UNCTAD

Possibility to conduct debt swaps

On a voluntary and bilateral basis, the Government of each creditor country or its appropriate institutions may sell or exchange, in the framework of debt for nature, debt for aid, debt for equity swaps or other local currency debt swaps : (i) all ODA loans ; (ii) the amounts of other outstanding credits, loans and consolidations mentioned in paragraph 1. above, up to 20% of the amounts of outstanding credits as of December 31, 1994 or up to an amount of SDR 20 million, whichever is higher. Participating creditor countries and the Government of the Republic of Madagascar will inform semi-annually the Secretariat of the Paris Club, who will inform other creditors, of the debt swaps agreements they have implemented. All elements necessary to evaluate the operation, its impact on the Republic of Madagascar's economy and on the evolution of creditor's exposure will be transmitted to the Secretariat including : its nature and purpose ; the parties to the debt swap ; the amount, type and value of the debt treated ; the price of sale to investors and the expense of the Republic of Madagascar.

Good will clause

Given the decision by Paris Club Creditors to contribute to the exceptional assistance in favour of the Republic of Madagascar under the enhanced Debt Initiative for the Heavily Indebted Poor Countries, the Participating Creditor Countries declare their readiness in principle to hold a meeting at the completion point designed to examine the question of the Republic of Madagascar's outstanding debt stock and to make the necessary effort, in favour of the Republic of Madagascar to reach the objective of its debt sustainability in the context of an equitable burden sharing among creditors, provided that :

- the Republic of Madagascar maintains satisfactory relations with participating Creditor Countries, fully implements all the agreements signed with them and maintains a sound adjustment track record ;

- the Boards of the International Monetary Fund and the International Development Association decide that the Republic of Madagascar has reached its completion point under the enhanced Debt Initiative for the Heavily Indebted Poor Countries.

Phases

• First phase : From December 01, 2000 up to December 31, 2001, implemented at the signature of the agreement
• Second phase : From January 01, 2002 up to December 31, 2002, implemented on January 20, 2003
• Third phase : From January 01, 2003 up to November 30, 2004, implemented on July 10, 2003

Payment of non-consolidated amounts before June 30, 2001

Possibility to conduct debt swaps

On a voluntary and bilateral basis, the Government of each participating creditor country or its appropriate institutions may sell or exchange, in the framework of debt for nature, debt for aid, debt for equity swaps or other local currency debt swaps : (i) the amounts of outstanding loans [treated in the present Agreed Minute] as regards official development aid loans ; (ii) the amounts of other outstanding credits, loans and consolidations [treated in the present Agreed Minute], up to 20% of the amounts of outstanding credits as of December 31, 1996 or up to an amount of 30 million SDR, whichever is higher.

Good will clause

In response to the request of the representatives of the Government of the Republic of Madagascar, the Participating Creditor Countries agreed in principle to a meeting to consider the matter of the Republic of Madagascar's debt service payments falling due after November 30, 1999 and relating to loans or credits pursuant to a contract or other financial arrangement concluded before July 1, 1983 provided :

- that the Republic of Madagascar continues to have an appropriate arrangement with the International Monetary Fund ;

- that the Republic of Madagascar has reached with other creditors effective arrangements meeting the conditions described in [the present Agreed Minute] and has reported in writing to the Chairman of the Paris Club, pursuant to [the present Agreed Minute] ;

- and that the Republic of Madagascar has complied with all conditions set out in this Agreed Minute.

Free transferability provision

The Government of the Republic of Madagascar will take the relevant administrative measures or extend existing measures to ensure that the private debtors in Madagascar will be permitted to pay into the Central Bank the local currency counterpart of their obligations past due or falling due, corresponding to their debt of any nature owed to or guaranteed by the Participating or Observer Creditor Countries or their appropriate institutions.

Pullback clause

The Participating Creditor Countries reserve the right to review and agree to the implementation of the conditions stated in [the present Agreed Minute] for the comparability of treatment between all creditor countries. If the Participating Creditor Countries determine that these conditions are not substantially fulfilled, and do not agree to their implementation, the provisions [...] of the present Agreed Minute will become null and void. In this case, the total amount of debts covered by the present Agreed Minute will be due and payable at that time, with the exception of maturities which have not yet fallen due on these debts. Any payments of principal and interest already made under [the recommendations of the present Agreed Minute] will be taken into account.

Special account

To facilitate the implementation of this Agreed Minute, the Government of the Republic of Madagascar will deposit in the special account established with the Banque de France, the equivalent of at least SDR 4 million at the end of each month, commencing in May 1997 through November 1999 inclusive. The Government of the Republic of Madagascar undertakes to have this Bank notify the Chairman of the Paris Club as soon as each deposit has been made. The total amount approximates the amounts estimated to be payable to all Participating Creditor Countries from January 1, 1997 up to November 30, 1999 inclusive under the terms of the bilateral agreements to be concluded pursuant to this Agreed Minute. As specific payments under these agreements become due, the Government of the Republic of Madagascar will draw on the special account to meet these payments ; no drawing will be made on the special account for any other use before all payments due from January 1, 1997 up to November 30, 1999 inclusive under these agreements have been made. Any drawing on this account will be made after a previous 15-day notice to the above Bank, which this Bank will notify immediately to the Chairman of the Paris Club. This scheme could be continued by agreement between the parties.

Phases

• First phase : From January 01, 1997 up to February 28, 1998, implemented at the signature of the agreement
• Second phase : From March 01, 1998 up to February 28, 1999, implemented on August 06, 1999
• Third phase : From March 01, 1999 up to July 31, 2000, implemented on August 06, 1999

De minimis threshold of 250 000 SDR

Payment of non-consolidated amounts before October 31, 1997