VZCZCXRO3364
RR RUEHBZ RUEHGI RUEHTRO
DE RUEHFR #1872/01 2841459
ZNR UUUUU ZZH
R 101459Z OCT 08
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 4479
INFO RUEATRS/DEPARTMENT OF TREASURY WASHDC
RUEKJCS/SECDEF WASHINGTON DC
RUEHRL/AMEMBASSY BERLIN 6854
RUEHSW/AMEMBASSY BERN 2138
RUEHBS/AMEMBASSY BRUSSELS 6810
RUEHCP/AMEMBASSY COPENHAGEN 1598
RUEHLO/AMEMBASSY LONDON 6993
RUEHMD/AMEMBASSY MADRID 2864
RUEHMO/AMEMBASSY MOSCOW 6189
RUEHNY/AMEMBASSY OSLO 1644
RUEHRO/AMEMBASSY ROME 8931
RUEHSM/AMEMBASSY STOCKHOLM 1664
RUEHTC/AMEMBASSY THE HAGUE 3019
RUEHKO/AMEMBASSY TOKYO 2833
RUEHBS/USEU BRUSSELS 2392
RUEHLU/AMEMBASSY LUANDA 0987
RUEHGI/AMEMBASSY BANGUI 0264
RUEHRY/AMEMBASSY CONAKRY 0087
RUEHBZ/AMEMBASSY BRAZZAVILLE 0171
RUEHGB/AMEMBASSY BAGHDAD 0128
RUEHAM/AMEMBASSY AMMAN 1217
RUEHMV/AMEMBASSY MONROVIA 7385
RUEHTH/AMEMBASSY ATHENS 0786
RUEHKI/AMEMBASSY KINSHASA 1672
RUEHAB/AMEMBASSY ABIDJAN 1267
RUEHLC/AMEMBASSY LIBREVILLE 1409
RUEHPU/AMEMBASSY PORT AU PRINCE 0878
RUEHPC/AMEMBASSY LOME 1136
RUEHBU/AMEMBASSY BUENOS AIRES 1577
RUEHKH/AMEMBASSY KHARTOUM 0331
RUEHWR/AMEMBASSY WARSAW 0869
RUEHBR/AMEMBASSY BRASILIA 2070
RUEHCH/AMEMBASSY CHISINAU 0425
RUEHJB/AMEMBASSY BUJUMBURA 0115
RUEHTRO/AMEMBASSY TRIPOLI 0173
RUEHBJ/AMEMBASSY BEIJING 1787
RUEHUL/AMEMBASSY SEOUL 1568
RUEHAK/AMEMBASSY ANKARA 0969
RUEHTV/AMEMBASSY TEL AVIV 0015
RUEHSA/AMEMBASSY PRETORIA 1584
RUEHKU/AMEMBASSY KUWAIT 0247
RUEHAD/AMEMBASSY ABU DHABI 0275
RUEHPL/AMEMBASSY PORT LOUIS 0989
RUEHPS/AMEMBASSY PRISTINA
RUEHIL/AMEMBASSY ISLAMABAD 0776
RUEHDJ/AMEMBASSY DJIBOUTI 0903
RUEHBH/AMEMBASSY NASSAU 0087
RUEHUB/USINT HAVANA 0090

UNCLAS SECTION 01 OF 16 PARIS 001872 
 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/IFD/OMA 
TREASURY FOR DO/IDD AND OUSED/IMF 
SECDEF FOR USDP/DSCA 
PASS EXIM FOR CLAIMS - MPAREDES 
PASS USDA FOR CCC -- ALEUNG/WWILLER/JDOSTER PASS USAID FOR CLAIMS -- 
WFULLER 
PASS DOD FOR DSCS -- PBERG 
 
E.O. 12958: N/A 
TAGS: EFIN ECON EAID XM XA XH XB XF FR
SUBJECT:  PARIS CLUB - SEPTEMBER 2008 TOUR D'HORIZON AND DISCUSSIONS 
ON METHODOLOGICAL ISSUES 
 
