SUPPORT FOR SECRETARY BAKER'S MEETING WITH THE POLISH DELEGATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP90T00114R000302850001-0
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 8
• Document Creation Date: December 22, 2016
• Document Release Date: February 10, 2012
• Sequence Number: 1
• Publication Date: March 6, 1987
• Content Type: MEMO

Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90T00114R000302850001-0
1JUl. NU cu-c /-/ d %do j
,~trT
'p',f;'~
P & PD /../ P01
-tin Omgm, u. c. z o s 0s
6 March 1987
MEMORANDUM FOR: Harvey Shapiro
Deputy Director, Office of East-West Trade
Department of Treasury
FROM: 25X1,
Office of European Analysis
Acting Chief, Eastern Regional Economics
Issues Branch
East European Division
SUBJECT: Support for Secretary Baker's meeting with
the Polish delegation
1:. Attached is our response to your request for support in
prepar'tion for Secretary Baker's meeting with the Polish
-
2. Table 1 outlines the principal and interest payments due
under the Polish rescheduling agreements and new money packages
from commercial banks when these were tied to a rescheduling
agreement. In particular, I want to call your attention to the
1986 Government Agreement which was initialed but never signed.
When this agreement is eventually renegotiated, the figures for
amounts due would of course change.
3. Table 2 describes the terms of the rescheduling
agreements including obligations covered, amount of debt relief,
and the repayment terms. We have provided in the comment section
of this table our best estimate of arrears owed under the
rescheduling agreements through the end of 1986.
25X1
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90T00114R000302850001-0
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TO0114R000302850001-0 25X1
pY I
4. I hope this information will prove useful to your needs.
Attachments:
As Stated
Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TO0114R000302850001-0
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TOO114R000302850001-0 25X1
SUBJECT: Support for Secretary Baker's meeting with the Polish
delegation
DDI/EURA/EE/EREIJ
(6 March 1987)
25X1:
Distribution:
1 - Harvey Shapiro,' Treasury
1 - C/EURA/EE
1 - DC/EURA/EE
1 - C/EURA/EF;/EREI
1 - EURA/EE/Chrono
1 - EURA/EE/EREI/Chrono
1 - EURA/EE/EREI/Production
1 - EREI Branch
Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TO0114R000302850001-0
25X1
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TO0114R000302850001-0
TABLE 1: REPAYMENTS DUE UNDER THE POLISH RESCHEDULING AGREEMENTS
YEARS 1982 1983 1984 1985 1986 1987 1988 1989 1990
(Debt Relief)
UNDER RESCHEDULING AGREEMENTS (Spread over LIBOR) 781 852 791 1427 1821 2400 3680 3261 4305
------------------------------ _______ __
I) 1981 Paris Club Agreement 2000 241 181 203 166 610 574 548 510 0
