RI private debt to be rescheduled<\/p>\n
TOKYO (Agencies): Leading banks from Europe, Japan and the
\nUnited States are likely to agree on a plan to reschedule
\nrepayments of principal on loans made to Indonesia's private-
\nsector companies, the Japanese daily Nihon Keizai Shimbun
\nreported in yesterday's evening edition.<\/p>\n
Under the plan, originally crafted by Standard Chartered Bank,
\nIndonesian firms would be allowed to postpone repayment of
\nprincipal for six months, but they would still be required to
\ncontinue interest payments, the paper said, quoting financial
\nsources.<\/p>\n
The plan would allow creditor banks to demand compensation
\nfrom Bank Indonesia, the central bank, in the event that borrower
\nfirms failed to meet interest payment obligations, the paper
\nsaid.<\/p>\n
It said an agreement on the plan might be reached as early as
\nyesterday in a meeting of 13 creditor banks, including Bank of
\nTokyo-Mitsubishi (BTM), Sumitomo Bank, Sanwa Bank, Standard
\nChartered Bank, Citibank, Deutsche Bank and ABN AMRO.<\/p>\n
The plan is also expected to include a proposal to create a
\ncurrency stabilization fund to provide funds to Indonesian firms
\nin foreign currencies, the paper said.<\/p>\n
The plan, once adopted by the creditor bank group, would be
\nproposed to the Indonesian government, the paper said. But it
\nremained uncertain whether Jakarta would accept the plan, the
\nsources told the paper.<\/p>\n
Japan's Fuji Bank Ltd. is also considering writing off non-
\nperforming loans to Indonesia and other developing Asian
\ncountries, a spokesman said yesterday.<\/p>\n
\"We cannot say how much, but are prepared to use adequate
\nreserves\" to write off the loans, the spokesman said.<\/p>\n
The Nihon Keizai said the major commercial bank was expected
\nto write off for the year to March a maximum 100 billion yen
\n($768 million) of its Asian loans, which now total 500-to-600
\nbillion yen.<\/p>\n
The Indonesian government is expected to formally present a
\nprivate-sector debt workout plan to foreign creditor banks next
\nweek after finalizing details in consultations with the
\nInternational Monetary Fund.<\/p>\n
A western financial expert close to the Indonesian government
\ntold Dow Jones on condition of anonymity Tuesday that details of
\nthe debt proposal will be completed \"within the next week\" and
\nwill be presented to creditors when the IMF and the Indonesian
\ngovernment reach an accord over fresh economic goals under a
\n$10.1 billion standby credit arrangement.<\/p>\n
\"The final details will still have to be worked out after next
\nweek with the banks,\" the financial expert said, explaining that
\n\"they'll be on a case by case basis. But by next week there will
\nbe a proposal from the government ready. It's still being
\nfinalized.\"<\/p>\n
He confirmed that the Soeharto government is looking at
\nmodeling the restructuring of about $74 billion in short-term
\ndebts owed by private Indonesian concerns along the lines of a
\nprogram instituted in Mexico in the early 1980s.<\/p>\n
The plan would include a foreign exchange facility to provide
\nlocal companies with liquidity to meet their foreign borrowing
\nobligations and a scheme to roll over Indonesian debt by between
\ntwo to three years.<\/p>\n
The Mexico program involved the creation of what was known as
\nthe 'Trust for Coverage of Exchange Risk' by the government. And
\na similar mechanism, according to the financial expert, could
\nevolve in Indonesia so that private concerns would have access to
\ndollars to meet debt repayments.<\/p>\n
Under the Mexico model, debtors would agree to repay creditors
\nin dollars, or other foreign exchange, at a future date. However,
\ninterest would be paid through a rupiah-denominated instrument,
\naccording to the model.<\/p>\n
IMF -- Page 8<\/p>\n
Shares -- Page 9<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/ri-private-debt-to-be-rescheduled-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }