IMF insists local firms repay debts

IMF insists local firms repay debts

JAKARTA (JP): The International Monetary Fund (IMF) has asked
the government to push recalcitrant indebted companies to repay
their foreign debt, Coordinating Minister for the Economy,
Finance and Industry Kwik Kian Gie said.

Kwik said on Wednesday that debtors who had good intentions to
come to the negotiation table to repay their loans would be given
incentives, while those who did not would be handed over to the
Attorney General's Office.

"This is an agreement between the government and the IMF so
that Indonesian debtors will have good intentions to negotiate
and repay (their overseas obligations)," he said following a
meeting with senior government officials and the IMF team.

Slow progress with the corporate debt restructuring program is
one of the several key economic reform measures which was unable
to be carried out by the government as promised in a letter of
intent (LoI) to the IMF in January.

The delay in implementing the key economic measures has forced
the fund to also postpone the disbursement of some US$400 million
in bailout loans to the country.

Some 2,200 local private companies have some $67 billion in
overseas borrowings. Most firms had stopped repaying their debt
after the rupiah plunged in value to the U.S. dollar in the
middle of 1997.

Only a handful of companies have reached a debt restructuring
agreement with their foreign creditors.

Kwik reaffirmed he was confident that the government would be
able to complete the implementation of the delayed key reform
measures by the new deadlines.

He said that several "items" would be executed by April 8,
while others would be completed by April 12.

The government was supposed to complete a host of ambitious
economic programs by the end of March to allow the IMF to
disburse its funds on April 4.

IMF Jakarta representative chief John Dodsworth said last week
that the IMF money would be disbursed in May.

Kwik was also optimistic that the Paris Club of creditors
meeting would be held as scheduled from April 12 to April 13 to
discuss the rescheduling of the country's sovereign debt.

The government has proposed to reschedule some $2.1 billion in
government overseas loans to help ease the pressure on the state
budget.

Many have said support from the IMF is crucial for Indonesia
to win agreement from foreign creditors for the debt rescheduling
proposal.

The delay in the implementation of key measures set in the LoI
has raised the criticism that the economic team of President
Abdurrahman Wahid is weak and lacks coordination.

The critics have even urged President Abdurrahman Wahid to
reshuffle the Cabinet.

Critics have also said the ministers were mostly focusing on
politics rather than concentrating on accelerating economic
reforms.

But Kwik dismissed these suggestions.

"We remain a solid (team). Those who have accused us of not
being coordinated have never seen how hard the economic ministers
work," he said.

"They also do not know that the economic ministers have had
marathon meetings."

The government said the delay in the disbursement of IMF aid
had no significant impact on state finances, pointing out that
the condition of the country's balance of payments was still
adequate for six months of imports.

But he acknowledged that implementing the key economic reform
programs was essential in renewing confidence in the ailing
economy.

Bank Indonesia Governor Sjahril Sabirin said on Monday that
the weakening of the rupiah against the U.S. dollar lately was
caused by reports of delays in the implementation of IMF-
sponsored economic reform programs.

The rupiah closed at Rp 7,750 per U.S. dollar on Wednesday
from Rp 7,700 during the previous trading day.

Meanwhile, Gadjah Mada University economist A. Tony
Prasetyantono conceded that completing the economic reform agenda
was crucial to reviving confidence in the economy.

He said judging from the statements made by IMF's Dodsworth,
the fund was particularly concerned over the internal rifts among
economic ministers who came from various political parties, and
the overgenerosity shown by the government to local debtors.
(rei/prb/sur/25)