¶1. (SBU) Summary:  At the Paris Club's September 17 session, Club 
Chairman Musca briefed creditors on recent contacts with the 
Government of Argentina (GOA), which revealed that Argentina intends 
to clear arrears excluding late interest and resume debt service on 
future installments.  Creditors instructed Musca to urge the GOA to 
follow through on Christina Fernandez de Kirchner's September 2 
announcement that Argentina would pay arrears and late interest in 
full, in addition to resuming debt service.  Several creditors 
indicated a willingness to consider concessions on late interest 
similar to what the Club provided on an exceptional basis to Angola 
in 2007; however, others, including the U.S., expressed opposition 
to an "Angola-style" solution.  All creditors other than the U.S. 
voiced support for initiating technical discussions with Cuba that 
could lead to a debt restructuring agreement outside of the Paris 
Club framework.  The IMF reported on discussions with the Democratic 
Republic of Congo (DRC) aimed at revising the $9 billion 
infrastructure and mining agreement with China, noting that the 
Fund's concerns about debt sustainability would need to be addressed 
before a new IMF program and full debt cancellation could proceed. 
 
¶2.  (SBU) Creditors reluctantly agreed to enter into force the 
second and third phases of Grenada's 2006 debt rescheduling, despite 
the country's unsatisfactory economic reform performance.  Creditors 
finalized the Paris Club Secretariat's submission on debt-related 
aspects of the Financing for Development review conference in Doha. 
There was no consensus to modify the Paris Club's long-standing 
policy to exclude all leases from debt treatments, although the 
Netherlands requested further clarifications.  Additional countries 
and methodological topics discussed included Burundi, Georgia, 
 
PARIS 00001872  002 OF 016 
 
 
Pakistan, Seychelles, the Paris Club's work program on 
methodological issues, a comprehensive data call on Paris Club 
claims owed by all debtor countries, policy on the entry-into-force 
of phases in debt restructuring agreements, access to detailed debt 
data in advance of negotiations, and the IMF/World Bank progress 
report on implementation of the Heavily Indebted Poor Countries 
(HIPC) and Multilateral Debt Relief Initiatives (MDRI).  End 
Summary. 
 
¶3. (U) For additional information on a specific country or issue, 
please contact Nicholle Manz or David Freudenwald in EEB/IFD/OMA. 
 
--------- 
Argentina 
--------- 
 
¶4.  (SBU) Paris Club Chairman Musca briefed creditors on his recent 
talks with Argentine Finance Secretary Lorenzino.  Musca sought 
creditors' agreement on the Club's proposed response to Lorenzino, 
procedures for dealing with the Argentine government, and 
communications.  Contrary to President Cristina Fernandez de 
Kirchner's announcement that Argentina would pay off its Paris Club 
debt in full, Argentina intends to clear arrears excluding late 
interest and resume debt service on maturities falling due. 
Creditors agreed that the Paris Club should demand full payment of 
arrears and late interest (in addition to a resumption of current 
debt service).  Payment in full is the simplest and cleanest 
solution. 
 
 
PARIS 00001872  003 OF 016 
 
 
¶5. (SBU) Most creditors expressed a willingness to consider some 
restructuring if necessary to close a deal.  The U.S. and Japan 
voiced the strongest opposition to accepting less than full 
repayment, although the U.S. explained that it would not block 
others from offering concessions provided all creditors were repaid 
on the same schedule.  The pressure is now on Argentina to meet 
expectations it had created for itself.  Club cohesion, including 
with regard to export credit agencies'(ECAs) policies toward 
Argentina, is also important.  Creditors agreed with Musca's 
suggestion that all data reconciliation and communication with the 
Argentine authorities be handled by the Secretariat. 
 
¶6. (SBU)  Anticipating media queries about the September 17 meeting, 
the Paris Club issued a brief press release hailing the GOA's 
announced intention to pay in full its debt to the Paris Club as "a 
very significant step towards the normalization of Argentina's 
relationship with all its external creditors." 
 
¶7. (SBU) The Secretariat provided preliminary analysis of debt data 
discrepancies.  According to Paris Club figures, Argentina's arrears 
(excluding late interest) amounted to $5.7 billion as of March 2008. 
 According to Argentine figures, the number is $4.9 billion.  Of the 
$812 million difference, the Secretariat attributed $647 million to 
loans which were previously reconciled with Argentina in 2003 but 
which the government apparently overlooked in its most recent 
submission. 
 
