This past Monday, the International Monetary Fund and the World Bank, together with other members of the international donor community, met with the Indonesian government at the interim session of the Consultative Group on Indonesia (CGI). The government reported on its progress in meeting outstanding CGI commitments, including reforms in the forestry sector. One important issue that was not discussed is, what has happened to the Rp 22 trillion (US$ 2.5 billion) in corporate debts associated with Indonesia’s forestry conglomerates under the Indonesian Bank Restructuring Agency (IBRA)? When the CGI met in February 2000, the government agreed to close heavily indebted forestry companies and wood industries under IBRA. The rationale for this commitment was two-fold: On the one hand, it was intended to facilitate downsizing of Indonesia’s wood processing capacity to bring domestic log demand to a more sustainable level.
