INTER-AMERICAN AGENCY FOR

COOPERATION AND DEVELOPMENT

NATIONAL ENDOWMENT

FOR

SOCIAL ACTION (NESA)

TRADING DEBT FOR DEVELOPMENTPANEL 1: Contributing Debt for Social Action

DEBT CONTRIBUTION PROBLEMS

EXISTING NEGOTIATING MECHANISMS

PRINCIPAL WRITEOFF METHOD

 

INTEREST RATE METHODOLOGY

LOCAL CURRENCY CONVERSION

SUGGESTED CRITERIA

• EXISTING LOAN DOCUMENTATION REMAINS UNCHANGED

 • PRINCIPAL FOREGIVENESS DIRECTLY LINKED TO

EXISTING NEGOTIATING MECHANISMS

 • UNIFORM METHODOLOGY TO ESTABLISH

INTEREST RATES AND CURRENCY CONVERSION

CRITERIA APPLICATION #1

• ORIGINAL CREDITOR REMAINS RESPONSIBLE FOR COLLECTION

• LOAN IS DIVIDED INTO TWO PARTS:SOVEREIGN (NOTE #1)NESA OBLIGATION (NOTE #2)

 • ORIGINAL CREDITOR AND OBLIGOR SIGN SEPARATE AGREEMENTS

WITH NESA • COUNTRY REMAINS RESPONSIBLE FOR WHOLE LOAN

ORIGINAL CREDITOR BILLS FOR BOTH NOTESOBLIGOR PAYS ORIGINAL CREDITOR FOR BOTH NOTES

CRITERIA APPLICATION #2

• ORIGINAL OBLIGOR DEDUCTS FULL AMOUNT DUE ON NOTE #1, REDMITING BALANCE TO NESA (SHOULD EQUAL NOTE #2 DUE

• NESA BILLS OBLIGOR FOR ANY BALANCE DUE ON NOTE #2. ORGINAL OBLIGOR RECIEVES CREDIT FOR FULL AMOUNT OF NOTE #2 WITH PARIS/LONDON CLUB

 • NESA RESPONSIBLE FOR BILLING ARREARAGES ON NOTE

#2 AFTER INITIAL BILLING

 • ARREARAGES CONSEQUENCES SPECIFIED

NESAALLOCATION

PROCESS

ALLOCATIONDECISION

ORIGINALLOAN

AGREEMENT

NESAALLOCATIONAGREEMENT

CREDITOR DEBTOR NESA IACD

ALLOCATEDNOTICE OF

PAYMENT DUE

NOTE #1PAYMENT

NOTE #2PAYMENT

ALLOCATION/LOSS

REPORTING

PARIS/LONDON

CLUB

INTER-AMERICAN AGENCY FOR COOPERATION ANDDEVELOPMENT

NATIONAL ENDOWMENTS FOR SOCIAL ACTIONFUNCTIONAL ALLOCATION DIAGRAM