IBRA pays Rp 25.84t in guarantee fund

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) has paid out some Rp 25.84 trillion (US$3.11 billion) since the government's guarantee scheme for the obligations of commercial banks began in early 1998.

IBRA deputy chairman Jerry Ng said on Tuesday about Rp 21.04 trillion was used to repay depositors money in closed down banks, Rp 4.20 trillion to cover interbank transactions, Rp 363.05 billion to cover trade financing and Rp 263.49 billion for foreign commercial borrowings and remittance.

"The amount of guarantee funds already paid by IBRA as of July 31, 2000, reached Rp 25.84 trillion," Jerry said during a media conference.

"The greatest benefits of the government guarantee scheme are enjoyed by the general public, namely the 1.6 million depositors," he added.

The government launched the guarantee program to help revive confidence in the banking industry following the closure of some 16 banks in November 1997, which triggered massive runs and a halt in international credit lines.

Under the scheme, the government guarantees the obligations of closed down banks to depositors and creditors, both domestically and overseas.

Since the financial crisis first struck in the middle of 1997, the government has closed down some 66 commercial banks in a bid to restructure the ailing banking industry.

The government guarantee scheme came into effect on Jan. 26, 1998, and was originally planned to run through Jan. 31, 2001.

However, IBRA must make an announcement six months prior to the guarantee scheme being ended. Since no announcement was made in August, the guarantee program will continue beyond this initial deadline.

Jerry said the guarantee funds provided by IBRA were based on Presidential Decree No. 26/1998, which was followed up by the issuance of two decrees by the finance minister.

The guarantee funds from IBRA do not include the emergency funds injected by Bank Indonesia into ailing banks. The central bank has issued some Rp 144.5 trillion in emergency liquidity support to 48 commercial banks, to help them cover mass withdrawals by panicked depositors.

But a recent investigative audit by the Supreme Audit Agency (BPK) revealed more than Rp 138 trillion of the emergency loans had been misused by the bankers. BPK placed part of the blame for this misuse on the weak supervision of the central bank.

The Attorney General's Office is currently investigating the alleged abuse of the liquidity support.

Attorney General Marzuki Darusman said recently that in the first stage, the investigation would focus on 10 banks. He also said there had been efforts by some bank owners to destroy evidence.(rei)