Rupiah rebounds as Indonesia formalises debt moratorium
Wednesday 28 January 1998
"What we have in mind is a temporary pause, so that we have time to reach an agreement between lenders and borrowers," said Radius Prawiro, a former cabinet minister appointed by President Suharto to help resolve the debt crisis. But he insisted Indonesia had no intention of seeking a national private debt moratorium.
Analysts said the announcement was vague, and made no mention of reform for Indonesia's unenforcable bankruptcy laws. A steering committee will be set up, including representatives of creditor banks, but there was no official word of how long the repayment freeze would remain in place.
But the uncertainty fostered by the moratorium was offset by the banking reforms, which will open Indonesian banks to foreign ownership and create a new body, the Indonesian Bank Restructuring Agency (IBRA), to take over and recover crippled banks.
Mari'e Muhammad, the finance minister, also announced government guarantees for depositors and creditors of commercial banks. Asia's markets are winding down for a long weekend due to the Chinese New Year and the Muslim holiday Eid al-Fitr, and the impact of the reforms on the markets will not be clear until next week.
The rupiah's plunge to a fifth of its value six months ago has made it impossibly expensive for companies to pay back dollar-denominated loans from foreign banks. Conservative estimates of private sector debt put it at $66bn (pounds 40bn), rendering most Indonesian companies technically insolvent.
Meanwhile Fitch IBCA, the credit rating agency, said Japanese banks faced "significant" risks as a result of the Asian crisis which, added to their other problems, could lead to downward rating adjustments.
Fitch IBCA estimated the extent of world-wide bank exposure to the south-east Asian region at more than $600bn.
- Richard Lloyd Parry
- 1 Jennifer Lawrence scores first UK top 40 single with Hunger Games track 'The Hanging Tree'
- 2 Shia LaBeouf claims he was raped during #IAMSORRY art installation performance
- 3 'You should come to my house and eat cheeses with me': 4-year-old sends adorable love letter to girl at school
- 4 Scientists predict green energy revolution after incredible new graphene discoveries
- 5 Michael Buerk wishes he killed Jimmy Savile when he had the chance - by pushing him overboard a cruise ship
Kim Jong-un 'in dire need of allies' within his own government as younger sister appointed to senior role
Black Friday UK: The shops hit by chaos and violence as shopping frenzy sweeps country
Scientists predict green energy revolution after incredible new graphene discoveries
Russell Brand: 'Katy Perry? I don’t know who that is'
Michael Buerk wishes he killed Jimmy Savile when he had the chance - by pushing him overboard a cruise ship
Obama: The only people with the right to object to immigration are Native Americans
Ukip says babies born to immigrants in the UK should be classed as migrants – which would include Nigel Farage’s own children
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
Ukip mocked after mistaking Westminster Cathedral – for a mosque
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
David Cameron sets out immigration reforms: We should distrust Ukip and their 'snake-oil of simple solutions'
iJobs Money & Business
Excellent Package: Austen Lloyd: EAST ANGLIA - SENIOR SOLICITOR LEVEL ROLE** -...
£Attractive Package: Citifocus Ltd: Prestigious asset management house seeks a...
£Negotiable: Citifocus Ltd: This is a varied role focusing on the firm's mutua...
£90000 - £140000 per annum + benefits: h2 Recruit Ltd: Are you a high achievin...