NORWAY OPEN TO QUICKLY CLEARING LIBERIA'S ARREARS

UNCLAS OSLO 000091 SIPDIS SIPDIS SENSITIVE DEPARTMENT FOR EB/IFD/OMA ABESMER E.O. 12958: N/A TAGS: ECON EFIN PGOV LI NO SUBJECT: NORWAY OPEN TO QUICKLY CLEARING LIBERIA'S ARREARS REF: STATE 9925 ¶1. (SBU) SUMMARY: Norway wants to see a quick clearing of Liberia's International Financial Institution (IFIS) arrears and is open to solutions. However, Norway is concerned about custom deals setting precedents that could ultimately damage IFIS financial health. Norway is willing to compensate IFIS on a fair share basis in line with G-8 HIPC proposals. While they want to see a rapid solution, any agreement should not be seen in isolation and should not be a quick fix. Norway will act in concert with Nordic/Baltic partners on IMF and WB boards. END SUMMARY ¶2. (SBU) On January 30 we delivered reftel proposal and background to Norwegian Ministry of Foreign Affairs Deputy Director General for Multilateral Bank and Finance Henrik Harboe. Harboe told us that Norway wants to see a quick settlement of Liberia's arrears and that they agree with us that Somalia and Sudan are not ready for an arrears exercise at this time. While not opposed to "de-linking" World Bank and African Development Bank settlements from the IMF, it is important to find a comprehensive solution that covers all institutions and does not simply provide a quick fix. Harboe thought that a mix of fresh money contributions and existing IFIS resources would be the best way to move forward. ¶3. (SBU) Harboe stressed that arrangements with the International Financial Institutions (IFIS) set precedents and cannot be seen in isolation, particularly when settlements of arrears even larger than Liberia's are concerned. Also, the financial impact that large arrears clearing will have on the IFIS themselves needs to be considered. To help lessen this impact, Harboe stated that Norway was willing to compensate IFIS on a fair share basis with other countries, in line with the G-8's proposal for Heavily Indebted Poor Countries (HIPC). ¶4. (SBU) Harboe said that Norway will act in concert with their Nordic/Baltic country partners on IMF and WB board matters. Norway will be represented at the February 13-14 Partners Forum by Ministry of Development State Secretary Anne Stenhammer. Ministry of Foreign Affairs Adviser for West African Affairs Hilde Johansen will also attend the Partners Forum. WHITNEY