'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.