IMF welcomes move to allow BCA, Niaga sale

IMF welcomes move to allow BCA, Niaga sale

JAKARTA (Dow Jones): The International Monetary Fund Friday
welcomed a decision by Indonesia's Parliament to allow the sale
of two nationalized banks to foreign investors.

The Washington-based IMF has delayed its latest tranche of
loans to Indonesia under a US$5 billion economic assistance
program for a number of reasons, among them the failure to sell
PT Bank Central Asia and PT Bank Niaga.

Indonesia had promised the IMF to sell the banks by the end of
last year in return for economic assistance, but the Parliament
blocked the sale saying it was against handing assets to
foreigners at fire-sale prices.

But late Thursday, a special parliamentary commission voted to
allow the government to sell a 40 percent stake in Bank Central
Asia and a 51 percent stake in Bank Niaga.

"I would say we welcome the decision of Parliament," the IMF's
Indonesia representative, John Dodsworth, told Dow Jones
Newswires.

"I think it was a difficult decision for them and they did a
commendable job," he added.

Still, it remains unclear how long it will take Indonesia to
finalize the sale of the two banks, Dodsworth said.

Under a revised timetable, Jakarta has promised the fund to
sell the banks by the end of June. Progress toward this goal may
allow the release of the delayed $400 million tranche.

Indonesian Bank Restructuring Agency Chairman Edwin Gerungan
said the government should be able to sell the two banks within
four months of the Parliament's approval.

Thursday's vote by Parliament came after Indonesia moved to
patch up relations with the IMF last week by saying provincial
governments could only borrow money after central government
approval.

New laws which give power to the provinces over revenues and
expenditures from this year have drawn criticism from the fund,
which is concerned the regions could build up huge debt,
worsening Indonesia's fiscal position.

The IMF is also worried that plans to amend the central bank
law, making it easier for the government to fire the governor,
could lead to political meddling in monetary policy.

Indonesia has said it plans to push ahead with the amendment,
which could still form a major stumbling block with the fund,
analysts say.