Colombia and the IMF

Press Release: IMF Executive Board Completes Third Review Under Stand-By Arrangement for Colombia and Approves US$284 Million Disbursement
June 30, 2004


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ColombiaLetter of Intent, Memorandum of Economic Policies, and Technical Memorandum of Understanding

Bogotá, Colombia, June 15, 2004

The following item is a Letter of Intent of the government of Colombia, which describes the policies that Colombia intends to implement in the context of its request for financial support from the IMF. The document, which is the property of Colombia, is being made available on the IMF website by agreement with the member as a service to users of the IMF website.
 

Mr. Rodrigo de Rato
Managing Director
International Monetary Fund
Washington, D.C. 20431

Dear Mr. de Rato:

The government remains fully committed to promoting faster sustainable and equitable economic growth through the implementation of its economic program for 2004, which is being supported by the two-year Stand-By Arrangement (SBA) approved by the Fund in January 2003.

We are requesting completion of the third review under the program. We are continuing to implement policies that will achieve the program's objectives for 2004. All quantitative performance criteria for end-December 2003 and end-March 2004 have been observed. All but one of the structural reforms are proceeding as scheduled. We are proposing to convert the quantitative indicative targets for end-September and end-December 2004 into performance criteria. We intend to advance the structural reforms already included in the program according to the schedule presented in the previous memorandum of economic policies. Moreover, we are adding structural benchmarks in the areas of reforming pensions, improving tax administration and divesting banks still controlled by the public sector. These policies are explained in detail in the attached Memorandum of Economic Policies (MEP) and Technical Memorandum of Understanding (TMU). We are also requesting a waiver for the nonobservance of the continuous performance criterion on the introduction of a multiple currency practice, as this was removed on April 16, 2004.

We are proposing that the Fund's Board conduct the fourth review by December 2004. Conditions for completing the fourth review are congressional approval of the revised budget code, as envisaged, and of a budget for 2005 that provides for a combined public sector deficit of 2 to 2½ percent of GDP. As usual, we will maintain a close policy dialogue with the Fund and stand ready to take additional measures, as necessary, to achieve the objectives of the program, and the government will continue to treat the arrangement as precautionary.

Sincerely yours,
/s/

Alberto Carrasquilla
Minister of Finance
and Public Credit

/s/

Miguel Urrutia
General Manager
Bank of the Republic


Memorandum of Economic Policies

Introduction

1. The government's economic reform program, which is anchored by fiscal discipline, is already bearing fruit. In 2003, real economic growth more than doubled to 3.7 percent from 1.6 percent in 2002, and the unemployment rate declined to 14.1 percent by December. Inflation fell from 7 percent during 2002 to 6.5 percent during 2003, but was somewhat above the program target of 5.9 percent partly because of unexpectedly high food prices in December (Table 1). The external current account deficit held steady at 1.8 percent of GDP in 2003, as exports performed well and family remittances from abroad rose by over 20 percent. Net international reserves increased slightly, compared with a targeted decline of about US$200 million.

2. This favorable economic outturn reflects the strengthening of policies implemented starting in August 2002. The combined public sector (CPS) deficit declined from 3.7 percent of GDP in 2002 to 2.7 percent of GDP in 2003, in line with the program target, with the primary surplus rising from 0.4 percent of GDP in 2002 to 1.7 percent of GDP in 2003. As a result, total public debt (including the financial public sector) declined to 56.2 percent of GDP from 58.8 percent of GDP at end-2002. The Banco de la República slowed inflation by raising its policy interest rate by 200 basis points in early 2003. All structural reforms proceeded on schedule, except for minor delays in submitting the draft reform of the budget code to congress and in bringing Bancafé to the point of sale. Also, Congress has not yet approved the new public procurement law, which was to be approved by December 2003 as a structural benchmark. The overall health of the banking system improved, as nonperforming loans declined and profitability and capital adequacy strengthened.

Economic policies for 2004

3. The government intends to sustain the momentum of economic reforms, which are crucial to ensure that economic performance continues to improve and sustain growth. Economic policies in 2004 aim to support an increase in real economic growth to 4 percent, while inflation is targeted to decline to 5½ percent. The external current account deficit is targeted at 2.2 percent of GDP, and net international reserves are likely to rise by US$0.7 billion. These are broadly in line with the program's original macroeconomic framework.

Macroeconomic Framework: Main Elements

 
2003

2004

 
Prog.
Est.
Prog.
Est.

