JAKARTA: Restructuring of debt formerly used for crisis relief in 1998 always ends with a deadlock although it has been discussed for more than 10 years.In fact, Bank Indonesia is ready to use it as a monetary instrument in order to reduce the state expenses.BI claimed that its not a problem to replace BI certificate (SBI) with debt (SU) formerly used as Bank Indonesia Liquidity Relief reaching to IDR250 trillion as long as its tradable in the market.The number of central banks monetary instrument will increase with the restructuring of debt into tradable so it can replace the SBI, Bank Indonesia (BI) Deputy Governor Hartadi A. Sarwono said.Monetary instrument will increase after finalizing the negotiation with Finance Ministry concerning the amendment of Government Securities owned by BI from untradeable to tradable, he told Bisnis, Yesterday.According to him, its no problem for the central bank to use such debt and its better to realize it immediately.It doesnt matter for us, the sooner the better, he added.As known, government and BI had restructured SU-002 and SU-004 in October 2006. Meanwhile, the accrued interest and indexation of SU-002 and SU-004 from 1999 to 2005 were combined by issuing SU-007 on November 24, 2006.SU-007 value reached IDR54.86 trillion that comes from SU-002 and SU-004 accrued interest at IDR16.93 trillion and indexation around IDR37.93 trillion.SU-007 is paid gradually every 6 months since February 1, 2007 until August 1, 2025 with exponential progressive installments and interest rate of 0.1% per annum. The government until now has paid four times as much as IDR3.46 trillion, which makes the remaining installment around IDR51.39 trillion.Nevertheless, the total amount of SU-002, SU-004 and SU-007 reaching to IDR250 trillion and it will be restructured to lighten government expenses as long as its status becomes tradable.The changing of status will enable the debt to be use as fundamental for BI to issue monetary operation instrument. Currently, BI uses its certificate as monetary operation instrument in banking financial system by conducting monthly auction.If the securities are released to the market the government should pay interest as high as yield that applicable in the market. Besides that, it would be difficult to trace the existence of debt in form of government promissory notes in BI in order to retract it, which is the same with troubled recapitulation bond.BI Governor Darmin Nasution assessed the interest rate adjustment will complicate the restructuring. It will be complicated since untradeable debt has low value that must be changed to tradable, he said.According to him, it will be easier for central bank to use debt as monetary instrument but its calculation problem will run long.SPN issuanceUntil last night, Bisnis Indonesia has not been able to contact Director General of Debt Management at Finance Ministry Rahmat Waluyanto to give comment on BI proposal.In addition, he revealed the plan to issue State Treasury Letter (SPN) with 3 months tenor valuing to IDR2 trillion as financial instruments replacing BI certificate.He admitted the 3 months SPN that will be issued has no great value since its only use as benchmark for other bond coupon. Each issuance will be at IDR2 trillion in maximum and issued soon. However, he didnt detail out the issuance period. Such issuance is conducted to balance BI policy that stop the issuance of BI certificate with 3 months and 6 months tenor. (t06/msw)

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