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CIA-RDP87T01127R001000890002-8
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50
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October 1, 1986
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Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Iq Next 1 Page(s) In Document Denied Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127RO01000890002-8 Directorate of Intelligence The l~I Risks of Spillover Meiican-IMF Agreement: pRWEC'T N U M B E R Y0 k- n L _ " cEnrii bB DER COPIES tISSEM DATE - A ,AGE MZMEFS tOT'AL MEBM OF COPIES 10 vo d J-/i-- 3-37 Owl Secret Secret GI 86-10068 October 1986 Copy 292 ILLEGIB Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127RO01000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1127RO01000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1127RO01000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Intelligence Directorate of Secret The Risks of Spillover Mexican-IMF Agreement: This paper was prepared by Office of Global Issues. Comments and queries are welcome and may be directed to the Chief, Economics Division, OGI Secret G/ 86-10068 October 1986 25X1 25X1 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1127RO01000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1127RO01000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Secret Mexican-IMF Agreement: The Risks of Spillover Key Judgments On 22 July 1986, Mexico and the International Monetary Fund announced Information available a ground-breaking agreement to deal with Mexico's debt problems. The as of 12 September 1986 agreement assumes more than $12 billion in new funding, allows for was used in this report. annual real GDP growth of at least 3 percent through 1987, and shields Mexico from the effects of further oil-price declines. This accord appears to have diffused a volatile situation-Mexico City reportedly planned to deposit the interest owed to its foreign creditors in an escrow account at the Central Bank until the foreign reserve position improved, in effect threatening to stop payment. Nevertheless, the precedents established in the accord could create new risks for the management of the LDC debt situation. In our view, the major risks will be those stemming from the spillover effect of this Mexican agreement on other debtors and negotiations: ? The debt negotiating environment will almost certainly become more drawn-out and strained as debtors stall in their negotiations and demand similar treatment and as commercial creditors become increasingly reluctant to go along with such arrangements. We already see signs of this in Argentina, Venezuela, and the Philippines. ? Other debtor governments will come under increased pressure from their domestic constituency to get "as good a deal as Mexico." To the extent they are unable to do so, the Mexican agreement may paradoxically increase the strains on other debtors that continue to pay their debts without resorting to concession-gaining strategies. ? There will be an increased concentration of exposure to debtor LDCs by the largest international banks as more regional banks swap or write off their existing LDC debt and refuse to participate in future financing packages. These increases in involuntary lending will place the larger creditors in greater jeopardy. Other LDC debtors believe their economic and political situations are similar to Mexico's and that they deserve equal treatment. In requesting relief they will cite a variety of reasons. In Latin America, some debtors- notably Argentina and Brazil-will cite prior economic reform efforts. The adverse effects of falling commodity prices will be used as justification by Secret GI 86-10068 October 1986 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Argentina and Venezuela in particular. All will argue the need for faster economic growth to justify debt conscessions. In addition, Egypt and the Philippines may cite their special relationships with the United States. Despite the risks it has created, the agreement has shown a new flexibility on the part of the Fund-in the Mexico case, allowing larger budget deficits and tying further assistance to growth-that may encourage other recalcitrant debtors to stay within the case-by-case debt strategy and not go it alone as Peru has done. Nevertheless, should key debtors fail to receive what they consider to be equal treatment to that given Mexico, it is possible that they may adopt unilateral measures to limit their debt service payments. Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Secret Key Judgments Key Asian Debtors Increased Complexity 8 Deterioration of Debt Negotiations 8 Debtor Networking 8 Creditor Response 9 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Major concessions of the Mexican-IMF letter of intent include: ? The amount of new financing. The agreement as- sumes more than $12 billion in new money between now and the end of 1987, with half coming from commercial banks, according to financial press reporting. Mexico's preliminary financing package comprises the following: ? Tying additional loans to commodity prices. A contingency fund has been created under the letter of intent to insulate Mexico from the further effects of declining oil prices. New money would be made available automatically if oil prices fall below $9 per barrel for more than 90 days during the first nine months of the accord. Mexico will receive less financing if oil prices rise above $14 per barrel. ? An orientation toward growth. The accord in effect replaces IMF's traditional policy of supporting austerity reforms with a new flexible approach that promotes efforts to foster longer term growth. The Fund agreed to let Mexico tailor an economic recovery program that allows real GDP growth of at least 3 percent starting in 1987. To assist Mexico, the letter of intent established a $500 million reserve to bolster domestic investment if the economy fails to recover by the first quarter of 1987. ? The longer term creditor commitment. Mexico can seek medium-term lending commitments from cred- itor banks beyond the 18 months covered by the IMF-supported program. In addition, the letter of intent reportedly allows Mexico to renew the IMF package automatically for another year at the end of the program. Although most of the official funding has been ap- proved for the package, Mexico's commercial credi- tors have yet to agree to provide the $6 billion specified in the accord. The IMF agreement fails to force Mexico to adopt a stringent austerity program, but Mexico City is promising to make a renewed effort to accelerate economic restructuring. Mexico's strategy is to reduce government operating costs, encourage new capital inflows, and stimulate trade. Mexico reportedly will try to cut its budget deficit projected to top 16 percent of GDP in 1986- primarily by increasing government revenues. Mexico has also promised to sell or close about 300 nonstra- tegic parastatals, although no formal timetable has been established. In addition, monetary policy will remain tight with interest rates higher than inflation in an attempt to reverse capital flight. Mexico will also encourage the entry of foreign investors, particu- larly those in export-oriented industries that provide modern technology, and meet GATT regulations as part of an expanded policy of opening its trade doors. Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 Secret Mexican-IMF Agreement: The Risks of Spillover Mexico has been the center of attention in the debt arena since the beginning of 1986. After suffering a decline in export revenues and international reserves, an economic slowdown in 1985, and with little pros- pect for improvement in 1986, Mexican debt negotia- tors again turned to their international creditors for relief. After lengthy and often difficult talks, Mexico and the International Monetary Fund (IMF) signed on 22 July 1986 a letter of intent that offers the de la Madrid administration a less painful solution to its chronic economic problems. We expect that other LDC debtors may use the Mexican-IMF agreement as a model for their future negotiations with creditors. Many of these debtors may put strong pressure on the IMF and commercial banks for similar concessions because they also face acute financial difficulties or believe that they deserve special consideration because of their strong economic adjustment efforts. In addition, some debtors-espe- cially those countries that are more financially hard pressed or belligerent-could model alternative pay- ment schemes after concessions granted in the Mexi- can agreement and take unilateral action to reduce debt payments instead of negotiating with creditors. Candidates for Spillover Mexico is not alone in being hard hit by export revenue losses resulting from stagnant or falling com- modity prices and lower import demand in developed countries. Falling export earnings and rising debt service burdens are forcing many other LDCs to continue economic reforms and austerity-related cutbacks in spending-especially for investment-to maintain financial solvency and foreign exchange reserves. In turn, these developments are placing additional checks on growth and development among the key debtors. These adverse financial conditions are likely to continue over the next 18 months and may lead to increased demands from several other debtors for Mexican-type concessions In our view, major LDC debtors will be likely to use at least one of the following arguments to support their demand for debt concessions: ? Bleak trade outlook. Export revenues in key debt- ors have fallen sharply over the past two years because of low commodity prices, a 50 percent drop in oil prices, and slack import demand in developed countries. Slowing real GDP growth in OECD member states and continued oversupply conditions make a sustained commodity price recovery unlike- ly, especially for agricultural products. In addition, many debtors frustrated by five years of economic austerity-are now more concerned with economic recovery than with debt service payments, and are determined to boost imports and real GDP growth. This combination of lower export revenues and the need for higher imports is setting the stage for growing financial gaps in many debtor countries. ? Prior economic reforms. A few key debtors, such as Brazil, have undertaken significant economic re- form measures, including exchange rate devalua- tions and anti-inflation programs. They could de- mand lenient debt treatment as a reward for these efforts, given their adverse impact on real GDP growth and unemployment. They may also contrast their own efforts with Mexico's lack of progress toward economic adjustment. ? A special relationship with major creditors. Mexico is of special concern to the United States, given the closeness of economic and political ties between Mexico City and Washington and Mexico's prox- imity to the United States. But the United States has developed special relationships, based on eco- nomic, political, and military factors, with other countries such as Egypt and the Philippines. In addition, European and Japanese creditors have maintained close ties to debtors in their regions. We feel that some of these countries will vociferously argue that Mexico used its special relationship with the United States as leverage to obtain concessions and that they are entitled to similar relief from creditors for the same reason. 25X1 25X1 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Figure 1 Key LDC Debtors: The Road to Financial Problems, 1975-86 And Slowing OECD Real GNP Growth ... Have Sharply Cut Export Earnings ... I I I I I I I I I I I 1 0 1984 85 86a 0 1984 85 86b 0 1984 85 86b 120 1984 85 86b Raising Debt Payments ... And the Debt Service Ratio ... Forcing Import Cutbacks ... And Reducing Average Annual Real GNP Growth I I I I I I I 1 1 40 1984 85 86b 0 1984 85 86b 80 1984 85 86b a Data for 1986 is for the first half. b Estimated. We believe several Latin American countries are candidates for spillover. These debtors will base argu- ments for debt relief on current financial hardships, the need for renewed economic growth, and structural adjustment achievements. Moreover, some political leaders have a "populist" outlook and are likely to demand lenient debt-repayment terms to alleviate what they perceive as painful economic burdens on their constituents. These countries have closely fol- lowed the Mexican talks and are already positioning themselves to demand similar concessions. Larger Countries Argentina. Argentina's year-old austerity program, the Austral Plan, sharply lowered the inflation rate, reduced the government budget deficit as a share of GDP, and set the stage for short-term industrial improvement. Even though the plan is beginning to Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 Secret unravel, Argentine officials will be quick to point out their progress on reform and argue that such efforts should be rewarded with debt concessions. On the payments side, falling prices and flooding in agricultural areas last fall could reduce 1986 export earnings by as much