Jakarta hails progress in debt talks with creditors
Jakarta hails progress in debt talks with creditors
TOKYO (Reuters): Indonesia's Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita said yesterday that the Southeast Asian nation achieved much progress with creditor banks during talks here to resolve its corporate debt problem.
"I see that we have made a lot of progress," Ginandjar, coordinating minister for economics and finance, told reporters in Tokyo.
"There are remaining issues to be resolved and I am confident that they can be resolved in Frankfurt (for the next round of talks starting on May 26)," he added.
Indonesia and its creditor banks held three days of talks which ended on Sunday without an agreement on the most thorny issue of resolving the debt held by companies.
But the bank steering committee, a group of creditor banks, said in a statement issued yesterday that even as more work needed to be done for corporate debt problems, it and Indonesia made progress in finding solutions for the problems of Indonesian banks' foreign currency debt and trade finance.
The terms of any individual restructuring will have to be agreed between individual debtors and creditors but it was agreed that the framework would be voluntary and not require debt forgiveness, the statement said.
The Tokyo talks were complicated by fresh violence in the sprawling archipelago, where two people have died during student protests demanding that President Soeharto resign.
But Ginandjar said that a series of riots demanding reforms in the country was temporary and would have little effect on the economy.
"I really think this is a short-term and temporary situation. It's not going to make it (the economy) worse. I am very sure about this. In Sumatra, order has been restored," he said.
He also said renewed weakness in the Indonesian rupiah was temporary. The rupiah was being quoted at 9,125/9,350 per dollar in late Asian trade on Monday, compared with 2,430 at the end of June 1997, prior to a wave of devaluations.
Asked if he considered the current rupiah rate to be reasonable, he said: "No, I don't think it's sufficient and I would like to see the rupiah move towards 6,000 -- which is in line with the IMF (International Monetary Fund) level."
In mid-April, the bank committee and representatives of Indonesian government agreed to provide a framework for bilateral negotiations in order to settle Indonesia's private external debt.
Under the framework, Indonesia will set up a fund called Indonesian Debt Restructuring Agency (INDRA), that would receive debt repayments in rupiah from Indonesian firms and pay in dollars to creditors.
The key issues under the Indonesian framework have been at which exchange rate Indonesian corporations would repay debts and who would assume the foreign exchange loss that could arise if the social unrest continues in Indonesia.
"For us we go one step further (than Mexico style) by grabbing the best rate in a continuous period of time... A 20-day moving average has been mentioned (during the debt talks)," Ginandjar said.
The Indonesian proposal is to employ the "best 20- or 30-day moving average" of the rupiah rate against the dollar by the end of the year, at which Indonesian companies repay external debts, he said.
Indonesia's private foreign debt totaled $67.69 billion at the end of January, $8.9 billion of which is owed by the banking sector and $58.79 billion owed by non-bank corporations, the country's central bank said in April.
Ginandjar said the desire of some Japanese banks for the rupiah-yen exchange rate to be fixed under a debt-restructuring framework had not been seriously discussed at the Tokyo talks.
"We are not really thinking about a large amount of funds to be deposited there (INDRA), but it's going to be an ongoing program. The government will support it."
The Indonesian government would not ask for fund contributions to INDRA from nations such as Japan, he said.
He also called on Japan, whose banks are Jakarta's largest creditor, to continue to support Indonesia.
Ginandjar is scheduled to meet officials including Prime Minister Ryutaro Hashimoto, as well as business leaders, during his trip. He will also hold a news conference on Wednesday.
Ginandjar did not make any specific requests for fresh aid from Japan in talks here, although he asked for continued support at an upcoming aid donor meeting, a Japanese finance ministry official said yesterday.
A Consultative Group for Indonesia (CGI) meeting is expected to be held in July.
The official was speaking following bilateral talks between Ginandjar, other Indonesian ministers and Finance Minister Hikaru Matsunaga.
Indonesia's Industry and Trade Minister Mohamad Hasan was quoted as saying that he would like tariffs for Indonesian lumber to be lowered and that he hoped that more Japan small and medium- sized firms would participate actively in Indonesia.