'Debt extension plan does not need IMF approval'

'Debt extension plan does not need IMF approval'

Berni K. Moestafa, The Jakarta Post, Jakarta

Just as it was appearing that the International Monetary Fund
(IMF) was going to interfere with a controversial government
decision to extend a debt payment program for ex-bankers, the
government said on Monday that the IMF had no say in the matter,
and was it only asking the Fund for consultation.

Coordinating Minister for the Economy, Dorodjatun Kuntjoro-
Jakti poured cold water over speculation that the IMF might
interfere with the government's decision to grant ex-bankers a
longer debt payment period.

Dorodjatun confirmed reports saying the IMF would send a team
to Jakarta to discuss the controversial decision.

"It's just for consultation," he said of the talks with the
IMF, after a Cabinet meeting.

He was unable to say when the IMF team would arrive, and did
not respond to questions about whether the team was already in
Jakarta.

Last week, State Minister of National Development Planning
Kwik Kian Gie said the IMF requested the government to delay its
decision as the Fund had not been informed beforehand.

Dorodjatun said the government would go ahead anyway.

Kwik, after the Cabinet meeting with Dorodjatun, refused to
answer questions, saying he was told not to speak to reporters on
this issue.

A former coordinating minister, Kwik is a staunch critic of
granting former bankers a further grace period with lower rates.

He is not alone. Bank analysts and economists called the
decision unfair, as it applied to ex-bankers who had violated the
law, and have been avoiding debt payments since.

The shareholders settlement program is an out-of-court
settlement for bankers who extended loans to affiliated parties
in excess of their legal lending limits, and misused state-funded
emergency loans that their banks received at the peak of the
economic crisis.

Of the Rp 144.5 trillion (about US$13.89 billion) in emergency
loans that banks received, some Rp 138.4 trillion were believed
to have been abused.

Former bankers may avoid prosecution if they agree to settle
their debts by way of surrendering their assets to IBRA.

The shareholders settlement program has given them up to four
years to repay or surrender their assets.

Ex-bankers who refused to pay or failed to comply with the
program were categorized as noncooperative debtors, and should
face prosecution.

Almost all bankers were noncooperative, according to IBRA.

A senior IBRA official has said that pushing for legal action
had proven to be more difficult than expected. Most of IBRA-filed
lawsuits ended up in favor of the debtors, the official said.

IBRA took the initiative to extend the maximum debt payment
period to 10 years from four, and to lower the interest rates.

It hopes a commercial approach instead of a legal one, would
entice the noncooperative debtors into paying.

Dorodjatun added the government would take tougher legal
action against debtors who still refuse to pay even after they
were granted the debt payment extension.

The government continues to debate what exactly these tougher
actions would be.

"There are a lot of technical details that need to be
finalized, when the time has come we will make an announcement,"
he said. The next cabinet meeting is slated for Thursday, but
Dorodjatun said another meeting might be held on Friday.