IMF, WB to provide help in private debt issues
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)