Identifier
Created
Classification
Origin
02AMMAN3227
2002-06-17 12:22:00
CONFIDENTIAL
Embassy Amman
Cable title:  

JORDAN FINANCE MINISTRY OFFICIAL ON DEBT AIMS

Tags:  EFIN JO 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L AMMAN 003227 

SIPDIS

TREASURY FOR A/S QUARLES, DAS RADELET, MICHAEL KAPLAN
DEPT FOR E, NEA, EB
NSC FOR CLAY LOWERY

E.O. 12958: DECL: 06/16/2007
TAGS: EFIN JO
SUBJECT: JORDAN FINANCE MINISTRY OFFICIAL ON DEBT AIMS

Classified By: DCM GREGORY L. BERRY. REASONS 1.5 B AND D.

C O N F I D E N T I A L AMMAN 003227

SIPDIS

TREASURY FOR A/S QUARLES, DAS RADELET, MICHAEL KAPLAN
DEPT FOR E, NEA, EB
NSC FOR CLAY LOWERY

E.O. 12958: DECL: 06/16/2007
TAGS: EFIN JO
SUBJECT: JORDAN FINANCE MINISTRY OFFICIAL ON DEBT AIMS

Classified By: DCM GREGORY L. BERRY. REASONS 1.5 B AND D.


1. (c) In a June 16 meeting with Econ chief, Dr. Muhammad
Abu Hammour, Secretary General of the Finance Ministry (the
number two ministry official and the senior such official
currently in town),said meetings in European capitals were
"going well" regarding Jordan's request for a stock of debt
treatment by the Paris Club next month. He said that Finance
Minister Marto had told him that the Germans and British were
"on the right track," but he was unable to provide additional
details of Marto's meetings. In addition to Marto's
meetings, Abu Hammour said Prime Minister Abu Ragheb would be
discussing the request in Madrid and Brussels over the next
few days. (He did not mention Planning Minister Awadallah's
meetings last week in Washington.)


2. (c) The most important upcoming meeting would, Abu
Hammour said, be King Abdullah's visit to Tokyo at the end of
the month. He said that as the largest creditor, Japan's
support for "extraordinary treatment" from the Paris Club was
essential. He felt that recent indications by Japanese
officials of a willingness to include post-cutoff date claims
in a traditional two-year consolidation period were
reassuring. He thought that Japan could go further under
sufficient pressure to maintain a multilateral Paris Club
consensus.


3. (c) Abu Hammour did not answer directly when asked if he
thought there was any possibility that Japan would consider
measures outside the Paris Club. He thought that this would
be consistent with the unilateral U.S. debt forgiveness and
large debt swap programs provided by European creditors.
However, he said that in his recent meetings in Tokyo with
Foreign Minister Muasher, senior Japanese officials had
emphasized Japan's economic problems as reasons why it was
difficult for Japan to do more for Jordan (beyond $20
million/year in non-project grant aid). They also told Abu
Hammour that Jordan's $3 billion in official reserves (8
months of imports) showed that Jordan did not need extra
support.


4. (c) In support of Jordan's ongoing need for balance of
payments relief, Abu Hammour said he argued that 1) reserves
would decline as a share of imports under the IMF program, 2)
Jordan had still to feel the full impact on its exports of
the aftermath of the September 11 attacks, 3) UN Compensation
Fund transfers that amounted to over $500 million in 2000 had
come to an end, 4) Jordan faced over $800 million per year in
debt service, and 5) that the new economic investment program
(PSET) would raise import requirements for the next several
years. He thought it ironic that given above market interest
rates on Jordan's current debt to Japan, Jordan was
effectively helping finance the Japanese economy.


5. (c) Comment: Abu Hammour's comments indicated that the
Jordanians have clearly heard the message that a
"Pakistan-style" stock treatment was more than creditors,
including the United States, were prepared to provide.
Nonetheless, he said this would remain Jordan's formal
request to the Paris Club -- given that it had been enshrined
in King Abdullah's recent letters to the Japanese and German
Prime Ministers. Abu Hammour stressed four basic themes
driving Jordan's debt objectives: 1) That Jordan faced
persistent large balance of payments funding gaps for the
next ten years, 2) that Jordan had implemented major policy
reforms under 12 years of IMF tutelage and that there was no
need for more IMF programs to encourage more policy reforms,
3) that Jordan's goal was thus to end the cycle of Paris Club
and IMF programs, and 4) that high interest rates on pre- and
post-cutoff date commercial and development aid debt to Japan
were the core of Jordan's ongoing debt servicing problem.
Gnehm