(Annual Percentage change)
Real GDP
2.8
3.7
3.3
4.0
CPI (end of period)
6.2
6.5
5.5
5.5
 
(In percent of GDP)
External current account deficit (-)
-2.2
-1.8
-2.5
-2.2
NFPS primary balance
2.0
1.7
2.4
2.5
Combined public sector deficit (-)
-2.8
-2.7
-2.5
-2.5
Total public debt
56.3
56.2
56.2
52.1
 
(In billions of U.S. dollars)
Net international reserves
10.4
10.5
10.5
10.5

Fiscal policy

4. Fiscal policy in 2004 is designed to reduce the CPS deficit further to 2.5 percent of GDP, as envisaged in the program, by raising the primary surplus to 2.5 percent of GDP. Total public revenues are projected to amount to about 31 percent of GDP, reflecting in part higher tax revenues resulting from the tax package approved in December 2003. Nontax revenues are expected to decline to 11 percent of GDP, as the operating surplus of Ecopetrol decreases. Total expenditure commitments are expected to rise to COL$82.8 trillion (about 33.7 percent of GDP), with current spending rising to 26.5 percent of GDP, reflecting higher military spending and additional pension payments caused by a faster than expected pace of retirement. Commitments of capital expenditure are projected to decline to 7.2 percent of GDP. The target for the CPS deficit will be adjusted upwards by an amount of up to 0.3 percent of GDP (COL$725 billion) to allow for the implementation of additional investment projects already included in the National Development Plan and will be contingent on the realization of proceeds of the sales of the government's shares in some public enterprises. With this adjustor, the government will strive to raise public investment to 7.5 percent of GDP. Details of this adjustor are presented in the attached TMU.

5. This fiscal stance is expected to reduce total public debt to about 52 percent of GDP by end-2004. In 2004, the government plans to rely on domestic financing equivalent to 0.8 percent of GDP and if the sale of government shares proceeds as expected, financing from privatization proceeds will amount to at least 0.3 percent of GDP. External financing is expected to be equivalent to 1.7 percent of GDP, including disbursements of US$1.2 billion from multilateral lenders and US$0.5 billion from bonds already placed in international markets. The government intends to purchase US$500 million of net international reserves from the Banco de la República (at the representative market exchange rate) to allow the government to scale back its external borrowing. The government may seek additional commercial external financing for liability management purposes or to pre-finance 2005 financing requirements. Over the medium term, the government intends to reduce the public sector's vulnerability to exchange rate fluctuations by raising peso-denominated public debt to 60 percent of total public debt by 2010 (46 percent at end-2003).

6. Over the medium term, the government remains committed to continue strengthening the fiscal position to reduce public debt to less than 45 percent of GDP by 2010. For this reason, the government will announce in mid-June 2004—as required by the new Fiscal Responsibility Law—that it intends to present to congress a budget for 2005 that is consistent with raising the public sector's primary surplus to 2½ to 3 percent of GDP and lowering the CPS deficit to 2 to 2½ percent of GDP. Moreover, as a structural performance criterion, by July 31, 2004 the government will submit a budget for 2005 that provides for a CPS deficit of 2 to 2½ percent of GDP.

7. It has been agreed to remove the electricity distribution enterprise (ISA) from the definition of the public sector starting in July 2004, on the grounds that it operates like a commercially-run enterprise. ISA has significant private ownership and has a sound governance structure that gives private shareholders a strong voice in major decisions affecting the enterprise. It has a high degree of managerial independence, does not benefit from any special financial treatment from the government, and is profitable and creditworthy. Also, in March 2004, ISA established a program to sell American Depository Receipts on the New York Stock Exchange, after having complied with the relevant reporting requirements of the United States' Securities and Exchange Commission. The government will work with Fund staff to develop a system for evaluating the commercial orientation of Colombia's other public enterprises and to continue to monitor ISA's operations. In addition, Colombia will participate in a pilot program designed to explore ways to allow for more public infrastructure investment, while ensuring proper accounting of public sector liabilities and within the constraints imposed by public debt sustainability.

Structural fiscal reforms

8. Over the next few years, it will be crucial to adopt reforms to moderate the growth in public spending, while sustaining revenues at current levels and making the tax structure more efficient. For this reason the government will continue to advance the reforms according to the schedule already envisaged in the program (Table 2):

  • Reform of the budget code: In mid-December 2003, the government submitted to congress a draft reform that aims to make expenditure management more flexible. The government intends to secure congressional approval of this law during 2004, which is a condition for completing the fourth review. As a preliminary step, the 2005 budget to be submitted to congress will include a presentation of expenditure according to a standard international classification system, which is a structural performance criterion.

