Peru has promised the International Monetary Fund that it will clear up its overdue interest payments to the lending agency by Aug. 15, monetary sources said yesterday.
As a result, sources said, the IMF has postponed any decision on whether to declare Peru ineligible for further loans until mid-August. Peru will be behind in its interest payments to the IMF by nearly $190 million by then.
Banking sources said they hope the Peruvian declaration signals a moderation in President Alan Garcia's sparring with the IMF and the world's commercial banks. Peru made a token $17.7 million payment to its commercial bank lenders last month, but is more than $450 million behind on interest payments to them.
About $6 billion of Peru's $14 billion in foreign debt is owed to commercial banks. The rest is owed to other governments or to multinational institutions like the IMF and the World Bank.
From the standpoint of the IMF, a vote to declare Peru ineligible would be little more than a diplomatic slap. But such a vote might force the World Bank and the Inter-American Development Bank to curtail their lending to the debtor nation.
Peru is up-to-date in its payments to both institutions, which make development loans to the South American country.
Garcia said last year Peru would remain current in payments to institutions from which Peru expected to continue borrowing -- such as the World Bank -- and that institutions such as commercial banks and the IMF would bear the brunt of the debt payment restrictions.
Because industrial governments are the dominant money suppliers to the IMF, the World Bank and the IDB, Garcia's plan to keep borrowing from the development institutions likely would have been destroyed if Peru failed to reach an accommodation with the IMF, monetary sources said.
Last month, Peru paid $30 million of what was then about $140 million in overdue interest and avoided being declared ineligible then -- giving it time to work out this week's compromise with the multinational financial institution.