IMF tackles Indonesian bank reform

IMF tackles Indonesian bank reform

WASHINGTON (Reuters): The International Monetary Fund (IMF) said on Tuesday important work still needed to be done to reform Indonesia's banking sector to protect depositors, and to cope with the country's corporate debt.

IMF First Deputy Managing Director Stanley Fischer told CNN's television program "Moneyline" that the IMF, Indonesian authorities, the World Bank and the Asian Development Bank were putting together a package that "will reassure depositors and stabilize the banking system."

Fischer said the IMF and the government were also working on a plan to deal with Indonesia's corporate debt.

"Together with the Indonesians, we're thinking about next steps in dealing with the corporate debt problem in Indonesia," he told CNN. Fischer said this plan would be announced by the government shortly. He did not elaborate further.

The IMF put together a $40 billion international rescue package for Indonesia, which asked for help after a fall in its currency, the rupiah, highlighted problems in the whole financial system.

But the two-month-old program has yet to restore market confidence amid mounting concern about political developments and fear that Jakarta might be forced to default on its debts.

Unlike South Korea, where much of the private sector debt is in the hands of banks, Indonesia's debt is in the hands of myriad companies and corporations.

In South Korea, the overseas lending banks have been able to get together to negotiate with the few Korean banks whose loans are coming due and work out rollovers or restructuring.

But in the case of Indonesia, the debt is spread over a diverse assortment of borrowers and therefore far more difficult to sort out.

"So there is work to be done," Fischer told CNN. "It is being done. I expect within the next week or so the details will be coming out. And that will complete the restructuring of the Indonesian economic program."