Govt, IMF agree to slow down BRI loan divestment

Govt, IMF agree to slow down BRI loan divestment

JAKARTA (JP): The government and the International Monetary
Fund (IMF) have reached an agreement not to force state-owned
Bank Rakyat Indonesia (BRI) to divest all its corporate loans by
the end of this year as originally scheduled, a senior government
official said on Monday.

Dipo Alam, assistant to the coordinating minister for the
economy, said the corporate loan transfer would be made
gradually.

"We can't force BRI to divest its corporate loans to zero
percent by the end of this year," he said following a technical
review meeting with the IMF.

Dipo said a "compromise solution" had been reached, but he
declined to disclose the new target for the corporate loan
transfer.

He said the solution would consider the bank's abilities
according to its business plan.

In the last letter of intent to the IMF, the government agreed
to divest all of BRI's corporate loans, currently at 20 percent
or equal to Rp 6.2 trillion, by the end of this year to allow the
bank to focus on financing the agriculture sector and small and
medium-scale businesses.

But the new policy was opposed by the bank. Minister of
Finance Prijadi Praptosuhardjo also said it was impossible for
BRI to meet the corporate loan transfer target as set by the IMF.

According to BRI's business plan, the bank will divest its
corporate loans from 20 percent this year to 18 percent by the
end of next year, and 17 percent in 2002. It is not clear when
the bank will finish selling its corporate loans.

Analysts have said forcing the bank to transfer all of its
corporate loans would badly hurt its financial performance
because BRI had obtained lucrative profit from the business.

A group of government senior officials have been engaged in a
technical meeting with the IMF officials since last week to
review the country's economic reform program set out in the
letter of intent. The technical meeting is scheduled to end on
Tuesday.

The meeting will be followed by a review meeting involving
senior economic ministers, which will set up a new letter of
intent.

The IMF is expected to disburse another tranche of its loan to
the country next month after approving the country's new letter.

The IMF is providing the current administration with some US$5
billion in bailout funds to help finance the country's three-year
economic program. So far, the fund has disbursed about $1
billion.

The government had made delays in the past in implementing its
key economic program agreed with the IMF, forcing the latter to
postpone its loan disbursement. The delay in the IMF loan
disbursement has hurt confidence in the country.

Dipo said the new letter of intent would only disclose a
"schedule and figures" to be achieved by the government.

He said the letter would no longer contain details of the
country's economic programs. (rei)