 
------- 
 
PARIS 00001872  004 OF 016 
 
 
Burundi 
------- 
 
¶8. (U) The IMF reported that Burundi could qualify in early 2009 for 
completion point and full HIPC debt cancellation when the IMF 
executive board considers the first review of Burundi's new Poverty 
Reduction and Growth Facility (PRGF) program.  An IMF mission is 
scheduled to visit Burundi to conduct the review in late October or 
early November 2008.  Creditors agreed with the Secretariat's 
proposal to resume interim HIPC debt relief by retroactively 
extending the consolidation period of the previous Paris Club 
agreement through mid-2009.  The other option would have been to 
negotiate a new agreement that folded in arrears, as in the case of 
Congo-Brazzaville (see para 9).  The Secretariat argued that, in 
contrast to Congo-Brazzaville, Burundi had fewer Paris Club 
creditors and was rapidly approaching completion point; hence, the 
option to retroactively extend the consolidation period made more 
sense.  (The U.S. is not a creditor.) 
 
------------------------------- 
Republic of Congo (Brazzaville) 
------------------------------- 
 
¶9.  (SBU) The IMF said staff had agreed ad referendum with the 
authorities on a new PRGF.  Assuming technical discussions conclude 
successfully in the following weeks, the IMF will ask the Paris Club 
for financing assurances at the October meeting. Negotiations with 
the Paris Club are expected in November. Creditors agreed to resume 
interim HIPC debt relief by negotiating a new agreement with 
 
PARIS 00001872  005 OF 016 
 
 
Congo-Brazzaville on Cologne terms, which will treat arrears that 
accumulated since 2006, when Congo's previous IMF program went 
off-track.  The Secretariat argued that negotiating a new agreement 
was preferable to retroactively extending the previous consolidation 
period given the long off-track period and the fact that recrediting 
payments already received posed legal difficulties for some 
creditors.  (When retroactively extending a previous consolidation 
period, creditors are required to recredit or refund payments 
received in excess of what would have been due had the previous 
Paris Club agreement been in force.)  The UK asked the IMF if it had 
any information about three new loan agreements that 
Congo-Brazzaville concluded with China.  The IMF said it did not, 
but noted that the new PRGF would prohibit all non-concessional 
borrowing.  The Secretariat said the authorities' July 25 response 
to the Paris Club's letter of April 1 failed to provide any details 
on agreements reached with litigating creditors. 
 
---- 
Cuba 
---- 
 
¶10.  (SBU) The Cuban central bank approached the Secretariat seeking 
a technical meeting with a "group of creditors," with the 
possibility that such a meeting could lead to negotiations.  (Note: 
In 2000 and 2001, a group of creditors, excluding the U.S., held 
inconclusive discussions with Cuba on a possible multilateral debt 
treatment.  End Note.)  Cuba sought a letter from the Secretariat, 
on behalf of the group of creditors, regarding a technical meeting. 
Spain, Italy, Denmark, Belgium, Canada, Finland, UK, Netherlands, 
 
PARIS 00001872  006 OF 016 
 
 
Sweden, Russia, and Austria welcomed the opportunity to restart the 
dialogue that stalled in 2001.  Australia asked how such a "group of 
creditors" would work.  Given that Cuba is not a member of the IMF, 
what would substitute for the IMF's role?  The Secretariat said it 
would review how the discussions proceeded in 2001 and mentioned use 
of Economist Intelligence Unit data.  Spain suggested an informal 
approach, with the Cuban side initiating correspondence.  Canada 
noted that it was having difficulty getting Cuba to pay short-term 
debt.  The Netherlands supported resuming contacts, but noted that 
Cuba had not paid for two years.  Russia was strongly interested in 
seeing the Cubans and strongly appreciated the Secretariat's 
efforts.  The U.S. was the only creditor to express opposition, 
pointing out that any agreement to provide treatment to an 
uncooperative and non-reforming Cuba would stand in stark contrast 
to the economic reform performance requirements the Club imposes on 
other poor countries.  The Secretariat said that since Cuba is not 
an IMF member, a formal Paris Club agreement would not be possible. 
Coeure noted creditors' strong interest but also a need to weigh the 
consequences, including how providing debt relief to Cuba in the 
absence of an IMF program could impact the Club's position vis-a-vis 
Argentina.  As a first step, the Secretariat will circulate an 
aide-memoire reminding creditors of discussions with Cuba in 2000 
and 2001. 
 
