Indonesia Debt Talks Progressing - World Bank
May 10, 1998 - 0:0
TOKYO - Indonesia and its creditor banks are making progress in their negotiations to reschedule the country's private-sector debt, but there was no word on when agreement might be reached, a World Bank official said yesterday. The main points under discussion are the corporate debt and trade financing issues, said Dennis de Tray, the chief representative of the World Bank in Indonesia. We are optimistic that we will make progress, De Tray told reporters as the group returned from lunch.
But he declined to comment on whether an agreement could be reached on Saturday. A steering committee of Indonesia's creditor banks, co-chaired by Bank of Tokyo-Mitsubishi (BTM), Chase Manhattan Corp and Deutsche Bank AG, has been meeting since Friday with a Jakarta team led by chief debt negotiator Radius Prawiro, and International Monetary Fund (IMF) and World Bank officials. The most contentious issue at the end of the first round of talks on Friday appeared to be the length of a possible postponement of Indonesian debt repayments, sources close to the negotiations said.
Jakarta has been calling for a four-year deferment of debt repayment. Asked about the repayment issue, De Tray only reiterated :"We will make progress." Bankers and Indonesian officials are also expected to discuss ways to smooth trade financing for Indonesian companies and ensure credit lines from foreign financial institutions. The group plans to issue a joint statement, banking sources said. Indonesian officials in Tokyo said top Economics Minister Ginandjar Kartasasmita plans to hold a news conference here on May 13.
On Friday, Finance Minister Fuad Bawazier, in Washington for talks with the IMF and the U.S. Export-Import Bank, told Reuters he expected details of a deal to be made final during the Tokyo talks. I think they are going to finalize the details. They are going to find a framework to reschedule the payments, and that is going to reduce pressures on demand for foreign exchange, he said.
He declined to comment on the rate of exchange that would be used for debt repayment. In mid-April, the steering committee and Jakarta agreed to provide a framework for bilateral negotiations in order to settle Indonesia's private external debt. The framework, originally put forward by BTM, involves a fund of $10 billion to $15 billion that would sell Indonesian companies dollars at a fixed rate of 5,000 rupiah.
The joint statement issued at the Time said the framework was inspired by the program that allowed Mexico to resolve its corporate debt crisis of the early 1980s. It also said the framework was intended to provide private-sector debtors with protection from foreign exchange rate risks. Japanese bankers say, however, the creditors and Jakarta need to agree on how to finance the framework and on who would assume the foreign exchange losses that could arise if social unrest continued in Indonesia. The rupiah is currently trading at around $9,000, well below a government target of an average 6,000 rupiah per dollar rate for the year to March 1999.
(Reuter)
But he declined to comment on whether an agreement could be reached on Saturday. A steering committee of Indonesia's creditor banks, co-chaired by Bank of Tokyo-Mitsubishi (BTM), Chase Manhattan Corp and Deutsche Bank AG, has been meeting since Friday with a Jakarta team led by chief debt negotiator Radius Prawiro, and International Monetary Fund (IMF) and World Bank officials. The most contentious issue at the end of the first round of talks on Friday appeared to be the length of a possible postponement of Indonesian debt repayments, sources close to the negotiations said.
Jakarta has been calling for a four-year deferment of debt repayment. Asked about the repayment issue, De Tray only reiterated :"We will make progress." Bankers and Indonesian officials are also expected to discuss ways to smooth trade financing for Indonesian companies and ensure credit lines from foreign financial institutions. The group plans to issue a joint statement, banking sources said. Indonesian officials in Tokyo said top Economics Minister Ginandjar Kartasasmita plans to hold a news conference here on May 13.
On Friday, Finance Minister Fuad Bawazier, in Washington for talks with the IMF and the U.S. Export-Import Bank, told Reuters he expected details of a deal to be made final during the Tokyo talks. I think they are going to finalize the details. They are going to find a framework to reschedule the payments, and that is going to reduce pressures on demand for foreign exchange, he said.
He declined to comment on the rate of exchange that would be used for debt repayment. In mid-April, the steering committee and Jakarta agreed to provide a framework for bilateral negotiations in order to settle Indonesia's private external debt. The framework, originally put forward by BTM, involves a fund of $10 billion to $15 billion that would sell Indonesian companies dollars at a fixed rate of 5,000 rupiah.
The joint statement issued at the Time said the framework was inspired by the program that allowed Mexico to resolve its corporate debt crisis of the early 1980s. It also said the framework was intended to provide private-sector debtors with protection from foreign exchange rate risks. Japanese bankers say, however, the creditors and Jakarta need to agree on how to finance the framework and on who would assume the foreign exchange losses that could arise if social unrest continued in Indonesia. The rupiah is currently trading at around $9,000, well below a government target of an average 6,000 rupiah per dollar rate for the year to March 1999.
(Reuter)