JITF meets US$14b target

JITF meets US$14b target

Berni K. Moestafa, The Jakarta Post, Jakarta

The Jakarta Initiative Task Force (JITF) has finalized the
mediation of debt restructuring talks worth US$14.2 billion from
the $14 billion targeted this year, but warned of tougher talks
ahead as a prolonged economic slump undermines companies'
cashflow.

JITF chairman Bacilius Ruru said on Thursday the agency's
target of restructuring $14 billion by Dec. 31 was set in the
Letter of Intent (LoI) to the International Monetary Fund (IMF).

"This represents the third consecutive time the JITF has
satisfied the targets set out in the LoI," Ruru said in a
statement.

JITF's debt restructuring target is one of the performance
indicators the IMF uses to gauge Indonesia's reform progress.

The LoI contains a set of economic reform targets, which the
government must meet to obtain the Fund's loans.

The JITF mediates debt restructuring talks between indebted
companies and their creditors.

It was set up in 1998 by the government to help accelerate the
debt restructuring process of the country's private sector.

Restructuring private debts enables the ailing banking sector
to earn interest rates on their loans, and revitalize indebted
companies.

JITF chief operating officer, Samuel Tobing said that over the
past six months, the task force had finalized major debt deals
with many companies

"Large conglomerates PT Bakrie & Brothers, and PT Semen
Cibinong closed a transaction for which a memorandum of
understanding had previously been negotiated," JITF said.

The two publicly listed firms owe debts to various creditors
in excess of US$1 billion.

At present, the task force handles the mediation of $22.2
billion in debts, according to JITF's statement.

But as the global economic downturn lingers into 2002, JITF
warned of tougher debt negotiations ahead.

"Although there have been some bright spots, we have also seen
renewed pressure on corporate cash flows brought about by a
deteriorating global economic picture and difficulties in
obtaining working capital," Samuel said.

He added that many debt deals were being renegotiated.

Some debt deals are based on earnings forecasts which face a
downward revision, as debtors must take into account the gloomy
outlook on the global economy.