IMF, WB to provide help in private debt issues
JAKARTA (JP): Indonesia will receive technical assistance from the IMF, World Bank and the Asian Development Bank in handling its corporate foreign debt problems, an Indonesian debt official has said.
Radius Prawiro, chairman of the Corporate Foreign Debt Settlement Team, said yesterday the three international financial institutions would help hasten the progress of solving the debt crisis.
The team and representatives of Indonesia's private debtors and foreign lenders held their first meeting yesterday.
IMF, World Bank and Asian Development Bank officials were also present at the meeting.
"It was a constructive and friendly meeting," Radius said after the talks, which were attended by 13 international bank lenders.
The 13 foreign banks have agreed to become members of a foreign lenders' committee set up to help restructure the staggering debt of the private companies.
Radius said the role of the foreign lenders "steering committee" was to liaise with other foreign banks and negotiate with a committee representing local debtors, former minister Radius said after the first meeting of the two bodies.
European and Japanese banks on the lender steering committee would include Standard Chartered, ABN Amro, Banque Nationale de Paris, Deutsche Bank, Bank of Tokyo, Sanwa Bank and Sumitomo Bank.
Other banks include Overseas Chinese Banking Corp., Hongkong and Shanghai Banking Corp. and Korea Development Bank. North American banks on the list are Bank of America, Citibank and Chase Manhattan Bank.
"All parties have agreed to work on a non-stop basis to reach speedy and constructive solutions for the private sector," he said after the meeting.
He explained that since President Soeharto appointed him to his position in January, he has created a technical team to inventory the country's private corporate debt to understand the sector's obligations.
He added that all parties involved must provide transparent and comprehensive information to his team and Bank Indonesia, the central bank.
Indonesia's legal and regulatory framework -- including contract enforcement laws, regulations on the seizure and sales of collateral, and bankruptcy rules -- will soon be strengthened, Radius said.
"The country's bankruptcy law will be replaced ... it's a product of 1905," he said.
The meeting discussed the need to ensure that borrowers able to pay back loans do so according to original agreements or to their best ability to maximize debt recovery by creditors.
It was understood that certain ailing private companies would need to have debt pressures brought to sustainable levels.
Participants also said there needed to be an immediate focus on troubled borrowers in the export industry which employed substantial numbers of workers.
Radius, however, reaffirmed that the government would not bail out companies or directly intervene to solve their debt problems.
Bank Indonesia recently unveiled updated figures for Indonesia's external debts. The country's foreign debt as of the end of 1997 totaled US$136.09 billion, lower than the $137.4 billion announced by Radius on Jan. 6.
Private sector debt was updated to $68.31 billion, compared to the earlier figure of $74 billion.
The debt share of private domestic companies, however, jumped to $30.12 billion, a significant increase compared to the previous announcement of $23 billion.
Radius said he would update the public on debt figures and the debt-solving process every two weeks.
The alarming level of Indonesia's corporate foreign debts has been a major factor in causing the plunge of the rupiah against the U.S. dollar. The rupiah value has dropped by some 75 percent from its July level of Rp 2,450. (08)