JORDAN'S DEBT SWAP PLANS

UNCLAS AMMAN 003494

SIPDIS

STATE FOR U/S LARSON

E.O. 12958: N/A
TAGS: EFIN JO
SUBJECT: JORDAN'S DEBT SWAP PLANS

REF: SCHEDLBAUER E-MAIL 4/09/04

During his April 8, 2004 meeting with U/S Larson, Jordan's
Finance Minister Mohammad Abu Hammour promised to deliver a
letter describing Jordan's experience with debt swaps and its
future plans. Abu Hammour passed the paper to DCM on May 6.
Abu Hammour said he planned to pursue this idea during Paris
Club meetings in
June.

Begin Text of letter:

Debt Swap


1. The Debt/GDP (Debt to Gross Domestic Product) ratio
increased by 11 percentage points during 2002 and 2003 due to
the appreciation of the exchange rate of the Euro.


2. In December 2003 we had a buy-back operation concerning
Jordan's stock of Brady Bonds. We also concluded debt swap
agreements with Britain and Germany. These agreements led to
a reduction in the debt/GDP ratio by 6 percentage points.


3. According to the Paris Club Agreed Minute of July 2002,
creditor countries have the option of debt swap amounting to
30% of the total debt or up to 40 million Euro whichever is
higher.


4. We have reached the maximum ceiling for the volume of
debt swap (Paris Club) with some countries and we need to go
to Paris Club to raise the 30% limit in order to reduce the
Debt/GDP ratio and the debt service.

End text of letter.
GNEHM