The World - News from June 4, 1989

The 26-nation Latin American Economic System (SELA) announced a proposal to cut the region’s foreign debt by 50% and replace it with long-term, low-interest bonds. The plan was presented by SELA Permanent Secretary Carlos Perez del Castillo at a news conference in Caracas, Venezuela. The proposal calls for replacing 50% of commercial bank debt with 20-, 30- and 40-year bonds backed by funds provided by the debtor countries. The funds would have initial deposits of no more than 1% of the value of the bonds, which would have a fixed interest rate of 5% a year. Perez del Castillo stressed that the proposal, still in draft form, is meant to serve as a framework for future bilateral negotiations.