Minister calls for Japanese aid to go on
Minister calls for Japanese aid to go on
TOKYO (Dow Jones): The political vacuum in Japan will hurt the yen and increase uncertainty in the region, Indonesia's Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita said yesterday.
Ginandjar told reporters in Tokyo that he hopes Japan's political crisis will not affect the country's direct support for Indonesia. He said past changes in the government haven't affected bilateral assistance pledges.
But Ginandjar said he is concerned the "vacuum may have some indirect effects on us." He added that "the vacuum itself may also create uncertainty in this region."
Ginandjar said that he plans to ask Japanese government officials, including the finance minister, to support the additional US$6 billion aid for Indonesia.
He said the request is being coordinated by the International Monetary Fund, but that he was to explain Indonesia's requirements to the various governments that control the IMF.
"It will be a full day," Ginandjar said.
The minister said that he will speak with Japanese officials Tuesday about securing an additional $6 billion in aid to Indonesia under auspices of the IMF. He declined to say how much of that aid will be specifically requested from Japan.
"As far as we are concerned, it is the $6 billion that is important," Ginandjar said, adding that the sources and breakdown of the funds were not important.
Ginandjar also said he hopes the meeting of the Bank for International Settlements in Tokyo yesterday and the meeting of central bankers from around Asia on Tuesday will produce some sort of action or understanding to stabilize currencies in the region, especially the yen and the Chinese yuan.
"I think this is the responsibility of central bankers," the minister said. "They cannot do it alone -- there has to be an international effort."
Commenting on a meeting between Indonesian officials and representatives from Japanese banks yesterday morning to promote Indonesia's plan to restructure about $80 billion in bank and corporate debt, Ginandjar said Japanese banks don't seem opposed to the plan.
He said that there were three options available for creditors and Indonesian borrowers: to join the plan, to come up with an alternative agreement among themselves, or for the borrowers to go bankrupt.
Debt roadshow
Indonesian officials met with representatives from Japanese banks yesterday morning to promote the Southeast Asian nation's plan to restructure about $80 billion in bank and corporate debt, and delegates leaving the meeting said talks progressed smoothly.
"It went satisfactorily," said Nalin P. Samarasinghe, resident representative at the Japan office of the Asian Development Bank after the meeting. Samarasinghe said the meeting consisted mostly of an explanation of the restructuring program by Ginandjar Kartasasmita, Indonesia's coordinating minister for economy, finance, and industry.
A delegate leaving the meeting said there were a few technical questions from Japanese banking representatives on the restructuring program. He added that the banks seemed optimistic about joining the scheme.
The delegate added that there were also some questions on exactly how the Indonesian Debt Restructuring Agency (INDRA) will protect Indonesia's currency -- an integral promise made in the debt restructuring plan agreed to last month.
Indonesia and a steering committee of international creditors agreed June 4 to restructure $80 billion in foreign private debt to alleviate pressure on the country's cash-strapped companies and shaky foreign exchange markets.
The June agreement is voluntary for both Indonesian debtors and their foreign lenders. Indonesian government officials and debt committee members are therefore marketing the deal in six major cities worldwide. Tokyo is the fourth stop on their global tour.
Ginandjar told the meeting that an agreement on interbank debt will give immediate relief to pressures on the foreign exchange market and help to strengthen the rupiah, according to prepared remarks made available to the press. He said that it is necessary to extend the maturities of the external debts of Indonesian banks to allow time for financial reform measures to take hold and for banks to regain access to markets.
"The extension of maturities will create a manageable maturity profile and substantially aid Indonesia's balance of payments. Again, participation by all creditors is critical to the success of our efforts," Ginandjar said.