DISCUSSING U.S. VIEWS ON DEBT RELIEF, MCA WITH

UNCLAS LIMA 001331 SIPDIS DEPT FOR WHA/EPSC, WHA/AND, EB/IFD/ODF E.O. 12958: N/A TAGS: EAID ECON EFIN SOCI PGOV PE SUBJECT: DISCUSSING U.S. VIEWS ON DEBT RELIEF, MCA WITH PERUVIAN FOREIGN MINISTRY REF: STATE 31823 ¶1. Acting EconCouns delivered on March 15 reftel demarche, outlining U.S. views on debt relief for poor countries, to Minister Counselor Cesar de las Casas of the Office of Commercial Promotion at the Ministry of Foreign Relations. De las Casas was accompanied by Vivian Weiner of APCI, the Peruvian Agency for International Cooperation. ¶2. Acting EconCouns passed to the officials and explained the U.S. proposal in reftel favoring up to 100 percent relief for IDA and AfDF debt for eligible HIPC countries and opposing recent UK proposals on debt relief and creation of an International Financing Facility (IFF). De las Casas, who had not heard of the proposals, thanked Acting EconCouns for the information. Weiner was aware of the proposals. De las Casas had no immediate comment on the U.S. plan, other than to express approval that it would not affect multilateral lending to non-HIPC countries such as Peru. He added that he would share the information with other Foreign Ministry officials. ¶3. Acting EconCouns then turned the conversation to Millenium Challenge Account (MCA) progress, passing to the officials the press release announcing the signing of the first MCA compact March 14 with Madagascar. He reviewed MCA funding trajectories and explained how Peru would become an MCA candidate country in FY-06, noting that, according to an analysis conducted by USAID and shared with the GOP, Peru barely meets a majority of MCA criteria in each of the three policy categories of ruling justly, investing in people and economic freedom. ¶4. Weiner responded that APCI and the Prime Minister's office have been working with USAID on the topic of the MCA. As a result, the GOP has formed an interagency MCA working group on the topic. The group met for the first time March 14, and decided to conduct an inventory of where Peru does and does not meet existing MCA criteria, and discuss possible projects that could be included in an MCA compact. She related that the working group is led by staff from the Prime Minister's office, while she represents APCI and is the working group's executive secretary. Also participating are representatives from the Ministry of Economy and Finance, the Minister of Women and Social Development, the National Competitiveness Council and the Peruvian Congress. Weiner added that the next working group meeting on March 28, and future meetings, would likely be open to outside participation. ¶5. De las Casas asked how long countries are taking to qualify for MCA funding, given that the first compact has only just been signed. He explained that it would be a great political boost to the Toledo government to complete an MCA compact before President Toledo's term ends in April ¶2006. Weiner expressed skepticism that this was possible, and Acting EconCouns agreed that this is uncertain. Both Peruvian officials underscored that the GOP is working hard to ensure it will be a strong contender for MCA funding next year. STRUBLE