Borrowers from RDI fund told to make audit

Dadan Wijaksana, The Jakarta Post, Jakarta

The government said on Monday it would ask state-owned and provincial-owned firms to audit the use of money borrowed from the central government's investment funds account (RDI) in response to claims the loans were not being repaid.

Director General for Financial Institutions at the Ministry of Finance, Darmin Nasution, said audits were needed to help trace where all the money had gone and to ensure prudent accountability mechanisms.

"Mostly, they are suffering from losses resulting in the failure to pay back the (RDI) funds. But still, there has to be an audit to determine where the funds went," Darmin said on the sidelines of a hearing with the House of Representatives Commission IX for financial affairs.

He was responding to calls from several state-owned and provincial-owned enterprises to provide them with debt relief facilities due to their poor financial condition.

The RDI funds are derived from accumulated interest rate gains the central government has obtained from the extension of two- step loans.

The funds originated from foreign loans which the government extended to various parties for investment purposes. Besides state enterprises, the debtors also include regional administrations.

As of May 2003, there was some Rp 23 trillion (US$2.77 billion) in cash kept in the RDI account in the central bank, Darmin said.

More than Rp 67 trillion of funds are still in the hands of borrowers.

Darmin said the government would stop channeling RDI funds until the House provided clear-cut guidelines for the use of the RDI account.

Earlier, state-owned airline PT Merpati Nusantara asked for up to Rp 200 billion in low-interest loans from the RDI account to improve the company's financial standing.

The RDI funds are currently kept at Bank Indonesia (BI), but no interest is charged. The Development Finance Comptroller audits the funds every year.

The RDI has long been regarded as one of the government's sources of non-budgetary funds.

However, given its contribution to the state budget, the government has never considered the RDI to be an off-budget fund source.

For this year, some Rp 7 trillion from the account has been earmarked to help finance the 2003 state budget.