  • Pension reform: In 2004, the government's net pension costs are projected to rise by 0.6 percent of GDP, and the public social security system will exhaust its reserves. Even after the reforms of December 2002 and May 2003, the actuarial deficit of the country's pension system remains high at 150 percent of GDP. Therefore additional reforms are needed. In March the government began to discuss with political parties a constitutional amendment that eliminates special pension regimes starting in 2008, ends the practice of paying a 14th monthly pension each year and caps the maximum pension at no more than 25 minimum salaries. In July, the government plans to submit this amendment to Congress, which must be approved by two consecutive sessions of Congress.

  • Strengthening fiscal decentralization: A recent FAD technical assistance mission provided useful recommendations to strengthen Colombia's system of fiscal decentralization. By September 2004, the economic policy cabinet (CONPES) will publish a plan to strengthen the current system of decentralization.

  • Statistical data on public sector financing. By June 2004, the government will develop a plan for a statistical reporting system of financing of the CPS deficit with the objective of obtaining monthly estimates of the below-the-line fiscal deficit with a minimum reasonable delay. This plan will be implemented by December 2004.

  • Public procurement: By December 2004, the government will resubmit to Congress the modifications to Law 80.

9. The government will make every effort to safeguard the current level of tax revenue over the medium term. By September 2004, the government will require the unification of tax accounts, the implementation of the plan to close businesses that evade taxes, and to begin reporting taxpayers in arrears to credit bureaus. During 2005, the government will submit to Congress legislation designed to make the tax structure more efficient and, if necessary, to help offset the revenue loss from the end of the temporary tax measures approved in December 2003.

Monetary and exchange rate policy

10. The Banco de la República is committed to taking the actions necessary to lower inflation to 5.5 percent during 2004, within the range of 5-6 percent. It has announced an inflation target of 3½ to 5½ percent for 2005, in line with its medium-term objective of lowering inflation to 3 percent. The Banco de la República's analysis suggests that short-term inflationary trends are favorable, reflecting in part an increase in the demand for Colombian financial assets that has contributed to the appreciation of the peso earlier this year. In this context, the Banco de la República has reduced its policy interest rate by a total of 50 basis points so far this year.

11. The Banco de la República will maintain the flexible exchange rate system, which includes the options based mechanisms for foreign exchange intervention in place since 1999. The central bank has purchased US$600 million so far this year, while letting the level of the currency reflect market forces. It has announced that it is prepared to purchase an additional amount of up to US$500 million through July. These operations are fully consistent with achieving the inflation target for 2004 and do not represent interference with the flexible exchange rate system. The effect on base money will be partially sterilized through the sale of the central bank's government securities.

12. We appreciate the recent technical assistance provided by the Fund's Monetary and Financial Systems Department and the Czech National Bank in strengthening our technical forecasting models of inflation and to further improve the operation of the inflation targeting framework.

Financial sector

13. The government will continue to strengthen financial supervision. Banks are making good progress in developing internal risk assessment models that are to be used to determine adequate levels of capital and provisioning in accordance with the Basle II capital standard, and the new provisioning and capital standards will be implemented gradually over the next few years. The superintendency of financial institutions will draft guidelines to strengthen consolidated supervision further. The quality of the mortgage loan portfolio is improving gradually, as the economy and housing prices recover further. Some banks with significant amounts of mortgages will continue to operate under restructuring plans, which—if necessary—could call for increases in provisioning and capital.

14. The government remains fully committed to divesting the financial institutions intervened in 1999. FOGAFIN will complete the sale of the government's stake in two small financial institutions during 2004. Following the unsuccessful sale of Bancafé, in which there were no bidders in the February 2004 auction, FOGAFIN will restructure Bancafé by end-2004, with a view to selling it in early 2005. FOGAFIN will announce by end-2004 an auction for Granahorrar, which would take place in early 2005.

Other issues

15. We have sent a letter to the Managing Director dated June 1, 2004 communicating Colombia's acceptance of the obligations of Article VIII under the Fund's Articles of Agreement. In the near future, a document will be sent to the Fund that inter alia confirms our plans to modify the regime for hydrocarbons exporters by December 2004 and to eliminate the tax on outward foreign exchange remittances by December 2005.

