This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS BRASILIA 003346 
 
SIPDIS 
 
SENSITIVE 
 
NSC FOR CRONIN 
TREASURY FOR OASIA - DAS LEE, FPARODI, KBERG 
STATE PASS TO EXIM 
STATE PASS TO FED BOARD OF GOVERNORS FOR ROBITAILLE 
USDOC FOR 4332/ITA/MAC/WH/OLAC/JANDERSEN/ADRISCOLL/MWAR D 
USDOC FOR 3134/ITA/USCS/OIO/WH/RD/DDEVITO/DANDERSON/EOL SON 
STATE FOR EB/IFD/OMA - MOSS AND FORSYTH 
 
E.O. 12958: N/A 
TAGS: EFIN ECON SENV PREL BR
SUBJECT: BRAZIL AND THE PARIS CLUB - PREPAYMENT OR 
POSTURING? 
 
¶1. (SBU) The Finance Ministry's Strategic Debt Planning 
Coordinator, Anderson Silva, confirmed to Emboff December 21 
that the Finance Ministry is studying a proposal to pay off 
all of its Paris Club (PC) debt in 2006.  According to 
Silva, no final decision has yet been made despite press 
reports that the GoB decided, at President Lula's end-of- 
year stock-taking cabinet meeting on December 19, to pre-pay 
its PC debt in the same fashion that it had pre-paid its 
$15.2 billion IMF debt.  Finance Ministry statistics, which 
may well differ from USG and other PC creditor country data, 
put Brazil's outstanding PC debt at approximately US$2.5 
billion as of September 2005.  France and Germany are the 
major creditors, each holding roughly a 20 percent share, 
while the USG accounts for a 10 percent slice. 
 
¶2. (SBU) Silva minimized the significance of the December 19 
announcement, affirming that most of the remaining PC debt 
would be paid of in 2006 anyway.  (Note: according to the 
press, all but $250 million of Brazil's PC debt will be paid 
off by end-2006 under the existing amortization schedules; 
the remainder would be paid off in 2007.)  Silva also 
acknowledged that a prepayment would raise coordination 
issues with PC creditors, a matter which had not yet been 
addressed.  Separately, the German economic counselor has 
told us that Brazil's debt to Germany already was scheduled 
to be entirely paid off in 2006. 
 
¶3. (SBU) Comment:  Given the maturity profile of Brazil's 
remaining PC debt, it appears this announcement -- as 
opposed to the more significant IMF repayment -- is more 
about posturing than debt management.  It is also unclear to 
us whether this decision has any relation to the recent 
rockiness in Brazil's participation in the Paris Club as a 
creditor.  One tangential issue this raises is that, even if 
the GoB does not prepay its USG debt, there may be very 
little debt left to swap under the Tropical Forest 
Conservation Act (TFCA).  Given holiday staffing at the 
finance ministry, however, we don't expect to get a fuller 
picture of GoB intentions until January. 
 
CHICOLA