Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698076871373.pdf (Guyana)
DEBT RELIEF AGREEMENT (HIPC Debt Initiative) Among THE GOVERNMENT OF THE CO-OPERATIVE REPUBLIC OF GUYANA and THE BANK OF GUY ANA and THE BOARD OF DIRECTORS OF THE CARICOM MULTILATERAL CLEARING FACILITY and THE CENTRAL BANK OF TRINIDAD AND TOBAGO · As Agent .

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DEBT RELIEF AGREEMENT Among THE GOVERNMENT OF THE CO-OPERATIVE REPUBLIC OF GUY ANA and BANK OF GUY ANA and THE BOARD OF DIRECTORS OF THE CARICOM MULTILATERAL CLEARING FACILITY and THE CENTRAL BANK OF TRINIDAD AND TOBAGO (as Agent) THIS AGREEMENT is made on the Fourteenth (14th) day of May 1999, among the GOVERNMENT OF THE CO-OPERATNE REPUBLIC OF GUY ANA, acting through the Minister of Finance, Ministry of Finance, Main and Urquhart Streets, Georgetown, County of Demerara, Co-operative Republic of Guyana (hereinafter referred to as the "Beneficiary Country") of the First Part, the BANK OF GUYANA, a central bank established under the Bank of Guyana Act, No.
19 of 1998, and whose offices are situated at No.I Avenue of The Republic, Georgetown, Guyana, (hereinafter referred to as the "Debtor Participant") of the Second Part, the BOARD OF DIRECTORS OF THE CARICOM MULTILATERAL CLEARING FACILITY (hereinafter referred to as the "Board") of the Third Part, and the CENTRAL BANK OF TRINIDAD AND TOBAGO, a body corporate established under the Central Bank Act, Chap.
79:02 of the Laws of the Republic of Trinidad and Tobago with its head office at Independence Square, Port-of-Spain, Trinidad, Republic of Trinidad and Tobago (hereinafter referred to as the "Agent") of the Fourth Part.
.., 1 WHEREAS: (A) By an Agreement dated March 4 , 1977, the Central Bank of Barbados, the Monetary Authority of Belize, (now called the Central Bank of Belize) the Eastern Caribbean Currency Authority (now called the Eastern Caribbean Central Bank), the Bank of Guyana, the Bank of Jamaica and the Central Bank of Trinidad and Tobago (collectively referred to as the "Participants") established the Caricom Multilateral Clearing Facility ("Creditor Facility") with effect on June 16, 1977, to inter alia, facilitate settlement on a multilateral basis, of payments of eligible transactions among the countries of the Participants; (B) Authority for the operation of the Creditor Facility is vested in the Board and the Board has appointed the Agent as agent to provide the necessary services for the day to day management and operations of the Creditor Facility; (C) The Board had agreed ("1989 Agreement") to consolidate and reschedule the debt of the Debtor Participant to the Creditor Facility and creditor Participants with effect from September 30, 1989, repayable over a period of twenty (20) years with a moratorium of ten (10) years on the principal, until 1999; interest payments at the rate of 5% per annum commencing on Aprill, 1990; (D) In 1993, agreement was reached for the netting-off of sums owed to the Debtor Participant by certain creditor Participants, as a result of which the principal balance owed by the Debtor Participant to the Creditor Facility and creditor Participants has been reduced to US$108.5 million
 as at November 1998; (E) The International Monetary Fund ("IMF') and the World Bank have designed a framework to provide special assistance for heavily indebted poor countries .., ("HIPCs") that pursue IMF and World Bank supported adjustment and reform programs, but for whom traditional debt relief mechanisms are insufficient ("HIPC Debt Initiative"); 2 if cf: (F) The HIPC Debt Initiative requires the participation of all creditors, including the Creditor Facility and creditor Participants, so as to reduce
 to sustainable levels the external debt burden of HIPCs; (G) The debt due from the Debtor Participant to the creditor Participants and the Creditor Facility forms part of the debt stock of the Beneficiary Country under the HIPC Debt Initiative; (H) In December 1997, the Beneficiary Country was the first country to qualify for assistance under the HIPC Debt Initiative's fiscal/openness criteria; (I) The IMF and World Bank boards endorsed a proportional burden-sharing approach under the HIPC Debt Initiative; (J) The assistance under the HIPC Debt Initiative by the IMF and the World Bank, as creditors of the Beneficiary Country is contingent on satisfactory assurance and commitment by its other creditors: (K) A trust fund called the HIPC Debt Initiative Trust Fund (the ''Trust Fund") was established to provide debt relief to eligible HIPCs on debt owed to participating multilateral creditors by prepaying or purchasing a portion of the debt owed to a multilateral creditor and canceling such debt or paying the debt service as it comes due; (L) The Creditor Facility and its creditor Participants are eligible creditors under the HIPC Debt Initiative arrangement and are participants in the HIPC Debt Initiative; (M) The net present value ("NPV") of a lllPC's external debt is a critical measure that takes into account the degree of concessionality/debt relief; (N) The NPV of the Debtor Participant's debt to the Creditor Facility and Creditor Participants as at "decision point",
 being the point of determining the Debtor Participant's share of debt relief, in terms of United States Dollars with interest accrued was US$112.451 million of which US$29.125 million in NPV terms has been committed for HIPC debt relief; 3 I.- ~ t& r-L/ ef ((_> ~ (0) The nominal debt of US$108.5 million owed to the Creditor Facility and the Creditor Participants by the Debtor Participant at completion point will be reduced by US$28.6 million in nominal terms (or US$26.678 million in NPV terms) at
 completion point; and subject to the receipt by the Board of payment of US$2.447 million from the International Development Association ("IDA"), as trustee of the Trust Fund, the Board shall apply the said sum of US$2.447 million to the next future payment(s) due from the Debtor Participant to the Creditor Facility and/or Creditor Participants upon receipt of such payment.
• (P) The parties hereto agree that debt relief be granted to the Debtor Participant/Beneficiary Country in respect of the amounts set out in row 6 of the First Schedule hereto, subject however, to the terms and conditions stipulated hereunder.