as $1 billion. Buenos Aires has already cited the US decision to subsidize agricultural sales to the Soviet Union as wreaking further havoc with its foreign payments position. In addition, boost- ing real GDP growth is an announced government priority, and renewed import growth is a prerequisite to higher real-income levels. To realize these goals, we believe that Argentina will seek $2-3 billion in new money over the next 18 months or concessions on interest payments to meet financial needs. The Mexican debt agreement with the IMF already is playing a role in Argentina's negotiating strategy. Buenos Aires delayed negotiations with the IMF and commercial banks until the details of the Mexican arrangement became clear. Press reports indicate that Argentina is seeking to link debt repayment terms to agricultural export prices. Brazil. With a $102 billion foreign debt, massive debt service payments, and a high debt service ratio, Brazil also is a candidate for spillover, despite its strong current account position and substantial foreign ex- change reserves. The Sarney administration has re- peatedly argued that foreign creditors should give Brazil the easiest financing conditions in Latin Amer- ica because of that country's superior economic ad- justment achievements. Brasilia can cite elimination of a current account deficit that was $16 billion in 1982, tax reform, and budget consolidation. More recently, the Cruzado Plan-Brazil's six-month-old austerity program-has slashed the rate of inflation, reduced interest rates, and set in motion market- oriented reforms that could strengthen Brazil's econo- my. However, government spending has not been curbed, savings have declined sharply, and new busi- ness investment continues to be sluggish-signs that inflationary expectations may not have been broken. Brazil's case for major concessions is not as strong as that of other Latin American debtors. Bolstered in part by higher coffee prices, export growth is likely to resume this year after a slight decline in 1985. Real GDP growth also remains strong. Lower oil prices and greater domestic production will reduce petroleum imports, allowing for higher imports of raw materials and other industrial inputs. Finally, an agreement to restructure debt repayments for 1985 and 1986 has been concluded, and press reports indicate that nego- tiations toward a more comprehensive multiyear re- structuring could begin before the end of 1986. Chile. Chile's financial situation is nearly as bad as Mexico's. Export earnings have stagnated since 1981-after a near tripling between 1975 and 1980- as lower prices (especially for copper) offset higher export volume. A worsening balance-of-payments sit- uation and sharp increases in the level of foreign debt forced draconian import cuts. As a result, real GDP fell 14 percent in 1982 and has yet to recover completely to 1981 levels. Chile's debt situation is now so burdensome that principal payments must be rescheduled, and interest payments take up 40 percent of export earnings. At the same time, Chile's economic management team has carried out domestic reforms, including liberalization of trade and capital markets, exchange- rate devaluation, and efforts to stimulate private saving while maintaining fair treatment of foreign investment. These measures have been supported by strict adherence to IMF-supported austerity pro- grams, supplemented by new loans and rescheduling agreements. These actions have allowed Chile to make interest payments and achieve some resurgence in economic growth over the past two years. Given its precarious financial situation and its eco- nomic reforms, Santiago probably feels it has a strong case for debt relief. Negotiations are scheduled to begin before the end of 1986, and US Embassy reports indicate that Chile will seek rescheduling of payments due through 1989 or 1990, and more than $400 million in new funding during the period 1987-88. Given competent economic management in the face of adverse external factors, a perfect interest payment record, and full compliance with IMF and World Bank adjustment programs, we believe that Chile can lay a strong case for debt relief. The human Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 rights issue, however, remains sensitive and could delay approval of new loans or other debt concessions, especially from official creditors. Venezuela. Venezuela is likely to argue for debt relief on grounds of a poor financial situation, the need to revive a stalled economy, and bank reluctance to provide new funds. Falling oil prices will cost Venezu- ela $5-6 billion in export revenue in 1986, and we forecast a 2-percent decline in real GDP. As a result, Venezuela almost certainly will request a postpone- ment of $3.4 billion in principal payments due during 1987-89. the Mexican debt negotiations/ Cara-' cas's unilateral and short-lived decision to pay private-sector debt with long-term, low-interest rate bonds angered creditors, and could complicate future debt negotiations. In our opinion, however, a resched- uling of public- and private-sector debt, coupled with the use of foreign exchange reserves, will be necessary to cover the loss of export revenue in the near term. Smaller Countries Colombia. In our opinion Colombia probably will not press for concessions or rescheduling over the next 18 months. We forecast a sharp increase in export earn- ings in 1986 as a result of higher coffee prices, and, it is unlikely Colombia will need to draw on all external funding that has been made available. A strenuous, IMF-monitored economic stabilization program has led to economic recovery; we forecast 4-percent real GDP growth this year, following increases averaging 2 percent per year between 1982 and 1985. Moreover, compared with other Latin American debtors, Colombian economic performance during the past four years has been excellent. Ecuador. The sharp drop in oil prices will slash Ecuador's export revenues by $500-600 million in 1986 and increase the current account deficit to $750 million, according to US Embassy sources. In re- sponse, Quito has negotiated increased financial assis- tance-such as a $200 million syndicated loan-and on 11 August announced new economic adjustment measures, including exchange-rate reform and dereg- ulation of interest rates on savings and loan accounts at private banks. Given Ecuador's proven record of making economic reforms and its poor financial out- look, we believe Quito has a strong argument for further debt concessions. Peru. Peru's financial outlook has been clouded by a number