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Cablegate: October 2009 Paris Club Meeting

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ZNR UUUUU ZZH
R 101908Z NOV 09
FM SECSTATE WASHDC
TO RUEHFR/AMEMBASSY PARIS 7123
INFO RUEHBY/AMEMBASSY CANBERRA 5718
RUEHVI/AMEMBASSY VIENNA 9921
RUEHBS/AMEMBASSY BRUSSELS 5468
RUEHOT/AMEMBASSY OTTAWA 0248
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RUEHKO/AMEMBASSY TOKYO 1195
RUEHTC/AMEMBASSY THE HAGUE 6907
RUEHNY/AMEMBASSY OSLO 9048
RUEHMO/AMEMBASSY MOSCOW 5212
RUEHMD/AMEMBASSY MADRID 3086
RUEHSM/AMEMBASSY STOCKHOLM 8452
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RUEHLO/AMEMBASSY LONDON 7688
RUEHBUL/AMEMBASSY KABUL 4407
RUEHWN/AMEMBASSY BRIDGETOWN 1639
RUEHAN/AMEMBASSY ANTANANARIVO 9707
RUEHBZ/AMEMBASSY BRAZZAVILLE 1703
RUEHBU/AMEMBASSY BUENOS AIRES 7986
RUEHKG/AMEMBASSY KINGSTON 0260
RUEHKI/AMEMBASSY KINSHASA 0597
RUEHUM/AMEMBASSY ULAANBAATAR 7560
RUEHTA/AMEMBASSY ASTANA 3839
RUEHRY/AMEMBASSY CONAKRY 2267
RUEHAB/AMEMBASSY ABIDJAN 2895
RUEHCH/AMEMBASSY CHISINAU 1149
RUEHDJ/AMEMBASSY DJIBOUTI 1220
RUEHBJ/AMEMBASSY BEIJING 1312
RUEKJCS/SECDEF WASHINGTON DC
RUEATRS/TREASURY DEPT WASHINGTON DC 0337

UNCLAS SECTION 01 OF 11 STATE 116023

SENSITIVE
SIPDIS
TRESURY FOR DO/IDD AND OUSED/IMF
SECDEF FOR USDP/DSCA
EXIM PASS TO CLAIMS - MPAREDES
USDA PASS TO CCC - WWILLER/JDOSTER
USAID PASS TO CLAIMS - WFULLER
DOD PASS TO DSCS - PBERG

E.O. 12958: N/A
TAGS: EFIN ECON EAID XM XA XH XB SF FR
SUBJECT: October 2009 Paris Club Meeting

1. (SBU) SUMMARY: During the October 2009 Paris Club "Tour
d'Horizon," creditors expressed consternation over the $939 million
payment made by Congo-Brazzaville to litigating creditors (a.k.a.
vulture funds), which violated the GOC's commitment to seek terms
from private creditors comparable to its Paris Club treatment. Due
to a supposed calculation error, the discount on the deal appears to
have been in the range of 25-37 percent, far short of the comparable
65 percent the GOC originally claimed. In addition, new information
from the Congolese authorities indicated that $306 million of the
payment covered the litigating creditors' alleged legal fees.

2. (SBU) On Argentina, the Secretariat had pressed the GOA to send a
formal letter to the Club regarding its intentions, and emphasized
again that there could be no formal debt restructuring without an
appropriate International Monetary Fund (IMF) program. Argentina's
Minister had reportedly instructed that he wanted to resolve the
arrears by year-end. For the Democratic Republic of Congo (DRC), the
IMF reported it was still awaiting a signed copy of the amended
project loan contract between the DRC and China, so it was unable to
request financing assurances, a necessary precursor to moving forward
with a new IMF program. The agreement for a program under the
Poverty Reduction and Growth Facility (PRGF) was to have started on
July 1st and there were some questions as to whether it would have to
be renegotiated given the resulting delay in producing a debt
sustainability analysis.

