Tue, 31 Oct 2000

Government to replace IBRA chief this week: Prijadi

JAKARTA (JP): Finance minister Prijadi Praptosuhardjo said on Monday that chairman of the Indonesian Bank Restructuring Agency (IBRA) Cacuk Sudarijanto would be replaced this week.

Prijadi said there were five candidates for the post but he declined to name them.

"Cacuk will be replaced this week... There are five candidates," he told the House of Representatives Commission IX for state budget and banking during a meeting.

Asked if former president of Bank Negara Indonesia (BNI) Widigdo Sukarman would be Cacuk's successor, he said: "It is not certain yet."

News reports have said earlier that Widigdo would replace Cacuk.

IBRA is a crucial agency managing around Rp 600 trillion (US$64 billion) worth of assets surrendered by closed or nationalized banks.

The agency is mandated to restructure and sell the assets to help finance the country's bank restructuring and recapitalization program.

The President has the authority to pick the chairman of IBRA.

Cacuk was appointed as the agency's chairman earlier this year but he was also recently inducted into the Cabinet holding the newly created post of the Junior Minister for the Restructuring of the National Economy.

The International Monetary Fund has been disappointed over the slow pace of the sale of IBRA's assets, including the recent delay in the government's divestment of Bank Central Asia (BCA).

IBRA has also been criticized for the debt restructuring mechanism for certain indebted conglomerates as it was seen as a government bailout.

The agency aims to raise around Rp 18.9 trillion in cash this year to help finance the state budget which is heavily burdened by the bank restructuring cost. IBRA has so far raised around Rp 12 trillion.

The government has issued more than Rp 400 trillion worth of bonds to help finance the country's bank recapitalization cost. The state budget covers the interest rate of the bonds. IBRA will contribute through the proceeds from the sale of its assets.

IBRA is targeted to raise around Rp 27 trillion for the upcoming 2001 state budget.

Meanwhile, Prijadi told legislators the government was planning to reduce the amount of outstanding recapitalization bonds to ease the burden of the state budget.

He did not elaborate but a senior official at the finance ministry later told The Jakarta Post the cash would come from the proceeds of the sale of IBRA assets.

The official said the IBRA proceeds could either be used to service the interest rate of the bonds or to repurchase the bonds.

He said another option for reducing the government bonds was swapping the bonds with bank loans under the management of IBRA.

Prijadi also said he would announce this week the new director general of state-owned enterprises.

He said since Oct. 10, the authority over the country's more than 150 state enterprises had been returned to the finance ministry.

Former president Soeharto created in 1997 a new ministry responsible for the state enterprises. During former president Habibie, state enterprises was put under the office of the state minister for investment and state enterprises development.

Prijadi said the government remained committed in continuing the privatization of state enterprises and expressed confidence that the government would meet the target of raising around Rp 5 trillion in privatization proceeds next year.

But he said the target to raise Rp 6.5 trillion this year could not be met due to various reasons including weak market sentiments and unresolved regulatory issues.

The government has initially planned to privatize 10 state firms this year but none has been finalized.(rei)