of adverse factors, including persistently low commodity prices. While progress has been made toward curbing triple-digit inflation and boosting economic growth, these benefits are likely to be short lived. As a result, we believe that a case for debt concessions can be made. However, given Peru's hardline confrontational attitude toward debt repay- ment, the resultant de facto debt relief, and a near- complete lack of creditor confidence, Lima almost certainly will not obtain major debt concessions from commercial banks or the IMF unless it substantially moderates its debt repayment position. insurgent threats. Core Four Central American Countries. Costa Rica, El Salvador, Guatemala, and Honduras-the Core Four Central American countries-may be candi- dates for spillover because of an increased debt bur- den and continuing economic stagnation. We expect total debt service to weigh heavily on these small economies, remaining near 40 percent of goods and services exports in 1986-after more than doubling between 1980 and 1985. In addition, we forecast only a slight increase in real GDP in 1986, which fell 5 percent between 1980 and 1985. Despite an expected improvement in the trade picture in 1986 because of higher coffee prices and lower petroleum imports, we expect most of these debtors to seek payment conces- sions and new financing to compensate for five years of eroding export earnings, the continued fall in per capita income, and the need to combat domestic 25X1 25X1 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Secret Jamaica. In the Caribbean, Jamaica is in need of some special financial arrangement because of baux- ite revenue losses and real GDP declines. Prime Minister Seaga, citing the need for growth after years of austerity, abandoned IMF guidelines in May. Because Jamaica's debt negotiations with the IMF and other creditors are currently at a difficult stage and the country is $70 million in arrears to the Fund, Kingston almost certainly will not obtain major con- cessions or new financing in the near term. Seaga, however, may feel that his good relations with the United States and the potential for former Prime Minister Michael Manley to be reelected if the economy does not improve may enhance his chances Manila probably believes that the severe political and economic problems faced by the new government put the Philippines in line for favorable treatment. With renewed economic growth a top govern- ment priority, Manila's approach is to seek the sup- port of its foreign donors and creditors for a growth- oriented economic strategy that includes a multiyear debt rescheduling and tolerates a high government budget deficit. for concessions. Key Asian Debtors In general, the potential for spillover is not as great in Asia as in Latin America. Most of the Asian countries have considerably stronger financial positions. More- over, Asian debtors generally are less belligerent toward creditors and are more amenable to imple- menting measures to permit full servicing of debt obligations. The Philippines The Philippines is a marked exception, however. There the financial and economic situation deteriorat- ed in 1983, and the economy remained in recession through 1985. Since 1984, Philippine export earnings have been depressed by a sharp 40-percent drop in commodity prices, imports have been slashed, and real GDP has fallen more than 2 percent. Since President Aquino assumed power in February 1986, however, economic adjustment measures have been put into effect-tax measures have been passed, trade liberal- ization is under way, and reform of financial institu- tions has begun. We believe, however, that Manila will need to demonstrate that leftists do not dominate policymaking, that the Communist insurgency can be arrested, and that the new government can implement economic programs to restore the confidence of credi- tors and investors. Indonesia and Malaysia Although they are in much stronger positions than the Latin American debtors, Indonesia and Malaysia also suffered economic and financial reverses during 1985 and 1986. Lower oil prices and, for Malaysia, a sharp decline in commodity prices have reduced export earnings for the two countries by $4-6 billion each since 1984, and resulting import cutbacks have re- duced the rate of real GDP growth. In addition, the decline of the US dollar has sharply raised debt servicing costs for both countries on the portion of foreign debt that is nondollar denominated. We believe that, unless oil and commodity prices rebound sharply, these countries will need substantial amounts of new funding-$2 billion per year for Malaysia and $5 billion per year for Indonesia-to boost real GDP growth and absorb labor force in- creases. If these funds are not forthcoming, debt concessions modeled in part on those in the Mexican agreement could be requested. Thailand Thailand's economic outlook has brightened, follow- ing an economic slowdown in 1985. Exports have risen 19 percent in dollar terms over the first half of 1986, and lower oil prices have slashed Thailand's oil import bill. In addition, while the cost of servicing yen- denominated debt has risen-as a result of the depre- ciation of the US dollar-Bangkok is refinancing its 25X1 25X1 25X1 25X1 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Figure 2 LDC Debtors: Trade and Financial Indicators Mozambique Madagascar Burma Somalia Egypt Morocco Chile Algeria Bolivia Sierra Leone Brazil Mexico Yemen Arab Republic Nigeria Colombia Uruguay Argentina Philippines Costa Rica Ecuador Kenya Tunisia Papua New Guinea Pakistan Jamaica Venezuela Malaysia dollar-denominated debt, and coverall debt servicing costs could be lower for 1986 than in 1985. We believe that, unless oil prices rise sharply, the chances for a Mexican-type debt agreement are remote. Nigeria Mozambique Venezuela Jamaica Somalia Sierra Leone Mexico Bolivia Burma Uruguay Egypt Kenya Yemen Arab Republic Madagascar Malaysia Tunisia Ecuador Philippines Chile Morocco Argentina Papua New Guinea Pakistan Colombia Costa Rica Brazil Algeria Egypt Although there are several countries in these regions that are candidates for spillover, Egypt is the one of greatest concern. Export revenues have been devastat- ed by lower oil prices and a sharp dropoff in worker 25X1 25X1 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Secret Figure 2 (continued) remains unpalatable to Cairo because the strict finan- cial and economic guidelines of a fund-supported program would almost certainly provoke political and social unrest. Mozambique Chile Madagascar Bolivia