3. (SBU) Paris Club creditors also discussed Afghanistan, Antigua and
Barbuda, Comoros, Cote d'Ivoire, Djibouti, Guinea, Jamaica,
Kazakhstan, Moldova, and Mongolia. Methodological issues discussed
included the implications for the Club of the reform of IMF
instruments and the debt sustainability framework, adjustments to the
Club's debt service reduction methodology (both carried over from
September), treatment of public sector and nationalized entities, and
outreach to non-members. After the plenary session, there was a
meeting of the working group on loan guarantees that have not been
called. End Summary.

-----------
Afghanistan
-----------

4. (SBU) The Fund reported that growth in the current fiscal year was
expected to exceed 15 percent, on the bases of post-drought
agricultural recovery and the stimulus effects of increased security
expenditures. The deteriorating security and uncertain political
situations continued to cause serious concern, however. The
authorities and the Fund were in agreement on fiscal policy for the
remainder of FY 2009-10, based on higher revenues. All completion
point triggers related to the Heavily Indebted Poor Countries (HIPC)

STATE 00116023 002 OF 011


initiative had been implemented or were at advanced stages, except
for the mining law amendment and parts of pension reform. Both
awaited cabinet approval; the mining law amendment needed
Parliamentary approval as well. HIPC completion point could come as
early as January 2010 assuming satisfactory performance on the sixth
review (expected in early December) and triggers, and on the
political situation.

-------------------
Antigua and Barbuda
-------------------

5. (SBU) The IMF reported that Antigua and Barbuda had been severely
affected by the global economic crisis, with fiscal imbalances
soaring and arrears continuing to accumulate. Fiscal revenues were
expected to fall by 20 percent in 2009 and GDP by 6.5 percent; the
latter was expected to fall a further 1.5 percent in 2010. The
government was responding with expenditure cuts and tax increases,
though a mission the previous week had concluded that significant
further fiscal adjustment would be necessary. There were mounting
banking problems in the wake of the Stanford financing scandal (Texas
businessman accused of orchestrating a $9.2 billion investment ponzi
scheme). Arrears accounted for 16.8 percent of GDP, of which 6
percent was to multilaterals, about 12 percent to the Club, 21
percent to non-Club bilaterals, and the remaining 61 percent to
private creditors. There could be an IMF program with a subsequent
debt restructuring, and financing assurances from the Club could be
sought.

6. (SBU) The World Bank noted the country's high income level
($13,790 per capita in 2008), and said it had no record of ever
having lent to the country, although it had made a modest grant for
addressing fluorocarbons. The country was part of a Bank project on
improving the debt profiles of Caribbean clients; creditors were
curious about this, but the Bank's representative could provide no
further details.

7. (SBU) The Secretariat noted a complexity in a potential
restructuring, significant debt was tied up in the Stanford entities
(6.5 percent of GDP, according to the Fund, vs. 12 percent to the
Club). The Secretariat also noted that Antigua and Barbuda was on
the OECD's Non-Cooperative Countries and Territories (NCCT) grey list
and asked whether this could affect creditors' willingness to provide
treatment.

8. (SBU) Several creditors reported arrears, including the
Netherlands (2 million Euro), the UK (which also reported having
received a very recent payment), the U.S. ($25 million), and France
(10 million Euro). Club members agreed to a data call.

---------
Argentina
---------

STATE 00116023 003 OF 011

9. (SBU) Club Chairwoman d'Amarzit reported on her October meeting
with Finance Secretary Lorenzino in Istanbul, noting that she had
carried the traditional message that no formal rescheduling was
possible without an appropriate Fund program. She had told Lorenzino
that Argentina needed to demonstrate a "real commitment" before
discussions could progress, and that Argentina should write formally
to the Club to describe its general intentions, if not a specific
proposal. She had also suggested that Argentina should resume making
scheduled payments, as a sign of good faith. (Since all U.S. debt is
in arrears, the U.S. would not directly benefit from this.)
Lorenzino had asked whether such payments would be applied to arrears
or to servicing current maturities; d'Amarzit had replied that it did
not matter, since all would be wrapped up in an eventual workout.
Lorenzino reported that Minister Boudou wanted to resolve the Club
issues by year-end, and had also mentioned that an offer to holdout
private creditors was imminent. The Club would need to "show
creativity" in dealing with Argentina, d'Amarzit concluded, but only
if the Argentines were being credible, which came down to "cash!"
The ball, she said, was firmly in the Argentine court.

