0316u
CONFIDENTIAL
i
INTERNATIONAL DEBT GROUP REPORT: DECEMBER 1988
Main points
Brazil's bank package has been successfully completed, but its SBA is
threatened by a loss of domestic financial control and hyperinflation.
the banks remain
Controversial IBRD loans for Argentina have been approved;
distinctly cool to a new money request and a satisfactory IMF programme seems
a distant prospect.
Mexico's balance of payments and fiscal programme have been dealt a blow by
the fall in oil prices. Reserves have been falling rapidly and the US has
offered unconditional bridging finance.
Following the offer of a substantial aid package, Nigeria and the IMF staff
have been able to agree a programme.
Poland has made an informal approach to the IMF for an SBA, but on the basis
of an apparently inadequate adjustment plan.
Iraq has approached HMG with a request for a bilateral rescheduling.
There are increasing worries about the capacity of Jordan and Oman to meet
their obligations.
Little progress has been made in bank negotiations with smaller Baker 15
debtors.
Secondary market prices of ldc debt have fallen sharply with widespread
selling by smaller US and Canadian banks and with demand restricted by the
suspension of debt:equity conversion programmes.
The Paris Club has begun to reschedule the debt of the poorest countries on
concessional terms.
Creditor governments have agreed that greater emphasis should be given to debt
reduction in the menu of options. Chile has bought back $300 mn of its debt.