Table 1. Colombia: Performance Criteria 1/

 
Dec. 31, 2003
2004

Mar. 31
Jun. 30
Sept. 30
Dec. 31

Cumulative flows from beginning of calendar year
(In billions of Colombian pesos)
Overall balance of the combined public sector
Floor
-6,375
-1,200
-1,650
-1,850
-6,100
Outturn
-6,093
-824
 
 
 
Margin (+) or shortfall (-)
282
376
 
 
 
 
Inflation rate 2/
(12-month inflation rate)
Inflation - Consultation band
Upper limit
7.9
8.0
8.0
7.7
7.5
Target
5.9
6.0
6.0
5.7
5.5
Lower limit
3.9
4.0
4.0
3.7
3.5
Outturn
6.5
6.3
 
 
 
 
(In millions of U.S. dollars)
Net international reserves of the Banco de la Republica
Floor 3/
10,301
10,240
10,300
10,400
10,540
Outturn
10,523
11,019
 
 
 
Margin (+) or shortfall (-)
222
779
 
 
 
 
Cumulative net disbursement from beginning of calendar year
(In millions of U.S. dollars)
Net disbursement of medium- and long-term external debt by the public sector
Ceiling
1,850
800
1,300
1,750
1,800
Outturn
716
54
 
 
 
Margin (+) or shortfall (-)
1,134
746
 
 
 
 
Change in the outstanding stock of short-term external debt of the public sector
Ceiling
100
200
200
200
200
Outturn
-274
-81
 
 
 
Margin (+) or shortfall (-)
374
281
 
 
 

Sources: Ministry of Finance; Banco de la Republica; and Fund staff estimates.

1/ Definitions of concepts and adjustments to the performance criteria are explained in the technical memorandum of understanding attached to the staff report for Colombia's request for a Stand-by Arrangement (EBS/02/210).
2/ Deviations from the quarterly path for inflation will trigger consultations with the Fund, as set out in the technical memorandum of understanding (TMU).
3/ Floor has been adjusted as explained in the TMU. In the event that the Banco de la República purchases foreign exchange beyond the US$700 million operation announced in March 2004, the staff of the Banco de la Republica will send-after the intervention is announced-a letter to Fund staff explaining how the intervention is consistent with the inflation target.

Table 2. Colombia: Structural Performance Criteria and Benchmarks Under the SBA1


Structural Performance Criteria
Status

October 31, 2003 Submitting to Congress a revision of the Budget Code (Ley Orgánica del Presupuesto). This revision will give the Ministry of Finance greater control over the expenditure level and budget execution with the purpose of achieving more transparency and higher budgetary flexibility. Specific measures will include (a) the adoption of budget classification according to international standards that fits into the context of Colombia's legal framework; (b) a requirement to include in the annual budget law information on tax expenditures, quasifiscal activities, subsidies, contingent fiscal liabilities, medium-term fiscal projections, and a fiscal sustainability analysis; (c) the establishment of a mid-year budget report to Congress.

Was structural performance criterion for end-October 2003.

Done Dec.16, 2003.Waiver approved.

July 31, 2004 The 2005 budget submitted to Congress will provide for a CPS deficit of 2 to 2½ percent of GDP and will include a presentation of expenditure according to a standard international classification system.
Prior to completion of fourth review Congressional approval of the changes to the Budget Code. The revision will (a) adopt a budget classification according to international standards that fits into the context of Colombia's legal framework; (b) require that the annual budget law include information on tax expenditures, quasifiscal activities, subsidies, contingent fiscal liabilities, medium-term fiscal projections, and a fiscal sustainability analysis; (c) establish a midyear budget report to Congress; (d) gradually phase out most revenue earmarking not mandated by the constitution by subjecting these earmarking provisions to explicit sunset provisions; (e) limit the budget carry over by eliminating the "reserva presupuestal"; and (f) limit the power of the government to make spending commitments for future years on projects not authorized under the Development Plan. Was structural benchmark to be completed by end-2003.

Structural Benchmarks

December 31, 2002 Issuance of a decree to eliminate existing vacancies in the public service with immediate effect, and also to close vacancies created by retiring staff. Done October 2002.
March 31, 2003 Approval by CONPES (Consejo Nacional de Política Económica y Social) of the Social Security Institute's financial sustainability plan for its health service. The plan will clearly identify the fiscal effect of each of its elements and be consistent with eliminating the deficit of the ISS health system by 2007. Done March 2003.
June 30, 2003

Congressional approval of the Fiscal Responsibility Law.