NOW TIIBREFORE IT IS HEREBY agreed as follows: 1.


The Debtor Participant and the Beneficiary Country acknowledge and agree that there is presently due and owing from the Debtor Participant to the Creditor Facility and the creditor Participants the amounts set out in the appropriate column of the Second Schedule hereto.

2.
2.

The Board and creditor Participants hereby agree to grant debt relief of US$26.678 million in NPV terms (the "Stated Amount") to the Debtor Participant and by extension to the Beneficiary Country by irrevocably releasing and discharging the Debtor Participant from any and all liabilities and obligations in respect of the amounts set out in row 7 of the First Schedule hereto, in accordance with the HIPC Debt Initiative.

3.
3.

Subject to the receipt by the Board of payment of US$2.447 million (the "Grant Amount") from IDA, as trustee of the Trust Fund, the Board shall apply the said sum of US$2.447 million to the next future payment(s) due from the Debtor Participant to the Creditor Facility and/or Creditor Participants upon receipt of such payment.

4 4.
4 4.

The obligations of the Board under this Agreement to apply the Grant Amount to the Debtor Participant's next future payment(s) due to the Creditor Facility and/or creditor Participants are contingent upon, and subject to, the receipt by the Board of payment from IDA, as trustee of the Trust Fund, of the Grant Amount pursuant to the mPC Trust Fund Grant Agreement, between the Board and the IDA ("the mPC Trust Fund Grant Agreement").
If, for whatever reason, the Board does not receive any or all of the Grant Amount pursuant to the HIPC Trust Fund Grant Agreement, then notwithstanding any other provision of this Agreement, the Debtor Participant shall be indebted to the Creditor Facility and creditor Participants in respect of the Grant Amount or any part thereof not received by the Board from IDA.

5.
5.

Subject to the foregoing, the Debtor Participant undertakes to continue to service its outstanding debt to the Creditor Facility and the creditor Participants, in accordance with the terms of the 1989 Agreement.

Debt payments received by the Agent shall be paid to the creditor Participants in accordance with the application of the proportionality principle determined as at December 31 , 1998 and set out in the Third Schedule hereto.

6.

