RI private debt woes get NY forum<\/p>\n
NEW YORK (Agencies): Talks to free Indonesia's companies from
\na crushing burden of foreign debt will shift to New York on
\nWednesday, reuniting many of the global bankers who helped South
\nKorea avert financial crisis in January.<\/p>\n
Bankers involved in the negotiations said their initial tasks
\nwill be to assess the extent of the Indonesian corporate sector's
\nUS$74 billion debt stockpile, and to evaluate the implications of
\nJakarta's reform package unveiled last week.<\/p>\n
But the eventual salvation for Indonesia's corporations, many
\nof which have not serviced their debt because of the Indonesian
\nrupiah's collapse, might rest with a 1983 Mexican program known
\nas \"Ficorca,\" bankers said.<\/p>\n
Jakarta has touted the Ficorca model as enabling the Mexican
\ngovernment to assume the foreign exchange losses on private debt
\nbut not loans themselves during a 1980s debt crisis in which the
\ncurrency fell precipitously.<\/p>\n
Global bankers seemed receptive to prospects of a \"Ficorca-
\nstyle\" program, now that Indonesia has taken steps to promote
\nstability and address structural problems.<\/p>\n
The committee will be co-chaired by Bank of Tokyo- Mitsubishi,
\nChase Manhattan Corp and Deutsche Morgan Grenfell, bankers said.
\nIt will also include Bank of America, Citibank, HSBC Holdings,
\nSanwa Bank, Sumitomo Bank, ABN AMRO, Standard Chartered, Korean
\nDevelopment Bank, Overseas China Bank Corp, and Banque Nationale
\nde Paris.<\/p>\n
Bankers warned, however, that the Indonesia negotiations would
\nprobably proceed far more slowly than the Korea debt talks, which
\ntook about one month for the two sides to agree to exchange
\nshort-term bank debt for new paper,<\/p>\n
Indonesia's problems are far more complex than Korea's, given
\nJakarta's faltering efforts at macroeconomic reform, and the debt
\ntalks would probably weigh many factors, including public debt
\nand the banking sector.<\/p>\n
High on Wednesday's agenda is the need to sift through
\nJakarta's agreement with the IMF, in which Indonesia listed 117
\nseparate reform measures to revive the battered economy and
\nenvisaged a rupiah level of 6,000 to the dollar.<\/p>\n
\"The first thing to accomplish is to understand the program
\nthat has been agreed with the Fund, and understand what steps
\nIndonesia to take, and then to get a handle on the numbers,\" one
\nbanker said.<\/p>\n
Other critical questions to be resolved involved how many
\ncompanies qualify for the plan, and could potentially postpone
\nrepaying capital on their debt, and whether some firms should be
\nliquidated.<\/p>\n
Bankers warned that several details will need to be worked out
\nto make Ficorca, which itself underwent several reincarnations,
\nwork for Indonesia.<\/p>\n
'Ficorca was a market-oriented solution to the problems of the
\nMexican financial sector in the 1980s. What we need now is a
\nmarket-oriented solution to Indonesia's problems in the 1990s,'
\nsaid Michael Chamberlin, head of the Emerging Markets Trading
\nAssociation and one of the top lawyers involved in shaping
\nFicorca.<\/p>\n
The main goal of Ficorca was to relieve companies, at least
\npartially, from their foreign-currency denominated debt by
\nfreezing its size in local currency terms.<\/p>\n
The program helped restructure about $12 billion in private
\nMexican debt. Under its guidelines, the debtors were required to
\nreach their own rescheduling agreements with creditors. To
\nreceive principal coverage from Ficorca.<\/p>\n
To obtain coverage on both principal and interest, the loans
\nneeded to be restructured with an eight-year maturity and four-
\nyear grace period.<\/p>\n
Among those expected to attend the New York talks are Bank
\nIndonesia's Governor Sjahril Sabirin, and Bank Indonesia's
\nManaging Director Miranda Gultom. Also scheduled to attend are
\nRadius Prawiro, the leader of President Suharto's private
\nexternal debt team, and businessman Anthony Salim, representing
\nIndonesia's corporate borrowers.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ri-private-debt-woes-get-ny-forum-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}