a) Interest 1.00% 241 181 203 166 110 74 . 48 10 0
b) Principal Repayment 0 0 0 0 500 500 500 500 0
II) 1981 Bank Agreement 1957 483 191 214 438 123 164 571 0 0
a) Interest on rescheduled amounts 1.75% 251 191 214 158 95 51 12 0 0
b) Deferred Principal 103 0 0 0 0 0 0 0 0
c) Rescheduling Fee 29 0 0 0 0 0 0 0 0
d) Interest due April-January 100 0 0 0 0 0 0 0 0
e) Principal Repayment 0 0 0 280 28 112 559 0 0
III) 1982 Bank Agreement 2225 57 380 243 201 166 232 703 650
a) Interest on rescheduled amounts 1.75% 0 218 243 201 150 105 67 14
b) Deferred Principal 0 117 0 0 0 0 0 0
c) Restructuring Fee 7 15 0 0 0 0 0 0
d) "Gap Interest" 50 30 0 0 0 0 0 0
e) Principal Repayment 0 0 0 0 16 127 636 636
IV) 1983 Bank Agreement 1192 0 100 132 109 91 89 213 265
a) Interest on rescheduled amounts 1.875% 0 0 132 109 91 89 94 86
b) Deferred Principal 0 63 0 0 0 0 0 0
c) Principal Repayments 0 0 0 0 0 0 119 179
d) Interest on late 1983 interest 0 20 0 0 0 0 0 0
e) Restructuring fee 0 17 0 0 0 0 0 0
0
0
0
0
0
301
62
0
238
0
0
V) 1984-87 Bank Agreement 1382 0 0 0 180 104 102 234 348 321
a) Interest on rescheduled amounts 1.75% 0 0 0 125 104 102 109 96 70
b) Deferred Principal 0 0 18 55 0 0 0 0 0
c) Principal Repayments 0 0 0 0 0 0 126 251 251
Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TO0114R000302850001-0
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TO0114R000302850001-0
d) Rescheduling Fee
0
0
0
0
0
0
VI) 1982-84 Government-Agreement
a) Interest on res
h
d
l
10765
0
0
0
332
515
1030
1093
1145
e
c
u
ed amounts
b) 1981 Interest Arrears
c) 1985 Interest Arrears
d) Repayment of deferred interest
e) Principal Repayments
1.00%
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
332
0
0
0
0
0
515
0
0
773
0
0
258
0
964
0
0
129
0
1017
0
0
129
0
2576
868
0
0
0
1708
VII) 1985 Government Agreement
a) Interest on res
h
d
l
d
1371
0
0
0
207
91
105
114
e
c
u
e
amounts
b) Principal Repayments
1.00%
0
0
0
0
0
0
207
0
91
0
105
0
114
107
107
0
0
VIII) 1986 Government Agreement
900
a) Interest on r
h
d
l
0
0
0
0
60
69
75
esc
e
u
ed amounts
b) Principal Repayments
1.00%
0
0
0
0
0
0
0
0
60
0
69
0
75
0
71
71
0
IX) 1986-87 Bank Agreement
a) Interest on rescheduled amounts
1789
1.375%
0
0
0
0
0
0
0
0
4
58
144
155
929
b) Principal Repayments
0
58
144
155
96
0
0
0
0
c) Rescheduling Fee
0
0
0
0
833
0
0
0
0
4
0
0
0
0
UNDER NEW MONEY PACKAGES FROM BANKS
I)
1982 A
r
----------------------------
a)
g
eement
Interest (spread: 1984)
374
0 0
40
34
28
28
32
397
0
b)
Principal (spread: 1985-89
1.50%
0 0
40
34
28
28
32
23
0
)
1.75%
0 0
0
0
0
0
0
374
0
II)
a)
1983 Agreement
Interest (spread: 1984-87)
479
1
75%
0 0
33
27
23
22
39
42
499
b)
Principal (spread: 1988-90)
.
1
50
0 0
33
27
23
22
39
42
20
.
%
0 0
0
0
0
0
0
0
479
III) 1984 agreement
a) Interest
257
1
75%
0 0
0
9
23
19
19
22
272
0
b) Principal
.