Done June 2003.
Presentation to Congress of a revision of Law 80 to improve management of government contracts. The objective is to curb corruption in government procurement, improve transparency in public contracting, promote e-procurement, and design and implement a standard methodology specifying bidding terms and conditions for typical contracts. Done July 2002.
Implementation of a reform of the special pension regime for teachers that reduces the actuarial deficit of the regime for teachers at least in a proportion similar to that proposed by the government for the special regime. Congress approved law in May 2003.
July 31, 2003 Implement reform of special pension regime for the military that will make the regime more equitable. Done July 2003.
December 31, 2003 CONPES to finalize a plan to streamline the management of government property under which an asset management unit will be set up to define and implement a management plan based on consolidated inventories and develop a program for inventory assessment. Done October 2003.
Congressional approval of the modifications of Law 80 to improve management of government contracts. Not yet approved.
Bring Bancafé to point of sale. Done in February 2004. No bids received.

Structural Benchmarks

March 31, 2004 Completion of a CONPES document to strengthen the government's legal defense service to take effect by 2005. Done November 2003.
June 30, 2004 The government will issue a plan to improve the statistical reporting system for the financing of the nonfinancial public sector deficit.
A financial evaluation of ISS health will be undertaken, in order to determine whether additional actions beyond those established in Decree 1750 of June 2003 are required.
July 31, 2004 Submit to Congress a constitutional amendment to eliminate special pension regimes, end 14th monthly pension and cap maximum pension at no more than 25 minimum salaries
September 30, 2004 Full implementation of CONPES plan to eliminate the deficit of the ISS health system by 2007.
Implementation of the plan to strengthen the governments' legal defense services.
Bring Granahorrar to point of sale Benchmark moved to December 31, 2004.
CONPES will publish a strategy for strengthening the current system of fiscal decentralization.
Adoption of the following measures to improve tax administration: (i) establish an integrated taxpayers' current account, which records all of a taxpayer's payments in a single account; (ii) begin to close enterprises that evade taxes; and (iii) begin to report persons with tax arrears to credit bureaus.
December 31, 2004 FOGAFIN will announce auction for Granahorrar
Restructuring of Bancafé will be completed.
Implement plan to improve reporting of financing of public sector
Resubmit to Congress the modifications to Law 80 to improve management of government contracts Moved from December 31, 2003

1 New or revised measures or dates are presented in italics.

 

Technical Memorandum of Understanding (TMU)

1. This memorandum sets out specific performance criteria for the remainder of 2004 and the structural performance criteria and structural benchmarks for the remaining period of the program. This TMU supplements the TMU of December 24, 2003, which presents all the definitions of the variables used to monitor performance under the program.

I. Fiscal Targets

A. Performance Criterion on the Overall Deficit of the Combined Public Sector


Ceiling
(In billions of Colombian pesos)

Overall deficit of the combined public sector
from January 1, 2003 to December 31, 2003
-6,375
Overall deficit of the combined public sector
from January 1, 2004 to:
March 31, 2004
-1,200
June 30, 2004
-1,650
September 30, 2004
-1,850
December 31, 2004
-6,100

The overall balance of the combined public sector (CPS) will remain as defined in the TMU of December 24, 2003. Starting in July 2004, the accounts of ISA will be removed from the accounts of the public sector for the reasons identified in the Memorandum of Economic Policies.

2. Adjustment

(i) The quarterly ceilings on the combined public sector deficit will be adjusted upward (larger deficit), and the ceiling on net disbursements of medium- and long-term external debt of the public sector (see below) will be adjusted upward by the full amount of any concessional loan disbursements, up to a maximum of 0.4 percent of GDP or US$360 million for 2004 as a whole, that are in support of the military expenditure component of the government's domestic security program "Seguridad Democrática." A loan will be considered concessional if it has at least a 35 percent grant element at the time of loan approval using the commercial interest reference rate (CIRR) as discount rate.

(ii) The cumulative quarterly ceiling on the combined public sector deficit for September and December 2004 will be adjusted upward up to a maximum of Col$725 billion (0.3 percent of GDP) for the purpose of making commitments for public investment projects already included in the National Development Plan. This adjustor is contingent on the realization of privatization proceeds from sales of the government's equity participation in some public enterprises. In the original program projections, there were no projected privatization proceeds. The asset sales envisaged for the year 2004, as part of the privatization scheme, include primarily the sale of the public natural gas enterprise (ECOGAS) and 20 percent of the shares of the electricity distribution company (ISA). All privatization proceeds are to be recorded as a financing item.

