I.M.F. Chief Backs Debt Aid to Honduras and Nicaragua


MANAGUA, Nicaragua -- The chief of the International Monetary Fund, Michael Camdessus, said Tuesday that he favored giving Nicaragua and Honduras, both devastated by a hurricane last month, a break on loans, canceling 80 percent of the debts to the fund.

While touring the subcontinent Camdessus urged individual governments to help ease a debt load that had stalled development in the two countries long before the hurricane, called Mitch, struck.

President Arnoldo Alemn of Nicaragua said after a breakfast meeting with Camdessus such aid would help Nicaragua use "the painful experience of Hurricane Mitch to rebuild and transform the country."

Camdessus pledged "our total commitment" to help Nicaragua and praised the Government for pledging to continue with fiscal changes that were agreed on months ago in an aid package.

"This should be a very powerful incentive" for other agencies to help, Camdessus said, "because now we are dealing not only with immediate aid for rebuilding, but also for the reconstruction of a new and better country."

As of last year, two-thirds of Nicaragua's foreign debt was with other governments and one-fourth with multilateral organizations like the I.M.F. and the World Bank. Most of the remainder was with commercial lenders or suppliers.

Austria, Cuba, France, Spain, the United States and other countries have announced that they will pardon all or some debts. Nicaragua owes more than $6 billion and Honduras $4.3 billion.

Both Governments have struggled for years to reduce the debts. The $300 million that Nicaragua owes each year is equivalent to 40 percent of all its exports.

The president of the Central Bank of Nicaragua, Noel RamIrez, estimated that the storm had caused $1.5 billion in damage. President Carlos Flores Facusse of Honduras has said damage there could exceed $4 billion.

RamIrez said Nicaragua had received $50 million in low-interest loans from the Inter-American Development Bank, $70 million from the World Bank and $50 million from the I.M.F.

Camdessus arrived here shortly after Hillary Rodham Clinton departed on Monday. Mrs. Clinton said the United States would double emergency aid to the region, to more than $250 million.

An adviser to Facusse told reporters Tuesday that no aid had reached 60,000 Miskito Indians on the Atlantic Coast.

"We are trying to bring humanitarian aid to the Miskitos," the adviser said. "But it is difficult to do that, because the zone can be only reached by canoe."

Foreign Minister Roberto Robaina of Cuba arrived Tuesday in Honduras with a 20-member medical team to add to Cuban workers who already helping in the region. Cuba says it has 103 doctors and 50 other health workers who are aiding hurricane victims in Central America.

Canada Suspends Debt

TORONTO -- To help Honduras recover from the storm damage Canada will provide $65 million in aid over four years, the Foreign Ministry announced Tuesday. On Friday, Canada agreed to suspend $20 million in Honduran debt. Honduras will not have to pay principal or interest on the debt until a new repayment schedule is in place.

Nicaragua has no outstanding debt with Canada.

Wednesday, November 18, 1998
Copyright 1998 The New York Times