0
9
23
19
19
22
15
0
0 0
0
0
0
0
0
257
0
Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TO0114R000302850001-0
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TO0114R000302850001-0
Agreement
Date of
Date of
Agreement
Signature
1981 Paris Club
March
April
Agreement
1981
1981
1981 Bank
August
April
Agreement
1981
1981
1982 Bank1
August
November
Agreement
1982
1982
1983 Bank2
August
November
Agreement
1983
1983
1984-87 Bank
April
July
Agreement
1984
1984
TABLE 2: TERMS OF THE POLISH RESCHEDULING AGREEMENTS
Obligations
Covered
Amount of Repayment Terms
Debt Relief ---------------------------------
Interest Rate Repayment Period
90 percent of prin- $2.0 billion Varies with January 1986- Arrears estimated at
cipal and interest creditor; gener- July 1989 $160 million
on medium and long ally 1 percent
term loans in arrears above domestic
of 1 May - December government
1981 borrowing rate
-----------------------------------------
----------------------------------------------
95 percent of pay- $2.0 billion LIBOR plus 1.75 December 1985- Principal repayments
ments on medium and percent December 1988 due in 1986-87
long term debt due rescheduled in
26 March 1981 - 31 September of 1986
December 1981
-----------------------------------------
----------------------------------------------
95 percent of prin- $2.2 billion LIBOR plus
cipal on medium and percent
long term debt due in
1982 -
-------------------------------------------
95
p
e
rcen
t
o
f
prin- $1.2 billion LIBOR
l
1.75
September
1986-
Principal repayments
September
1989
due in 1986-87
rescheduled in
- __
September of 1986
p
us 1.875 January 1988- Principal repayment
cipal on medium and percent July 1992 schedule is graduated:
long term debt due 10 percent due in
in 1983 1988, increasing 5
percent annually to
reach 30 percent in
1992
-----------------------------------------------
------------------------------------------
95 percent of prin- $1.4 billion LIBOR plus 1.75 December 1988-
cipal due 1 January percent December 1993
1984 to 31 December
Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TO0114R000302850001-0
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TO0114R000302850001-0
1982-84 Gov't
January
July
Agreement
1985
1985
1985 Gov't
November
November
Agreement
1985
1985
1986 Gov't
March
N.A.
Agreement
1986
1986-7 Balk
June
September
Agreement
1986
1986
and 80 percent of
principal due in period.
1987 under the 1981
and 1982 agreements
1987 on medium and
long term debt
---------------------------------------------------------------------------------------
100 percent of prin- $10.8 billion LIBOR plus 1.00 January 1990- Arrears estimated at
cipal and interest percent July 1995 $515 million
due on medium and
long term debt due
in 1982-84
-----------------------------------------------------------------------------------
100 percent of prin- $1.4 billion LIBOR plus 1.00 January 1991- Arrears estimated to
cipal and interest percent July 1995 be at least $140
due on medium and million
long term debt due
in 1985
--------------------------------------------------------------------------
100 percent of prin- $900 million LIBOR plus 1.00 August 1991- Initialed but never
cipal and interest percent February 1995 signed due to arrears
due on medium and on the 1981 and 1985
long term debt due agreements
in 1986
-----------------------------------------------------------------------
---------------
95 percent of prin- $1.8 billion LIBOR plus 1.375 June 1990- 4 year grace with a
cipal due in 1986 percent December 1991 one year repayment
-------------------------------------------------------------
-----------------------------
ootnotes:
Separate agreement provided that 50 percent of interest payments be relent in the form of 6 month trade credits, rolled over
2 for 3 years at an interest rate of 1.5 percentage points over LIBOR.
Separate agreement provided that 65 percent of interest payments be relent in the form of 6 month trade credits, rolled over
3 for 3 years at an interest rate of 1.75 percentage points over LIBOR.
Seperate agreement calls for banks to extend 45 percent of their March 1981 exposure in the form of new loans, and 1 percent
to be drawn December 1985. These credits carry an interest rate of 1.625 percentage points over LIBOR through 1986 and 1.725
2
25X1
Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TO0114R000302850001-0
 Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TO0114R000302850001-0
percentage points over LIBOR during 1987-89. Repayment is scheduled for June to November 1989. The banks also agreed to
extend until 1989 the repayment of credits provided under the 1982 facility. These were originally to be repaid in 1985.
4 The interest rate will be raised to 1.75 percentage points over LIBOR.
The agreement also provided that 15 percent of principal due in 1987 will be converted from medium term debt and used to
supplement the 1983 revolving trade facility currently in effect. The expiration date on the 1983 trade facility was also
extended two years from December 1987 to December 1989. The margin over LIBOR of the 1983 trade facility was lowered from
1.75 percent to 1.375 percent.
Declassified in Part - Sanitized Copy Approved for Release 2012/02/10: CIA-RDP90TO0114R000302850001-0