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)