Indonesia - Bambang Subianto.

The finance minister, Subianto is an important figure in Habibie's regime. He and Ginandjar have played key roles behind the current clean up of the banking sector. Together with other Suharto associates working in the background, they have excluded a bank owned by the Bakrie group from being declared bankrupt. The Bakrie family has long been associated with Suharto and has also maintained links with President Habibie.

Subianto and the IMF agreed on a far-reaching plan - which was announced on March 14, 1999 after a delay of two weeks - whereby 38 local banks were shut down on that day and the government nationalised seven more banks. The PT Bank Nusa Nasional, which used to be owned by Aburizal Bakrie, was among those nationalised in a compromise deal with the IMF. Aburizal Bakrie sits on an economic recovery council, a resilience body chaired by President Habibie. Another bank tied to Suharto was nationalised as well.

Nationalisation was the preferred alternative to a shut down from the standpoint of bank owners. Those seven banks which were nationalised had more than 80,000 accounts and large branch networks. The IMF and World Bank agreed to a state take-over at the last minute, with the government having stressed the need to limit the disruption of massive closures to the banking sector.

Under the plan, the government is to recapitalise nine of the largest private banks, seven state banks, 14 regional banks and 11 nationalised banks. This will be done through a Rp300,000 billion ($34 bn) government bond issue in April. But the bonds cannot be sold for cash, leaving banks with only interest income to counter a drain on capital from higher deposit rates than they borrow at. In turn, the IMF would approve release of another tranche of its $11.3 billion lending package to Jakarta and consider boosting that loan to help fund the country's expected budget deficit in the coming fiscal year which begins on April 1.

Subianto says 41 banks managed to raise capital independently and join 32 banks which earlier posted the required minimum capital adequacy ratio of 4% or more. This should take pressure off the funds allocated to recapita-lise the private banks.

The finance ministry on March 16 promised to start pushing for the repay-ment of loans to state banks by launching bankruptcy procedures and speed-ing debt talks which had so far failed to produce any restructuring deals. In a letter of intent with the IMF, needed for a new loan disbursement, it said the Indonesian Banking Restructuring Agency and the seven state banks would initiate bankruptcy suits against 20 big corporate debtors by end-April. (Jakarta in 1998 failed to meet a pledge to launch bankruptcy procedures, despite adopting a bankruptcy law and creating a court to press debtors).

Indonesian enterprises owe $80 billion in offshore debt. Little of this is being paid, with large amounts owed to domestic banks.

The finance minister in Suharto's regime was Ma'rie Muhammad, one of the technocrats of the younger generation who was at odds with the high-spending approach of then technology minister Habibie. Muhammad enhanced his reputation among the public during the Bank Pembangunan Indonesia (Bapindo) scandal in 1994/95, among the biggest corruption dramas in Indonesia's history. It involved an ethnic Chinese businessman defaulting on loans received on recommendations by former ministers. It prompted Muhammad to expose the extent of bad loans at state banks. His moves coincided with warnings from the World Bank that Indonesia had to manage its foreign debt with caution, prescribing tough measures to restructure the banking sector.