-------- 
Djibouti 
-------- 
 
¶11.  (U) The IMF thanked creditors for providing financing 
 
PARIS 00001872  007 OF 016 
 
 
assurances by e-mail prior to the IMF executive board's September 17 
discussion of Djibouti's new PRGF.  Approval of the program paves 
the way for Djibouti to come to the Paris Club later this year for a 
debt treatment under the Evian approach.  The Secretariat summarized 
its working paper, which recommends that the Paris Club provide 
Djibouti an initial rescheduling of arrears and future installments, 
together with a commitment by creditors to provide further relief at 
a future date if necessary to restore debt sustainability. 
 
---------------------------------- 
Democratic Republic of Congo (DRC) 
---------------------------------- 
 
¶12.  (SBU) The IMF outlined its concerns with the DRC's $9 billion 
mining and infrastructure agreement with China.  (These concerns are 
described in detail in an August 29 letter from the IMF and World 
Bank to DRC Prime Minister Gizenga.) The IMF said its concerns would 
need to be addressed before staff could move forward with a new PRGF 
program for the DRC.  The primary concerns include the sheer size of 
the deal, direct/indirect sovereign guarantees, earmarking of 
revenues to repay the Chinese, and the non-concessional nature of 
the financing.  Under the latest debt sustainability analysis, the 
current deal would render the DRC's debt unsustainable even after 
full HIPC debt forgiveness.  The IMF and DRC authorities are 
discussing options to deal with these issues.  The World Bank noted 
that new non-concessional borrowing by the DRC would trigger a 20 
percent reduction in International Development Association grants. 
Japan summarized the G-7 deputy finance ministers' August 27 letter 
to the IMF, which indicated that the G-7 "may have great difficulty 
 
PARIS 00001872  008 OF 016 
 
 
providing financing assurances for a future IMF program" if the 
sovereign guarantees remained in place.  The Secretariat stressed 
that the letter was not meant to suggest that the DRC could not 
borrow from China, but rather that any new borrowing must be 
consistent with HIPC guidelines.  Italy asked whether the IMF had 
raised these matters with the Chinese; the IMF said it should not 
negotiate with a creditor on behalf of a debtor.  Nevertheless, the 
Fund representative acknowledged the PRC is aware of the issues but 
unwilling to engage on the DRC.  The UK praised the IMF for taking a 
strong position and suggested that the Paris Club consider sending a 
letter to the DRC authorities, depending on the outcome of current 
discussions between the authorities and IMF staff.  The Secretariat 
said the Paris Club could revisit the UK's suggestion next month. 
Belgium, the only non-G-7 member to comment, noted that it would not 
be easy for the DRC to renegotiate a deal that had already been 
struck. 
 
------- 
Georgia 
------- 
 
¶13.  (SBU) The IMF described the pressures that the Georgian economy 
is experiencing and said a $750 million Stand-by Arrangement (SBA) 
had just been approved.  Russia said approval of the SBA by the 
IMF's executive board "deviated from standard procedure," reflecting 
high-level political interference.  Russia further commented that 
under Georgia's 2001 and 2004 Paris Club reschedulings, the Georgian 
government committed to implement social and economic reforms, 
including spending to reduce poverty, but instead ramped up military 
 
PARIS 00001872  009 OF 016 
 
 
spending. Therefore, if Georgia requested a new debt treatment, the 
Paris Club would need to examine the request carefully.  The 
Secretariat responded that it did not anticipate that Georgia would 
seek further debt relief from the Paris Club. 
 
------- 
Grenada 
------- 
 
¶14. (SBU) Creditors agreed to enter into force the second and third 
phases of Grenada's May 2006 rescheduling, covering installments 
falling due in 2007 and 2008, despite the fact that Grenada's 
performance on its IMF program in 2007 was unsatisfactory.  Russia 
said it would not block consensus, although its preference was not 
to enter into force the second phase because doing so would weaken 
the conditionality principle.  The U.S. expressed strong 
reservations about not enforcing the Paris Club's conditionality 
principle but agreed to go along with Secretariat's recommendation 
in this case this time on an exceptional basis.  The IMF 
acknowledged that it had not contemplated the possibility that the 
Paris Club might not enter into force the second phase, even though 
all Paris Club agreements clearly stipulate that debt relief is tied 
to the debtor country's implementation of economic reforms.  The IMF 
said non-entry into force of the second phase would have placed 
Grenada's PRGF program under stress and forced staff to reconsider 
the program's financing. 
 
