Govt to sell more shares to plug deficit
Govt to sell more shares to plug deficit
Urip Hudiono, The Jakarta Post/Jakarta
The government is in a hurry to sell its remaining shares in
several publicly listed banks this year to help plug the state
budget deficit amid a shortfall in revenue from the privatization
program.
"We will sell more of our minority stakes in the banks in an
effort to cover the deficit," Minister of Finance Yusuf Anwar
said on Friday.
"We will try to accomplish this by the end of the year --
within the remaining 60 days we have left."
The government has set itself a deficit target of Rp 26.6
trillion (US$2.9 billion), or 1.3 percent of gross domestic
product, for this year. This deficit is supposed to be financed
by proceeds from the privatization of state enterprises, the sale
of government assets (primarily shares in a number of publicly
listed banks) under the PPA, the Ministry of Finance's asset
management company, and foreign loans.
But State Minister for State Enterprises Sugiharto said on
Friday that the government would not be able to meet the Rp 5
trillion (US$550 million) privatization proceeds target. So far
it had only managed to raise Rp 3.4 trillion from the
privatization program. With only a couple of months before the
current fiscal year ends, it would be impossible for the
government to continue the privatization program particularly
with the ongoing internal conflict in the House of
Representatives. The government would need to obtain the House's
approval for the sale of stakes in state enterprises.
"The government does not have enough time to formulate new
privatization plans, and so will have to push ahead with those
that have been approved by the House of Representatives for this
year," he said, referring to the planned sale of stakes in state-
controlled Bank Mandiri and Bank Negara Indonesia (BNI).
The government on Thursday managed to raise Rp 1.74 trillion
from the sale of a 10 percent stake in publicly listed Bank
Danamon.
PPA president director Mohammad Syahrial said on Friday that
his office was ready to sell another 20 percent of government
shares in Bank Permata in the middle of December.
"It (the selling price) is, however, still being calculated by
the finance ministry," he said.
The Standard Chartered and PT Astra International consortium
recently won a bid to buy the government's 51 percent stake in
Permata, which was valued at Rp 2.77 trillion.
The government currently holds 5 percent of the shares in Bank
Central Asia (BCA), 20.8 percent in Bank Internasional Indonesia
(BII), and 21.5 percent in Bank Niaga. The government obtained
stakes in these private banks after bailing them out in the wake
of the late 1990s financial crisis.
The government expects to be able to earn a total of Rp 12.9
trillion in cash from the sale of assets vested in the PPA this
year. This figure is more than double the initial target of Rp 5
trillion.
While some analysts said that the plan to sell more of the
government's shares in publicly listed banks was timely
considering the current rally in the stock market, others said
that the pressure to carry out the sales quickly could result in
investors making lower than expected offers.