Posted on 11/16/2001 1:25:23 PM PST by vooch
Paris Club forgives two thirds of Yugoslav debt
By Gordana Filipovic
BELGRADE, Nov 16 (Reuters) - The Paris Club of lending countries has written off two thirds of the $4.5 billion owed to it by Yugoslavia, raising hopes of reviving the country's war-ravaged economy.
Serbian Finance Minister Bozidar Djelic told Reuters in an interview the United States, Britain, France and other creditors would write off 51 percent now and up to 66 percent later in tandem with International Monetary Fund (IMF) reforms.
"This is a historic event for Serbia and Yugoslavia," Djelic told Reuters in an interview by phone from Paris. "This is the largest forgiveness for a medium developed country which the Paris Club has granted in the past 45 years."
He was speaking before the news was announced at a press conference.
Yugoslavia asked for two thirds forgiveness at the start of the four-day talks, which Djelic described as "trench warfare." Many analysts had forecast it would receive only 50 percent.
Its reformist government asked for a big write-off to speed badly needed economic reforms including privatisations after a decade of sanctions.
Yugoslavia, which now consists of Serbia and much smaller Montenegro, has secured almost as good a deal as its former republic of Bosnia, which got 67 percent. Croatia and Macedonia got less favourable terms and Slovenia will repay all its debt.
Serbian leaders said after talks last week with U.S. officials, including President George W. Bush, they had secured U.S. support for debt reduction, although details were scarce.
Bush is keen to encourage political reforms in Yugoslavia and closer cooperation with the U.N. war crimes court.
ECONOMIC REFORMS
"Now that we have got lower interest and favourable grace periods we must immediately embark on privatisations and reforms of our economy to attract investment and to do our best to create the economic means to repay our debts," Djelic said.
This is the first debt servicing agreement with the Paris Club since Yugoslavia defaulted in 1992.
"We had to remove the huge obstacle to growth and investment that is our external debt. This sends a very strong signal to external investors," Yugoslav Deputy Prime Minister Miroljub Labus told the Paris news conference.
Stephane Pallez, negotiating on behalf of the Paris Club, said: "This agreement takes into account the economic situation in the Federal Republic of Yugoslavia to give it the ability to grow within a sustainable financial setting."
The first tranche of debt, about $2.4 billion, will be written off when Yugoslavia signs a medium-term arrangement with the IMF, which is expected to happen in March.
The second tranche, about $650 million, will be written off when that arrangement expires, which could be in 18, 24 or 36 months depending on what terms are negotiated, Djelic said.
The remainder will be repaid over 22 years with a six-year grace period during which no repayments are required.
They also rescheduled between $600 million and $650 million in short term debt over eight years with four years' grace.
"The agreement in Paris has not only emphasised support for the reforms, it is also a sign of trust in their future," Prime Minister Zoran Djindjic told Beta news agency.
Djelic said Yugoslavia would ask for similar terms at talks with the London Club of commercial creditors in Paris at the end of November, for the $2.2 billion it owes them.
That figure was cut from $2.8 billion after it told bankers that anyone who was close to former leader Slobodan Milosevic would not gain from the deal.
(additional reporting by Rebecca Harrison in Paris)
14:03 11-16-01
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Today the Paris Club effectively agreed that those late fees and other penalties were simply bogus as long as sanctions were in place. and guess what FR's, taxpayers are left to pay interest charges for the Paris Club debt.......net, net Clinton's counterproductive sanctions are looking to cost US taxpayers something on the order of $5 billion
Yugoslavia always agreed it was responsible for the principle owed, but not the post-sanctions penalties.
Get ready for the next stage of debt negotiations.......
This time Belgrade will (rightfully) argue that $1.5 billion of principle is owed by Kosovo (ie UNMIK) and $800 million owed by Podgorica........leaving Belgrade oweing a sum total of $2.1 billion
pretty decent when compared to Croatian debt of $11 billion and Slovenian debt of $6 billion.
But Vooch, it would seem to me that if they argue that point they are completely letting go of Kosovo. I don't think that public opinion in Serbia would go for that.
The value of the stolen real estate and infrastucture of Kosmet(Kosovo and Metohija) is ,at least,fifty times bigger than the "forgiven" debt!So,thank you for the favour !The very same generous" creditors will be a future owners of Trepcha Conglomerate($5-8 bilion) Kosovo Coal mines (150 years estimated reserves),power plants (Obilich Sistem=35% of Yugoslav electricity output)...Tomorow,Serbia will be forced to by electricity produced in her own power plants and stolen by NATO!
I could be generous under such terms as well!Wouldn`t you,folks?
UNSCR 1244 establishes Yugoslav soverignity over KosMet.
Anyone who hasn't paid off his Yugo by now must be really slow in mailing in the payments.
But if Obilich is so important then why is Kosovo still having to import over 50% of its electricity, most if from Serbia?
As far as Obilich is concerned,it was working despite the sanctions thanks to the excellent Yugoslav engeniers and technicians!Now,they are gone,and all mighty UN is not capable to establish a regular production!Both Trepcha and Obilich could be running at full speed in couple of years with some additional investments and overhaul!And they will.But,investors are not interested in providing a service to the local population,but in gaining as much value with as little money they can!
Not theft but violation of UN charter....You`re joking,Vooch,right?!
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