This Agreement takes effect from the 14th day of May, 1999.
IN WITNESS WHEREOF, the Beneficiary Country, acting through its Minister of Finance, /¥-1:- day of ~.)
1999, the Debtor has caused this Agreement to be signed on the Participant, acting through its duly authorised representative, has caused this Agreement to be /Jt 7tday of ~J 1999, the Board has signed this Agreement on the day and year first above written and the Agent acting through its duly authorised representative signed on the has caused this Agreement to be signed on the I 1/.-7b day of H°'1J 1999. behalf of the OFT ECO-OPERATIVE REPUBLIC OF GUY ANA 5 r • , .
;) • Signed for and on behalf of the Debtor Participant, BANK OF GUY ANA By: Gfl.

;fj.

~~ Gove mor__J__ ~ [__:::() in the presence of: --~-+--'----------- Signed by the BOARD OF DIRECTORS OF THE CARICOM MULTILATERAL CLEARING FACILITY Board representative of the Central Bank of Barbados ~ti l= Boar 7presentative of the Central Bank of Belize ?
Bo resentati ve of the Eastern Caribbean Central Bank Board representative of the Bank of Guyana Board representative of the Bank of Jamaica Board representative of the Central Bank of Trinidad and Tobago All in the presence of: --~-+L-L------------------- ~d~ .

Signed for and on behalf of the Agent, CENTRAL BANK OF TRINIDAD AND TOBAGO By:~--'~~~-~~~~~~~~--~~~~~~ Governor 6 .
~ SCHEDULE 1 Caricom Multilateral Clearing Facility HIPC Debt Relief through Write-down of CMCF Common Share (In thousands of US$) ,_ Debt Outstanding Principal payments Interest payments Total Debt Service NPVof Debt -· r:;.~(9:11r;~::: x r;:~;~):~X ·.• 108.401 37,955 9,166 11,741 11,741 5,273 4,686 17,014 16,427 101,053 90,537 79,931 11 .741 4,099 15,840 69.231 11 ,741 11 .741 11 ,741 11,741 11.741 11 ,741 3.512 15,253 58.429 2,925 2,308 1,751 14,666 14,079 13,492 47.520 36.496 25,351 1.164 12.905 14.076 577 12,318 2,663 2,732 102 2,835 0 6 Committed HIPC Debt Relief HIPC Debt Relief through CMCF: CMCF share in 1998 debt slock = 26.4% CMCF debt service stream forgiven of which Principal Interest 7 8 9 10 Net Present Value of this assistance 11 Financing gap Debt Outstanding 13 Principal payments 14 Interest payments 15 Total Debt Service 16 NPV of debt 62,500 53,859 45,218 36,576 27,935 ;,, Memorandum Item: NPV reduction through reduced interest nllit: 17 18 Interest payments Total Debt Service 19 NPV of debt 20 21 Interest rate reduction from 5% to 0% Financing gap Source: CMCF 79,850 21.203
 7,922 0 0 11,741 11 ,741 73,244 66,212 0 11.741 58,729 0 11 ,741 50,764 0 0 11 .741 11 ,741 42,287 33,265 0 11,741 23,663 0 0 11,741 11,741 13,444 2,567 2,0 11 75 2,086 0 0 2,732 0 SECOND SCHEDULE Caricom Multilateral Clearing Facility ("CMCF') Debt Outstanding - as at November 30, 1998 (in millions of US$ and in percent) TOTAL Central Bank of Barbados Central Bank of Trinidad and Tobago CMCF Eastern Caribbean Central Bank Central Bank of Belize TOTAL Central Bank of Barbados Central Bank of Belize Eastern Caribbean Central Bank Central Bank of Trinidad and Tobago US$ mn.
108.5 44.0 32.9 28.6 2.4 0.7 % 100.0 40.5 30.3 26.4 2.2 0.6 Exposure excluding CMCF 100.0 55.0 0.8 3.0 41.1 79.9 44.0 0.7 2.4 32.9 8 THIRD SCHEDULE Application of the Proportionality Principle to Remaining Debt due from Debtor Participant - According to share of debt due to creditor Participants as at December 31, 1998 Creditor Participants Percentage Application Central Bank of Barbados Central Bank of Belize Eastern Caribbean Central Bank Central Bank of Trinidad and Tobago 55% 0 .8% 3% 41.1 % 9