The rift between Peru and the international financial community is widening and probably will result in a total cutoff of all development lending to the debt-ridden South American nation, officials said yesterday.
Presidential spokesman Jose Megia said yesterday that the nation will make only a partial payment on the $70 million in overdue principal and interest that it owes the International Monetary Fund, United Press International reported.
The IMF, the international lender of last resort, has given Peru until April 14 to bring its payments up to date. The IMF's board is expected to decide on April 16 whether to declare Peru "ineligible" for further loans. If the IMF formally decides to declare Peru ineligible, the World Bank probably will be forced to stop making any new loans to Peru.
Sources said that Peru appears to be courting a hostile IMF vote. Yesterday, Peruvian officials confirmed that the country will force the IMF to close its office in Lima on April 12 and will bar any IMF officials from entering the country.
Washington sources said that the IMF might have been able to tolerate only a partial payment from Peru, but not if Peru cuts off contact with the IMF.
Because Peru cannot receive any new IMF funds as long as it is in arrears, a declaration of ineligibility will not have any real impact on the country's ability to borrow from the multinational agency. But the IMF vote is likely to trigger a similar vote at the World Bank, the IMF's sister institution that makes long-term development loans.
Peru still is borrowing from the World Bank and has kept its accounts current with that agency. The Inter-American Development Bank also might be required to stop any new lending to Peru. Officials said that disbursements from loans in progress might continue.
Megia said Prime Minister Luis Alva Castro told visiting European dignitaries Tuesday night that the country would demand that the IMF shut its Lima offices. Megia said "the decision that the monetary fund would end its mission was taken a while ago."
He said Alva Castro made the decision public to refute charges by Marxist Lima Mayor Alfonso Barrantes that Peru was involved in secret negotiations with the IMF.
In his statement, Alva Castro, who also is economic minister, said the IMF delegate in Peru, Waldemar de Moraes, would be asked to leave the country by April 12.
De Moraes, a Brazilian economist who has been the IMF delegate to Peru for two years, is in Washington visiting IMF headquarters. He is scheduled to return to Peru next week.
The IMF maintains representative offices in approximately 25 member countries, always at the host government's request, to provide technical assistance. The Lima office was established under the previous regime.
Alva Castro asserted that the IMF must cooperate with President Alan Garcia's plan to use only 10 percent of Peru's $3 billion in export earnings to pay its $14 billion foreign debt.
Instead of paying the IMF all of the approximately $70 million that under the IMF charter must be paid by April 14, Megia said Peru would make a "good faith" payment of between $5 million and $10 million.
Peruvian debt negotiators announced a similar "good faith" payment to commercial bankers in New York three weeks ago. Peru is roughly $450 million in arrears in interest to some 290 foreign banks. The private banks hold about $6 billion of Peru's foreign debt.