'Debt extension plan will prolong IBRA's mandate'

'Debt extension plan will prolong IBRA's mandate'

The Jakarta Post, Jakarta

The controversial policy of the powerful Financial Sector Policy
Committee (FSPC) to ease the repayment terms for the huge debts
owed by former bank owners implies that the life of the
Indonesian Bank Restructuring Agency (IBRA) would have to be
extended for at least another six years, according to State
Minister for National Development Planning Kwik Kian Gie.

"The decision of the FSPC ... implicitly implies that the
existence of IBRA will be prolonged. Can the FSPC make such a
crucial decision?" Kwik said on Wednesday during a hearing on the
debt extension plan with House of Representatives Commission IX
on financial affairs.

IBRA, which first proposed the new debt settlement scheme, is
supposed to end its six-year mandate in 2004.

The FSPC, which groups senior economic ministers led by
Coordinating Minister for the Economy Dorodjatun Kuntjoro-Tjakti
and has the final say on major debt restructuring policies,
decided late last year to extend the repayment period for the
debts from four to ten years with interest rates being lowered to
a minimum of nine percent.

But the policy has raised controversy as critics said that the
government was being soft on bad debtors. The government injected
more than Rp 138 trillion (about US$413 billion) in bailout funds
in the wake of the 1998 financial crisis to help the banks stay
afloat.

The government has discussed the FSPC policy at several
cabinet meetings but has failed to reach a final conclusion.
Three senior ministers have been assigned to review the policy.

Kwik has been a strong critic of the FSPC policy on the debt
extension plan.

Elsewhere, Kwik also expressed his doubts about the
authenticity of an intelligence document, circulated by IBRA
chairman I Putu Gede Ary Suta at a cabinet meeting, which
supported the agency-proposed debt extension plan.

The report, reportedly drafted by the National Intelligence
Body (BIN), said the debt settlement scheme would benefit the
economy as a whole, as it would allow companies to keep operating
and generating income, while at the same time creating job
opportunities.

But Kwik said that the report did not carry the signature of
BIN's chief Hendroprijono.

Press reports had earlier quoted the BIN report as saying that
the debt extension plan could trigger social unrest as it ran
contrary to society's sense of justice.