Announcement of World Bank Places Loans to Honduras in Nonaccrual Status on April 3, 1989

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.* Telephone: (202) 477-1234 NEWS RELEASE NO. 89/F52 Contact: Sheldon Rappaport (202) 477-8066 WORLD BANK PLACES LOANS TO HONDURAS IN NONACCRUAL STATUS WASHINGTON, April 3 -- The World Bank has placed all loans to, or guaranteed by, Honduras in nonaccrual status effective April 1, 1989. This action was in accordance with the Bank's standing policy of placing all its loans to, or guaranteed by, a country in nonaccrual status if payment on any loan is overdue by more than six months. At that date, the principal amount outstanding on loans to Honduras was about $505 million equivalent in various currencies or about 0.6 percent of the Bank's total outstanding loans. Overdues totaled about $57 million, consisting of $26 million of principal and $31 million in interest and other charges. There are two consequences of placing loans in nonaccrual status. One is that, to avoid overstating income, the World Bank will no longer include in its income statement interest and other charges due from the country concerned until such amounts have actually been received. The second is that the Bank periodically adds to its consolidated loan loss provision a percentage of the outstanding principal amount of all loans in nonaccrual status. Currently, this provisioning is at a rate of one percent monthly. As of March 31, 1989, the aggregate principal balance outstanding to the nine countries now in nonaccrual status -- Guyana, Honduras, Liberia, Nicaragua, Panama, Peru, Sierra Leone, Syrian Arab Republic and Zambia -- was $3.3 billion equivalent (4 percent of total outstanding loans), of which about $613 million was overdue; and the amount of the consolidated loan loss provision was about $750 million. The Bank previously had suspended loan disbursements to Honduras, also in accordance with established policy, when debt service became overdue by 75 days. -0-