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.