IMF's Neiss Says Focus of JKT Talks on Corporate Debt (fwd)

[Robert Weissman <rob@essential.org>]

IMF's Neiss says focus of Jakarta discussions on corporate debt
Mon 07 Sep 98 - 12:16 GMT
JAKARTA, Sept 7 (AFP) - IMF Asia-Pacific director Hubert Neiss said Monday
the
review of the Indonesian government's letter of intent on economic reforms
will be complete by the end of this week and will focus on corporate debt.
"All the policies you will read on Friday (in the) letter of intent," Neiss
told reporters at the National Development Planning Ministry after a
meeting
with economic ministers, World Bank and Asian Development Bank officials.
"There's a letter of intent every month, of course, and the government will
always publish it. You can read all of the details," AFX-ASIA, an AFP
financial affiliate quoted Neiss as saying.
"The main element where we have to work this week is to establish a
framework
for corporate debt restructuring, domestic debt restructuring. "This is a
serious issue and corporations have to normalize their relations with
commercial banks in order to get new credit and restart production. That's
the
main emphasis in this month's meeting," he said.
Indonesia's corporate debt was officially estimated last month at 67.7
billion
dollars, and programs to roll it over have so far met with limited success.
Attending the meeting with Neiss were Coordinating Minister for Economy,
Finance and Industry Ginandjar Kartasasmita, Industry and Trade Minister
Rahardi Ramelan, State Enterprises Minister Tanri Abeng and Bank Indonesia
governor Syahril Sabirin, AFX-ASIA said.
Asked how long the government should sustain rice subsidies, Neiss said:
"As
long as it's necessary ... rice is the most important staple commodity and
the
government has to make sure it is available in large enough quantity and it
is
available at prices people can afford."
However, he suggested that targetted subsidies would be more efficient
because
general subsidies are available to both the rich and the poor.
"Whereas if you can manage to target you really pay for what you should pay
namely that the poorest get the commodities at the low price," he said.
Neiss, who is on a routine monthly review mission to Jakarta, said that
while
high rice prices were discussed at Monday's meeting, the prices of palm oil
were not as these had stabilized.
He also added that they did not discuss the possibility of Indonesia
introducing foreign exchange controls because the government had already
stated its intention to continue with a free-float mechanism.
However he said corruption was discussed at the meeting.
"As you know we try to reduce corruption by indirect ways like dismantling
all
monopolies, like reducing all special priviledges, tax privileges, credit
privileges," AFX-Asia quoted him as saying.
"We don't have any direct measures against corruption, that's up to the
government," he said but held out no hope for a relaxation of the
International Monetary Fund (IMF)-imposed tight monetary policy that
businessmen blame for scores of bankruptcies.
"It will take still a while until the situation normalises and
unfortunately,
in order to get to that normalisation, monetary policy has to be tight,
which
also means sacrifices to the economy," he said.