Government hopes to issue treasury bills in July
Government hopes to issue treasury bills in July
The Jakarta Post, Jakarta
The government said it would start issuing treasury bills in
July this year after the House of Representatives approves the
sovereign debt securities law.
The T-bills were supposed to have been launched in March as
agreed with the International Monetary Fund late last year.
"(But) given that parliamentary approval of the sovereign debt
securities law has been delayed, we also propose to rephase the
structural benchmark related to the treasury bill auction to end-
July 2002 ...," the government said in a letter of progress to
the IMF, a copy of which was obtained by The Jakarta Post.
The House is currently in recess and will resume deliberating
the bill next month.
As reported earlier by this newspaper, the letter, which was
signed by Coordinating Minister for the Economy Dorodjatun
Kuntjoro-Tjakti, Minister of Finance Boediono, and Bank Indonesia
Governor Sjahril Sabirin, and was sent to Washington prior to the
April 11 to April 12 Paris Club creditors meeting, will be used
as a basis for the disbursement of the latest IMF loan tranche to
the country.
The Fund's board of directors is expected to meet later this
month to discuss the letter and decide on the loan disbursement.
The IMF is providing a US$5 billion bailout package to help
finance the country's reform program.
The issuance of the treasury bills is crucial to helping
refinance more than Rp 600 trillion ($60 billion) worth of
government bonds issued in the late 1990s to bail out the
country's collapsing banking sector.
Around Rp 3.9 trillion of the bonds will mature in July, and
further large chunks will mature in 2004 and 2010, which could
lead to a fiscal disaster if not handled properly.
The government also said in the letter that the implementation
of a burden-sharing agreement with Bank Indonesia over Rp 138
trillion worth of emergency loans to the banking sector had been
postponed into June from an earlier end of March deadline to
allow international experts to finalize their recommendations.
The government, via Bank Indonesia, had extended the emergency
loans in the late 1990s to help ailing banks. But since a huge
portion of the loans had been misused by the recipient banks, the
government insisted that the central bank must also bear some of
the burden.
Elsewhere, the government said that progress with other key
reform targets was on track. Bank Indonesia had also met the base
money target set by the IMF.
The government said that it was determined to bring inflation
down to below 10 percent by the end of 2002 despite strong
inflationary pressures during the first couple of months of this
year.
"The rise in headline inflation in early 2002 reflects the
rises in fuel and other administered prices, as well as the
impact of the recent floods on the supply of basic commodities,"
the letter said.
"In the area of monetary policy, we will continue to gear our
policies towards achieving single digit inflation by the end of
2002
"While we expect these (inflationary) pressures to subside
over the course of the year, (Bank Indonesia) will tailor its
monetary stance to ensure that these developments do not lead to
a more generalized increase in inflation."