Brazil Somalia Mexico Argentina Burma Morocco Philippines Ecuador Costa Rica Uruguay Egypt Colombia Sierra Leone Yemen Arab Republic Venezuela Nigeria Jamaica Kenya Tunisia Algeria Papua New Guinea Pakistan Malaysia is far reaching and comprehensive, but specific weak- nesses remain in the areas of the budget deficit, credit expansion, and exchange-rate reform. Egypt has proved more adept at proposing reforms than at implementing them, which has created a credibility gap with commercial banks, creditor governments, and the IMF, and has delayed agreement on a new standby accord. Finally, Cairo will continue to cite its special relation- ship with Washington as an argument for debt con- cessions. Egypt and the United States share concerns on several major military and political issues, and Cairo almost certainly assumes that the strong US commitment to supporting a moderate regime in Cairo will provide the leverage needed to win in- creased funding and debt rescheduling. Nigeria Elsewhere, Nigeria could argue that its financial situation is worse than Mexico's and that major debt relief is needed. Falling oil prices will slash export earnings as much as $5 billion in 1986, and, despite initial moves such as a two-tiered exchange-rate system, political considerations will make meaningful austerity measures difficult. In addition, efforts to obtain an IMF agreement have been stalled by strong anti-IMF feeling within the government. Nevertheless, Nigeria does not seem willing to press the issue of debt relief. Lagos is aware that past 3106798 104r.' actions, such as the accumulation of large debt ar- rearages, have left creditors with a dim view of further lending. In addition, Nigeria does not demand remittances, and we believe that, even with modest the attention from creditors that the Latin American import cutbacks, Cairo will require substantial new countries receive. Creditors appear split on offering funding to meet financial needs. Although US Em- new financing to Lagos, with most US banks viewing bassy reports indicate that the Egyptians have recent- Nigeria as a poor credit risk, while European banks ly met with IMF officials, a formal IMF agreement are still willing to make new loans because of their Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Cairo will probably also point to a newly formulated program of economic reform as justification for debt 50 60 relief. US Embassy reports indicate that the program Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 historical relationship with Africa These differences could make agree- ment on a package of debt concessions more difficult. Morocco and Tunisia Morocco and Tunisia could be candidates for spill- over, given their bleak financial condition, strategic location at the entrance to the Mediterranean, and shared concern with the United States over regional political matters. Export earnings have fallen because of declining demand for phosphate, and foreign ex- change reserves for both countries are nearly exhaust- ed. Cautious steps toward economic reform are now being taken to secure increased funding, but progress has been limited by fear that these measures will lead to a repeat of the bloody riots that followed the attempted imposition of austerity in 1984. Sub-Saharan Africa A number of small countries in Sub-Saharan Afri- ca-including Cameroon, Ghana, Ivory Coast, and Senegal-have implemented economic reform pro- grams to rescue their battered economies, ensure continued external funding, and create a more favor- able long-term environment for economic growth. These measures, however, have not been without opposition, and have potentially serious political and social implications because already poor countries are being called on for further sacrifice. As a result, these debtors may press for lenient debt treatment as a reward for their economic reform efforts. Creditor-debtor relations are likely to become more complicated in the wake of the Mexican package. Mexico is the first debtor to have commodity export prices explicitly linked to the terms of a new IMF agreement, thus setting the stage for other key debt- ors with narrow export bases to demand similar terms. For example, debtors such as Argentina and Malaysia could argue for linkage to a basket of commodity export prices, and Indonesia, Nigeria, and Venezuela could demand terms linked to oil prices. Press reports confirm that Buenos Aires is already making such an argument. Similarly, some key debtors seem more inclined to link debt payments to GDP. For example, Brazilian Finance Minister Funaro stated in off-the- cuff remarks to the press on 28 July 1986 that Brazil needs to limit its debt service to 2.5 percent of GDP to support economic growth. Funaro and members of President Sarney's staff subsequently explained that reducing payments was a goal Brasilia wanted to negotiate with creditors and did not imply an inten- tion to take unilateral action. A major risk of the Mexican package is a deteriora- tion in the conduct of debt negotiations. The Mexican package makes it politically more difficult for other debtors to continue paying without extracting conces- sions from creditors while continuing to keep tight reins on their respective economies. Therefore, we believe that debt-troubled countries will be less will- ing to operate under the old strategy where continued financing was contingent on an IMF-supported pro- gram. If a debtor fails to receive what it considers adequate financing or payment terms, or cannot find other orderly ways to reduce debt payments or at least link them to export performance, there is a greater possibility that the debtor would unilaterally act to curtail payments. While we believe the possibility of a debtors' cartel remains remote, there nevertheless is now a greater chance that LDC debtors may act jointly if they are not satisfied with creditors' respons- es to their plight. We expect the question of spillover will grow in importance as the future debt negotiations of major LDCs progress. Debtors are likely to increase contacts among themselves in an effort to receive comparable treatment from creditors-stepping up bilateral con- tacts, keeping each other informed of current negoti- ating strategies, and exchanging documentation. 