10. (SBU) The U.S. delegation reported on Treasury DAS Lee's meeting
with Minister Boudou in Istanbul, noting the Argentine desire to
resolve the debt issue; their interest in improving relations with
the Fund, though short of a program; and their reluctance to pay in a
lump sum from reserves.

11. (SBU) D'Amarzit responded that despite the law that had been
enacted to enable payment in full from reserves, the central bank
governor "had issues" with that mode of payment. In her meeting, the
Argentines had noted that Spain's unilateral restructuring had been
for a five-year period; she had replied that since that period had
ended in 2008, the Argentines should pay the Club immediately. She
also emphasized that there could be no reverse comparability of
treatment with the holdouts, meaning that the deal with holdouts
would not be a template for any restructuring with official
creditors.

12. (SBU) The Netherlands suggested that the arrangement facilitated
by the Club in 2007 to clear Angola's arrears might guide relations
with Argentina, and suggested that it be mentioned to the Argentines
in bilateral contacts. D'Amarzit replied that she had mentioned
Angola to Lorenzino, but noted some significant differences,
particularly the ratio of arrears to late interest and that the U.S.
(which had very little flexibility to address past due interest) had
not had arrears with Angola by the time that arrangement was
concluded.

13. (SBU) The Fund noted that it had hoped to agree on a way forward
for the Article IV consultation in Istanbul, but had been unable to
do so. The Bank reported a positive meeting in Istanbul, during
which Argentina had expressed appreciation for the Bank's support.
Net transfers from the Bank to Argentina would be positive in 2009

STATE 00116023 004 OF 011


for the first time in many years.

-------
Comoros
-------

14. (SBU) The Fund reported that the PRGF program was approved
September 21. Real GDP was expected to grow just 1 percent in 2009,
though inflation was easing in the face of retreating food and fuel
prices. The fiscal deficit was expected to reach 6.2 percent of GDP
in 2009; the debt to exports ratio was an unsustainable 260 percent.
Total debt was $262 million at the end of 2008, 54 percent of GDP,
while arrears were 5.1 percent of GDP. HIPC eligibility still needed
to be confirmed, though there appeared to be no serious doubts.
Assuming it was, decision point could come in the first half of 2010.

15. (SBU) The Secretariat noted that the Club held only a small share
of Comoros' debts, so as agreed it had reached out to other
creditors, without success - Kuwait had indicated that it did not
want to participate in negotiations, the UAE had not replied, and
Saudi Arabia was unlikely to participate. The World Bank reported
that its mission chief had also reached out to the Executive
Directors from non-Club creditors to ask them to participate.

16. (SBU) The Club agreed to extend an invitation to Comoros, which
is now scheduled to negotiate Naples Terms treatment on November 19.
The U.S. will only observe as it is not a creditor.

---------------------------------
Democratic Republic of Congo (DRC)
---------------------------------

17. (SBU) At the time of the October meeting, the Fund still had not
received a signed copy of the revised China project loan contract, so
the planned request for financing assurances was not made. The Bank
reported that technical work was proceeding, especially on estimating
the grant element of the package. Bank staff were also helping
authorities to prioritize infrastructure projects, including those
being financed by the loan package, and were pleased that the
authorities seemed committed to an economic return methodology.

18. (SBU) The Netherlands noted the passage of time, asking whether
the Fund planned to re-phase the agreed PRGF program (which was to be
effective from July 1). The IMF responded no, although they admitted
that the July date "could not hold much longer." The Secretariat
asked about reports that the Chinese loan's interest rate had been
raised to reflect the loss of guarantees; the Fund noted reports that
the loan had been set at a fixed rate of 4.4 percent.

19. (SBU) The Netherlands also asked whether there would be a new
Club agreement rather than a reactivation of the old one, and noted
substantial arrears, asking whether treatment of these could be
deferred to completion point, to provide incentives for performance,

STATE 00116023 005 OF 011


regretting that this had not been done in the recent Burundi and Cote
d'Ivoire cases. Germany strongly supported this, and the Secretariat
agreed that the Club could consider doing so, though it noted that
given low capacity to pay, the action would be symbolic.

