FINANCE MINISTER DEFENDS BANK CENTURY BAILOUT

Jakarta, March 1 (ANTARA) - Finance Minister Sri Mulyani here Monday defended the government's bailout of Bank Century saying that all parties should ideally accept the decision because it was done to save the national economy.

Speaking before invited bankers at the Merdeka Palace here, she said the bailout was justified based on credible reasons and prudently decided in response to the global economic crisis.

Accompanying President Susilo Bambang Yudhoyono at the meeting, Sri Mulyani said, from the beginning, the head of state had confirmed that the government's decision about the troubled bank was "right".

In the dialogue, the invited bankers said the government's decision to rescue Bank Century amid last year's global crisis was a "correct policy" to save the country's financial sector.

"We believe that the government's decision at the time was right for the sake of the safety of the country's financial sector," Bank Mandiri CEO Agus Martowardojo said.

Despite the fact that Bank Century was relatively small, its closure amid the unstable economic situation had major systemic impacts on other banks, he said.

Sharing Martowardojo's views, Bank Mandiri's independent commissioner, Pradjoto, said there was nothing wrong with the Financial System Stability Committee's (KSSK) decision.

If there were problems when the bailout was paid, they were the problems of the bank's old management. "Thus, it is incorrect if this problem is burdened to Sri Mulyani and Boediono," he said.

Meanwhile, Chairman of the Indonesian Public Banks Association (Perbanas) Sigit Pramono said the Bank Century's bailout funds were not automatically taken from the state's resources.

"Despite the fact that the government's money does exist in the Deposit Insurance Agency (LPS), the biggest amount is the banking premium fund," he said.

Compared to the 1997-1998 banking crisis in which the recapitalization efforts used the state's budget, the funds for rescuing Bank Century was not directly from the state budget, he said.

The central government has come under sharp public ridicule over its decision to rescue failed Bank Century with a total of Rp6.7 trillion in bailout funds.

Vice President Boediono, a former Bank Indonesia (BI) governor, and Finance Minister Sri Mulyani were among those named by several party factions in the House of Representatives' (DPR) Bank Century Inquiry Committee as responsible for the Bank Century scandal.
Among the factions that had mentioned Boediono, Sri Mulyani, and other government officials were the Indonesian Democratic Party-Struggle (PDIP), the Prosperous Justice Party (PKS), and Golkar Party.

The inquiry committee's final views will be delivered by all party factions at the DPR's plenary session on Tuesday and Wednesday, he said.