Yesterday, the Dominican government announced it had successfully concluded the agreement for the restructuring of the external public debt in London, England. According to a report in El Caribe, Finance Minister Vicente Bengoa and Presidential Technical Secretary Temistocles Montas signed on behalf of the Dominican government. The debt was renegotiated with Bilbao Vizcaya, ABM Amron, Nova Scotia, Deutsche Bank and HSBC banks. The agreement establishes deferred payments to the international private banks corresponding to 2005 and 2006 for a total of US$180 million, and includes grace periods of two years plus three additional years for the payment of principal. The London Club agreement needs to be ratified in Congress.
The DR also committed to pay US$35 million in arrears owed to the commercial banks that accumulated through December 2004, within the next two weeks.
Franco Uccelli of Bear Stearns comments positively on the advances in debt restructuring. He points out in a 18 October report that next on the government’s agenda is to finalize a debt relief program with the Paris Club for this year and possibly next. “Armed with the endorsement of the IMF and having successfully restructured most of its external private debt and, as a result, having complied with the Paris Club’s comparability of treatment demand, we assign a high probability of success to the Dominican Republic’s efforts to re-profile its bilateral debt coming due this year (a request for relief for 2006 may have to be reformulated at a later date),” he writes. “We welcome the Dominican Republic’s progress toward the restoration of healthy relations with the international financial community, something that enhances its credit standing and should allow the authorities to shift their attention more firmly toward the consolidation of the country’s economic recovery,” writes Uccelli.