BI has no objection to publication of audit results

JAKARTA (JP): Bank Indonesia (BI) said on Wednesday that it had no objection to the audit on its balance sheet being made public as such a move would not affect its operations but would improve transparency.

Nevertheless, Bank Indonesia governor Sjahril Sabirin warned that the central bank would be forced to book a substantial loss if the Supreme Audit Agency refused to give an opinion on BI's balance sheet.

But, he said, even if that happened, it would not force the central bank to cease operations because the government was required by the new central bank law to absorb the losses.

"There are possibilities that Bank Indonesia may suffer losses. But according to the current law, if we lack capital the government has to fill the gap," Sjahril told a media conference on Wednesday, during which he was accompanied by his deputies.

BI senior deputy governor Anwar Nasution added that the refusal of the Supreme Audit Agency to offer an opinion would not affect the central bank's day-to-day operations.

"It doesn't mean there's going to be a doomsday. It doesn't mean that Bank Indonesia will be liquidated," he said. "We have a lot of foreign exchange reserves and we will continue to meet our foreign obligations."

Indonesia's audit agency was assigned by the government to audit Bank Indonesia's balance sheet as of May 17, 1999 -- the date the central bank became an independent body.

The agency's chairman, Satrio "Billy" Joedono, said on Tuesday that the agency could not give a concrete opinion on the audit results because Bank Indonesia's information system was "chaotic."

"We cannot reach a conclusion whether there were any irregularities conducted by Bank Indonesia in providing the emergency liquidity support (to commercial banks)," Billy said.

The agency's "disclaimer opinion" implies that the agency does not have confidence in the Rp 51.7 trillion in emergency liquidity that the central bank injected into local banks in late 1997 amid widespread bank runs.

Bank Indonesia injected a total of Rp 164.5 trillion in emergency support for struggling banks.

Sjahril said it acted on behalf of the government and its blanket guarantee program, and expected to be reimbursed. He said former finance minister Bambang Subianto had agreed to reimburse the central bank.

Finance minister Bambang Sudibyo, however, has refused to reimburse all the funds. He said the government needed to conduct an investigative audit into the problematic Rp 51.7 trillion in emergency liquidity credit.

If the government fails to take over the Rp 51.7 trillion, it would force the central bank to book a loss of Rp 34.3 trillion.

According to Dow Jones, Bank Indonesia has sent letters to the audit agency and the House of Representatives, informing them about the consequences of giving "disclaimer opinions" about the central bank's balance sheet.

The letters said the publication of the audit agency's "disclaimer opinion" on Bank Indonesia's liquidity support would ruin international and national confidence in the central bank.

But Anwar rejected the notion that the central bank lobbied the agency and the House. He said the central bank just wanted to clarify the disputed emergency liquidity credit.

When asked about the impact of the disclosure of the audit on the central bank, Anwar said: "The effects do not concern us. That's past history." (rid)