-------- 
Pakistan 
 
PARIS 00001872  010 OF 016 
 
 
-------- 
 
¶15.  (SBU) The IMF reported that macroeconomic conditions had 
deteriorated markedly due to adverse political and security 
developments, oil and food price shocks, and policy inaction during 
and after the political transition.  Pakistan faces large financing 
gaps, which it is trying to fill through accelerated privatizations 
and bilateral support.  The GOP had requested an oil facility from 
Saudi Arabia, but terms and timing are uncertain.  Even if the GOP 
were to obtain $5 billion per year from the Saudis, more financing 
would be needed for this year.  It is unclear at this time whether 
the government will seek an IMF program.  Asked to estimate the 
financing gap, the IMF rep declined, saying financing commitments 
are not clear.  The World Bank added that the GOP needs to take 
policy actions and present a serious reform framework to donors; the 
Bank can then adapt its lending strategy, and donors will need to 
step up.  Russia complained that a $163 million payment from 
Pakistan had been blocked by the Pakistani authorities.  Russia said 
it planned to raise the issue in the IMF executive board. 
 
---------- 
Seychelles 
---------- 
 
¶16.  (U) The IMF said the Seychelles was suffering from food and oil 
price shocks, a foreign exchange shortage, inflation at 34 percent, 
and large financing gaps.  In July, the government defaulted on a 55 
million euro amortizing note, prompting holders of the notes to 
accelerate payments and leading S&P to downgrade its credit rating 
 
PARIS 00001872  011 OF 016 
 
 
for the Seychelles.  The authorities have hired financial and legal 
advisors and held an initial meeting with a creditor committee in 
August.  Meanwhile, the authorities have had constructive 
discussions with IMF staff about a possible program.  A request for 
an SBA could come to the IMF executive board in November, in which 
case the IMF would request financing assurances in early November. 
Seychelles cleared its arrears to the World Bank last year.  (The 
U.S. is not a creditor.) 
 
------------------------------------- 
Methodological Discussion: 
Work Program of Methodological Issues 
------------------------------------- 
 
¶17.  (U) Creditors approved the proposed work program of 
methodological issues for the remainder of 2008 and the first 
quarter of 2009, including the following topics: 
 
-- A Paris Club submission to the Doha Conference on Financing for 
Development; 
 
-- Outreach to non-Paris Club creditors and update on contacts with 
private creditors regarding litigation against HIPCs; 
 
-- A global, aggregated data call of Paris Club claims on all debtor 
countries; 
 
-- Seniority rules and their impact on Paris Club debt treatments; 
 
 
PARIS 00001872  012 OF 016 
 
 
-- Links between Paris Club debt treatments and the IMF; 
 
-- Paris Club treatments for fragile states (in the absence of an 
IMF program with conditionality); 
 
-- Sustainable lending and ODA loan policies; 
 
-- Illegitimate debt (for internal Paris Club discussion only); 
 
-- Debt buybacks and comparable treatment; and 
 
-- Financial leases (discussion and review of the September Working 
Paper; there is no consensus to change Paris Club policy - see para 
20.). 
 
¶18. (SBU) Germany requested to add the topic of illegitimate debt to 
the work program; Norway agreed.  Italy, Netherlands, the UK, and 
the U.S. all questioned why the Paris Club should spend any time on 
a concept that many Paris Club member governments do not recognize. 
Germany argued that it would be helpful to exchange views on how to 
respond to NGOs.  In the end, creditors agreed that the discussion 
would be strictly internal and non-binding. 
 
----------------------------------- 
Methodological Discussion: 
Paris Club Input to Doha Conference 
----------------------------------- 
 
¶19. (SBU) Creditors agreed to submit a Paris Club working paper to 
 
PARIS 00001872  013 OF 016 
 
 
the Financing for Development review conference that will take place 
in Doha from November 29 to December 2.  The working paper provides 
the Paris Club's assessment of the implementation of the Monterrey 
Consensus as it relates to external debt, and articulates policy 
recommendations on debt issues.  The Secretariat drafted the paper 
with input from Paris Club members and is broadly consistent with 
USG views.  Spain and Germany requested mention of the Sovereign 
Debt Restructuring Mechanism (SDRM) proposal, which they had 
supported in 2002; given lack of Club consensus, however, the 
Secretariat devised a neutral reference to past discussion of the 
concept. 
 
