FSPC approves major corporate debt restructuring
JAKARTA (JP): The powerful ministerial Financial Sector Policy Committee (FSPC) said on Thursday that it had approved corporate debt restructuring deals worth some Rp 189.7 trillion (US$18.9 billion) between 2000 and the end of March.
The FSPC said in a press release that the total value of the debt workouts approved by the committee during the first three months of this year alone was almost three times as large as those concluded throughout last year.
"During the first three months of 2001 alone, the total value of debt restructuring deals approved by the FSPC was Rp 141.04 trillion, or almost three times as large as those concluded through all of last year," said Coordinating Minister for the Economy Rizal Ramli.
Rizal chairs the FSPC which groups several senior economic ministers, including the ministers of finance, and industry and trade.
The Indonesian Bank Restructuring Agency (IBRA) is authorized to decide on debt restructuring and asset sale deals worth only less than Rp 1 trillion. Transactions worth Rp 1 trillion and more must get prior approval from the FSPC.
The press release said that the corporate debt restructuring deals approved by the FSPC were those processed by IBRA, the Jakarta Initiative Task Force (JITF) and the state-owned Bank Mandiri.
IBRA itself controls more than Rp 260 trillion worth of bank non-performing loans (NPLs) it took over from nationalized and closed banks.
The JITF is a government-sponsored agency set up to provide a mediation process between debtors and creditors focusing particularly on the restructuring of private sector overseas debt. But debtors and creditors cannot be forced to join the JITF mediation process because it is based on a voluntary approach.
Last year, the JITF managed to restructure around US$9 billion in corporate debts.
The press release did not mention the reason why Bank Mandiri had sought the approval of the FSPC in the restructuring of its debtors, particularly as most of the bank's huge NPLs had been transferred to IBRA.
The FSPC did not specify which of the approved restructuring deals had finally been closed and which were based on provisional MOUs (Memorandum of Understanding).
Rizal has repeatedly asserted that the FSPC is strongly committed to accelerating the restructuring of the country's massive corporate debt in a bid to help restore the ailing economy.
The government has been criticized for the slow progress in the corporate debt restructuring area.
The criticism has also been directed at the FSPC as some of the deals were seen as more benefiting the debtors, particularly big conglomerates, than the state.
Among of the critics were the International Monetary Fund and the World Bank.
An IMF mission led by deputy director for Asia Pacific Anoop Singh arrived in Jakarta earlier this week to start a review of the country's key economic reform program with the government. The review will include the corporate debt restructuring issue.
The mission will complete the review in about two weeks and will report to Washington before the IMF decides on the disbursement of its next crucial $400 million loan tranche to the country.
The IMF promised early last year to provide a total of $5 billion in loans to the current administration to help finance a three-year economic reform program. So far around $1 billion has been disbursed.
The third loan-tranche disbursement was delayed late last year due to signs that the government was wavering in the implementation of key reform programs, including corporate debt restructuring.
In a bid to appease the IMF, the FSPC recently issued a new corporate debt restructuring ruling, which includes allowing the oversight committee of IBRA to review all the restructuring deals made by IBRA. (rei)