Most ministers oppose debt extension plan, says Kwik

Berni K. Moestafa, The Jakarta Post, Jakarta

State Minister of National Development Planning, Kwik Kian Gie confirmed suspicions on Thursday that Cabinet members were seriously divided over a controversial debt extension plan, saying most members had rejected the plan.

Calling it the "silent majority" , Kwik said most ministers had rejected the plan but lacked the technical understanding to convincingly argue against it.

"Many ministers agree with me just by using their logic," Kwik told reporters, after attending a Cabinet meeting.

His claim served as another blow for a plan to extend the debt payment period for bad debtors to 10 years from four years.

The debtors are former bankers, on whose banks billions of U.S. dollars were spent to bail them out in the wake of the 1997 financial crisis.

It turned out that most of the state-sponsored bailout funds had been illegally abused.

To escape prosecution, the former bankers agreed to a four- year shareholder settlement program.

Extending it to 10 years now, critics said, might tempt debtors to skip payment altogether, when law enforcement should have been the solution.

They added the plan smacked of injustice, at a time when the poor must shoulder the burden of recent fuel price hikes.

Backers of the plan argued that debtors were unable to pay over the last three years because of unfavorable business conditions.

The Indonesian Bank Restructuring Agency (IBRA), which initiated the plan, warned that without the extension, there might be no payment at all.

"The heated debate centers on whether it's true that the debt extension plan will ensure that the debtors will pay," Kwik said.

He said all arguments had been collected and forwarded to an interministerial team that has been assigned to review the plan.

The team includes officials from the Coordinating Ministry for Political and Security Affairs, which indicates the plan carries some security risks.

Sources, quoting intelligence reports, have warned of social uprising if the plan, deemed insensitive to the plight of the poor, goes ahead.

The plan may also prove politically risky as top politicians have used it to criticize the country's six-month-old administration.

Among them is Assembly Speaker Amien Rais, who political analysts said might pose a threat to President Megawati Soekarnoputri at the 2004 general election.