Government, BI form joint team to end dispute over loan
Government, BI form joint team to end dispute over loan
JAKARTA (JP): Coordinating Minister for Economic Affairs Rizal
Ramli said on Wednesday that the government and Bank Indonesia
had formed a joint team to verify the disputed amount of the bank
liquidity support facility.
Rizal said that the team was expected to complete its work
next week.
Speaking to reporters following a closed door meeting with
central bank officials and other related senior government
officials, he said that the central bank and the finance ministry
continued to disagree over the amount of the loan facility that
must be shouldered by the government.
"The discussion on the amount has been tough," he said.
The government via Bank Indonesia channeled some Rp 144.5
trillion (US$15.88 billion) in emergency loans between 1997 and
1999 especially to help domestic banks avoid bank runs. The
loans were supposed to be used only for repaying depositors.
But the Supreme Audit Agency (BPK) has recently revealed in
its audit report that some Rp 138.4 trillion of the loan facility
had been misused by the banks including for currency speculation
and financing affiliated businesses. BPK said that this was
partly due to weak supervision by the central bank.
The government is supposed to repay Bank Indonesia for the
liquidity support facility by issuing bonds to the central bank.
But the government said it would not cover that part of the loans
which were misused.
On the other hand, the central bank has insisted that the
government must pay the full amount. It also maintained that the
disbursement of the loan facility was in accordance with
government policy.
Forcing Bank Indonesia to cover the abused portion of the loan
would send the central bank into bankruptcy.
The talks have been dragging on for almost a year and have
consumed a lot of energy and time of both government and central
bank officials. The misuse of the loan facility became a high
profile political issue.
The House of Representatives has instructed the government and
Bank Indonesia to settle their dispute by November 10, but Rizal
demanded more time.
"The problem has been dragging on for a year and they wanted
us to settle this in 10 days. Life is really unfair. We need
more time," Rizal said.
The owners of banks which received the liquidity support
facility have, in many cases, transferred assets to repay the
loans.
But the government is now pressing several former bank owners,
the largest recipients of the loan facility, to transfer more
assets because the assets they pledged earlier turned out to be
insufficient to cover their obligations.(rei)