CONFIDENTIAL
xvii
57
Provisional data show a January-May trade surplus of $23 mn (cf a small deficit
in the 1987 period). Inflation continues to rise and reached a 12 month rate of
20.7% in July.
The fiscal deficit so far this year is larger than targeted.
Guyana
58 Although a minor debtor, Guyana has become the first major test case for the new
co-operative approach to the arrears problem agreed by the Interim Committee in
September. As part of a rapprochement with the IFIs, a Policy Framework Paper was
approved by both the Fund and Bank Boards in July. The medium-term outlook is made
difficult by the need to close a large financing gap even after rescheduling.
Extensive discussions have been taking place between the IFIs and creditor
governments since August but little progress has been made; an inconclusive donors'
meeting was held on 7 November. A "support group" has been established, with
Canada in the chair, and hopes to have finalised a financing package by
mid-January.
-
However, a number of issues eg whether there should be retroactive
access to ESAF, the length of the shadow programme, the sequencing of clearance of
arrears to IFIS remain outstanding. The continuing delay in reaching a
settlement with the IMF is causing political difficulties for Predient Hoyte. His
Prime Minister and main political rival within the PNP, Hamilton Green, stands to
benefit politically if Hoyte fails in his attempts to restructure the economy.
Trinidad
The
59 Trinidad is in the process of its first rescheduling of public sector debts and
its first use of Fund resources. A further devaluation is expected soon.
Banks' Advisory Group (led by Bank of Tokyo) has agreed to reschedule most
maturities due September 1988 - August 1992 (about $440 mn), over 12 years 4 1/2
grace at LIBOR +15/16%. (A rescheduling of Paris Club debts will be discussed in
January.) The Fund Board approved a CCFF for SDR85 mn on 18 November;
and a
Letter of Intent has been sent as the basis for an SBA request for SDR 99 mn.
SOUTH AND EAST ASIA
Philippines
60
The Philippines has begun a fresh round of negotiations with the banks and IMF
and has asked for new money totalling $3.11 bn over 3 years from 1988 to 1990.
Both sides are currently considering their positions and another meeting will
Page 105Page 106