Debt nations prepare plan

Press, 22 June 1984, Page 6

Debt nations prepare plan

NZPA-AFP Cartagena, Colombia

Latin American Foreign and Finance Ministers were considering yesterday setting up a joint commission to persuade industrialised countries to accept a slower pace of debt repayment.

The commission would also try to persuade the rich countries to buy more goods from Latin America so that they could afford to repay their ?US3SO million (about $516 million) in foreign debts.

The proposal for the commission was worked out by deputy Foreign and Finance Ministers of 11 countries owing about SUS3IS billion (about $489 billion). “We did not prepare the rebellion of the indebted nations,” said the Colombian M Finance Minister, irangela Gomez, who co-ordinated discussion at the preparatory meeting. But several governments in critical economic straits

might press for tougher action when the debt crisis conference began today, observers said.

For instance, Bolivia has already suspended payments of its debts to United States banks, and in the Dominican Republic austerity measures to cope with the debt triggered riots in which 60 people were killed recently. The other conference participants are Brazil, Argentina, Chile, Ecuador, Mexico, Peru, Uruguay, and Venezuela.

© In Brasilia, the Peruvian President, Mr Fernando Belaunde Terry, said yesterday that Peru was prepared to accept austerity but not recession to service its SUSI 3 billion foreign debt.

His aides said that Peru would have to find ?US9 to SUSIO billion between 1985 and 1989 to meet repayments on its debts, adding

that the nation’s difficulties had been aggravated by a 12 per cent drop in gross national product last year. In Lima, the Central Bank’s president, Mr Richard Webb, was quoted by “El Comercio” newspaper as saying that the interest burden would be a drag on Peru’s economic growth plans. He also hinted that Peru might have to renegotiate the terms of an accord with the International Monetary Fund for a 5U5340 million loan signed in April. Asked by “El’Comercio” if he thought that Peru could meet the Fund’s second-quarter economic targets, he said, “The first estimates, according to spending and financing planned ... would imply that we would have to renegotiate the plan agreed to in February.”

Foreign bankers said that a failure to comply with the accord would unravel

Peru’s loan agreements with foreign governments and commercial banks.

® Portugal cut some interest rates yesterday after initialling an accord with the Fund revising last year’s stand-by loan agreement as a result of several months of sticky negotiations.

A Finance Ministry communique announced a cut of 1 per cent on loans of up to 90 days to 28.5 per cent and up to 180 days to 29.5 per cent.

Interest on deposits of less than six months, and more' than one year would also be liberalised, the Ministry said.

The new rates took effect today, a public holiday in Portugal. Long-term borrowing remains at its present high rate of 32 per cent for over five years in line with the country’s continuing austerity programme agreed to with the fund.