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)