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RUEKJCS/SECDEF WASHINGTON DC
RUEPTRS/TREASURY DEPT WASHINGTON DC 0634

UNCLAS SECTION 01 OF 12 STATE 013489 
 
SENSITIVE 
SIPDIS 
TRESURY FOR DO/IDD AND OUSED/IMF 
SECDEF FOR USDP/DSCA 
EXIM PASS TO CLAIMS - MPAREDES 
USDA PASS TO CCC - WWILLER/JDOSTER 
USAID PASS TO CLAIMS - WFULLER 
DOD PASS TO DSCS - PBERG 
 
E.O. 12958: N/A 
TAGS: EFIN ECON EAID XM XA XH XB SF FR
SUBJECT: January 2010 Paris Club Meeting 
 
¶1.  (SBU) Summary: During the January 2010 Paris Club Tour d'Horizon, 
creditors discussed Afghanistan, Antigua and Barbuda, Argentina, 
Democratic Republic of Congo, Congo-Brazzaville, Cte d'Ivoire, Cuba, 
Djibouti, Dubai/UAE, Grenada, Guinea, Guinea -Bissau, Haiti, Liberia, 
Mauritania, Seychelles and Ukraine.  Iceland was discussed over 
lunch.  Methodological issues included outreach efforts, UNCTAD's 
initiative on responsible borrowing and lending, and the Club's 
annual report.  Following the tour, there was a meeting of the 
working group on non-indemnified credit guarantees. 
 
¶2. (SBU) The Club issued a press release highlighting the 100 percent 
debt forgiveness provided to Haiti, and urged other bilateral 
creditors to do the same.  The Club is preparing for negotiations 
with the Democratic Republic of Congo (DRC) on February 24.  The U.S. 
noted strong human rights concerns and relevant legislation but said 
it was cautiously confident it would be able to provide treatment. 
Negotiations with Congo-Brazzaville and Afghanistan are scheduled for 
March, with both countries reaching their "completion point" under 
the Heavily Indebted Poor Countries (HIPC) initiative.  End Summary. 
 
----------- 
Afghanistan 
----------- 
 
¶3. (SBU) The International Monetary Fund (IMF) reported that despite 
the security situation, economic performance had been satisfactory. 
GDP was expected to grow 15% in FY2009-10, with inflation of 6%. 
Revenue collection had improved, and non-security spending was below 
the program ceiling.  The sixth review of the program under the 
Poverty Reduction and Growth Facility (PRGF) had been completed in 
January and the program extended to June, and the GoA and IMF would 
discuss a successor program. 
 
¶4. (SBU) Afghanistan reached completion point on January 25, with 
waivers requested on triggers relating to pension reform and 
restructuring ministries.  Based on the IMF's latest calculations, 
the amount of debt eligible for HIPC treatment was raised by $11 
million, to $1.131 billion (in NPV terms), with "required assistance" 
of $582 million. (NOTE: This amount refers to the level of HIPC debt 
relief required in March 2010, in 2006 NPV terms, to bring 
Afghanistan's debt-to-exports ratio down to an acceptable level as 
agreed under the HIPC initiative.  Given the increase in eligible 
debt, the level of required assistance was revised upward from the 
$571.4 million estimated at decision point to $582.4 million. In 
nominal terms the required assistance is estimated at $1.3 billion, 
of which $225.3 million would be delivered by multilateral creditors 
 
STATE 00013489  002 OF 012 
 
 
and the remainder by bilateral and commercial creditors. In practice, 
the official bilateral creditors are expected to go beyond this level 
of required assistance and cancel 100 percent of their claims on 
Afghanistan.  End Note) Even with this level of debt relief, the IMF 
rep said the future remained highly uncertain and the country 
remained at high risk of debt distress, largely due to remaining 
multilateral debt.  Completion point negotiations with the Club are 
expected to take place in March.  [Note: In a hallway conversation, 
the Russian delegate indicated that he did not anticipate any 
obstacles with the negotiations. End Note.] 
 
------------------- 
Antigua and Barbuda 
------------------- 
 
¶5. (SBU) The IMF reported that Antigua had been hard-hit by declines 
in tourism, foreign direct investment (FDI), and remittances.  Fiscal 
revenues had fallen by 10% in 2009, and were expected to decline a 
further 2% in 2010.  There was a mounting banking crisis, driven in 
part by the Stanford and Trinidad Group collapses.  Program 
discussions had not been proceeding as rapidly as had been hoped, but 
the 2010 budget was a positive step, incorporating a shift to a 
primary surplus, cuts in transfers, widening of the VAT base and 
adjustments in import duties.  A March mission would discuss the 
budget and further steps, with the hope of finalizing SBA 
negotiations for an April Board consideration.  External and domestic 
debt restructuring would be "critically needed."  Antigua had engaged 
advisors and was considering options, including on arrears. 
 
¶6. (SBU) The Secretariat agreed that the high level of arrears would 
need to be addressed in negotiations, and raised the prospect of 
financing assurances being requested at the Club's March meeting.  It 
noted that the nature of the treatment was open, with sustainability 
an important consideration.  On the margins, USdel reconfirmed that 
the U.S. lacked authority or funding to go beyond a rescheduling of 
Antigua's debt. 
 
--------- 
Argentina 
--------- 
 
¶7. (SBU) The IMF reported that the recent crisis regarding the 
establishment of a payment account in the central bank and central 
bank independence had caused asset prices to fall, but was not likely 
to have much impact on the real economy, although investment could 
suffer if it lingered.  Argentina was trying to regain market access 
through its new offer to holdout creditors, though its launch would 
be delayed by the central bank dispute.  The offer, on about $20 
billion of debt, would be a 66% haircut, with full payment of about 
$10 billion in past due interest.  The offer would also make up past 
 
STATE 00013489  003 OF 012 
 
 
warrants, and would come in the form of a new 7-year bond, at market 
rates.  Institutional creditors would have to put in new money. There 
had been no progress between the Authorities and the Fund on an 
Article IV. 
 
¶8. (SBU) Canada asked whether the Secretariat had received a response 
to its October letter to Brazil, chastising that government for 
providing new financing to an Argentine state-owned airline.  The 
Secretariat confirmed that none had been received; the letter was 
later mentioned in the presence of the Brazilian delegation, which 
did not comment. 
 
----------------- 
Congo-Brazzaville 
----------------- 
 
¶9. (SBU) The IMF reported that Congo-B's performance had been 
satisfactory, that it had fully met all of its HIPC triggers, 
including all required decisions, measures and implementation, and 
that Board approvals of completion point were scheduled for January 
26 and 27.  [Note: These did occur.]  The economic outlook was 
positive, due to rising oil production and the recovery of the global 
economy. 
 
¶10. (SBU) The IMF noted that HIPC assistance would total $1.6 
billion, with $178 million (nominal) in additional relief from the 
multilateral debt relief initiative (MDRI), mostly from IDA.  The 
Bank reported that the government had approached its remaining 
private sector creditors, mainly trade creditors, and had requested 
Bank support, including possibly from IDA's Debt Reduction Facility. 
The Bank was examining the request, and was discussing technical 
assistance on debt management.  The Club agreed to invite the 
authorities for completion point negotiations in March. 
 
------------- 
Cte d'Ivoire 
------------- 
 
¶11. (SBU) The IMF reported that CDI had been little affected by the 
crisis in large part due to good harvests and high cocoa and oil 
prices, which helped GDP to grow 3.7% in 2009. Structural progress 
was slow, in part because of elections.  The first review of the 
program had taken place on November 18; a mission for the second was 
planned for mid-February, but it was unclear when the review would be 
completed due to the elections.  The Fund rep said it was possible 
CDI could reach HIPC completion point in a year's time.  Creditors 
discussed whether the Club should insist on CDI's seeking comparable 
treatment from the Sphinx group of private creditors that had 
provided funding when all other sources declined.  The Secretariat 
said fully comparable treatment was unlikely.  It was left that the 
 
STATE 00013489  004 OF 012 
 
 
Secretariat would contact the government informally; while 
reiterating Club principles, the Secretariat would express 
understanding for the CDI's difficulties in dealing with these 
creditors. 
 
---- 
Cuba 
---- 
 
¶12. (SBU) At November's meeting, Australia had raised the possibility 
of its canceling its debts to Cuba outside the Club; the response had 
been overwhelmingly negative.  In view of this, Australia's foreign 
minister suggested during a November visit that Cuba consider 
approaching the Club.  Cuba replied that it was not interested.  The 
Secretariat reported that it too had been in touch with Cuban 
authorities, and had received the same response. 
 
---------------------------- 
Democratic Republic of Congo 
---------------------------- 
 
¶13. (SBU) The IMF reported on the December 11 Board approval of DRC's 
Extended Credit Facility (ECF) program, following the Club's 
provision of financing assurances.  The program provided for $550 
million in access, and interim HIPC relief of $73 million for the 
year.  The Fund's preliminary view was that performance (the program 
began in July, despite the December Board approval) had been 
satisfactory.  The program's 2009 fiscal targets had been achieved, 
with better-than-targeted revenues outpacing spending overruns that 
were driven by humanitarian and security needs. 
 
¶14. (SBU) A mission was planned for the first half of March to review 
the ECF and examine progress on HIPC triggers.  Data reconciliation 
would take place later this quarter, with a view towards completion 
point in June, probably alongside the first review of the program. 
The Bank concurred with the June date, although a strong effort on 
triggers would be required.  Of particular concern was the trigger on 
procurement, since Parliament needed to approve the code (which had 
been ready for a month), which then required three months of 
implementation. 
 
¶15. (SBU) The Secretariat then turned to the upcoming negotiations, 
scheduled for February 24.  The U.S. noted that it was analyzing the 
poor human rights situation in DRC to determine whether the country 
met the U.S. legislative conditions for debt relief.  The delegation 
noted that it was "cautiously confident" that DRC's situation would 
not meet the stringent test specified in the legislation so that the 
U.S. would be able to provide treatment, but that a decision had not 
yet been reached.  There was remarkably little response.  Over lunch, 
the IMF rep expressed hope that the U.S. would at least be able to 
 
STATE 00013489  005 OF 012 
 
 
join the treatment of arrears - otherwise, financing of the Fund 
program was in doubt.  Creditors discussed but did not reach 
agreement on whether to cancel arrears, as would be normal for this 
interim HIPC treatment, or reschedule them, as several creditors 
favored as a further incentive to reach completion point.  USdel 
expressed support for rescheduling arrears. 
 
-------- 
Djibouti 
-------- 
 
¶16. (SBU) Club negotiations with Djibouti in October 2008 were very 
contentious, in large part because of the authorities' last-minute 
attempts to exclude certain debts.  The authorities were still trying 
to achieve this by not concluding bilateral agreements, and the 
Secretariat drafted a letter expressing annoyance at this and 
indicated that the failure to conclude bilaterals and consequent 
arrears to the Club, along with the failure to complete the second 
program review, meant that the conditions for the second phase of the 
treatment had not been met.  Belgium and Italy, which had only ODA 
credits, both reported that bilaterals had been signed, but the three 
creditors with commercial debt - Spain, Germany, and France - all 
reported that Djibouti was refusing to sign the commercial terms. 
The Secretariat indicated that creditors could bill Djibouti, based 
on original payment schedules and that any payments could then be 
reimbursed if and when the phase was implemented. 
 
----- 
Dubai 
----- 
 
¶17. (SBU) The IMF reported on recent developments, including the 
effects of lower oil prices and the global recession, the burst of 
the property bubble, Dubai's attempts to boost demand with 
infrastructure investments, and Dubai World's announcement that $26 
billion of debt would need to be restructured.  $4.1 billion of the 
$10 billion bailout from Abu Dhabi had been used to pay the Nakheel 
Islamic bond, but many issues remained. 
 
¶18. (SBU) There was still a lack of information on Dubai World and on 
its attempts to restructure the remaining $22 billion.  There were 
some indications of attempts to increase transparency and strengthen 
corporate governance, and there was better cooperation both among the 
emirates and between them and the UAE government.  Abu Dhabi sought 
to maintain stability but discourage moral hazard; it continued to 
support Dubai World but said it was not legally liable for Dubai's 
debts.  There was some concern about the new insolvency decree for 
Dubai World, which fell under several legal frameworks in the UAE. 
Some creditors felt that it removed their other means of recourse. 
 
 
STATE 00013489  006 OF 012 
 
 
------- 
Grenada 
------- 
 
¶19. (SBU) The IMF reported that Grenada had been hard-hit by the 
crisis.  The collapse of the Trinidad Group had seriously impacted 
financial system stability.  There was a strong commitment to the 
ECF, however; the fourth review was completed in November, along with 
an Article IV.  The government was controlling capital spending and 
had met all June quantitative targets, and the Fund's preliminary 
view was that it had met all year-end quantitative targets as well. 
The centerpiece of the program - introduction of a VAT by February - 
appeared to be on track.  Other structural steps taken include a new 
investment act, enhanced supervision of nonbank financial 
institutions, and a PRSP, due by mid-2010. 
 
¶20. (SBU) Nevertheless, the near term was challenging.  The debt/GDP 
ratio had risen by 14 percentage points in 2009 to 116%, after having 
fallen in each of the two previous years.  The country was 
consequently at high risk of debt distress, the economy was expected 
to contract further in 2010, there was no fiscal space and the local 
currency board meant there was little space for any sort of 
countercyclical policy.  The country faced an external gap for 
2010-13, and the government had requested a successor ECF.  Fund 
financing alone would be insufficient, however, so Grenada intended 
to approach the Club for Evian Terms treatment.  [Note - the USG 
would be able to participate in a classic rescheduling, but not to 
provide debt reduction.] 
 
¶21. (SBU) There is some animosity towards Grenada in the Club, due in 
large part to its failure to seek comparable treatment from Kuwait 
and its claim that this was not required by the Club, an issue that 
dragged on for much of 2009.  Belgium complained that after the last 
extension had been granted, Grenada had taken the liberty of 
considering the extended payments to be short term, paying interest 
but not principal. 
 
¶22. (SBU) The Secretariat also raised a proposed loan from China - 
equivalent to 17% of GDP - for construction of a luxury hotel.  The 
Fund replied that it would emphasize to the authorities that the loan 
could impact various programs, including availability of concessional 
resources and Paris Club treatment, and that it would urge the 
authorities that at a minimum the loan should be concessional. 
 
------ 
Guinea 
------ 
 
¶23. (SBU) Guinea had been on the verge of completion point at the 
time of the December 2008 coup.  It was on the Club's agenda because 
 
STATE 00013489  007 OF 012 
 
 
of recent political developments, particularly the January 15 
agreement between political factions, and to discuss the second phase 
of the country's decision point treatment, which had never entered 
into force.  After surveying members, IMF management had determined 
in September 2009 that there was no government in Guinea with which 
the Fund could engage.  Consequently, the flow of information had 
dried up. 
 
¶24. (SBU) The Secretariat noted that the beginning of the second 
phase was a year overdue, and recalled its May 2009 letter to the 
authorities that had informed them that they should resume making 
payments according to the original schedules.  Creditors discussed 
whether to send a second letter, informing the country that the 
second stage had been cancelled.  They agreed that such a letter at 
the current juncture could be misinterpreted as a negative signal 
regarding the political developments, which were generally seen as 
encouraging.  They therefore agreed that no letter would be sent, 
though the Secretariat could have some informal contact with 
authorities. 
 
-------------- 
Guinea -Bissau 
-------------- 
 
¶25. (SBU) The IMF reminded creditors that Guinea-Bissau had reached 
decision point in December 2000, and then had quickly gone off-track. 
 Arrears had been accumulating since then; total debt at the end of 
2008 was approximately $1.04 billion, 246% of GDP - in NPV terms, 
171% of GDP and 573% of exports.  Arrears accounted for more than a 
third of the stock, $384 million.  The country, not surprisingly, was 
in debt distress. The government needed to limit spending to 
available resources, protect priority spending, and address domestic 
arrears.  A mission was in the country to conduct an Article IV 
review and discuss an ECF, which could pave the way for completion 
point.  If the ECF were approved in the first half of the year, 
completion point could conceivably be reached by year-end. (The USG 
is not a creditor.) 
 
----- 
Haiti 
----- 
 
¶26. (SBU) The Club's January 19 press release noted that the Club had 
provided 100% debt cancellation, and called on the remaining 
bilateral creditors to do the same.  The Secretariat had also 
attempted to contact those two creditors, Taiwan and Venezuela.  It 
failed to make contact with Venezuela, whose finance minister had 
taken office the previous week, but the Taiwanese said they were "not 
closed" to the idea, though it raised political issues and would 
require legislation.  The Fund and Bank both pointed to the $100 
 
STATE 00013489  008 OF 012 
 
 
million in additional financing they had each announced, additional 
access under the PRGF/ECF and additional grants from IDA 
respectively.  The IMF representative noted that the Fund was not 
considering other measures, since there was no framework for doing 
so, the interest rate Haiti faced was zero, and debt service payments 
were negligible. 
 
------- 
Iceland 
------- 
 
¶27. (SBU) Iceland was not on the agenda, but the Netherlands and UK 
briefed creditors over lunch, in view of the Icelandic President's 
decision not to sign the Icesave legislation implementing the 
agreement among the governments.  As expected, they argued that 
Iceland was obligated to repay the entire amount of deposit 
guarantees, including interest.  The two countries argued that the 
terms agreed with Iceland were generous, with fixed rates of 5.55%, 
fifteen year period with seven of grace, no breakage charges, and a 
goodwill clause allowing renegotiation if the Fund finds a 
significant deterioration of Iceland's debt sustainability.  The UK 
and Dutch deflected a question as to what they would do if the 
agreement was rejected in the planned referendum. 
 
------- 
Liberia 
------- 
 
¶28. (SBU) The IMF reported that implementation of the three-year ECF 
approved in March 2008 remained satisfactory, with good progress on 
both structural and macro conditions.  A waiver had been needed for a 
June 2009 revenue shortfall, but this had been addressed.  The third 
review was competed in December and a fourth was expected in June 
¶2010.  Progress on HIPC completion point triggers was significant, 
and completion point could accompany the fourth review. 
 
---------- 
Mauritania 
---------- 
 
¶29. (SBU) The IMF requested that Mauritania be placed on the agenda, 
even though it is a post-completion point HIPC.  The Fund noted that 
the August 2008 coup had caused a suspension of the PRGF program, and 
led many donors to discontinue aid.  The 2009 elections brought a 
resumption of normality.  The macroeconomic situation deteriorated 
sharply due to the political crisis, global situation, and declines 
in prices of exports.  The PRGF program was cancelled, and the 
authorities had requested an ECF.  There was agreement on the terms 
of the program covering 2010-12, which could go to the Board in 
March.  Goals would include a resumption of growth to about 5% a 
 
STATE 00013489  009 OF 012 
 
 
year, bolstering reserves, improving the tax and financial systems, 
and other changes. 
 
---------- 
Seychelles 
---------- 
 
¶30. (SBU) The IMF reported that the Board approved the third review 
under the Standby Arrangement and a $30 million (225% of quota) 
Extended Fund Facility (EFF) to replace the Standby on December 18. 
December 2009 performance criteria had been met.  The Fund would send 
a mission in May 2010 for the first review under the EFF, with 
six-monthly reviews thereafter.  The IMF further reported that the 
stage was set for a second set of reforms, mostly structural. 
Financing from the EU, IMF, and AfDB, along with the debt 
restructuring, would close the residual gaps.  The Seychelles' debt 
exchange offer closed on January 15; with 100% participation except 
on the Eurobond, but the 84% participation on that would be 
sufficient to trip the collective action clause, bringing it to 100% 
as well.  The World Bank opined that performance in 2009 was 
"remarkable." 
 
¶31. (SBU) All non-Club bilateral creditors except Kuwait had agreed 
in principle to comparable treatment, and agreements were in various 
stages of completion.  Among banks, Nedbank agreed to follow the 
terms of the South African bilateral, RBS and Barclays had concluded 
negotiations, and MCB of Mauritius agreed to convert its loan to 
rupees and to defer payments.  Other banks were moving more slowly. 
 
----- 
Sudan 
----- 
 
¶32. (SBU) Sudan was added to the agenda at the request of the U.S. in 
response to a letter requesting debt data that USAID had received 
from the authorities.  The Secretariat noted that Sudan's debts to 
the Club exceeded $10 billion, payments hadn't been made in years, 
and arrears had (in part) prevented Sudan from reengaging with 
international financial institutions.  The IMF reported Sudan had 
been hit hard by the crisis, with terms of trade having fallen.  Oil 
accounted for 95% of exports and 60% of revenues.  Net international 
reserves had fallen from $2 billion in August 2008 to $350 million at 
end-2009, about two weeks of imports.  Structural reform efforts, 
including on tax compliance and fiscal monitoring, had been 
"promising." 
 
¶33. (SBU) However, 2010 was likely to be challenging, with inflation 
of about 10% and GDP growth of 4.5%.  Challenges included significant 
spending needs, inflation, dwindling reserves, and a need to broaden 
the revenue base.  Debt overhang was also a concern.  The last debt 
 
STATE 00013489  010 OF 012 
 
 
sustainability analysis (DSA) estimated external debt at $34 billion, 
about 60% of GDP, up from $15 billion in 2000.  Most of this was a 
buildup of arrears, but it also reflected new borrowing from Arab 
countries, China, and India.  In 2008 alone, Sudan contracted $1.1 
billion in new debt, of which $679 million was concessional (from 
regional Arab funds) and the remainder commercial, comprised of $351 
million in Islamic bonds, and the remainder from India and China. 
Since Sudan had no access to traditional sources of financing, it had 
to raise money where it could.  In response to a question from the 
U.S., the Fund reported that it had not discussed debt issues with 
authorities; the Bank reported having had only internal discussions. 
 
¶34. (SBU) The Fund and authorities had cooperated closely for over a 
decade, and performance on a succession of staff monitored programs 
(SMPs) was generally good.  The current SMP, concluded in May 2009, 
covers the period from July 2009 through December 2010.  An Article 
IV mission would visit in early March.  Payments to the Fund had 
exceeded payments due, by about $11 million in 2009, slightly above 
the $10 million target.  Arrears to the IMF were still roughly $1.5 
billion at the end of 2009, however.  The World Bank reported that it 
was not providing support to Sudan, which had been in non-accrual 
status since 1994, and had arrears to IDA totaling $571 million. 
 
¶35. (SBU) The U.S. asked whether others had also received letters 
asking for bilateral debt data.  Russia and Canada had also received 
the letters, while Norway, Austria, and Denmark reported receiving 
them every year.  The U.S. letter, at least, had indicated that the 
information was for the Central Bank's annual report, which contains 
a debt table.  The Secretariat suggested that those that did not 
receive letters might consider providing the information to Sudan 
anyway. 
 
