RI debt talks may be over this morning

RI debt talks may be over this morning

FRANKFURT (Agencies): Indonesia's chief negotiator in talks
aimed at rescheduling the country's US$80 billion private sector
debt said yesterday negotiations may be completed this morning.

Asked if he was confident that a deal would be reached with
Indonesia's creditor banks, Radius Prawiro told Reuters: "We are
working on it."

Asked if that deal could be reached on Wednesday, he said:
"No, maybe tomorrow morning".

A source at Bank Indonesia said the international banking
community would have reached a "satisfactory" conclusion on a
possible restructuring of Indonesian corporate and public debt
yesterday.

"We expect that the banking community will reach a consensus
on which policy it will take in extending Indonesian debt," the
source told Dow Jones Newswires.

Earlier, U.S. banking sources said they doubted that a major
breakthrough was in sight, but added that reports that the talks
may run through today could imply that the two sides were
approaching a deal.

The Nikkei English news service cited yesterday's edition of
the Nihon Keizai Shimbun newspaper as saying Indonesia's creditor
banks had agreed to convert short-term loans to Indonesian banks
to medium-term debt backed by the Indonesian government.

Nikkei also cited sources familiar with the talks as saying
the two sides were close to a workout of Indonesian corporate
debt, including repayment terms.

The report also said banks had agreed to guarantee letters of
credit issued by Indonesian financial firms in order to
facilitate international trade with Indonesia.

The debt talks, which began in Asia before moving to New York
and then Frankfurt, were previously said to have been deadlocked
as Indonesian banks rejected calls for concessions to foreign
creditors, which include some Japanese, U.S. and European banks.

The least controversial element of the talks may be a decision
by the global banks to continue trade credits to Indonesia, as
the extension is favored by some Japanese and Singaporean
creditors, the sources said.

But on the thornier issues of corporate debt, which was owed
by thousands of Indonesian companies, a workout plan appeared to
be still distant, the U.S. sources said.

Indonesia's Coordinating Minister for Economy, Finance and
Industry Ginandjar Kartasasmita said last week he hoped the
Frankfurt meeting would "finalize the general understanding with
the creditors."

A total of 13 banks are represented at the Frankfurt talks,
including the three co-chairs of the steering committee, which
are Deutsche, Bank of Tokyo-Mitsubishi Ltd. and Chase Manhattan
Corp..

Radius is accompanied by central bank director Dono Iskandar;
Glenn Jusuf, Finance Ministry director general for financial
institutions, and Rino Effendi, an economist at state-owned
Danareksa Sekuritas.

The meeting had originally been scheduled for May 26 in
Frankfurt but was delayed because conditions for discussions were
judged unfavorable in light of the political unrest in Indonesia
at that time.

Since the delay was agreed, Indonesian president Soeharto has
stepped down and handed over power to his protege B.J. Habibie.