IBRA wants a say in BLBI talks
IBRA wants a say in BLBI talks
M. Taufiqurrahman, The Jakarta Post, Jakarta
Chairman of the Indonesian Bank Restructuring Agency (IBRA)
Syafruddin Temenggung demanded that his agency be included in the
current talks to seek a burden-sharing mechanism between the
central bank and the finance ministry over the huge debts from
the Bank Indonesia liquidity support facility (BLBI).
He feared that if the agency was not given a chance to make
itself heard in the talks, IBRA could end up being solely
accountable for failing to recoup the Rp 144.5 trillion (US$16.23
billion) worth of BLBI loans handed out by the central bank in
the late 1990s to bailout troubled banks.
Speaking during a hearing with the House of Representatives
Commission IX on financial affairs on Thursday, he said that IBRA
had received from the central bank promissory notes issued by the
borrowers. But the notes had not been backed up by sufficient
collateral, making it impossible for the agency to recoup at
least 70 percent of the loans, as demanded by the law.
He said that according to an audit by the Supreme Audit Agency
(BPK) the value of the promissory notes was only worth around Rp
12 trillion.
The central bank, at the request of the government,
distributed the BLBI loans during the banking crisis period, and
the borrowers were said to have provided enough collateral. It
turned out that most of the money, around Rp 138 trillion, was
misused by the bank owners and the collateral has not proven to
be recoverable. Such misuse and lack of collateral has created a
situation wherein the government, specifically the finance
ministry, is now unwilling to fully cover the debts, putting the
independent central bank in a difficult position.
The central bank and the finance ministry have recently agreed
on a burden-sharing mechanism, under which the finance ministry
would issue capital maintenance notes to Bank Indonesia, which
would only receive interest for the notes if its capital ratio
falls below 5 percent. If the capital ratio is above 5 percent,
the excess can be used to cut the government debt to the central
bank. However, the House has yet to approve the deal.