25X1 25X1 25X1 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 Secret Although debtor demands for relief will probably be modeled after the Mexican financial package, alter- native schemes have been proposed-and some have been implemented. It is possible that these proposals could surface again as debtor countries search for ways to ease their financial problems. Such past actions have included: ? Tying payments to export revenues. President Garcia announced on 28 July 1986 that Peru would restrict principal and interest payments on public debt to 10 percent of export revenues for another year, and that payments would be contingent upon creditor inflows meeting or exceeding Peru's pay- ment levels. At the same time, Lima stated that new interest rate charges or refinancing terms must meet the 10 percent payment limit. Similarly, Nigeria announced on 31 December 1985 that it would limit debt payments to 30 percent of export revenues, covering roughly half the projected obli- gations due in 1986. ? Issuing bonds to service debt. Venezuela passed a new law on 7 July 1986 that provided for repay- ment of a portion of $7 billion in private-sector debt in the form of 15 year, dollar-denominated govern- ment bonds carrying a 5 -percent interest rate. Un- der this system, Venezuelan firms would buy bonds from the newly created exchange compensation fund in domestic currency and then turn the bonds over to foreign creditors as payment for outstanding debt. Criticism from creditors forced Caracas to Troubled debtors may use this network to time an- nouncements of alternative payment schemes to maxi- mize their effect. For example, in Venezuela the main impetus for the bond program was Caracas's under- standing that Mexico was approaching confrontation with its creditors and the time was therefore propi- tious also take a tough stance with banks Only when Mexico decided to negotiate rather than take unilateral action did Venezuela become abolish the legislation in mid-August, and Venezu- ela will instead alter the prior private-debt scheme through executive decrees to change the exchange agreements, according to the US Embassy. ? Domestic currency deposit schemes. Mexican fi- nance officials, reportedly with the backing of Pres- ident de la Madrid, drafted a plan where interest payments due to foreign creditors would instead be deposited in an escrow account at the Central Bank, according to press reports. These funds were to bear interest at the normal interbank rate set in London, but could not be transferred abroad as dollars until Mexico's foreign reserves increased substantially. Although the need to implement this plan has lessened with the signing of the IMF letter of intent, its presentation to creditors showed the severity of Mexico's threat to lower debt payments and sig- naled the end of its previously moderate approach to debt negotiations. Creditors have generally responded harshly to unilat- eral attempts at reducing debt payments. Commercial creditors view such payment schemes as setting dan- gerous precedents and as obstacles to financial nego- tiations. When such unilateral actions are taken, banks first retaliate against an LDC-as they did with Peru, Nigeria, and Venezuela-by cutting back short-term trade financing. But they may also take more drastic steps; for example, banks threatened legal action against Venezuelan firms when the bond system was first announced. more willing to negotiate a mutually acceptable solu- tion instead of maintaining its hardline position. There also is a danger that creditors, especially commercial banks, will become more opposed to negotiating with debtors if the Mexican-IMF accord becomes the standard. They view solutions that link Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 debt payments to commodity prices or GDP growth as unacceptable because payment amounts are then sub- ject to factors beyond their control and ability to plan, e believe that com- mercial banks will remain hesitant to extend new longer term loans to most LDCs unless pressured to do so in conjunction with an IMF-supported program. In addition, creditors would be likely to face a substantial need for new funds if every major debtor is to receive a large Mexican-scale agreement. Also troubling is the fact that involuntary bank lending over the next few years will become more concentrat- ed among the world's larger banks-increasing their risks and exposure-as US regional and smaller foreign banks largely opt out of large new money packages. Although most large money center banks are now in better financial shape after building up loan-loss reserves, lending to LDCs that are poor credit risks, as well as the possibility of unilateral payment stoppages or negotiated payment reductions, places these creditors-especially some large interna- tional banks-in greater jeopardy. Offsetting these increased risks is the fact that be- cause the Fund will be perceived as having had a more flexible approach during negotiations-by allowing larger budget deficits and by tying further assistance to growth and oil prices-some recalcitrant debtors may be encouraged to stay within the case-by-case debt strategy and not follow Peru's example and go it alone. Nonetheless, should other key debtors fail to receive what they consider to be equal treatment, or at least softer payment terms, the spillover risks may become real, and it is possible that some debtors will even adopt unilateral measures to limit debt service payments. Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1127RO01000890002-8 Secret Secret Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1127RO01000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 s. r ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : REPORT : OGI*4098*86 GI*10068*86 005/155/0010/0001161 WH ADDRESS MICHAEL K BOHN DIRECTOR WHITE HOUSE SITUATION ROOM 005/155/0010/0001167 WH ADDRESS 1 2 2 DESIGNATE WHITE HOUSE SITUATION ROOM WEST WING THE WHITE HOUSE 008/155/0110/0001173 VICEPRES ADDRESS DONALD GREGG 1 3 3 ASSISTANT TO THE VICE PRESIDENT FOR NATIONAL SECURITY AFFAIRS ROOM 298, OLD EXECUTIVE OFFICE BUILDING WHITE HOUSE 020/170/0050/0002203 CEA ADDRESS BERYL SPRINKEL 1 4 4 CHAIRMAN COUNCIL OF ECONOMIC ADVISORS ROOM 314 OLD EXECUTIVE OFFICE BUILDING 020/150/0050/0002209 CEA ADDRESS' ACTING DESIGNATE SENIOR STAFF ECONOMIST COUNCIL OF ECONOMIC ADVISERS OLD EXECUTIVE OFFICE BUILDING 025/150/0050/0003403 OSTR ADDRESS HARVEY BALE 1 6 6 ASSISTANT UNITED STATES TRADE REP ROOM 103 WINDER BLDG 17TH & PENNA AVE (COLLATERAL ONLY) SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : REPORT : OGI*4098*86 GI*10068*86 025/150/0050/0003439 OSTR ADDRESS GEZA FEKETEKUTY OFFICE OF THE U S SPECIAL TRADE REPRESENTATIVE 1 7 7 RM 103, 600 17TH ST,N W WASHINGTON, D.C. (COLLATERAL ONLY) 030/180/0110/0004007 ADDRESS PHILIP A DUSAULT 1 8 8 OMB DEPUTY ASSOC DIR, INTERNAL AFFAIRS