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Debt treatment -
May 12, 2005

Supporting agreements with the international institutions

program with the IMF : arrangement under the Poverty Reduction and Growth Facility (PRGF) approved on February 18, 2004

Download the IMF report : Letter of Intent dated on February 2, 2004

Total external debt of the country

$4 800 million as of December 31, 2003

$1 473 million of which being due to Paris Club as of March 01, 2005

Amounts treated

$316 million of which $206 million being canceled, of which $110 million being rescheduled

Accorded treatment

Completion point reached on April 05, 2005

Categories of debt treated

Treatment of arrears as of February 28, 2005

Treatment of the stock as of March 01, 2005


Repayment profile

Treatment under HIPC Initiative Exit terms

Specific provisions

Payment of non-consolidated amounts before December 01, 2005

Comparability of treatment provision

The Republic of Honduras was declared eligible to the Enhanced HIPC initiative by the IDA and the IMF in 1999 and was declared to have reached its Completion Point respectively on March 28 and April 5, 2005. In this context, the Republic of Honduras commits to seek promptly from all its external creditors which are not participating in the Agreed Minutes dated May 12, 2005, their appropriate contribution in terms of debt relief to the enhanced HIPC initiative, on top of traditional debt relief mechanisms and consistent with the proportional burden sharing based on their relative exposure in net present value of total external debt at Decision Point after the full use of traditional debt relief mechanisms.

The appropriate nature of the debt relief provided will be assessed not only on the basis of the reduction in the net present value of the debt as computed under Appropriate Market Rate, but also on the terms of repayment of the debts not cancelled. For this purpose, all relevant elements shall be taken into account, including the level of cash payments received by those creditors as compared to their share in the Republic of Honduras' external debt, the nature and characteristics of all treatment applied, including debt buy backs, and all characteristics of the reorganized claims and in particular their repayment terms whatever forms they take and in general the financial relations between the Republic of Honduras and creditor countries not listed in the Agreed Minutes.

Consequently, the Republic of Honduras commits not to accord any category of creditors -and in particular creditor countries not participating in the Agreed Minutes, commercial banks, suppliers and bondholders- a treatment more favourable than that accorded to the Participating Creditor Countries.

Cut-off date

June 01, 1990

Organisation of the session

The meeting was chaired by M. Ramon Fernandez, Vice President of the Paris Club.

The head of the debtor country's delegation was M. William Chong Wong, Minister of Finance.


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