JITF seeks to extend role until end 2003

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.