Government urged to provide legal basis for IBRA

JAKARTA (JP): President Megawati Soekarnoputri needs to immediately sign a new decree to provide a legal foundation for the Indonesian Bank Restructuring Agency (IBRA) to work "properly" from, a senior legislator said on Monday.

Faisal Baasir of the House of Representatives Commission IX for financial and development planning affairs said that the new decree was needed following Megawati's decision to transfer the agency from under the supervision of the Ministry of Finance to the State Ministry of State Enterprises.

"What's most important for the House is that everybody carries out their jobs properly without having to worry about legalities," he told the Jakarta Post.

IBRA was previously under the supervision of the Ministry of Finance as stipulated by government regulation No. 17/1998.

Megawati decided to transfer IBRA to the State Ministry for State Enterprises to allow the Ministry of Finance to focus on its efforts to achieve state budget sustainability.

IBRA controls various banking assets worth Rp 600 trillion (US$68.72 billion) transferred from closed banks, ailing banks and former bank owners, making the agency vulnerable to intervention from politicians and influential businessmen.

The agency is mandated to restructure the assets and sell them to raise cash to help finance the state budget deficit.

But IBRA often has to face severe political obstacles, including from Commission IX legislators, in implementing its program.

This year, the agency was targeted to raise about Rp 27 trillion in cash, and so far it has raised Rp 14 trillion.

For the 2002 state budget, the government has targeted to raise Rp 35.3 trillion in cash, of which Rp 21.5 trillion is to help finance the projected budget deficit of 2.5 percent of the gross domestic product, and the remaining Rp 13.8 trillion is to repurchase government bank recapitalization bonds to help ease the burden of the state budget.

The agency is also mandated to restructure some Rp 7.5 trillion of non-performing bank loans under its management, which will be swapped with bank recapitalization bonds.

Late last week, IBRA chairman I Putu Ary Suta said the new target was difficult to achieve given the deteriorating value of IBRA's assets.

Ary Suta confirmed on Monday that the government had yet to issue the new decree governing IBRA's new status.

"No, not yet. I haven't received any information about that yet," he said on Monday.

He refused to elaborate further on the subject saying he was not in a position to comment on that particular matter.(10)