----------------------------------- 
Methodological Discussion:  Leasing 
----------------------------------- 
 
¶20. (U) Based on the results of the recent questionnaire, the 
Secretariat recommended that the Paris Club retain its policy of 
excluding all lease arrangements from Paris Club treatments. 
Germany, Norway, and the U.S. voiced support for this 
recommendation.  The Netherlands, however, said it needed more 
information on financial leases -- in particular, their volume and 
potential impact on a debtor country's capacity to pay -- before it 
could give its consent.  The Secretariat agreed to do more analysis 
and added the topic to the work program of methodological issues. 
The Netherlands asked whether a creditor could voluntarily include a 
lease arrangement, or whether all lease arrangements had to be 
excluded.  The Secretariat said this particular point was not 
addressed in the questionnaire and therefore was open to discussion. 
 
PARIS 00001872  014 OF 016 
 
 
 Italy asked to include this item in the Paris Club's Work Program 
(see para 17). 
 
---------------------------------- 
Methodological Discussion: 
Data Call on All Paris Club Claims 
---------------------------------- 
 
¶21.  (U) Creditors agreed to participate in a global data call that 
will aggregate the Paris Club's claims (both non-ODA and ODA) for 
each debtor country.  The results will be made public and updated 
periodically.  The Secretariat will share the disaggregated data on 
a confidential basis with Paris Club members and the IMF.  The 
Secretariat will prepare a chart on how creditors currently treat 
such information. 
 
-------------------------- 
Methodological Discussion: 
Entry-into-force of Phases 
in Paris Club Agreements 
-------------------------- 
 
¶22.  (U) The Secretariat proposed measures to make the Paris Club's 
process of entering into force phases of debt relief more 
transparent and predictable.  The aim is to avoid a recurrence of 
what transpired with Grenada, where the IMF was caught off guard 
when the Paris Club seriously contemplated not entering into force 
the second phase of Grenada's 2006 agreement.  The U.S. asked the 
Secretariat to clarify precisely which IMF review would trigger 
 
PARIS 00001872  015 OF 016 
 
 
entry into force of a given phase.  The Secretariat's response led 
to more questions, and the discussion ultimately bogged down.  The 
Secretariat promised to revise its working paper to try to clarify 
some of the issues raised. 
 
---------------------------- 
Methodological Discussion: 
Sending Detailed Debt Tables 
to All Creditors 
---------------------------- 
 
¶23. (U) In response to Germany's request, the Secretariat agreed to 
share detailed data call results with all Paris Club creditors ahead 
of all future negotiations.  (In recent years, the Secretariat has 
distributed a summary of the results, rather than a loan-by-loan 
breakdown for each creditor.)  The Secretariat will share the 
earliest version of the data call available and alert creditors if 
the numbers change significantly before the negotiations. 
 
----------------------------- 
Methodological Discussion: 
HIPC and MDRI Progress Report 
----------------------------- 
 
¶24.  (U) The IMF summarized its 2008 progress report on the 
implementation of HIPC and MDRI.  Among the report's key findings: 
 
-- Significant debt relief has been delivered in a flexible manner 
that accommodates country circumstances while preserving core 
 
PARIS 00001872  016 OF 016 
 
 
principles.  The positive results achieved include reduced debt 
burdens, increased poverty reduction-related spending, and 
improvements in broader macro-economic aggregates. 
 
-- Debt relief constitutes only a small fraction of net aid inflows 
to HIPCs.  Additional aid flows are urgently needed to address 
HIPCs' development needs. 
 
-- About 40 percent of non-Paris Club bilateral creditors 
participate in HIPC. 
 
-- Commercial creditors' participation in HIPC has increased, 
although litigation remains an issue. 
 
-- Reaching completion point is a challenge for the remaining 
HIPCs. 
 
-- Debt sustainability remains a challenge even after debt relief. 
Of the 23 post-completion point HIPCs, four are judged to have a 
high risk of debt distress. 
 
-- Debtors must maintain prudent borrowing policies, and creditors 
must promote sustainable lending policies and capacity building. 
 
STAPLETON