Then they suggested a rescheduling of debt payments to German banks.
The sharply increased use of bonds and other securities has actually compounded the problem of moving such governments toward disciplined, transparent financing methods and made more difficult the rescheduling of such debt instruments during periods of financial distress.
"a generous rescheduling of official debt and reductions of 50% or more of the principal on official debt" in Paris Club arrangements.
Risk: It will be argued that Western banks and possibly the international financial system as a whole will be badly damaged by any interruption in repayment of outstanding principal and interest due on Soviet debt beyond the already agreed debt rescheduling of principal-only for 1992.
An international outcry is no less in order now regarding the incipient EU rescheduling of Syria's external debt.
Details of the debt rescheduling will now be announced on August 24th.
Our response to such appeals should be straightforward and firm: Those profligate Western governments and banks (especially in Germany, Italy and France) which showered credit guarantees and direct loans on the now-discredited central authorities in the Kremlin must shoulder most if not all of the burden and costs of Soviet debt rescheduling and forgiveness.
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The banking laws introduced at the beginning of the month were intended to buy time while the second stage of the debt-rescheduling plan is completed.
They artificially lower the interest rates and increase the size of credits as the risk of any future debt rescheduling or default is transferred from private commercial banks to Western taxpayers.
The reconfigured Soviet center is also collaborating with Western governments to stave off an imminent Soviet debt rescheduling by quick infusions of taxpayer-guaranteed funds.
"The Soviet Union is already in a piecemeal debt rescheduling with a series of 'quiet' Western government 'refinancings' likely this year -- all in the interest of avoiding a more formal and debilitating Paris Club process, " Center Board member Robinson said.
What distinguishes this area, however, from others (such as ruble convertibility schemes, balance of payments relief, debt rescheduling, etc.) is that it could result in improving the Soviet military's capabilities to build more advanced weapons for its own arsenal and for export.
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Terminate all Western government guaranteed loans to the USSR and other Warsaw Pact countries which, by definition, transfer the risk of any future Soviet debt rescheduling or default from the commercial banks involved to Western taxpayers and which artificially lower the interest rates on such loans.
Inevitably, there will be strenuous efforts made by the Bush Administration, other Western governments and numerous private banks to stampede the former Soviet Union into a commitment to secure all debt obligations beyond the very limited rescheduling of principal payments already agreed for 1992.
There is also growing optimism that Pakistan will get generous terms for rescheduling its debt with the Paris Club - a club of rich states which lend money to less developed countries.
The only difference as in the case of Donald Trump is that it saves embarrassed creditors the loss of face involved when imprudent lending results in an overextended borrower requiring a formal debt rescheduling.
The bottom line is that the Soviet Union should reschedule its debt now, rather than have such a rescheduling artificially staved-off at the expense of Western taxpayers.
All Western financial assistance measures intended to stimulate Polish reforms such as IMF support, Paris Club rescheduling and debt relief, OPIC coverage and GSP eligibility must be fully reversible in the event of subsequent political crackdowns, financial default, or other missed milestones.
What is called for now is expanded debt rescheduling covering several years beyond 1992 (including the debt contracted after 1 January 1991), to say nothing of debt forgiveness.
If an inevitable Soviet debt rescheduling is undertaken now, we can clear the decks albeit with substantial pain of pre-coup communist debt and get to the task of working closely with the most reformist republics to bring them into the Western economic and financial community.
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