Govt, IMF to discuss debt restructuring extension
Govt, IMF to discuss debt restructuring extension
Berni K. Moestafa, The Jakarta Post, Jakarta
The government and the International Monetary Fund (IMF) are
preparing to discuss the extension of a debt restructuring
program for former bank owners under the Indonesian Bank
Restructuring Agency (IBRA), a senior government official said on
Wednesday.
An advisor to Finance Minister Anggito Abimanyu said the 10-
year extension of IBRA's shareholders' settlement program would
be discussed in the upcoming review of the fifth Letter of Intent
(LoI) with the IMF.
The current LoI allowed the government review the shareholders
settlement program, Anggito was quoted as saying by the news web
site, detik.com.
Under the original program, the former owners of the banks,
which are now under IBRA, have only four years time in which to
settle their debts.
As of yet, most have not even begun to repay the debts or
surrender their assets to the IBRA.
The debtors cited the prolonged economic slump as being behind
the difficulties in raising enough cash within the four year
period.
The IBRA, with the backing of senior economic ministers under
the Financial Sector Policy Committee (FSPC), then decided last
month to extend the deadline by up to 10 years.
The decision drew criticism from bank analysts who charged the
IBRA of being soft on uncooperative debtors.
But IBRA officials said that, without an extension, the
uncooperative debtors would continue deferring their debt
payments.
Thus far, the FSPC has turned down suggestions to revert to
its original shareholder settlement program.
Anggito said the government and the IMF had agreed to take
decisive action against what they called noncooperative debtors.
That, he said, included reviewing the original shareholder
settlement program.
Bringing the program's extension into discussion with the IMF
implied the decision was subject to the Fund's approval.
The fourth LoI did say that the government should take
decisive action against uncooperative debtors but rather within
the context of taking legal actions.
The IBRA has filed legal actions against 49 noncooperating
debtors of the top 21 obligatory with a total debt of Rp 13
trillion (about US$1.23 billion), a copy of the fourth LoI said.
"In the future, the IBRA envisages more regular use of its
PP17 powers, as to accelerate asset recoveries," it said.
PP17, or government regulation no. 17, enables the IBRA to
expedite legal proceedings by ignoring some of the normally
required procedures.
Anggito said the government and the IMF would begin talks over
the targeted reforms which will be prepared for the fifth LoI
next month. The IMF, meanwhile, will have the final say over the
LoI reforms program.