Peru has reached agreement on a financial rescue package with international commercial banks and will sign the loan documents today, Citibank and the Peruvian finance minister announced yesterday.
Peru, whose finance minister said owes $11.5 billion to foreign lenders, is one of many Latin American nations that has become unable to meet its debt payments in the past year, and been forced to ask commercial bankers for new loans and a stretchout of old loans to deal with a cash shortage. The debt crisis, precipitated last August when Mexico, with over $80 billion of foreign debts, announced that it could not keep up payments, quickly spilled over to many other nations in the region as bankers became nervous about making new loans.
Peru, which was already borrowing from the International Monetary Fund, asked to renegotiate its commercial debts in March, when it encountered severe economic and financial difficulties. The IMF approved its latest economic measures a month ago after some delay. Its strict economic policy has pleased bankers, although it has led to social and political strains in Peru.
The finance minister, Carlos Rodriguez Pastor, said that the agreement with commercial banks would provide Peru with all the money it needed for the remainder of this year, but it would need help "for some time to come."
Citibank headed the negotiations for the banks and is the lead bank for two parts of the package. Senior Vice President William R. Rhodes said the agreement includes a stretchout of $380 million of loans due to be repaid between March 1983 and March 1984, a new medium-term credit of $450 million, and consolidation into a one-year loan of about $2 billion of very short-term debts, such as trade credits, he said. The refinanced and new money will be lent for eight years, with a three-year grace period before repayment. Rhodes said the new medium-term credit was oversubscribed by $85 million, which will be returned to the banks.
The first installment of Peru's new medium-term credit--for $250 million--will be paid out sometime in July, Rodriguez Pastor said. The next two, of $100 million each, will be due to be borrowed in September and December.