LIMA, PERU, JULY 8 -- The government of Peru plans to resume payments to the World Bank and take other "coherent" economic measures to lure foreign investment, the prime minister said today.
Prime Minister Guillermo Larco Cox, who took office just 10 days ago, said the center-left government of President Alan Garcia needs foreign capital to sustain growth.
Larco Cox revealed that Los Angeles-based Occidental Petroleum Corp. has agreed to sell stock on the local stock market to raise capital for further oil exploration in Peru and avoid any "abrupt expropriation."
Peru, Latin America's sixth-largest borrower with a foreign debt of $14.7 billion, has strained relations with nearly all its governmental and private creditors.
Larco Cox, speaking to foreign correspondents, said he intends to obtain credit abroad and reestablish "good relations" with the World Bank.
Asked how he plans to do that, Larco Cox responded: "There is only one way to do so: pay."
The World Bank halted disbursements to Peru on $460 million worth of proposed or ongoing projects May 5 because the South American nation had fallen more than 90 days behind on $55 million in interest payments.
In June, Peruvian officials said they stopped paying the World Bank because scheduled debt payments were greater than new loan disbursements.
Larco Cox said Peru is negotiating with World Bank officials for reduced payments that would open the way for discussion of new projects. A World Bank vice president will visit Peru soon, he said.
Larco Cox reiterated Peru's policy of giving priority to creditors who disburse more in new loans than they collect in loan payments.
But he added that Peru was responsible for the falloff in new credits from the World Bank because it had not presented proposals for new projects to finance.
Larco Cox said his nomination as prime minister "should give an image of ... confidence." He said that image could "be obtained only through concrete and coherent deeds."
Peru will reduce but not cut off payments to the Soviet Union and other Warsaw Pact nations, to which it owes $956 million, he said.
Garcia announced Sunday that Peru would become "more severe and strict" in its payments to creditors because his government had exceeded a self-imposed policy of limiting debt payments to 10 percent of export income.
Garcia said his government would include payment of debt in goods rather than cash -- a method it employs widely with Soviet bloc nations -- within the 10 percent cap.
Larco Cox said of the Soviet debt: "We have been paying by the barter system without receiving any new loans and this situation has to be modified to continue.