said that if the rupiah appreciated in value by the
\nsecond anniversary of the program, debtors would be entitled to
\nthe benefits of the improved exchange rate for the remainder of
\nthe arrangement.<\/p>\n
INDRA offers important relief to debtors without involving any
\nsubsidy or assumption of commercial risk by the Indonesian
\ngovernment.<\/p>\n
Participation in INDRA is voluntary and requires the consent
\nof both debtors and creditors. It offers incentives for debtors
\nsigning on before the end of January 1999.<\/p>\n
\"The INDRA program provides a framework to be used on a case-
\nby-case basis for the restructuring of corporate debt,\" they said
\nin a statement.<\/p>\n
Glenn Yusuf, director general of financial institutions at the
\nIndonesian Ministry of Finance, said here yesterday that he
\nbelieved INDRA would be strong enough to withstand fluctuations
\nin the rupiah's exchange rate against the dollar.<\/p>\n
He told a news conference he expected INDRA would receive
\nsufficient rupiah funding to have surpluses.<\/p>\n
He added that, given that the rupiah was at present
\nundervalued and was likely to strengthen through adherence to IMF
\nreforms, the INDRA fund would have \"enough strength to withstand
\nfluctuations of the rupiah-dollar exchange rate.\"<\/p>\n
He said earlier that an agreement between Indonesia and its
\ncreditor banks would take effect on about August 1.<\/p>\n
Head of Indonesia's debt settlement team Radius Prawiro said
\nhere the agreement should expedite the country's economic reform
\nand the solving of the huge private external debts.<\/p>\n
Coordinating Minister for Economy, Finance and Industry
\nGinandjar Kartasasmita said in a teleconference call from Jakarta
\nthat the agreements laid the basis for invaluable support for
\nIndonesia's economic recovery.<\/p>\n
\"The agreements reached between Indonesia and its Bank
\nSteering Committee demonstrate both support for and long-term
\nconfidence in the Indonesian economy,\" Ginandjar said.<\/p>\n
Asked how he foresaw the market's reaction to the agreements,
\nhe said: \"We hope the market will react positively to the
\nagreements.\"<\/p>\n
Speaking on the second element of the program, Ginandjar said
\nthe maturity of external, nontrade related liabilities of
\nIndonesia's commercial banks, falling due through March 31, 1999,
\nwould be extended for up to four years.<\/p>\n
Indonesia banks would offer to exchange for these liabilities
\nnew loans, guaranteed by Bank Indonesia, with maturities of one
\nto four years.<\/p>\n
\"The extension of these maturities will create a manageable
\nrepayment profile for the external debt of the banking system and
\nsubstantially aid Indonesia's balance of payment,\" Ginandjar
\nsaid.<\/p>\n
On trade financing, Ginandjar said Indonesia would shortly
\nrequest trade creditors to \"undertake for a period of one year to
\nuse their best efforts to maintain trade finance at levels
\nexisting at the end of April 1998\".<\/p>\n
He reiterated that trade credits would be fully guaranteed by
\nBank Indonesia.<\/p>\n
\"This facility will help reverse the decline in trade finance
\nand provide vital support to the Indonesian economy,\" he said.<\/p>\n
All parties to the negotiations, including the International
\nMonetary Fund, the World Bank and the Asian Development Bank,
\nconsidered that the program provided a \"constructive basis for
\nthe resolution of Indonesia's external debt problems which should
\nalleviate the pressures on foreign exchange markets and produce a
\nsignificant improvement in the Indonesian economic situation\".<\/p>\n
Welcoming a debt deal between Indonesia and its creditors, the
\nIMF said yesterday it would next review its lending program to
\nthe country on June 8.<\/p>\n
\"An IMF staff team will conduct discussions on the second
\nreview of Indonesia's IMF stand-by program with the Indonesian
\nauthorities in Jakarta, beginning next Monday, June 8,\" IMF
\nmanaging director Michel Camdessus said in a statement.<\/p>\n
The World Bank welcomed yesterday the debt deal between
\nIndonesia and creditor banks and said it would help the agency to
\nconsider providing $1 billion to Indonesia in the next two weeks.<\/p>\n
In a statement from Washington, World Bank vice president for
\nEast Asia and the Pacific Jean-Michel Severino said the agency's
\nIndonesia country team was preparing a full review of the
\ncountry's situation.<\/p>\n
\"The bank's board could consider early release of up to $1
\nbillion in further lending to Indonesia after completion of this
\nassessment, perhaps in the coming two weeks.\"<\/p>\n
The chairman of the Indonesian Chamber of Commerce and
\nIndustry, Aburizal Bakrie, hailed the agreements which he said
\ncould serve as a \"benchmark\" for both debtors and creditors alike
\nto settle the debt hangover.<\/p>\n
-- More stories on Page 9<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/ri-creditors-strike-private-debt-deal-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }