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Peru Announces Token Payment on Debt to IMF

August 7, 1986

LIMA, Peru (AP) _ The government said Wednesday it will pay part of a $186 million debt to the International Monetary Fund by the Aug. 15 due date, but not all of it.

El Peruano, the official gazette, quoted Deputy Economy Minister Gustavo Saberbein as saying a ″realistic payment″ would be made. Peru runs the risk of becoming ineligible for more IMF loans if the full debt is not discharged.

Saberbein said the government does not want to lose its eligibility and hopes the international lending agency will understand President Alan Garcia’s efforts to deal with Peru’s economic problems.

The deputy minister told a news conference last week, however, that becoming ineligible ″would affect us very little because we have no program with the IMF.″

Since taking office a year ago, Garcia has kept to his inaugural vow not to negotiate with the agency because the austerity programs it demands would exact too high a price from the nation’s poor.

Peru sidestepped IMF ineligibility in April by coming up with $34 million. Its debt to the organization is nearly $900 million and the total foreign debt is about $14 billion.

Garcia said July 28, his first anniversary in power, that the ceiling of 10 percent of export earnings he had put on foreign debt payments made more IMF loans unnecessary.

Saberbein said Wednesday that Garcia was studying proposals from some American and European banks and lending institutions, which he did not name, that Peru pay a third of its debt with exports.

A decree published Wednesday in El Peruano and signed by Garcia announced creation of a commission to determine which products would be used for such payments.

During the last year of President Fernando Belaunde Terry’s administration, Peru paid part of its debt to the Soviet Union in exports.

Garcia, his successor, has tried to interest other creditors in similar arrangements.

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