BI officials should not disrupt market: Ministers

BI officials should not disrupt market: Ministers

JAKARTA (JP): Senior ministers say Bank Indonesia has no
reason to debit the account of commercial banks that received the
disputed Rp 51.7 trillion of emergency liquidity credits from the
central bank.

Coordinating Minister for Economy and Finance Kwik Kian Gie
and Minister of Finance Bambang Sudibyo said separately on
Tuesday Bank Indonesia had received government bonds totaling Rp
164.5 trillion to cover most of the emergency credits it had
extended to commercial banks since late 1997, and, therefore, had
no need to debit the recipient banks.

"What do they want? Do they want to create chaos? Do they?
They do not need to debit the (commercial) banks' account. What
business is it of theirs? This creates chaos, doesn't it?," Kwik
told journalists after meeting with President Abdurrahman Wahid.

Earlier, Bank Indonesia's governor Sjahril Sabirin threatened
to debit the account of commercial banks which owed a liquidity
debt to the central bank if the government did not take over the
debt.

If that happened, Sjahril said, the economic cost for the
government would be greater than if it took over the debt itself.

Speaking to reporters at his office, Bambang said if Bank
Indonesia debited the accounts of the indebted commercial banks
it would force those banks to stop their operations and hence
disrupt the country's payment system.

He therefore called on BI officials not to issue damaging
statements in the name of Bank Indonesia as it would only
undermine the central bank's credibility.

"BI can not be and will not be taken as a hostage like that,"
he said. "BI can not be used as a cover by its people."

Bambang said he may sue the media, experts and officials who
make statements that could result in higher government costs to
recapitalize the central bank.

On Monday, Bank Indonesia's deputy governor Miranda S. Goeltom
warned the forced announcement of the damning audit report on BI
by the Supreme Audit Agency could affect BI's Yankee bonds, its
credibility to guarantee letters of credits issued by local
commercial banks and its ability to absorb government bonds used
to recapitalize the country's rotten commercial banks.

Bambang said the government would continue to pursue those who
had a role in bankrupting the central bank with the irresponsible
disbursement of huge liquidity supports to commercial banks.

"Investigations into those people will continue, but Bank
Indonesia as an institution must be saved," he said.

He noted the central bank's emergency liquidity loans had
supplied the largest cash flow in the country since 1997. And he
suspected that the loans were disbursed "through a pipeline with
a very weak control system".

"If there are corruptions, probably the largest will be there
(in the disbursement of the emergency liquidity credits) because
that is the largest amount and disbursed through a weak control
mechanism," he said.

Bambang said the problem was not whether or not the government
accepted the disputed Rp 51.7 trillion in BI's liquidity
supports, because the financial impact on the government would be
the same.

If the government agreed to take over the debt, he said, the
government would have to issue bonds to cover it. And the
government had done that. Likewise, if the government rejected
the debt, it would still have to issue bonds to recapitalize the
central bank as a result.

The problem, Bambang said, rested on the accountability of the
central bank in disbursing such a huge amount of money with
little control.

He said the government had tasked the Development Finance
Comptroller to audit commercial banks that had received BI's
emergency liquidity supports.

The government had also asked the House of Representatives to
task the Supreme Audit Agency to conduct investigative audits on
BI over the disbursement of the emergency loans.

"We need to clarify whether or not there were irregularities
in their disbursement. People need to know that." (prb/rid)