(iii) The cumulative quarterly ceilings on the combined public sector deficit will be adjusted downward by 130 percent of the revenue (gross deposits) of the petroleum stabilization fund (FAEP), as currently defined in the law, in excess of the baseline set out in the table below.

B. Baseline Assumption for Oil Stabilization Fund Revenue (FAEP)


Revenue
(In millions of U.S. dollars)

From January 1, 2003 to December 31, 2003
0
From January 1, 2004 to March 31, 2004
0
From January 1, 2004 to June 30, 2004
0
From January 1, 2004 to September 30, 2004
0
From January 1, 2004 to December 31, 2004
0

II. Monetary Targets

3. Reflecting the BR's inflation targeting framework for monetary policy, quarterly targets for 2004 have been established for the 12-month rate of consumer price inflation, measured by the Indice de precios al consumidor (IPC) compiled by the Departamento Administrativo Nacional de Estadisticas (DANE). The authorities will complete consultations with the Fund (Executive Board) on the proposed policy response before requesting purchases from the Fund in the event that the observed quarterly inflation were to deviate from the programmed quarterly baseline target by 2 percentage points or more, as set out in the table below. In the event that the actual inflation deviates significantly from the programmed target within the 2 percentage points margin in any calendar quarter, the BR staff will report to the IMF staff on the reasons for the deviation and the policy response adopted, if any. The BR will provide Fund staff with monthly information and analysis of inflationary developments and forecasts, and keep the staff informed of all policy actions taken to achieve the inflation objectives of the program.

A. Performance Criterion on Inflation1


Inflation
(12-Month Percentage Change)

December 31, 2003
5.9
March 31, 2004
6.0
June 30, 2004
6.0
September 30, 2004
5.7
December 31, 2004
5.5

1 These performance criteria trigger consultations with the Fund, as noted above.

III. External Targets

A. Performance Criterion on NIR of the BR1


Target
(In millions of U.S. dollars)

Outstanding stock as of:
   December 31, 2003
10,540
   March 31, 2004
10,240
   June 30, 2004
10,300
   September 30, 2004
10,400
   December 31, 2004
10,540

1 These performance criteria are explained in Table 1 of the TMU.

4. Adjustment. The quarterly NIR targets may be adjusted downward by up to US$2.0 billion for the cumulative net foreign exchange sales in 2003-04 to help secure orderly foreign currency market conditions in the event of exogenous disturbances in the foreign currency market and consistent with transparent rules used by the central bank for foreign exchange intervention. If these net sales become negative, i.e., there are net foreign exchange purchases, the NIR targets will not be adjusted upwards. The details of this adjustment are presented in Table 2 of the TMU. In the event that NIR declines by US$1.0 billion during any 30-day period, the authorities will complete consultations with the Fund (Executive Board) on the proposed policy response before requesting purchases from the Fund. In the event that the BR announces additional foreign exchange purchases beyond the US$700 million operation announced in March 2004, the staff of the BR will send a letter—after the announcement of the new intervention—to the Fund staff explaining the consistency of this intervention with the inflation target for 2004 and 2005.

B. Performance Criterion on the Net Disbursement of Medium-
and Long-Term External Debt of the Public Sector1


 
Ceiling
(In millions of U.S. dollars)

Cumulative net disbursement of external debt by the public
   sector from January 1, 2003 to December 31, 2003
1,850
Cumulative net disbursement of external debt by the public
   sector from January 1, 2004 to:
   March 31, 2004
800
   June 30, 2004
1,300
   September 30, 2004
1,750
   December 31, 2004
1,800

1 These performance criteria are explained in Annex 2 to the TMU.

C. Performance Criterion on Net Disbursement of Short-Term
External Debt of the Public Sector1


 
Ceiling
(In millions of U.S. dollars)

Cumulative net disbursement of short-term external debt of the public
   sector from January 1, 2003 to December 31, 2003
100
Cumulative net disbursement of short-term external debt of the public
   sector from January 1, 2004 to:
   March 31, 2004
200
   June 30, 2004
200
   September 30, 2004
200
   December 31, 2004
200

1 These performance criteria are explained in Annex 2 to the TMU.

IV. Structural Performance Criteria

5. These are described in the Table 2 of the Memorandum of Economic Policies.

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