CENTRAL AMERICAN MONETARY STABILIZATION FUND (LOAN COMPLETION REPORT REVIEW SUPPLEMENT)

Evaluation covers the period 12/75-9/77 and updates a 12/75 loan completion report. The Fund"s paid-in capital, consisting of capital contributions plus reinvested earnings, now stands at $37.9 million, up from $25 million on 7/31/76 and $18 million at the end of l975. CAMSF"s Executive Secretary expects the Fund to reach its total authorized capital of $50 million by the end of 1977. No new credit lines were negotiated during the year, as none were needed. Total loans and credits thus remain at $l02 million. Repayments by El Salvador, Honduras and Nicaragua proceeded as scheduled. As of 8/13/77, El Salvador had a balance outstanding of CA$16.9, Honduras of CA$10, while Nicaragua had liquidated its balance. No new loans were granted in l976/77 owing to the region"s strong balance of payments position, and it is doubtful whether new loan applications will be received in l977/78. A substantial reduction in coffee prices would, however, have serious adverse balance of payments consequences and might force recourse to the Fund in late l978 or l979. Despite CAMSF"s progress in achieving loan objectives, it has pooled, as of 6/30/77, only 2.9% of CA foreign exchange reserves of $1.755 million. A major aspect of the problem is that CA countries contribute equally in capitalizing integration institutions. Thus, contributions to CAMSF are limited by the willingness and capacity of the weakest member. While additional voluntary contributions are possible, there is little incentive to make them, since this will not enhance a country"s voting power in the Fund"s management. Still, CAMSF"s Executive Secretary believes countries might be persuaded to make such voluntary contributions in an emergency situation.