VZCZCXRO4665
OO RUEHGR
DE RUEHPO #0554 2921924
ZNR UUUUU ZZH
O 191924Z OCT 07
FM AMEMBASSY PARAMARIBO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9750
RUEHRC/DEPT OF AGRICULTURE WASHDC IMMEDIATE
RUEATRS/DEPT OF TREASURY WASHDC IMMEDIATE
INFO RUCNCOM/EC CARICOM COLLECTIVE IMMEDIATE

UNCLAS PARAMARIBO 000554 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
EEB/IFD/OMA FOR MARLENE SAKAUE AND DAVID FREUDENWALD 
USDA FOR WILLIAM WILLER 
 
E.O. 12958: N/A 
TAGS: EFIN ECON ETRD PREL NS
SUBJECT: SURINAME: CENTRAL BANK REPAYING PL480 DEBT ARREARS 
 
REF: A. 06 PARAMARIBO 206 
 
     ¶B. 05 PARAMARIBO 684 
     ¶C. 05 PARAMARIBO 514 
 
¶1. (SBU) Summary.  Central Bank Governor Andre Telting, 
during an October 15 meeting with the Ambassador and Pol/Econ 
Chief, said the Central Bank is making payments to bring its 
PL480 debt to the United States up-to-date but will continue 
to negotiate on making payments on the GSM102 debt.  End 
Summary. 
 
¶2. (SBU) The Central Bank has already made two payments to 
bring the PL480 debt up-to-date and has one payment 
remaining, Central Bank Governor  Andre Telting informed the 
Ambassador during an October 15 meeting.  The third payment 
will be paid on October 31 and will make Suriname up-to-date 
on the servicing of this debt. 
 
¶3. (SBU) Regarding the GSM102 debt, Telting said he will 
stick to his offer of repaying principal and interest but not 
late payment penalties.  Telting said he had hoped the USG 
would accept his offer so the debt could be paid off like a 
&bullet8 in one lump sum.  He was not ready to pay off debt 
including late penalty charges, however, because late penalty 
charges constitute approximately 80 percent of the total 
amount owed.  (Note:  USG sources indicate that in fact 
principal arrears, interest arrears and late interest charges 
total 29.4 million USD so late interest penalties are only 
about 49 percent of the total amount due.  End Note.) 
 
¶4. (SBU) Since the USG did not accept his offer, payment of 
the GSM102 debt will likely have to wait until the debt issue 
with the Brazilians has been negotiated, Telting stated. 
(Note: Suriname,s largest amount of outstanding sovereign 
debt is currently owed to Brazil totaling approximately 100 
million USD.  End Note.)  If the USG can show him that late 
interest penalties are not merely punitive measures but are 
due to losses incurred to the USG by having to pay a 
creditor, Telting said he could reconsider his position. 
 
¶5. (SBU) The Ambassador reminded Telting that Suriname is not 
eligible for debt forgiveness and advised him to repay the 
GSM102 prior to engaging in negotiations with the Brazilians. 
 Time spent not making payments on this debt will only 
increase the total amount owed, she warned. 
 
¶6. (SBU) Telting stressed that he understands the importance 
of debt repayment on the international ratings of Suriname. 
He gave a lengthy example of an event several years ago when 
Standard and Poor's decreased Suriname's rating after 
analysts "mistook" (Telting's characterization) a government 
debt to Spain as commercial debt.  A Surinamese company had 
plans to sign for a loan with a South African bank to go into 
the tiger shrimp business just after Asian shrimp farming had 
been decimated by the tsunami.  But, after Suriname's rating 
dropped, the South African bank wanted new studies on the 
project.  Even though Standard and Poor's reinstated 
Suriname's rating only a week later, the damage was done. 
The studies required by the South African bank continued and, 
in the meantime, the South African bank was bought out by 
another bank.  In the end, the Surinamese company did not 
receive the loan.  Telting said this was a regrettable event 
and showed how international ratings have a significant 
impact on a country's economy. 
 
¶7. (SBU) Comment:  Although committed to servicing Suriname's 
debt, thereby improving his country's credit rating, Central 
Bank Governor Telting remains adamant that late interest 
penalities on GSM102 debt are unfair to Suriname.  The 
Governor argues that the USG originally made the loans when 
Suriname was at its most vulnerable.  Penalties applied now, 
he implies, violate the spirit in which the original loans 
were granted.  Post will continue to press the GOS to fully 
pay its debt but anticipates continued resistance on the part 
of the Central Bank Governor to that portion of the debt that 
he characterizes as (unfairly) punitive.  End Comment. 
SCHREIBER HUGHES