BIS urges early deals between creditors, lenders

BIS urges early deals between creditors, lenders

BALI (AFP): A top official of the Swiss-based Bank for International Settlements (BIS) called here yesterday for an early and voluntary agreement among creditors and debtors to resolve Asia's mounting debt problems.

"It is important at an early stage to come up with an early and voluntary agreement with all creditors," BIS general manager Andrew Crockett said on the sidelines of a Southeast Asian central bankers' meeting here.

"I hope the creditors are willing themselves because it is in their interest, but I do believe that based on the lesson of past experiences, an early and voluntary agreement is the best, rather than prolonging the situation," he said.

Based in Basel, Switzerland, the BIS is known as the "central bankers' bank" and provides an influential forum for world monetary watchdogs.

The two-day meeting in Bali of the Governors of Southeast Asian Central Banks (SEACEN) includes Indonesia, Malaysia, the Philippines, Singapore, Thailand and Myanmar, as well as Taiwan, South Korea, Nepal and Sri Lanka.

Cambodia, Fiji and Tonga are attending as observers of SEACEN, which plays a key role in training and research among central bankers in the region.

Crockett told journalists that he spoke behind closed doors here with the governors on "financial stability and international capital flows"

Officials from the International Monetary Fund (IMF) , which has engineered rescues for Thailand, Indonesia and South Korea totaling more than 100 billion dollars, were also in the Bali meeting.

Crockett was optimistic that in Asia, the debtors' side, including banks and corporations, "realize their own interests in having an early agreement."

"On the creditors' side, it is in nobody's interest to prolong a situation in which there is uncertainty," he said.

"It will be up to those of us in positions like the international organizations to make clear to the private-sector creditors that they have an interest in reaching an agreement, that in not reaching an agreement they cannot expect the official community to either bail them out or to exercise undue pressure on the other side," he said.

Economists say only South Korea has so far succeeded in adopting a structured approach to rolling over its short-term private sector debts, with Indonesia and Thailand still in negotiations.

Thai officials said Japanese financial institutions had agreed to roll over 80-90 percent of the debts owed by the Thai private sector.

Press reports said that in Indonesia, which has US$74 billion in private debt, Japanese bankers had come up with a proposal to funnel as much as $15 billion to keep them from defaulting on loan payments.