20. (SBU) Russia reported that it had a $1.4 million short-term debt
that had not been paid, and that it would "keep this in mind" in
considering financing assurances. The Secretariat retorted that
there were arrears "left, right, and center."

21. (SBU) Several creditors expressed concern about the details of
the Chinese loan and its impacts, emphasizing the need for detailed
information from the international financial institutions (IFIs) and
for enough time to consider the forthcoming debt sustainability
analysis carefully before deciding on financing assurances. In
September, the World Bank had reported that the country's interim
HIPC treatment was to expire on October 15; the Bank representative
was unable to provide an update on how the Bank planned to proceed.

-------------------
Congo - Brazzaville
-------------------

22. (SBU) The Secretariat had received a new letter from the
authorities, following the earlier one in which the Congolese had
admitted to "errors" in Congo's earlier submission on its settlement
with private vulture funds. According to the new letter, the payment
made was $939 million, of which $306 million was allegedly to cover
the funds' legal expenses. Given the new data, it is clear that the
settlement was not remotely comparable to the treatment provided by
the Club. Originally, the Congolese had claimed that the discount
was a comparable 65 percent. Based on the new numbers, they were
claiming just a 25 percent discount although the Fund's preliminary
analysis suggested 37 percent. The Fund and Secretariat were unable
to confirm the numbers, however, since the Congolese continued to
refuse to provide the agreements or underlying data, claiming
confidentiality requirements in the settlement. The GOC letter
passed blame to the international community, which it accused of not
supporting Congo in its efforts to deal with private litigants.

23. (SBU) Creditors were angry about the payment but recognized there
was little they could do about a payment that had already been made.
Some asked what additional support the international community could
provide to debtors in future such cases, and some suggested the
African Development Bank's (AfDB) African Legal Support Facility
could help.

24. (SBU) The U.S. delegation argued that while the IFIs would not,
of course, become directly involved in country-creditor negotiations,
as asserted in the GOC letter, they would have been willing to
provide technical assistance on calculating comparable treatment, as
would the Secretariat and even creditors. The GOC had not sought
such support. We also noted that Congo had apparently negotiated the

STATE 00116023 006 OF 011


settlement without benefit of competent legal and financial advice.
Clearly, if the Congolese authorities could find $306 million to pay
the litigating creditors' legal expenses, they could have secured
competent counsel for themselves, had they wished to - particularly
given the magnitudes involved.

25. (SBU) Creditors concluded the authorities' failure to seek
advice, and the outcome, raised doubts about their true motivations -
doubts exacerbated by their refusal to share the underlying
information with the Fund and Secretariat, even on a confidential
basis.

26. (SBU) On the macro and HIPC fronts, the Fund reported significant
fiscal consolidation, mostly attributed to an increase in discipline.
The non-oil primary deficit had fallen from 56 percent to 37 percent
this year, and the country was pressing hard to reach completion
point by the end of 2009. A mission found that some triggers had
been met and that progress was being made on others; the Bank
reported that a final verification mission was planned for November,
with a completion point target of December 22.

-------------
Cote d'Ivoire
-------------

27. (SBU) The Fund reported that the recent mission found the country
to be reasonably resilient to the global economic crisis and that
growth could be strong if the elections go well and progress
continues on structural reforms. Real GDP was expected to rise 3.7
percent in 2009, after growing 2.3 percent in 2008, with the help of
good rains and a strong showing by the mining sector; in 2010 it was
expected to grow 4 percent. The current account had strengthened,
and the fiscal deficit was on target at 1.4 percent of GDP. The Bank
reported some progress on HIPC completion point triggers, including a
reduction in cocoa taxes and a cocoa strategy near completion.
Implementation of the poverty reduction strategy paper (PRSP)(another
completion point trigger) had begun, and was expected to be reflected
in the 2010 budget.

28. (SBU) The Secretariat reported on the agreement recently reached
with London Club creditors. The net present value (NPV) reduction
was 22 percent, comparable with treatment provided by the Paris Club,
and the London Club was also matching the exceptional cash flow
relief provided by the Paris Club through 2011. Talks with other
private creditors, as reported in September, were proving more
difficult. Some had contacted the Secretariat to ask why they were
being subjected to comparable treatment, since their loans were in
CFA francs and governed by domestic law. The Secretariat had replied
that the Club regarded them as external creditors based on their
residence.

