IBRA meets 2000 cash target of US$ 2 billion

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) has met the government's target to raise some Rp 18.9 trillion (US$2 billion) in cash to help finance the 2000 budget.

IBRA said in a press statement that it had raised about Rp 20.71 trillion during the fiscal year.

"In the fiscal year 2000, IBRA has provided some Rp 20.71 trillion in cash to the finance ministry. Some Rp 18.9 trillion is to be contributed (to the state budget), while the remainder is to repay (the government) guarantee fund," the agency said.

One of IBRA's mandates is to raise cash to help finance the state budget which has been heavily burdened by the huge cost of the government bank restructuring and recapitalization program.

In the current 2001 fiscal year, IBRA must raise Rp 27 trillion in cash to help finance the state budget deficit estimated at 3.7 percent of gross domestic product.

The huge deficit arises primarily from the interest costs of the government bank restructuring and recapitalization bonds worth more than Rp 600 trillion. The interest costs this year are estimated at Rp 55 trillion.

The agency must sell various banking assets under its management to meet the target. IBRA must also recover the huge amount of bad loans transferred by closed down and recapitalized banks including via restructuring measures.

IBRA, a unit under the finance ministry, controls more than Rp 600 trillion worth of various fixed banking assets and some Rp 260 trillion worth of bank bad loans. Former bank owners surrendered various assets to help repay their debts to the government.

One of IBRA's key deals in 2000, was the sale of its stake in the publicly-listed auto giant PT Astra International in March to a consortium led by Singapore's Cycle & Carriage. The proceeds went to help meet the agency's 1998/1999 cash target.

The IBRA 2000 target was fulfilled after the agency managed to sell plantation firms previously owned by the Salim Group in December to Malaysia's Guthrie for some Rp $350 million.

Salim is the former owner of the giant Bank Central Asia (BCA).

IBRA was strongly criticized last year after the government decided to postpone the sale of the agency's remaining ownership in BCA. The agency was supposed to complete the sale late in 2000, but the government and the House of Representatives decided to postpone it to the first quarter of 2001 due to unfavorable market conditions.

The delay irked the International Monetary Fund, which some say is one of the reasons prompting the Fund to delay the latest disbursement of $400 million loan tranche. The loan is now expected to be disbursed sometime in February or March.

The IMF promised in January last year some $5 billion to help finance a three-year economic reform program. The IMF has disbursed about $1 billion so far.

The recovery of bad loans contributed to meeting the 2000 target when IBRA was able to sell some restructured loans.

The IBRA statement said that the agency managed to sell around Rp 1.63 billion in bank corporate loans last year.

IBRA managed to resolve around 89.41 percent of the Rp 88.5 trillion in non-performing loans owed by 21 of its largest debtors, according to the statement.

The agency said that 86.56 percent or equal to Rp 76.60 trillion of the debt had been resolved via restructuring (MoUs of the debt restructuring agreement have been signed), 9.88 percent had been resolved via litigation, and the remaining 2.85 percent was still in process.

The agency said that it could not reach 100 percent resolution of the debt owed by the 21 largest debtors last year because in some cases IBRA was a minority creditor and needed time to negotiate with the bigger creditors. (rei)