Announcement of Commercial Banks Meet to Discuss External Financing for Argentina on May 12, 1987

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 87/S31 Contact: Ciro Gamarra (202) 477-5320 COMMERCIAL BANKS MEET TO DISCUSS EXTERNAL FINANCING FOR ARGENTINA WASHINGTON, May 12 -- A meeting of the Commercial Banks Working Committee for Argentina was held today at the World Bank's headquarters in Washington, D.C. to discuss the external financing needs for this country. The meeting, chaired by William R. Rhodes, Group Executive and Chairman of the Restructuring Committee at Citibank, included about one hundred representatives of United States-based commercial banks. Representatives of the Argentinian government, the International Monetary Fund and the World Bank also participated in the meeting. The President of the World Bank, Barber B. Conable, addressed the meeting and expressed the Bank's endorsement to the request of the Government of Argentina for international financial assistance in support of the Austral Plan. He said that the World Bank considers the Austral Plan an excellent program to realize Argentina's potential and that to be successful this program requires external financing. Mr. Conable commended the Working Committee and the Government of Argentina for their success in finding common ground that will benefit both parties, and emphasized that it was of critical importance that all commercial banks speedily ratify the agreement. The Bank's President reiterated the intention of the Bank to reach a level of lending of $2 billion to Argentina over the period 1987-88. This expanded lending will be in support of the important reforms undertaken by the Argentine government. World Bank assistance will be linked to key structural changes in the areas of trade liberalization, banking, public sector operation, and industrial restructuring. It will ~lso help finance specific investments in agricultural development, energy, export promotion and diversification, industry, the social sectors and transport. Today's presentation is the second of a series. The first one was yesterday in Tokyo. Other presentations will be held in Toronto tomorrow, in Frankfurt May 15, in Paris May 18 and in other cities in the Middle East and Western Europe. "The Argentine package is a good example of the menu approach involving increased options for the commercial banks," Mr. Rhodes said. These options include the trade credit and deposit facility, on-lending, new morey bonds and alternative participation instruments.  - 2 - Argentina's approximate 350 creditor banks are being asked to commit to the agreement by June 17. Mr. Rhodes pointed out that the banks committing by that date are being offered the early participation fee of 3/8 of 1 percent of their total new money commitment. As previously announced the proposed commercial bank portion of the Argentine financing plan includes the medium-term loan of $1.55 billion, a new money trade credit and deposit facility totalling $400 million, restructuring of public and private sector maturities totalling approximately $30 billion, a trade credit maintenance facility and stand-by money market facility. There are also provisions allowing debt equity conversions, on-lending, an early participation fee, new money bonds and alternative participation instruments. - 0 -