ANNEX 1
ANTIGUA'S DEBT TO ECGD.
NOTE BY
THE EXPORT
CREDITS GUARANTEE
DEPARTMENT (ECGD)
Antigua's original debt to ECGD amounted in total to some
£5.5 million plus USD 129,000 with original due dates between
1981 and 1989. The largest amount (£4.75 million) arose from
a contract between the Antiguan Public Utilities Authority and
Mirrlees Blackstone (Stockport) Ltd for the supply of two diesel
generators. There were three other contracts between different
UK suppliers and various parts of the Government of Antigua.
2. Antigua had been pressed for many years to rectify their
arrears on all the amounts outstanding and during the late 1980s
there had been suggestions of reschedulings, either through the
Paris Club or international banks but nothing materialised, largely
because of Antigua's refusal to implement IMF recommendations.
Antigua finally approached ECGD in 1995 to try to resolve matters.
Their main concern was the Mirrlees debt, but ECGD insisted that
all debts be discussed.
3. Whilst entering into bilateral discussions, ECGD were
mindful of the need to maintain international parity with other
creditor countries and therefore looked to settle on no worse
terms than the Paris Club might offer (i.e., five year rescheduling
to include delay interest at LIBOR + 50 basis points with a 10
per cent downpayment). It was clear from discussions that Antigua
had not made any provisions for payment of delay interest and
would not commit themselves to any rescheduling with ECGD. They
were advised that they should consider multilateral rescheduling
of all their debt.
4. In April 1996 the Antiguan High Commissioner in London
requested a further meeting to discuss the debt. He was provided
with details of all outstanding debts together with an explanation
of how delay interest would be calculated at the floating rate
of six month LIBOR + 50 basis points. He was also advised of the
official UK position regarding a multilateral settlement. The
High Commissioner considered that the rigours of an IMF programme
were unsuitable for Antigua and that this would preclude an approach
to the Paris Club for at least three years. This meeting did not
result in any fresh proposals. In June 1996, Antigua made a single
payment. This cleared the three smaller debts (apart from delay
interest that had accrued) but not the Mirrlees debt, the total
amount of which remains outstanding.
5. Following this payment, ECGD calculated the appropriate
delay interest on the three smaller debts and sent a demand for
payment to the High Commissioner, together with a request for
settlement of the Mirrlees debt also including delay interest.
In reply, Antigua refused to accept that delay interest should
accrue on outstanding debts. In September 1996 ECGD wrote to the
High Commissioner to reaffirm its position in respect of a number
of points including the specific question of applying delay interest
to outstanding sums.
SUMMARY
6. The debts in question are Antiguan Government debt for
which, in ECGD's view, standard Paris Club terms, which include
delay interest, are appropriate. In charging and seeking to recover
such delay interest, ECGD is applying a consistent approach to
those countries seeking a bilateral settlement in circumstances
where ordinarily they would be seeking a multilateral solution.
7. The amount of delay interest due is substantial because
of the age of the debts, most of which are over 10 years old.
The amounts are however in line with that which would have been
due under a Paris Club rescheduling arrangement. The rate of delay
interest is not excessive, seeking to recompense the UK government
for the loss of the use of the funds that should have been paid
many years ago. Some £4.751 million principal and contractual
interest with delay interest as at 31 December 1997 amounting
to some £5.418 million remains outstanding on the Mirrlees
debt. Delay interest of some £0.828 million and $0.156 million
remains outstanding on the three other contracts.
ECGD
10 March 1998
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