JITF seeks to extend role until end 2003
Dadan Wijaksana, The Jakarta Post, Jakarta
The Jakarta Initiative Task Force (JITF) confirmed on Monday it had requested an extension of its mandate for another year to 2003, because of the debt restructuring workload that would not be settled by the time it's tenure expired at the end of this year.
Samuel Tobing, chief operations officer of the JITF, told The Jakarta Post that the decision would be taken at the next meeting of the Financial Sector Policy Committee (FSPC).
"The decision is up to the FSPC, but we expect the proposal to be approved because of the outstanding workload," Samuel said, adding that he had yet to be informed when the committee's next meeting would take place.
The FSPC groups a number of senior economic ministers and has the final say on the country's major corporate and bank restructuring programs.
The JITF was supposed to make a presentation about its proposal at last week's meeting of the committee.
Established by the government in 1998, the JITF is in charge of restructuring the country's huge corporate debts, especially those owed to foreign creditors.
It plays a role as a mediator between the indebted corporate sector and creditors. But debtors and creditors cannot be forced to apply for a JITF facilitation program.
The total foreign debts owed by the country's corporations amounts to around $60 billion.
According to Samuel, of some US$30 billion in corporate debt registered with the Task Force, the JITF had managed so far to finalize the restructuring of some $15.4 billion in debt.
"So, there is still around $14.6 billion of debts left to be restructured. That's why we're asking for an extension," he added.
For this year, the JITF is targeting mediating the restructuring of debts worth up to $4 billion.
The establishment of the JITF formed part of the economic reform program agreed with the International Monetary Fund (IMF), and was intended to help reactivate the real sector.
A successful debt restructuring program is seen as being crucial in returning confidence to foreign investors.
This would consequently speed up economic activity and, with plenty of manpower being absorbed, could be expected to become the locomotive of the country's economic revival.
Moreover, the restructuring of overseas corporate debt would eventually help ease the pressure on the rupiah.
Although the rupiah has been on the rise lately, constant high dollar demand from corporations for debt repayments are believed to have slowed down the local currency's upward movement.