--------
Djibouti

STATE 00116023 007 OF 011


--------

29. (SBU) The Fund reported that the global economic crisis had hit
Djibouti hard, though the current account deficit had fallen sharply,
mostly because of foreign-financed investment. Fiscal policy had
been loosened, with the deficit more than doubling in the first half
of 2009. Borrowing had been mostly concessional, but the country was
still at high risk of debt distress. Performance on the IMF program
had been mixed, with waiver of four benchmarks necessary to pass the
last review in June.

30. (SBU) Creditors holding commercial debt continued to report
problems in concluding bilateral agreements. France reported that
Djibouti had asked for separate agreements on commercial and Official
Development Assistance (ODA) debts, which France had refused, while
Germany indicated that the Djiboutian authorities were refusing to
implement the agreed minute at all, insisting on full relief. Spain
also reported difficulties on commercial loans. Belgium and Italy,
which had only ODA loans, reported that they had signed bilaterals,
though Italy reported that some of the debt was committed to a swap
that was not being implemented.

------
Guinea
------

31. (SBU) The IMF again reported that the situation in Guinea was
worsening, with hard-won gains under the PRGF program and HIPC
initiative unraveling. As reported in September, the de facto
authorities had attempted to fix the exchange rate at unrealistic
levels while inflation had resumed, as had central bank financing of
the government, to the extent of 0.7 percent of GDP in the first nine
months of 2009. Reserves remained stable, but at only one month of
imports. In response to a question, the Fund rep assured creditors
that the de facto authorities were not able to access Guinea's
Special Drawing Rights (SDR) allocation, and that based on a poll of
its members, the IMF did not recognize or deal with any Guinean
government.

32. (SBU) The Secretariat reminded creditors of the Club's June
letter to the GOG, noting that since there had been no IMF program
review the second phase of Guinea's debt treatment had been
suspended, so creditors could now invoice on the original payment
schedule. By the end of the year, the Club should decide whether or
not to cancel the Paris Club agreement entirely. France and the U.S.
had received payments. Several creditors expressed concerns about
recently-reported loan deals with China, but there was no information
beyond what had been reported in the press.

-------
Jamaica
-------


STATE 00116023 008 OF 011


33. (SBU) The U.S. delegation had asked that Jamaica be added to the
agenda, to seek an update on IMF program discussions. The Fund noted
that discussions were ongoing, with a mission planned for October 26.
GDP was expected to fall by 3.8 percent in the current fiscal year,
and there had already been strong fiscal adjustment. Major debt
restructuring was likely to be needed, although the Fund
representative didn't foresee a request to the Club. The Bank
indicated that it was discussing a $100 million development policy
loan, in conjunction with the planned Fund program.

----------
Kazakhstan
----------

34. (SBU) The Secretariat reported that no response to its September
12 letter to the GOK regarding banking restructuring had been
received. The IFIs noted that a term sheet had been signed between
Alliance Bank and its creditors but that the process with BTA Bank
was taking longer (the Club letter had insisted that creditors be
given enough time to consider work-out proposals). In the World Bank
rep's view, creditors thought that government threats to revoke
Alliance's license were credible; those regarding the bigger BTA were
less so.

35. (SBU) The Secretariat expressed concern that the proposed workout
treated debts on a pari passu basis, rather than honoring the
widely-accepted seniority of trade finance, and suggested that the
IMF should communicate this concern to the authorities, noting that
failure to respect the principle could raise the cost of future
financing to Kazakhstan; the IMF did not respond directly. Italy
asked more broadly that the IMF mention Club support for Export
Credit Agencies (ECAs), but the IMF demurred.

