Camdessus sees possible RI private debt accord

Camdessus sees possible RI private debt accord

PARIS (Agencies): IMF managing director Michel Camdessus said
on Monday that a debt deal with Indonesia was possible at a May
26 meeting in Frankfurt with creditor banks.

"I am convinced that the new meeting in Frankfurt on May 26
will be a step forward, probably a final step, to a rescheduling
of this debt which will be an absolutely decisive element for
Indonesia's economic recovery," he was quoted as saying by
Reuters

Camdessus was talking to reporters after meeting President
Jacques Chirac.

Indonesia's Coordinating Minister for Economy, Finance and
Industry Ginandjar Kartasasmita said in Tokyo earlier on Monday
he was confident that remaining debt issues could be settled in
Frankfurt.

Indonesia and its creditor banks held three days of talks
which ended on Sunday without an agreement on the most thorny
issue of resolving the debt held by companies.

But the bank steering committee, a group of creditor banks,
said in a statement on Monday that even as more work needed to be
done for corporate debt problems, it and Indonesia made progress
in finding solutions for the problems of Indonesian banks'
foreign currency debt and trade finance.

The terms of any individual restructuring will have to be
agreed between individual debtors and creditors but it was agreed
that the framework would be voluntary and not require debt
forgiveness, the statement said.

In Tokyo, Stanley Fischer, IMF's deputy managing director
said yesterday the agreement reached last weekend between
Indonesia and its international bank creditors to roll over part
of the country's debts is a "significant achievement", said

Fischer said he thought the initial reaction to the Tokyo
meeting had been too gloomy, adding that he had never expected it
to reach agreement on private-sector debt, estimated at some $80
billion, the paper said.

But he also said he felt positive that an agreement on this
would be reached at the next meeting on the issue, scheduled for
May 26 in Frankfurt.

Support

Another IMF's senior official said in Washington that IMF is
willing to back a plan for $8 billion in Indonesian government
guarantees of the nation's external interbank liabilities in
1998,

The senior IMF official, speaking Monday to Dow Jones
Newswires on condition of anonymity, said the guarantee plan
"will follow Korea in having government guarantees of the
interbank" liabilities.

His remarks show a major hurdle in the nearly two-month-old
debt deliberations has been cleared, particularly since the IMF
initially was concerned about widespread demands for government
guarantees.

A range of corporate debt issues still must be resolved before
an overall debt-restructuring framework is settled. But the
interbank issue have moved forward "faster than anyone expected,"
the senior IMF official said.

He added that given the progress made in debt talks last week
in Tokyo, the IMF is expecting Indonesia will get "much closer to
a deal" on the overall framework at the next round of talks
between Indonesia and foreign creditors starting May 26 in
Frankfurt.

Total Indonesian interbank liabilities to foreign institutions
are placed around $16 billion, which is only a modest portion of
the $80 billion in external debts currently subject to
negotiation.

Corporate debt, which totals around $64 billion, was expected
to be the most difficult issue to settle even before the
negotiations began. And the fact the Tokyo debt talks didn't
resolve the corporate issues isn't surprising, the senior IMF
official said.

The IMF is hoping that government guarantees on interbank
debts due only in 1998 will be sufficient when coupled with
actions to provide relief on trade finance debts, and debts owed
by Indonesia's corporate sector.