On Friday, 16 April, the Paris Club announced it had settled an agreement with the Dominican Republic to reschedule US$193 million of the DR?s bilateral foreign debt. The agreement would consolidate around US$155 million of maturities that fall due between 1 January 2004 and 31 December 2004, and US$38 million of arrears due to Paris Club creditors. The rescheduling would reduce the debt service due to Paris Club creditors in 2004 from US$479 million to US$293 million. In a press release, the Paris Club says that the consolidation is expected to make an important positive contribution to the DR?s economic outlook and strengthen its external position. The Dominican Republic agreed to seek comparable treatment from non-Paris Club bilateral and private creditors. The members of the Paris Club that participated in the reorganization of the Dominican Republic’s debt were representatives of the governments of France, Germany, Japan, Spain and the United States of America. Technical Secretary of the Presidency Carlos Despradel headed the negotiations for the Dominican Republic. The stock of debt owed to Paris Club creditors as at January 1, 2004 was estimated to be US$1.56 billion.
Diario Libre reported that payments will now be spread out over 12 years with a five-year grace period. The newspaper says that the Central Bank?s reserves will be under less pressure, thanks to the rescheduling. With only US$226 million in hard currency reserves, the looming payment of US$186 million would have been a hard blow. Actual reserves do not even reach the normal average levels of consumption of goods and services, which in 2003 reached US$260 million per month. The Dominican Republic is one of the few countries in the region without a three-month cushion to cover global imports. So far, government efforts to bolster the cushion have failed. The IMF proposed a gradual and moderate recovery from the low of US$97 million held in reserve as of September of 2003, up to a US$300-million reserve by 2005.
For the full Paris Club release, see http://www.clubdeparis.org/en/news/