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)