Bailout Prevented Crisis: Sri Mulyani

By webadmin on 01:24 am Jan 14, 2010
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Dion Bisara & Febriamy Hutapea

Finance Minister Sri Mulyani Indrawati, flanked by most of her directors general, on Wednesday calmly faced down a House of Representatives inquiry committee that aggressively questioned her over the legality of the controversial PT Bank Century bailout.

One of the country’s most respected technocrats, here and abroad, Sri Mulyani answered a barrage of questions thrown at her by committee members with ease, despite repeated interruptions by the lawmakers.

The much-awaited session began with a ruckus as committee members engaged in heated debate for 30 minutes over how much question time each political faction should be allocated.

Sri Mulyani, who as finance minister chaired the Committee for Financial Sector Stability (KSSK) that decided on the rescue on Nov. 21, 2008, was mostly queried about her role in the decision, potential state losses, the central bank data upon which the decision was based and whether President Susilo Bambang Yudhoyono knew about the bailout decision.

She said that although the cost of the bailout had swelled to Rp 6.7 trillion ($710 million), it did benefit all Indonesians.

“All the horrid economic predictions about layoffs in the hundreds of thousands, growth contractions and enormous crisis cost did not materialize. Instead, our state budget today is one of the best in the world and [we are] one of the fastest growing countries,”
she said.

She defended the government’s argument that the problems faced by Century posed a systemic threat to the banking sector, saying the collapse of the lender would have psychologically eroded public trust and confidence in the banking sector and put it under enormous pressure.

At the time of the bailout, she said, Indonesia was facing a situation where global financial turbulence was seriously threatening economic stability, and reiterated her conviction that Bank Century would have posed a systemic risk if it was allowed to collapse.
The minister also blamed “unsatisfactory” data from the central bank for causing the bailout costs to soar from the initial estimate of Rp 632 billion to Rp 6.7 trillion.

“I felt what you all feel now,” said Sri Mulyani, referring to her anger at the rising costs.

Ganjar Pranowo, from the Indonesian Democratic Party of Struggle (PDI-P) , said: “We’re happy she revealed most of the facts that central bank officials barely addressed.” He was referring to the various former central bank officials, including Vice President Boediono, who were previously questioned by the committee.

But Melchias Markus Mekeng, from the Golkar Party, said he was disappointed that her answers were sometimes inconsistent, especially in regards to how fragile the country’s economic condition was at the time of the bailout.

Committee Chairman Idrus Marham said at the end of the session that Sri Mulyani may be summoned again but gave no schedule.
Former Vice President Jusuf Kalla is scheduled to face the special committee at 10 a.m. today.