CONFIDENTIAL
13
y the authorities merged the first and second tier rates in the Foreign Exchange Market, and all external transactions are now subject to the rate determined by the fort ghtly auction; however, restrictions have been imposed on foreign banks' ability to bid for foreign exchange and the Nigerians have sharply increased the amount of foreign exchange supplied to the auction, thereby causing the naira to appreciate. In mid-June the London Club Steering Committee met in an attempt to regain the momentum lost in the past few months. The banks were able to resolve
many of the issues; signature of the banks' agreement is targetted for mid-September and the Nigerians have been given the draft terms which are essentially as originally agreed. The banks are still hoping that the last four major Japanese banks will commit before signature (the Japanese commitment level has risen to 70%), and that agreement on the terms of the promissory note rescheduling will be reached fairly soon. The Nigerians are expected to offer proposals to noteholders within the next week or so. The early signature of the present bank agreement is becoming increasingly important. A World Bank mission is presently negotiating a Trade and Investment Loan (TIL), to follow on from the Trade Policy Loan, but because of linkages between the commercial bank negotiations on 1988 maturities and the TIL, delays in signature of the present commercial bank agreement may hold up release of the first tranche ($200 mn) of the TIL, seriously undermining Nigeria's 1987 cash flow.
32
Despite its declaration of a moratorium on public and publicly-guaranteed debt on 25 May, Cote d'Ivoire has recently agreed a draft letter of intent for a new SBA and for a CFF, following a visit to Abidjan by Camdessus. Details of the package, which should trigger new Paris and London Club reschedulings together with additional concessional flows, have yet to emerge but there is a danger that the programme will be a weak one. The request is not expected to come before the Board until October.
33 With no further debt developments in Zambia or Zaire, interest in central southern Africa has shifted slightly since the last report. Zimbabwe remains current on its debt service, but continues to suffer a serious shortage of foreign
exchange. In May, a package of measures was introduced including a cut in dividend remittances on pre-independence investments coupled with relaxations on the
investment of blocked Zimbabwean dollars. The package was designed to stimulate
new investment, but seems to be regarded by investors as negative overall.
Mozambique agreed its first IMF programme, a SAF, on 8 June; this was followed on
16 June by its second rescheduling at the Paris Club. Paris Club creditors offered
Mozambique notably favourable terms: relief of 100% of principal and interest
repayable over 20 years with 10 years' grace. Angola, faced by mounting external
4
No comments yet.
Private notes are available after approval.