Political uncertainty hampers debt restructuring

Political uncertainty hampers debt restructuring

JAKARTA (JP): Minister of Finance Bambang Subianto said on
Friday the country's political uncertainty was a major obstacle
to the restructuring of overseas private sector debt.

"Foreign creditors are still waiting for domestic political
stability.

"We need a longer time to come to a final (debt restructuring)
agreement," he said.

He said so far only state-owned PT Danareksa Securities had
joined a debt relief scheme under the auspices of the Indonesian
Debt Restructuring Agency.

Danareksa needed some 16 months to hammer out a debt
restructuring deal with its 40 creditors.

Bambang also said that as of September, only some US$3 billion
of the more than $23 billion in debt owed by the 280 companies in
the Jakarta Initiative Task Force had been restructured.

He added that in a joint survey conducted by Bank Indonesia
and the finance ministry, only 46 of the 298 companies responding
to the survey had reached a debt restructuring deal as of Sept.
15, 1999.

The 46 companies were able to reduce their combined
outstanding debt from $2.1 billion to $1.8 billion through
restructuring, he said.

The survey also showed that 78 companies with a combined
foreign debt of $6.1 billion were in negotiations to restructure
their debts, he said.

"They said they needed between six to nine months before they
would be able to reach a debt restructuring agreement," Bambang
said.

Indonesia's private sector has some $67 billion in overseas
debt, and many experts believe restructuring this debt is key to
the country's economic recovery.

The government so far has opted not to provide companies any
debt bailout facility. (rei/prb)