OMB 030/180/0110/0004011 OMB ADDRESS DAVID SITRIN DEPUTY ASSOC DIR FOR NATIONAL SECURITY OMB 1 9 9 009/120/0050/0004615 PFIAB ADDRESS GARY J SCHMITT PFIAB N- (A-1/OGI PRODUCTS ONLY) ROOM 340 EOB 1 10 10 035/150/0030/0004621 NSC ADDRESS JAMES H KELLY,JR SENIOR STAFF MEMBER EAST ASIA NSC 1 11 11 035/150/0110/0004663 NSC ADDRESS GEORGE VAN ERON INTELLIGENCE COORDINATION 3 12 14 ROOM 381, EXECUTIVE OFFICE BLDG. NATIONAL SECURITY COUNCIL SL .T Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : REPORT : OGI*4098*86 GI*10068*86 035/150/0030/0004673 NSC ADDRESS RICHARD T CHILDRESS NSC STAFF ROOM 383 OEOB 1 15 15 035/150/0050/0004683 NSC ADDRESS STEPHEN DANZANSKY SPECIAL ASSISTANT TO THE PRESIDENT 1 16 16 SENIOR DIRECTOR,INTERNATL ECON AFFAIRS NATIONAL SECURITY COUNCIL ROOM 373, EOB 035/170/0050/0004713 NSC ADDRESS DAVID WIGG DIRECTOR INTERNATIONAL ECONOMIC AFFAIRS 1 17 17 ROOM 373 VIA ROOM 381 EXECUTIVE OFFICE BUILDING 045/170/0110/0005815 COMM DEPT ADDRESS BYRON L JACKSON D/OFFICE OF INTELLIGENCE LIAISON ROOM 6854, MAIN COMMERCE DEPARTMENT OF COMMERCE (ONLY I COPY IF CW) 4 18 21 055/190/0110/0006483 DOD ADDRESS CRAIG ALDERMAN, JR DEPUTY UNDER SECRETARY OF DEFENSE 1 22 22 (POLICY) DEPARTMENT OF DEFENSE ROOM 2EB12 THE PENTAGON A144 053/170/0110/0007021 JCS ADDRESS LT GENERAL JOHN H MOELLERING ASSISTANT TO THE CHAIRMAN 1 23 23 JOINT CHIEFS OF STAFF ROOM 2E872 THE PENTAGON (A-1) SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*10068*86 055/180/0110/0007997 DOD ADDRESS THE HONORABLE RICHARD L ARMITAGE 1 24 24 ASSISTANT SECRETARY OF DEFENSE (INTERNATIONAL SECURITY AFFAIRS) ROOM 4E808 THE PENTAGON 065/010/0020/0009635 DIA ADDRESS WALTER BARROWS 1 25 25 DIO FOR AFRICA (A-1-OGI/AFRICA) AND GLOBAL ISSUES,DIA ROOM 2C238 THE PENTAGON 075/150/0110/0013619 AIR FORCE ADDRESS MAJ GENERAL SCHUYLER H BISSELL. USAF 1 62 62 ASSISTANT CHIEF OF STAFF, INTELLIGENCE ROOM 4A932 (A-1) DEPARTMENT OF THE AIR FORCE THE PENTAGON 080/150/0110/0014317 ARMY ADDRESS LT GENERAL SIDNEY T WEINSTEIN 1 63 63 ASSISTANT CHIEF OF STAFF FOR INTELLIGENCE C786 (A-1) DEPARTMENT OF THE ARMY ROOM 2E466, THE PENTAGON 25X1 25X1 SE. _ r Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 S, r ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*10068*86 085/170/0110/0015027 NAVY ADDRESS RADM WILLIAM 0 STUDEMAN 1 64 64 DIRECTOR OF NAVAL INTELLIGENCE DEPT OF THE NAVY ROOM 5C572 THE PENTAGON 086/170/0010/0015062 NAVY ANNEX ADDRESS BRIG GENERAL FRANK J BRETH 1 65 65 DIRECTOR OF INTELLIGENCE (A-1) D150 ROOM 3233, NAVY ANNEX DEPT OF THE NAVY 087/170/0010/0015405 DIRECTOR, NSA/CSS T5152 FORT GEORGE G MEADE MD 090/150/0010/0015715 DOE ADDRESS GARNETTA PHILLIPS 3 72 74 DOE OPSCTR GA-257-FORRESTAL BLDG (A-6/3) 1000 INDEPENDENCE AVE,SW (DO/NSA/DIA/DOS APPROVED (YES/NO):( )SANDIA ( )LL LABS ( )LOS ALAMOS ( )OAKRIDGE ( )PAC NW 110/190/0050/0018711 STATE ADDRESS W ALLEN WALLIS 1 75 75 UNDER SECRETARY OF STATE ECONOMIC AFFAIRS ROOM 7256 DEPARTMENT OF STATE 110/170/0110/0018723 STATE ADDRESS RICHARD H SOLOMON 1 76 76 DIRECTOR, POLICY PLANNING COUNCIL DEPARTMENT OF STATE NOTE: (EURA/A-5) ROOM 7311 SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT GI*10068*86 110/150/0110/0018731 1 STATE ADDRESS NELSON C LEDSKY PRINCIPAL DEPUTY DIRECTOR POLICY PLANNING COUNCIL 1 77 77 110/180/0030/0018743 STATE ADDRESS AMBASSADOR GASTON J SIGUR ASSISTANT SECRETARY EAST ASIAN AND PACIFIC AFFAIRS 1 78 78 ROOM 6205 110/080/0050/0019503 STATE ADDRESS ALAN P LARSON EXECUTIVE ASSISTANT TO THE UNDER SECRETARY FOR ECONOMIC AFFAIRS 1 79 79 ROOM 7256 DEPT OF STATE 110/080/0050/0020103 STATE ADDRESS RALPH R JOHNSON DEPUTY ASSISTANT SECRETARY TRADE AND COMMERCIAL AFFAIRS BUREAU OF ECONOMIC AND BUSINESS AFFAIRS ROOM 3831A DEPT OF STATE 1 80 80 110/180/0050/0020105 STATE ADDRESS WILLIAM B MILAM DEPUTY ASSISTANT SECRETARY FOR INTERNATIONAL FINANCE AND DEVELOPMENT BUREAU OF ECONOMIC AND BUSINESS AFFAIRS DEPARTMENT OF STATE 1 81 81 110/170/0050/0020109 STATE ADDRESS SHAUN E DONNELLY DIRECTOR OFFICE OF DEVELOPMENT FINANCE BUREAU OF ECONOMIC & BUSINESS AFFAIRS DEPARTMENT OF STATE 1 82 82 SE ~T Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 SE ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : REPORT : OGI*4098*86 GI*10068*86 110/170/0050/0020115 STATE ADDRESS CLARKE N ELLIS DIRECTOR OFFICE OF INVESTMENT AFFAIRS BUREAU OF ECONOMIC AND BUSINESS AFFAIRS DEPARTMENT OF STATE 1 83 83 110/080/0050/0020119 STATE ADDRESS LAURALEE PETERS DIRECTOR OFFICE OF MONETARY AFFAIRS BUREAU OF ECONOMIC AND BUSINESS AFFAIRS DEPT OF STATE 1 84 84 110/080/0050/0020127 STATE ADDRESS MARSHALL L CASSE DIRECTOR PLANNING AND ECONOMIC ANALYSIS STAFF BUREAU OF ECONOMIC AND BUSINESS AFFAIRS DEPT OF STATE 1 85 85 110/080/0050/0020131 STATE ADDRESS ELINOR G CONSTABLE DEPUTY ASSISTANT SECRETARY BUREAU OF ECONOMIC AND BUSINESS AFFAIRS DEPT OF STATE 1 86 86 110/170/0130/0022443 STATE ADDRESS W ROBERT WARNE DIRECTOR, OFFICE OF REGIONAL ECONOMIC POLICY BUREAU OF INTER-AMERICAN AFFAIRS DEPARTMENT OF STATE 1 87 87 111/170/0110/0024001 INR ADDRESS AMBASSADOR MORTON I ABRAMOWITZ DIRECTOR BUREAU OF INTELLIGENCE AND RESEARCH(INR) 1 88 88 ROOM 6531 DEPARTMENT OF STATE SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*IOO68*86 111/170/0110/0024003 INR ADDRESS FRANCIS J MCNEIL DEPUTY DIRECTOR BUREAU OF INTELLIGENCE AND RESEARCH 1 89 89 ROOM 6531 DEPARTMENT OF STATE 111/120/0110/0024007 INR ADDRESS HENRY S MYERS EXECUTIVE ASSISTANT TO THE DIRECTOR, INR 1 90 90 ROOM 6510 VIA ROOM 6531 DEPARTMENT OF STATE 111/180/0110/002.4012 INR ADDRESS JEROME H KAHAN DEPUTY ASSISTANT SECRETARY FOR FUNCTIONAL ANALYSIS AND RESEARCH BUREAU OF INTELLIGENCE AND RESEARCH(INR) ROOM 6535 - DEPARTMENT OF STATE 1 91 91 111/180/0110/0024014 INR ADDRESS RICHARD CLARKE DEPUTY ASSISTANT SECRETARY FOR REGIONAL ANALYSIS BUREAU OF INTELLIGENCE AND RESEARCH DEPARTMENT OF STATE ROOM 6535 1 92 92 111/170/0110/0024062 INR ADDRESS RAYMOND E PLATIG DIRECTOR, INR/LAR 1 93 93 (WXX REQUIREMENT-122000,132,500,800000) DEPT OF STATE 111/100/0010/0024065 INR ADDRESS JOHN DONOVAN INR/LAR/LAS 1 94 94 SE, i Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 PROJECT : REPORT : OGI*4098*86 GI*10068*86 111/020/0010/0024066 INR ADDRESS EDWARD G GRIFFIN INR/LAR/LAS 1 95 95 111/140/0010/0024070 INR ADDRESS WILLIAM J TRAINOR INR/LAR 1 96 196 111/150/0110/0024071 INR ADDRESS V JAMES FAZIO, JR BUREAU OF INTELLIGENCE AND RESEARCH INR-IS ROOM 6510A DEPARTMENT OF STATE 1 97 97 111/150/0030/0024111 INR ADDRESS CORAZON S FOLEY INR/EC/RE 1 98 98 ROOM 8666 DEPT OF STATE 111/150/0110/0024189 INR ADDRESS KATHLEEN M WALKER INR/IC/CD 4 99 102 ROOM 8646 DEPT OF STATE (A-4, ALL NON-CODEWD/PUBS) 