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European Business News 96-09-30

European Business News (EBN) Directory - Previous Article - Next Article

From: The European Business News Server at <http://www.ebn.co.uk/>

Page last updated September 30 1625 CET


CONTENTS

  • [01] Yasser Arafat advocates delay to Washington summit
  • [02] Eurotunnel shares suspended ahead of announcement
  • [03] British Gas calls off sale talks
  • [04] Italy's news budget has mixed reviews
  • [05] G7 approves debt-relief plan

  • [01] Yasser Arafat advocates delay to Washington summit

    PLO leader Yasser Arafat has suggested a delay in the Washington summit on Palestinian-Israeli peace moves, fearing the proper steps have not been taken to ensure success of the session, a senior PLO official said.

    The official, who spoke on condition of anonymity, said both Arafat and Egyptian President Hosni Mubarak were hesitant to attend the summit without assurances Israel was ready to make concessions in the peace process.

    The statement came as Arafat and Mubarak were meeting in the Egyptian city of Alexandria on the Mediterranean coast.

    [02] Eurotunnel shares suspended ahead of announcement

    Shares of Anglo-French Channel Tunnel operator Eurotunnel have been suspended pending an announcement on debt negotitations due before midnight, when the mandate of court-appointed mediators runs out.

    The mediators, appointed by the French court overseeing the Anglo-French Channel tunnel operator's restructuring of about Ffr65bn in junior debt with creditor banks, won't extend their stay past the deadline of September 30, officials have said.

    The mediators, Lord Wakeham and Robert Badinter, already twice extended their mandate at the request of the company on June 30 and July 31.

    A Eurotunnel spokeswoman said that it wasn't certain when a press release would be issued, but that because a decision was expected before midnight, shares had been suspended from trading for an indefinite period in Paris, London, and Brussels.

    The debt-restructuring talks, according to reports, have been held up on the size and price of the debt-for-equity swap expected to be included in the deal. Eurotunnel suspended payment on its debt to 225 banks on September 14, 1995.

    Earlier this month, Eurotunnel executive president Patrick Ponsolle said progress in the talks had been made but wouldn't elaborate. He also said the group was still waiting to hear whether the French and British governments would participate in the restructuring.

    [03] British Gas calls off sale talks

    British Gas (BRG) ended discussions to sell its Scottish and Northern England operations to Hydro-Electric.

    British Gas said in a statement no further announcement would be made on a deal between the two companies.

    The Financial Times newspaper reported British Gas was unable to complete the deal because of commercial and regulatory pressures.

    [04] Italy's news budget has mixed reviews

    Some foreign concerns praised, and some domestic groups panned, the 1997 supplementary budget proposed by Prime Minister Romano Prodi's government.

    Giorgio Fossa, the president of industrialists group Confindustria, said that 'Even though I am not rejecting it (the budget), there are many points that I hope will be explained.'

    He also expressed some skepticism that this 62.5 trillion lire ($41.29bn) budget would bring the deficit-to-gross-domestic-product ratio down to 3% next year from 4.5%, given the expected slowdown in the Italian economy.

    Nevertheless, kudos came from Washington, where finance ministers and central bank heads from the Group of Seven industrialized nations met over the weekend.

    Theo Waigel, the German finance minister, said, 'I congratulate the Italian government for an exceptional budget plan.' But, he said, 'I don't know whether it's good enough to get (Italy) into the first round of European economic and monetary union.'

    European Union President Jacques Santer said 'to the Italian government goes all my enthusiasm for this courageous and tough budget.'

    Cautious optimism, instead, was seen from Bank of Italy Governor Antonio Fazio, who said, 'It's clearly a good budget that goes in the right direction.'

    However, as far as monetary policy is concerned, Fazio said that 'the reduction of interest rates will come only if inflation and inflation expectations are defeated. We aren't there yet, even if we have made great strides.'

    [05] G7 approves debt-relief plan

    Finance ministers and central bankers from the Group of Seven major industrial nations approved a plan to relieve the massive debt of some of the poorest nations and reached broad agreement on a $55bn fund to head off financial crises.

    The emergency fund, which would be used to stabilize financial crises such as the Mexican peso collapse in 1994, will be backed by the G-7 and other Western nations along with some of the powerful Asian economies, and will be run by the International Monetary Fund.

    But as the crisis fund nears completion, much of the world is in its best economic shape in years, with low inflation and steady recovery or growth, G-7 officials said. 'Conditions appear to be in place for a strengthening and broadening of the expansion of the world economy into 1997,' said Treasury Secretary Robert Rubin. Last week, the IMF projected strong global growth of 4.1% next year. Rubin and Federal Reserve Chairman Alan Greenspan represented the US at Saturday's meeting of the G-7, which includes Japan, Germany, France, Britain, Italy and Canada.

    This week, the IMF and World Bank also are expected to approve the debt-relief plan. The crisis-fund plan, which doubles existing IMF intervention funds, won't be adopted formally by all contributors until the spring, but G-7 officials said a consensus has been reached and funding agreements are enough to proceed.

    The debt-relief plan, under discussion for more than a year, would ease more than $7bn of debt owed to the IMF, World Bank and individual creditor nations collectively known as the Paris Club. Eventually, it would benefit as many as 20 countries, many in Africa, that have made economic reforms but can't expand because of crushing international debt.

    'This is a real breakthrough,' said Justin Forsyth, Washington director for Oxfam America, a nonprofit international aid group. The package still doesn't provide all of the relief needed, but it should help some of the countries begin to build growing economies, he said. The Paris Club creditors agreed Saturday to forgive as much as 80% of bilateral debt, on a case-by- case basis; the plan's backers, including the World Bank, had pressed for 90%.

    Forsyth said Uganda probably will be the first country to benefit; other candidates include Mozambique, Zambia, Ethiopia, Tanzania and Mali in Africa, and Bolivia, Nicaragua and Guyana in Latin America. A G-7 official wouldn't cite specific nations, except to say that eight to 13 were likely to benefit in the first round. The IMF and World Bank each would contribute at least $2bn, along with a similar amount from the Paris Club, G-7 officials said.

    Last week, an IMF plan to sell as much as $2bn of its $40bn of gold reserves to help finance its part of the plan was delayed indefinitely. Yesterday, Rubin told the IMF governing committee that the US will seek congressional support for financing a contribution to the relief effort 'only when the membership of the IMF has committed to a comprehensive. . . .financing package that includes early gold sales of at least five million ounces.' He noted that the IMF board now has the votes to force the sale -- over the objections of Germany, Switzerland and Italy, which have blocked it so far.


    From the European Business News (EBN) Server at http://www.ebn.co.uk/


    European Business News (EBN) Directory - Previous Article - Next Article
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