An Arab bank has dropped its objections to a $925 million loan to the Philippines, paving the way for signing an agreement with the cash-starved country during the week of May 20.
Manufacturers Hanover Trust Co., the Philippines' lead bank, said yesterday that banks also will provide $3 billion in trade credits to the Philippines and will restructure the terms on outstanding debts.
Last December, the International Monetary Fund and the Philippines came to terms on an economic austerity program. The IMF pledged to loan the country $615 million between Dec. 14, 1984, and June 13, 1986.
Last November, the Philippines major bank lenders agreed to the $925 million loan, but the loan signing has been held up because National Commercial Bank of Saudi Arabia refused to agree to its $12 million piece of the loan. The bank agreed to sign last week.
The Philippines also removed an iritation point with its commercial bank lenders when it agreed to find a solution to the $83 million in debt owed by the nation's biggest fertilizer company, Planters Products Inc.
The Philippines is one of the developing world's largest debtors, with $24 billion in loans from foreigners -- including banks and governments and multilateral institutions such as the IMF and the World Bank.
A spokesman for Manufacturers Hanover said he did not know when banks would sign a restructuring agreement with the Philippines. Last November, the banks agreed to stretch out repayment of $5.8 billion in loans that come due between Oct. 17, 1983 and Dec. 31, 1986.