-------
Moldova
-------

36. (SBU) The IMF reported an economy hit hard, with GDP expected to
fall by 9 percent in 2009, driven by sharp falls in exports, foreign
direct investment (FDI) (now virtually zero) and remittances (down 40
percent). The budget deficit was expected to be 8-10 percent of GDP,
impacted by election spending and weak revenues. The banking system
was fragile, with one license having been revoked and other
revocations possible. Heavy intervention in the first four months of
the year had lowered reserves, and there were renewed discussions of
a program. An October mission was planned; if there was agreement, a
program could come to the Board in December or January; it was still
unclear whether a program would involve a request to the Club for
debt treatment. The Bank added that the new government was moving
swiftly, but that the country faced significant financing needs in
2010 and 2011. (Note: An October 28 IMF press release reported
preliminary staff-GOM agreement on a three-year Extended Credit
Facility or Stand-by Arrangement.)

STATE 00116023 009 OF 011

--------
Mongolia
--------

37. (SBU) Russia had asked that Mongolia be placed on the agenda so
it could raise the issue of arrears. Russia claimed that most data
had been fully reconciled in 2006; the Mongolians had initially
confirmed this reconciliation but later refused to confirm some
categories of debt. Russia stated that the outstanding claim was
$180 million, of which 90 percent was in arrears. Much larger claims
- over $10 billion - had been forgiven in 2003; the current arrears
were unrelated to this 'big debt' forgiveness. Finland also reported
$9 million of long-standing arrears, which it was still trying to
reconcile. It had offered debt reduction, most recently in August,
but the Mongolian authorities had been non-responsive.

38. (SBU) The IMF expressed concern, since under the Fund's lending
into arrears policy the arrears could hold up the SBA's review, but
it noted that if the debt was disputed, it would not be considered to
be in arrears for program purposes. Russia noted that some but not
all of its claims were disputed; Finland merely appealed to the Fund
to press the Mongolians to reply to their most recent letter. The
Secretariat said that Russia should clarify the situation so the IMF
would know how to proceed. Given the uncertainty, the Club would not
become involved.

39. (SBU) The Fund reported that implementation of April's SBA was
strong, and that all conditions had been met on time. A mission was
planned in October to prepare the first review. Tight fiscal
controls had allowed the authorities to meet targets despite revenue
weakness, and economic growth, expected to be 0.5 percent in 2009,
could reach 7 percent in 2010, on the back of high copper prices,
though the financial sector remained a major source of risk.
Mongolia had just signed an agreement for a mining project that could
generate export revenues of 50 percent of GDP; details remained
scarce, however, and the financing could be non-concessional.

---------------------
Methodological Issues
---------------------

40. (SBU) Reform of IMF Instruments - Review of DSF and Debt Limits
in IMF Programs/Impact on Paris Club: Discussion of how the Club
should consider the revamped IMF program instruments was held over
from the September meeting. The only new instrument that seemed in
question was the Flexible Credit Line (FCL), which is an upper credit
tranche program (the Club criterion for treatment), but with only ex
ante conditionality. The Secretariat noted that few countries
availing themselves of the FCL were likely to come to the Club, since
in most cases the Club accounted for small shares of their debts, and
because its comparability requirements would create too many issues
regarding the remainder.

STATE 00116023 010 OF 011

41. (SBU) There was also further discussion of the new provisions for
the treatment of state-owned enterprises (SOEs) in debt
sustainability analyses (DSAs), and particularly on whether the Club
should presumptively exclude the debts of any SOEs excluded from a
DSA. There was general agreement that the decision should remain
with the Club.

--------------------------
Treatment of Public Sector
and Nationalized Entities
--------------------------

42. (SBU) In a related discussion, the Club considered how it should
treat the debts of SOEs and newly-nationalized entities. The
discussion came about in response to recent cases involving Grenada,
Djibouti, and Seychelles, when debts of certain SOEs were excluded
from treatment; and Kazakhstan, where there was disagreement as to
whether debt of nationalized entities should be considered sovereign.

43. (SBU) The Secretariat had prepared a paper, which noted different
definitions of public sector that had historically been used by the
Club, and which suggested some criteria the Club could consider going
forward - the treatment assumed by the IMF in programs and DSAs, and
the individual criteria used by the IMF to make its determinations,
such as managerial independence and relationship with the government.

44. (SBU) On nationalized debtor entities, the paper stressed that
nationalization did not imply government assumption of obligations,
but that there might be a practical role for the Club in pressing for
fair treatment, as it had been doing in the case of Kazakhstan. The
Secretariat made clear that it considered this only in the context of
nationalizations carried out when the entities were defaulting and
presented systemic risk, and not for nationalizations of choice.

