YUGOSLAVIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00287R000500410001-3
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: August 17, 2010
• Sequence Number: 1
• Publication Date: February 15, 1983
• Content Type: REPORT

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Yugoslavia
The international committee coordinating the role of Western
commercial banks in the financial rescue effort for Yugoslavia
met last week to review the report on Yugoslavia's needs compiled
by a team of bank economists. According to press reports, the
economists recommended that the banks put up less -new credits,.
but refinance more maturing
loans than proposed by the IMF.
Several points of disagreement must be resolved before
Western governments, commercial banks, the Bank for International
Settlements (BIS) and the IMF can complete their financial
package for Yugoslavia. US and West European banks-apparently
have not yet resolved their dispute over each side's share in the
new credits. The banks also remain concerned about equitable
burdensharing between themselves and Western governments. The
banks believe that the $1.3 billion package pledged by Western
governments does not contain enough untied financial credits and
that the governments are not increasing their exposure
sufficiently with Yugoslavia.
The Yugoslavs arecontinuing__t_o
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resist the BIS requirement that they pledge gold collateral for
$200 million of the $500 million loan offered by central banks.
Belgrade may also object to the commercial banks' demand that the
National Bank be the guarantor of all refinanced credits and the
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Hungary
According to press reports, Hungary has persuaded the Arab
Banking Corporation and the Bank of Tokyo to join Deutsche Bank
as lead managers for a $200 million syndicated loan. Arab
Banking will try to line up support from Persian Gulf banks while
the Bank of Tokyo will launch a similar effort in Asia. The
Hungarians apparently turned to these banks after Deutsche Bank's
approaches to West European banks received a lukewarm response.
The US Embassy in Budapest reports that only a few banks with
substantial exposure in Hungary have shown any interest in the
loan. Although a US bank's effort to arrange a $200-300 million
syndication for Hungary failed last month, several banking
sources believe that the new approach can succeed with Arab and
Japanese support. Nonetheless, the lead managers must drum up
more enthusiasm among West European banks in order to win
sufficient Middle Eastern-'and Asian participation.
Although Hungary is 25X1
receiving substantial trade financing from banks, Budapest needs
a sizable medium-term credit to cover its debt repayments and
avoid depletion of its.reserves. The Hungarians also hope that a
global syndication will reestablish their credit rating.
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Romania
Romania and nine major Western banks meeting in Paris on 2-3
February agreed on terms for rescheduling debt due to private
creditors in 1983. The agreement calls for 70 percent of
principal payments to be rescheduled over six and one-half years
including three years' grace, with the remaining 30 percent due
in the second half of this year. The rescheduled obligations
will carry an interest rate of one and three-quarters percent
over LIBOR. The terms are the same as in the 1982 agreement with
the banks except that last year's pact covered 80 percent of
The proposed terms now have to be submitted for approval to
the rest of Bucharest's roughly 300 bank creditors. Last year,
disputes among creditors delayed conclusion of the agreement from
February, when the nine banks and the Romanians agreed on terms,
until December, when the:-agreement was signed. We believe the
principal payments.
1983 rescheduling should progress more smoothly.
The amount being rescheduled this year is only $600
million, according to press reports, compared to $1.5
billion last year.
The terms are somewhat more favorable for the banks.
Bucharest is earning large trade surpluses in order to
turn around its hard currency accounts and to meet
obligations under the 1982 agreement.
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