Debt extension plan review waste of time, economist says
Debt extension plan review waste of time, economist says
Dadan Wijaksana, The Jakarta Post, Jakarta
Rather than setting up a special team of senior ministers to
review the controversial policy to ease repayment terms of
indebted ex-bank owners, the government should instead focus on
how to execute the original debt settlement scheme, says an
expert.
Didik J. Rachbini, an economist at the Institute for
Development of Economics and Finance (Indef), said the setting up
of a review team was waste of time and only illustrated the
government's failure to identity the heart of the problem.
"We do not need the team. If they (debtors) have proven
uncooperative, let them accept all the consequences. If that
means seizing their assets, then do it," Didik said on Saturday.
President Megawati Soekarnoputri formed the interministerial
team on Jan. 19 to review the much-criticized government policy
to grant debt payment extensions to and lower interest rates for
former bank owners owing huge debts to the Indonesian Bank
Restructuring Agency (IBRA).
The team is expected to complete its job in the middle of next
month. In addition to senior economics ministers, the team also
includes the coordinating minister for security, the attorney
general and the National Police chief.
The ex-bankers owe around Rp 144.5 trillion (about US$14
billion) to the government after their banks received massive
liquidity support at the height of the 1997 financial crisis.
In 1998, the government reached agreement with the former bank
owners for the latter to repay the debts within four years. The
businessmen also agreed to transfer assets to IBRA as part of
their debt payments.
But to date, most of the debtors have not started making
payments, and many of the assets transferred had either been
pledged to other creditors or their market value was far from
sufficient to cover their debts.
The government then announced on Dec. 11, 2001 that it would
ease the repayment terms to enable the ex-bankers to repay the
debts.
This has put the government under public scrutiny, with
critics claiming the government is impotent against large and
politically well-connected debtors when it comes to forcing the
reluctant debtors to return the funds.
With the debt extension plan, the debtors would be tempted to
become even more lax in meeting their obligations, therefore,
legal proceedings should be what they face at the moment, he
said.
Didik was of the opinion that the government had no other
alternative but to take legal action against debtors who failed
to make payments.