CONFIDENTIAL
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30 The strength of the oil market following the recent OPEC agreement will continue
top Algeria. The international capital markets are still demonstrating a
limited appetite for Algerian paper, and a recent Y12.5 bn ($86.7 mn) credit
arranged by Bankers Trust for Sonatrach was oversubscribed. However, there are as
yet no signs of any reduction in the country's arrears, and the bulk of the $4 bn of
amortisation payments due this year has still to be financed. In Morocco, the
failure for the second time to meet the performance criterion on external arrears has resulted in a waiver under the IMF programme. But the programme remains
essentially on track and the Moroccans eligible to draw. The likely date for the signing of the rescheduling agreement with the banks is now late July or August: although some banks have yet to respond, neither the authorities nor the Steering Committee envisage any problems and draft legal documentation is now with the
lawyers acting for Morocco. A formal offer of £30 mn DX cover was made to the
Moroccans during the state visit of King Hassan.
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Although arrears to ECGD have been largely cleared, Iraq's foreign exchange
shortage remains serious. As expected, State-owned commercial bank, Rafidain, intends to reschedule its 1985 $500 mn Euroloan when the first repayment falls due in October. The terms are likely to be similar to those of the rescheduling, earlier this year, of a 1983 $500 mn Euroloan on which most repayments were postponed for two years.
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