111/150/0050/0024263 INR ADDRESS RALPH E LINDSTROM 1 103 103 DIRECTOR, OFFICE OF ECONOMIC ANALYSIS INR/EC ROOM 8722 DEPARTMENT OF STATE SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT REPORT : OGI*4098*86 GI*10068*86 111/150/0050/0024289 INR ADDRESS DAVID R KONKEL CHIEF, TRADE AND MONETARY AFFAIRS DIVISION (INR/EC/TM) 1 104 104 ROOM 8727 DEPT OF STATE 120/200/0130/0024837 AID ADDRESS ERNEST H PREEG DEPY ASST ADMINISTRATOR-CHF ECONOMIST BUR FOR PROG & POLICY COORD (AID/PPC) 1 105 105 ROOM 3741 STATE DEPARTMENT 140/130/0110/0027211 TREAS DEPT ADDRESS DOUGLAS MULHOLLAND SPECIAL ASSISTANT 6 106 111 TO THE SECRETARY (NATIONAL SECURITY) 4 ROOM 432 DEPARTMENT OF THE TREASURY (A-6) 160/170/0050/0029601 FED RES SYST ADDRESS PAUL A VOLCKER CHAIRMAN BOARD OF GOVERNORS FEDERAL RESERVE BOARD 1 112 112 160/120/0050/0029603 FED RES SYST ADDRESS HENRY C WALLICH MEMBER BOARD OF GOVERNORS FEDERAL RESERVE BOARD 1 113 113 160/120/0050/0029605 FED RES SYST ADDRESS CYNTHIA SUTTON DIVISION INTERNATIONAL FINANCE BOARD OF GOVERNORS FEDERAL RESERVE BOARD SE _f 1 114 114 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : REPORT : OGI*4098*86 GI*10068*86 160/170/0050/0029607 FED RES SYST ADDRESS CHARLES SIEGMAN ASSOCIATE DIRECTOR DIVISION OF INTERNATIONAL FINANCE BD. OF GOVERNORS, FEDERAL RESERVE 20TH & CONSTITUTION AVE. N.W. WASH. DC 1 115 115 160/120/0050/0029621 FED RES SYST ADDRESS ANTHONY SOLOMON PRESIDENT FEDERAL RESERVE BANK OF NEW YORK NEW YORK, NEW YORK ATTN: DEBBIE LITTLE(POUCH) 1 116 116 160/120/0050/0029625 FED RES SYST ADDRESS SAMUEL Y CROSS, JR SENIOR VICE PRESIDENT FOR FOREIGN RELATIONS FEDERAL RESERVE BANK NEW YORK 1 117 117 160/170/0050/0029653 FED RES SYST ADDRESS DONALD L KOHN STAFF DIRECTOR FOR MONETARY POLICY BOARD OF GOVERNORS FEDERAL RESERVE BOARD 1 118 1.18 170/120/0110/0030815 OPIC ADDRESS ROBERT C FLETCHER OFFICE SERVICE MANAGER ADMINISTRATIVE OFFICE 1129 20TH STREET, N.W. ROOM 405 WASHINGTON, D.C. 1 119 119 195/150/0110/0033709 EXIMBANK ADDRESS ALBERT H HAMILTON GOVERNMENT AFFAIRS EXPORT-IMPORT BANK ROOM 235 811 VERMONT AVE., NW 1 120 120 SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*10068*86 001/170/0012/0045005 CIA ADDRESS ROBERT M GATES 1 121 121 DEPUTY DIRECTOR OF CENTRAL INTELLIGENCE NMIC ADDRESS 1 122 122 CIA ADDRESS 1 123 123 CIA ADDRESS 1 124 124 CIA ADDRESS 1 125 125 CIA ADDRESS 1 126 126 9 X1 25X1 SE _T Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 S. r ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*10068*86 CIA ADDRESS 3 129 131 CIA ADDRESS 1 132 132 CIA ADDRESS 4 133 136 CIA ADDRESS 1 137 137 25X1 25X1 SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*10068*86 CIA ADDRESS 1 141 141 CIA ADDRESS 1 142 142 CIA ADDRESS 1 143 143 25X1 LDAI SE_..cT Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 S, PROJECT : OGI*4098*86 REPORT : GI*10068*86 CIA ADDRESS 1 144 144 CIA ADDRESS 1 145 145 CIA ADDRESS 1 146 146 CIA ADDRESS 2 147 148 CIA ADDRESS 1 149 149 CIA ADDRESS 1 150 150 25X1 25X1 SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*10068*86 CIA ADDRESS 1 151 151 CIA ADDRESS 1 152 152 CIA ADDRESS 1 153 153 CIA ADDRESS 1 154 154 CIA ADDRESS 1 155 155 CIA ADDRESS 1 156 156 SL. _T Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 25X1 25X1 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 SL ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*10068*86 CIA ADDRESS 1 159 159 CIA ADDRESS 1 160 160 CIA ADDRESS 1 161 161 CIA ADDRESS 1 162 162 25X1 25X1 SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*10068*8G CIA ADDRESS 1 164 164 CIA ADDRESS 1 165 165 CIA ADDRESS 1 166 166 CIA ADDRESS 2 167 168 CIA ADDRESS 6 169 174 25X1 25X1 SEL Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*10068*86 DATE OF RUN : 10/14/86 CIA ADDRESS CIA ADDRESS CIA ADDRESS 4 175 178 5 179 183 5 184 188 CIA ADDRESS 4 189 192 CIA ADDRESS 3 193 195 CIA ADDRESS 5 196 200 25X1 25X1 SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT 0GI*4098*86 REPORT : GI*10068*86 DATE OF RUN : 10/14/86 CIA ADDRESS CIA ADDRESS CIA ADDRESS 3 201 203 1 204 204 2 205 206 CIA ADDRESS 1 207 207 CIA ADDRESS 1 208 208 CIA ADDRESS 27 209 235 25X1 25X1 SE. _r Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87T01127R001000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*10068*86 DATE OF RUN : 10/14/86 CIA ADDRESS" CIA ADDRESS CIA ADDRESS 1 236 236 1 237 237 1 238 238 CIA ADDRESS 1 239 239 CIA ADDRESS 1 240 240 CIA ADDRESS 1 241 241 25X1 SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER REPORT : GI*lOOG8*86 DATE OF RUN : 10/14/86 CIA ADDRESS 1 242 242 CIA ADDRESS 1 243 243 CIA ADDRESS 1 244 244 CIA ADDRESS 1 245 245 CIA ADDRESS 1 246 246 CIA ADDRESS 3 247 249 25X1 25X1 SE _T Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 S. I ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*10O68*86 DATE OF RUN : 10/14/86 CIA ADDRESS 1 250 250 CIA ADDRESS 1 251 251 CIA ADDRESS 1 252 252 CIA ADDRESS 1 253 253 CIA ADDRESS 2 254 255 CIA ADDRESS 1 256 256 25X1 25X1 SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*10068*86 DATE OF RUN : 10/14/86 CIA ADDRESS 1 257 257 CIA ADDRESS 5 258 262 CIA ADDRESS 1 263 263 CIA ADDRESS 1 264 264 CIA ADDRESS 1 265 265 CIA ADDRESS 1 266 266 25X1 25X1 SE. .T Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT REPORT : GI*10068*86 CIA ADDRESS 1 267 267 CIA ADDRESS 1 268 268 CIA ADDRESS 1 269 269 CIA ADDRESS 1 270 270 CIA ADDRESS 20 271 290 CIA ADDRESS 2 291 292 25X1 25X1 ,25X1 SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*IOOG8*86 CIA ADDRESS 9 369 377 CIA ADDRESS 2 378 379 CIA ADDRESS 1 380 380 CIA ADDRESS 1 381 381 9 X1 25X1 SE... ._T Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER REPORT : GI*10068*86 CIA ADDRESS 1 385 385 CIA ADDRESS 1 386 386 CIA ADDRESS 1 387 387 CIA ADDRESS 1 388 388 25X1 25X1 SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 SECRET ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT OGI*4098*86 REPORT : GI*10068*86 CIA ADDRESS 1 389 389 CIA ADDRESS 1 390 390 CIA ADDRESS 1 391 391 CIA ADDRESS 1 392 392 CIA ADDRESS 1 393 393 CIA ADDRESS 1 394 394 25X1 25X1 SEL t Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 ADHOC DISSEMINATION LIST TITLE : MEXICAN IMF AGREEMENT: THE RISKS OF SPILLOVER PROJECT : OGI*4098*86 REPORT : GI*10068*86 CIA ADDRESS 1 395 395 CIA ADDRESS I 396 396 CIA ADDRESS 1 397 397 CIA ADDRESS 1 398 398 CIA ADDRESS 1 399 399 CIA ADDRESS 1 400 400 25X1 25X1 SECRET Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1 127RO01 000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1127RO01000890002-8 Sanitized Copy Approved for Release 2011/03/16: CIA-RDP87TO1127RO01000890002-8