------- 
Ukraine 
------- 
 
¶36. (SBU) The IMF reported that its program helped stabilize the 
economy, and that the recession appeared to have bottomed out.  GDP, 
which had fallen 18% and 20% respectively in the first two quarters 
of 2009, ended the year down 14%, and was expected to rise by 3.5% in 
2010, with inflation in single digits.  The exchange rate was broadly 
stable, and gross reserves were $26.5 billion at end-December.  The 
resolution of Nadra Bank was delayed to complete restructuring of its 
external debts.  Preliminary agreement was reached in December, and 
the government was committed to a resolution by February.  The third 
review of the program was delayed due to a lack of consensus by 
stakeholders, with fiscal performance the main problem. 
 
METHODOLOGICAL ISSUES 
 
 
STATE 00013489  011 OF 012 
 
 
---------------------------------------- 
Outreach Related to Comparable Treatment 
---------------------------------------- 
 
¶37. (SBU) The Secretariat noted that its earlier proposal for 
coordinated diplomatic demarches to non-PC creditors had not received 
broad support.  It proposed instead that Club members stress the need 
for comparable treatment in Board remarks at Article IV reviews of 
problem creditors.  The U.S. and most others supported this idea and 
a pragmatic approach of taking advantage of all available 
opportunities to raise the issue with the relevant non-PC creditors. 
There was also discussion of a recent letter from Turkey, which 
argued that greater participation by non-PC creditors should be 
allowed in negotiations and poorer creditors should be allowed to 
provide less relief.  A draft response was warm on the first point 
(inviting significant non-Club creditors is already standard Club 
practice) but rejected the second.  The Secretariat also reported 
that it was still awaiting data from Israel. 
 
--------------------------------- 
UNCTAD Initiative on Responsible 
Borrowing and Lending 
--------------------------------- 
 
¶38. (SBU) The Secretariat reported that it had been invited to 
participate in an experts group to UNCTAD's project on responsible 
lending and borrowing, noting that its contributions would strictly 
follow Club orthodoxy.  There was general support for the proposal, 
though the U.S., supported by Germany and others, underscored that 
the Secretariat should make clear in advance that its participation 
did not imply Club endorsement of any final product or conclusions. 
 
------------- 
Annual Report 
------------- 
 
¶39. (SBU) The Secretariat circulated a draft table of contents for 
the 2009 annual report.  The Secretariat proposed discussing the 
draft report at the April tour, with a view to approving and 
publishing the report by end-May. 
 
WORKING GROUP ON NON-INDEMNIFIED GUARANTEES 
 
¶40. (SBU) After the Tour d'Horizon, there was another meeting of the 
working group on non-indemnified claims.  Creditors had examined the 
treatments provided to Indonesia and Pakistan, and all with 
guarantees reported that those had been indemnified before treatment, 
suggesting that in practice concerns about unequal burden-sharing 
were overblown.  The U.S. also noted that its agencies found no case 
where Paris Club treatment was followed by default on an untreated 
 
STATE 00013489  012 OF 012 
 
 
guaranteed loan.  The U.S. reiterated its view that there was no 
clear evidence that the status quo was problematic, a view supported 
by Canada and Russia.  Germany disagreed, arguing that standard 
agreed minute language on coverage of guarantees was not limited to 
those that had been indemnified.  The Secretariat, conceding that 
consensus was not possible, indicated that it would prepare a working 
paper which would cover the Club's intention to: enhance transparency 
through expanded data calls; provide equivalent treatment when 
guarantees have been indemnified; continue the status quo in cases of 
non-default; and consider possible changes to standard agreed minute 
wording on debts covered. 
 
¶41. (U) For additional information on any of the countries or issues 
mentioned above, please contact EEB/IFD/OMA David Freudenwald at 
freudenwalddj@state.gov or Nicholle Manz at manznm@state.gov. 
 
 
CLINTON 
CLINTON