Funds needed for write-offs

Funds needed for write-offs

JAKARTA (JP): Governor of Bank Indonesia (the central bank) J.
Soedradjad Djiwandono warned yesterday that state banks must
provide supporting funds before writing off their bad loans.

"The funds must be there. Don't just write off (bad loans)
easily," Soedradjad told journalists after attending a
coordinating ministerial meeting on economy and finance
yesterday.

When asked about the capability of state banks to provide the
funds, he said: "I'm sure they can provide them. But, just wait
and see."

Soedradjad declined to mention which banks have written off
their bad loans. "I'll disclose it later on," he said as quoted
by Antara news agency.

Sutan Remy Sjahdeini of the state-owned BNI 1946, said
recently the World Bank, as a fund lender to Indonesia, forbids
some state banks from writing off some of their non-performing
loans before 1994, and others before 1996.

This condition, Remy said, has prevented state banks from
going public, by which they could generate "cheap" funds to
supports their reserves, so that they can write off their non-
performing loans. (rid)