Boediono defends debt discount policy
Boediono defends debt discount policy
The Jakarta Post, Jakarta
Minister of Finance Boediono said on Monday there was no
"political motive" behind the government's latest policy to offer
huge discounts to companies with debts to the state.
Boediono said that the policy was merely aimed at easing the
burden of the indebted small- and medium-sized enterprises (SMEs)
in a bid to accelerate the debt repayment process.
He explained that the settlement of the debts would not only
allow the government to recover the state funds, but should also
make the SMEs more bankable, which in turn would help accelerate
economic growth.
"The objective to provide the discount is purely aimed at
easing the burden of the indebted SMEs. It is expected that the
policy will help revive the real sector," he said.
Boediono was commenting on the government policy announced
over the weekend that it would provide a discount of between 25
percent and 50 percent for debt principal and the writing off of
interest rate arrears and penalties. The new policy comes at a
time when the current outgoing government is about to end its
mandate, and so again raises suspicions of a political motive
behind the move.
The facility was being offered to debtors who less than Rp 10
billion (about US$1 million) in debt, which have challenged an
earlier debt settlement mechanism imposed by the now defunct
Indonesian Bank Restructuring Agency (IBRA) in the courts.
The debtors initially borrowed the money from local banks.
But in the wake of the late 1990s financial crisis, the
government, via IBRA, took over the troubled banks and their
debt. IBRA, which had the task of collecting the money owed by
the debtors, was officially closed down in February 2004, but the
government set up a team to deal with the unsettled debts.
Boediono said that the new policy was launched at a time when
the current government was ending its mandate because the team
was given a deadline until January 2005 to complete IBRA's
unfinished debt restructuring work.
He also said they wanted to prevent abuse of the debt discount
policy, so the government planned an audit mechanism by an
independent auditor.