Growth hinged on ‘ifs’
would take a relatively shorter time since “there are no hard issues here.”
He said the country has not been in default of $ 420 million in maturing principal and interest in the last four months since it has shown good faith by paying 30% of the interest due, the same terms covering the second rescheduling of loans over an 18-month period ending August 1988. “They understand the delays.”
OPTIONS 0N DEBT
Right now, the Department of Finance is “outlining the inventory of (debt relief and debt reduction) options and testing them out.” Mr. Jayme said. Among these options is the French proposal for an interest cap for heavily indebted countries. Very similar to the cap extended by the United States to England in 1945, the creditor and the debtor will agree on a ceiling for interest payments as a percentage of, say, annual exports. Should interest payments exceed the ceiling, the creditor condones or absorbs the difference.
The Japanese, who have agreed to match the IMF facility on a 1:1 basis, are thinking along similar lines, the debt to commercial banks to be pooled together before a ceiling on interest payments is pegged.
Another European country is floating the idea of converting Third World debt into local currency and donating the amount to foundations or institutions involved in improving the quality of life in the debtor-country.
BORROWINGS
Meanwhile, Finance Undersecretary Ernest Leung said the country intends borrow $2.7 billion next year, exclusive of IMF financing. He said new commitments for 1989 involve 33 loans totaling $2.6 billion compared to this year’s level of $2.139 billion involving 26 loans. Actual disbursements of existing and new loans next year will amount to $2 billion compared to projected disbursements of $920 million for this year.
He said discussions have begun with the World Bank for the $250-million financial sector loan and the $300-$350-million energy sector loan, with the Overseas Economic Cooperation Fund for the 16th yen loan package, and with the Export-Import Bank of Japan for cofinancing of about $150 million for the Sucat, Bataan and Malaya energy projects and about $200 million for a government sector loan.