Govt to decide on debt extension plan Thursday

Govt to decide on debt extension plan Thursday

The Jakarta Post, Jakarta

The government said on Tuesday it had finalized a draft
decision on a controversial debt extension plan, and would make a
final decision on whether to go ahead with the plan during a
Cabinet meeting on Thursday.

Coordinating Minister for the Economy Dorodjatun Kuntjoro-
Jakti said a decision was due to come out as part of an economic
stimulus package the government would release.

"We will submit it (the package) at Thursday's Cabinet
meeting. God willing, on Thursday we will announce all decisions
on what we're going to do," Dorodjatun told reporters after
meeting with Vice President Hamzah Haz.

He gave no details on the draft decision, which he, the
coordinating minister for security affairs and the minister of
social affairs formulated as part of a joint team.

The government formed the joint team in response to the
controversy that erupted last December over the debt extension
plan.

A decision on the issue could put to rest the protracted
public debate over a plan to grant large debtors up to 10 years
to repay their loans. The debtors currently have four years to
make good their loans.

The plan would apply to former owners of banks the government
bailed out at the height of the financial crisis in the late
1990s.

A large percentage of this bailout money, disbursed as
emergency loans totaling some US$14 billion, was misused.

Bankers agreed to repay the loans by surrendering assets of
equal value to the funds they received within four years. In
return, they would not face criminal charges.

However, most debtors have yet to begin repaying their loans
although many of their debt settlement deals expire this year.

At the same time, the assets that were surrendered by the
bankers have declined in value by as much as 80 percent.

Selling these assets would allow the government to recoup just
20 percent of the taxpayers money that was used to bail out the
bankers.

The plan to grant these bankers more time to repay the loans
was harshly criticized by the public, and was reportedly not well
received by most ministers.

Several Cabinet meetings called to discuss the plan ended
without a decision, which led President Megawati Soekarnoputri to
assign Vice President Hamzah Haz to take over the discussions.

Many believe the decision reached under Hamzah will see the
government strike a middle ground between easing terms on
cooperative debtors while getting tough on uncooperative ones.

Dorodjatun said the draft decision also dealt with debt
restructuring for small and medium enterprises and the
uncollected debts of farmers.

The decisions to these issues form part of a policy guideline
known as the Economic Stimulus Package. Few details of the
package have leaked out.

Some economists who have been invited to discuss the plan with
Hamzah, described it as a locally drafted letter of intent,
referring to the economic reform targets outlined in the
government's letter of intent with the International Monetary
Fund.