IMF demands greater transparency at IBRA

IMF demands greater transparency at IBRA

JAKARTA (JP): The International Monetary Fund (IMF) said on
Wednesday that an independent body to oversee the Indonesian Bank
Restructuring Agency (IBRA) must be established in a bid to
ensure transparency and restore public trust in the agency.

IMF Indonesia representative John Dodsworth said on Wednesday
that public trust was crucial for IBRA to succeed in
restructuring the ailing economy.

"(IBRA) is important as a symbol for improved governance and
transparency. If there is no trust in IBRA, then the economic
program as a whole is in jeopardy," Dodsworth told a seminar.

He explained that the government needed to balance two
conflicting aims between an urgency in moving to sell assets and
restructuring debts, but at the same time ensuring the integrity
of the process.

"There need to be effective checks and balances on IBRA's
operations to ensure that the taxpayer is the true beneficiary,
that asset values are maximized and that the actions of IBRA are
not perverted into serving narrow political or commercial
interests," he said.

"A new oversight body is needed that combines political
support with independence of decisions and technical competency,"
he added.

Dodsworth said that the oversight role played by the
International Review Committee (IRC), daily reporting to the
Minister of Finance, obtaining clearance from the Financial
Sector Policy Committee (FSPC) on large transactions and
consultations with President Abdurrahman Wahid on policy issues
were insufficient.

IBRA was created by the government in early 1998 to help
restructure the country's ailing banking and corporate sector.
The agency now controls over Rp 600 trillion worth of various
banking assets surrendered by or taken from former bank owners
and businessmen.

With the vast assets under its control, IBRA also plays an
important role in stimulating foreign investment and financing
the state budget.

The agency is targeted to raise some Rp 18.9 trillion in cash
in the 2000 budget year.

But the large size of assets also opens the possibility for
abuse and corruption.

IBRA was badly hit last year by the high profile Bank Bali
scandal which allegedly involved several senior government
officials.

There have also been reports of alleged misconduct by IBRA
officials in the restructuring of assets.

Dodsworth said that the government's privatization program was
also an important source to help finance the state budget.

He said that potential investors were looking for greater
clarity in the government's privatization objectives.

"What investors are looking for is management control (in
state companies)," he said.

He said that although in some sectors the government might be
able to raise privatization proceeds without releasing majority
control in state enterprises, in others it clearly was not
capable of doing so.

He said that another objective of the privatization program
was to promote increased efficiency, partly with changes in
management.

The IMF is sponsoring the country's economic reform programs.
Dodsworth said that the IMF's managing director Stanley Fischer
was expected to come to Indonesia soon, followed by a team of
experts to review the country's progress with the reform
measures.

The IMF is expected to disburse a US$400 million bailout
tranche in May, depending on whether it approves the reform
progress.

Separately, Coordinating Minister for the Economy, Finance and
Industry Kwik Kian Gie said after a Cabinet meeting on Wednesday
that Indonesia was considering changing the $400 million IMF
payout to a standby loan.

He said that the change would allow the government to draw on
the loan only when needed.

He said the standby loan would provide security for the
country's foreign exchange reserves.

Kwik expressed optimism that the IMF would disburse the cash
in the middle of next month because the government had completed
almost all of the reform programs agreed with the IMF in January.

The IMF was supposed to disburse the loan earlier this month,
but delayed it because the government failed to meet the end of
March deadline to complete the various economic reform measures.
(rei/prb)