GUINEA-BISSAU Debt Treatment - May 10, 2011

Creditors also committed on a bilateral basis to cancel an additional USD 27 million.

possibility to conduct debt swaps

On a voluntary and bilateral basis, the Government of each Participating Creditor Country or its appropriate institutions may sell or exchange, in the framework of debt for nature, debt for aid, debt for equity swaps or other local currency debt swaps:

(i) all official development aid loans;

(ii) the amounts of other outstanding credits, loans and consolidations, up to 20% of the amounts of outstanding credits as of 31 December 1994 or up to an amount of SDR 20 million, whichever is higher.

The Republic of Guinea-Bissau was declared eligible to the enhanced HIPC Initiative by the IDA and the IMF in 1998 and was declared to have reached its Completion Point in December 2010. In this context, the Republic of Guinea-Bissau commits to seek promptly from all its external creditors which are not participating in the Agreed Minutes dated 10 May 2011, their appropriate contribution in terms of debt relief to the enhanced HIPC Initiative, on top of traditional debt relief mechanisms and consistent with the proportional burden sharing based on their relative exposure in net present value of total external debt at Decision Point after the full use of traditional debt relief mechanisms.

The appropriate nature of the debt relief provided will be assessed not only on the basis of the reduction in the net present value of the debt as computed under Appropriate Market Rate, but also on the terms of repayment of the debts not cancelled. For this purpose, all relevant elements will be taken into account, including the level of cash payments received by those creditors as compared to their share in the Republic of Guinea-Bissau’s external debt, the nature and characteristics of all treatment applied, including debt buy backs, and all characteristics of the reorganized claims and in particular their repayment terms whatever forms they take and in general the financial relations between the Republic of Guinea-Bissau and all their other creditors.

Consequently, the Republic of Guinea-Bissau commits not to accord any category of external creditors -and in particular litigating creditors, creditor countries not participating in the Agreed Minutes dated 10 May 2011, commercial banks, suppliers and bondholders- a treatment more favourable than that accorded to the Participating Creditor Countries.

Participating creditors

Observers

Press release