Government to set up deposit insurance agency

JAKARTA (JP): The government is preparing the establishment of a deposit insurance agency to guarantee depositors' money in the country's banks.

Rizal Ramli, a member of the economic monitoring team, said here on Tuesday that the plan to set up a deposit insurance agency was discussed during the cabinet's weekly meeting on Monday evening.

"The insurance agency will take over the blanket guarantee scheme currently provided by the government to bank depositors," Rizal said.

The government launched a blanket guarantee in early 1998 to protect depositors following massive bank runs, which had led to the closure of several major banks.

Minister of Finance Bambang Sudibyo has said the guarantee will remain in place until the government sets up a deposit insurance company to take over its function.

Rizal said that during the Monday weekly meeting, the government had also explored the possibility of freeing state-owned air carrier Merpati Nusantara from the obligation to serve certain important but unprofitable routes.

He said President Wahid considered it would be better that the special missions be carried by a new and separate state owned company.

"That way, Merpati can concentrate its operations on the more profitable routes to improve its financial performance," he said. (cst)