Government refused to execute FSPC's 30 debt workout decisions
Government refused to execute FSPC's 30 debt workout decisions
JAKARTA (JP): The director general of financial institutions
at the finance ministry, Darmin Nasution, denied on Thursday an
accusation that the ministry had been undermining corporate debt
restructuring deals approved by the Financial Sector Policy
Committee (FSPC).
Darmin suspected that what he termed the baseless accusation
may have been deliberately raised to justify a plot to replace
certain top officials at the ministry.
But Darmin admitted that the finance ministry and Indonesian
Bank Restructuring Agency (IBRA) had refused to execute around 30
debt workout decisions made by FSPC.
Since he also acknowledged that each of the decisions could
involve several debtors, the total number of debt workout deals
simply cast aside by the finance ministry could be as large as
140, as claimed by an official of FSPC.
FSPC secretary Syafruddin Tumenggung raised the accusation on
Wednesday at a seminar. He said that the finance ministry under
Prijadi Praptosuhardjo, and IBRA had refused to implement around
140 decisions on corporate debt restructuring programs approved
by the FSPC.
The FSPC, which groups several economics ministers and has the
final say over the country's major corporate debt restructuring
schemes, was led by Rizal Ramli until June 12 when he was still
the coordinating minister for the economy. Rizal is now the
finance minister after having replaced Prijadi as part of last
week's cabinet reshuffle. Prijadi is now out of the cabinet.
"I'm concerned that there is a plot now developing, and those
involved are now seeking a justification using misleading
information," Darmin told reporters.
Sources have said that Rizal and Prijadi often disagreed over
major economic issues.
There have been rumors that Rizal is considering reshuffling
the top officials in the finance ministry, including the director
general of taxation, director general of financial institutions,
director general of customs and excise, and the IBRA chairman.
Rizal confirmed on Thursday the statement made earlier by
Syafruddin, but said that he had no intention of replacing senior
officials in the finance ministry unless they had failed to
perform their duties.
"During a meeting with the Vice President yesterday, it was
reported that many of the FSPC decisions had not been implemented
by the finance ministry (under Prijadi)," Rizal said.
"... But I don't think there's any such plan (to replace
senior officials), except for those who have not performed ... We
(the finance ministry) are now focusing on tax compliance and
other ways of increasing state revenues," he told reporters.
Meanwhile, new Coordinating Minister for the Economy
Burhanuddin Abdullah, who also now heads the FSPC, said on
Thursday that decisions already approved by the committee must be
implemented.
Speaking to reporters following a cabinet meeting, he expected
Rizal to be able to push ahead with the implementation of
previous FSPC decisions.
The finance ministry is under pressure to collect a huge
amount of revenue through whatever means available, including
taxes and the sale of banking assets held by IBRA, to plug the
holes in the 2001 state budget.
IBRA manages around Rp 600 trillion worth of various banking
assets including bad debts. The agency is mandated to
restructure the assets and sell them on the market to raise cash
to help cover the state budget deficit.
Darmin also dismissed the suggestion that IBRA required the
endorsement of the finance minister to carry out FSPC decisions.
He pointed out that under the existing regulations, IBRA did
not have to obtain the finance minister's approval before
implementing FSPC decisions on corporate debt restructuring,
except for restructuring deals worth more than Rp 1 trillion.
Regarding the FSPC decision on the restructuring of debts owed
by small and medium enterprises (SMEs) to state-owned banks, as
raised by Syafruddin at the seminar, Darmin said that it could
not be implemented because the decision ran contrary to an
existing regulation issued last year by the finance ministry.
Darmin pointed out that according to this regulation, a
discount could only be given in respect of interest and fees, not
on the principal of the debt.
According to the FSPC decision, SMEs were entitled to enjoy a
25 percent discount on principal and a waiver on interest arrears
as part of corporate restructuring schemes approved by IBRA.
Darmin said that when the particular FSPC decision was made,
there was no awareness of the above regulation.
He said that for the FSPC decision to be implemented, the
government would either have to revoke the existing regulation
first, or revise the FSPC decision. (rei/bkm)