JITF on track to meet debt restructuring target

The Jakarta Post Jakarta

The Jakarta Initiative Task Force (JITF), which facilitates the restructuring of the country's huge corporate debt, is on track for meeting this year's restructuring target of US$14 billion in debt, despite the unfavorable macroeconomic situation.

Secretary of the Financial Sector Policy Committee (FSPC) Syafruddin Temenggung said on Tuesday that as of mid-December, JITF had managed to restructure some US$13.5 billion in corporate debt.

FSPC, which groups several senior economic ministers led by the coordinating minister for the economy, has the final say on the major corporate and bank restructuring program.

In 1998, the government set up the agency to help accelerate the restructuring of the country's massive corporate debt, particularly overseas debt, which totaled around $70 billion.

The task force plays a mediating role between debtors and creditors, but they cannot be forced to use the mediation facilities provided by JITF.

Restructuring the country's corporate debt has been a major headache, partly due to the volatility of the rupiah and rising interest rates.

A successful debt restructuring program would bring back confidence among foreign investors and therefore prompt them to keep flowing their lines of credit to domestic industries.

Separately, State Minister of State Enterprises Laksamana Sukardi said on Tuesday that the Indonesian Bank Restructuring Agency (IBRA) had established a team to oversee the planned merger of five banks under the supervision of the agency.

He reaffirmed an earlier statement that the formal merger of the ailing banks would be completed before the end of this year.

However, Syamsuddin reiterated that the government was not aiming for the planned legal merger to be finalized this year, saying, "The legal merger does not have to take place this year."

The banks are: Bank Universal, Bank Bali, Bank Patriot, Bank Prima Expres and Bank Artha Media. The banks must be merged to avoid closure.

Syafruddin also said that the government had yet to decide which of the five banks would be "the surviving bank".

Commenting on a plan to divest Bank Central Asia (BCA), he said that the FSPC had not yet made any decision on whether or not to delay the sale.

He said: "There's no policy yet on whether to delay it or not."

IBRA, which controls BCA, has been targeted to complete the sale of the government stake in BCA before the end of this year.

However, certain senior government officials indicated earlier that the sale might have to be delayed again as foreign bidders needed more time to carry out their due diligence investigations.