45. (SBU) There was little discussion, though Germany suggested the
need for more economic criteria, not just legal and institutional
ones. The U.S. supported the Secretariat's approach and emphasized
the importance of the IMF's sharing its plans for DSA exclusion as
far in advance as possible.

----------------------------------------
Debt Service Reduction (DSR) Methodology
----------------------------------------

46. (SBU) The discussion of DSR methodology, held over from
September, was very brief. The Secretariat had prepared a brief
paper on how it calculates the treatment to be provided by creditors
that selected the debt service reduction option in a previous
treatment for the same debtor. This is based on estimating the stock
reduction, at the time of the second treatment that simulates
equivalent treatment at the time of the first, using average interest
rates for the intervening period. There was no discussion.

STATE 00116023 011 OF 011

------------------------------
Outreach - Request from Israel
------------------------------

47. (SBU) Under the Club's agreed outreach policy the Secretariat had
reached out to three occasional observer creditors - Brazil, Korea,
and Israel - to invite them to cooperate more closely with the Club.
Only Israel had replied, indicating interest not just in closer
involvement, but in full membership. Following the outreach policy,
the Secretariat proposed that Israel be invited to attend full
sessions of the Club, including methodology discussions (currently,
non-members attend only the discussions of countries of which they
are creditors). Israel would be asked to provide comprehensive data
to the Club, and to honor Club principles such as solidarity. The
path from that to full membership - including listing on the website
- remained unclear, and could be considered after the Club had had
more opportunity to work with Israel.
Creditors agreed to the proposal, though some asked about how it
would be presented to the outside world. Until Israel became a full
member, the only public notice would be Israel's listing among
observers in negotiation press releases.

---------------------------
Working Group on Guarantees
---------------------------

48. (SBU) The working group on loan guarantees that have not been
called discussed how to create more uniformity of treatment. It was
generally agreed that it would be useful to include such guarantees
in future data calls, as had been done in the case of Sri Lanka. The
data call template would address whether a specific guarantee had
been indemnified, and if not whether the creditor government could
reschedule the underlying loan. USdel stated that the USG would
participate to the extent it could, but passed on warnings that U.S.
ECAs do not always have full payment schedules for guaranteed loans.

49. (SBU) In terms of action, it was generally agreed that any
special cases identified in the data call could be discussed by
creditors before a negotiation, to attempt to resolve questions of
treatment. There was no agreement on whether such guarantees should
always be treated, however. Some creditors argued that Agreed
Minutes could be drafted with an "option," allowing the debts to be
treated in the event of default as had been done in Pakistan's 2001
treatment. The issue will need to be discussed further. The
Secretariat subsequently issued a draft summary of the discussion,
which Washington agencies are still reviewing.

50. (U) For additional information on any of the countries or issues
mentioned above, please contact EEB/IFD/OMA David Freudenwald at
freudenwalddj@state.gov or Nicholle Manz at manznm@state.gov.


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OECD: COVID-19 Crisis Puts Migration And Progress On Integration At Risk, Says

Watch the live webcast of the press conference Migration flows have increased over the past decade and some progress has been made to improve the integration of immigrants in the host countries. But some of these gains may be erased by the COVID-19 pandemic ... More>>


Pacific Media Watch: How Pacific Environmental Defenders Are Coping With The Covid Pandemic

SPECIAL REPORT: By Sri Krishnamurthi of Pacific Media Watch Pacific Climate Warriors - creative action to trigger better responses to climate crisis. Image: ... More>>

Reporters Without Borders: Julian Assange’s Extradition Hearing Marred By Barriers To Open Justice

After monitoring four weeks of evidence in the US extradition proceedings against Wikileaks publisher Julian Assange, Reporters Without Borders (RSF) reiterates concern regarding the targeting of Assange for his contributions to journalism, and calls ... More>>

OHCHR: Stranded Migrants Need Safe And Dignified Return – UN Migrant Workers Committee

The UN Committee on Migrant Workers has today called on governments to take immediate action to address the inhumane conditions of migrant workers who are stranded in detention camps and ensure they can have an orderly, safe and dignified return to ... More>>