(UNTITLED)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85T00287R000502230001-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 4
• Document Creation Date: January 12, 2017
• Document Release Date: June 29, 2011
• Sequence Number: 1
• Publication Date: November 15, 1983
• Content Type: REPORT

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IXIFP"v
15 Nov 83
EAST GERMANY
Germany's net debt to Western banks (excluding those in the FRG)
fell by nearly $1.2 billion in the first half of 1983. East
Berlin's liabilities fell by $600 million while its reserves
East
believe that East Germany improved its position vis-a-vis
international banks by running an $800 million current account
with the banks increased by $570 million.
surplus and by borrowing from other sources.(
In addition, East Germany increased its borrowing
from West Germany through the $400 million dollar government-
guaranteed loan granted earlier this year and a trade deficit of
nearly $300 million at midyear.
25X1 L Eu~r~1 S`TS- iQ2~~C
According to Embassy reporting, discussions apparently are
underway for a second West German loan of $375 million to the
Honecker regime. Many West German political leaders, however,
are unhappy with Bonn's handling of the earlier loan and will
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object to any new credits unless the East Germans make
substantial political concessions. At this time, East Berlin
shows no sign of going beyond the very limited concessions it
made after the previous loan.
YUGOSLAVIA
Western governments which participated in the 1983 "Friends
of Yugoslavia" financial rescue package, Kuwait, Yugoslavia, and
the IMF are meeting on 18 November to examine implementation of
the package and to assess Yugoslavia's economic performance.
The IMF projects Yugoslavia's 1984 financing requirement at
$3.3 billion; the projection assumes a $1 billion build-up of
reserves and a current account surplus of $250 million. The Fund
wants Western governments to refinance $500 million in maturing
loans and to provide $250 million in new trade credits while
commercial banks would refinance $1.0 billion and provide $400
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25X1
million in new loans. Credits from the IMF, World Bank, and
suppliers would cover the remainder of the financing
requirement. 25X1
The IMF is likely to encounter opposition to its financing
package. While some Western governments and Yugoslavia favor the
IMF approach, others (the UK and France) prefer that Yugoslavia
reschedule its debt in the Paris Club. Western bankers accept
the need to refinance their claims, but many are unwilling to put
up new money. Some bankers believe that Belgrade is too
ineffective in forcing Yugoslav enterprises to repatriate export
earnings and that the banks should not cover this shortfall.
Other bankers argue that much of the new money they put up for
the 1983 package was used to pay off government creditors and
that some West European governments have not advanced trade
credits pledged in the "Friends of Yugoslavia" agreement. 25X1
The failure to advance the government credits could cause
problems with the remaining disbursement of the 1983 bank
package. the banks released the 25X1
first tranche of new money ($255 million) on 26 October, and the
second tranche ($90 million) was scheduled to be disbursed on 14
November. The final tranche of $240 million is to be disbursed
before the end of the year, but this depends on Yugoslavia
drawing $745 million in government credits. Because of problems
in using the credits, the Yugoslavs may fall short of this
total. 25X1
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POLAND
A US banker attending a meeting between Western banks and
Polish finance officials told Embassy officers that the banks and
Warsaw would begin negotiations on rescheduling 1984 debts before
the end of this year. The banker felt that both sides were
likely to agree to some multi-year format this time around and
that an agreement could be hammered out by early next year. The
banker doubted that Western banks would extend new credits any
time soon, even if Warsaw reached a rescheduling agreement with
its official creditors in the Paris Club.
Sanitized Copy Approved for Release 2011/06/29: CIA-RDP85T00287R000502230001-1