RI team, creditors to meet in New York

RI team, creditors to meet in New York

NEW YORK (Dow Jones): The head of Indonesia's debt team will meet with foreign bankers in New York today to address the political changes in the Asian country and prepare for the next round of debt negotiations scheduled to take place in Frankfurt on June 1, banking sources said Tuesday.

Indonesia and international bankers are trying to hammer out a solution to the country's crushing debt burden. Although no official announcement was made, the meeting implies that team leader Radius Prawiro and his key people remain at their posts after last week's political turmoil.

At their last meeting in Tokyo earlier this month, both sides came close to agree on plans to extend the maturity on about $8 billion in bank debt and to roll over about $7 billion in trade financing arrangements. About $64 billion in corporate debt also needs to be addressed.

The restructuring efforts were thrown into doubt last week by President Soeharto's decision to step down in the face of mounting protests.

But now with all key players remaining in place and with the International Monetary Fund envoy in Jakarta, Hubert Neiss to meet with Indonesia's economic and finance team, negotiations seem once again on track.

Chase Manhattan Bank, Deutsche Bank AG and Bank of Tokyo- Mitsubishi -the three co-chairs of the banks' Indonesian steering committee- met yesterday in New York to discuss the new political developments in Indonesia and prepare for the Frankfurt meeting.

The banks will then meet with Radius and some of his team Thursday (today), banking sources said.

One of the main issues on everyone's mind will be how Indonesia's new president B.J. Habibie will carry out his promises to reform the country.

Habibie Monday endorsed early parliamentary elections, although he didn't specify any dates. Habibie succeeded Soeharto two months into his seventh five-year term.

Bankers said that although the momentum of the debt talks was put off by political uncertainty last week, the fact that key Soeharto officials were retained by Habibie allowed the negotiations to move on.

Chief among those is Coordinating Minister for Economy, Finance and Industry, Ginandjar Kartasasmita.

With the longevity of the Habibie administration still in question, bankers said they would take a cautiously positive approach.

"We're following the domestic situation closely, but we need to give this situation a little time and see how it plays out," a banker close to the negotiations said.