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.