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."