20 - Old and New Debts (1969)

Summary

Introductory Note: When any change of administration occurs in a country, like that in our country in mid 1966, there will be a tendency to accrue new debts on top of old ones. The old debts are those incurred by the old administration whose repayment has yet to be fully settled. The settlement of these old debts is the responsibility of the new administration. If the new administration is in no position to assume this responsibility and does not consider the debts as its responsibility, the governments of other countries will be in no position to extend fresh loans to the new administration and will even sue it in their domestic courts or international courts of law. They can even seize the property of the new administration, such as aircraft and vessels that happen to be in other countries. Therefore, there is no alternative for the new administration but to acknowledge the debts of the old administration as theirs and try to find the best solution possible. It is the obligation of the new administration to find a way to solve the problems of old debts in the best possible manner, while avoiding the accrual of further debts burdens.

There are a number of questions about offshore loans. On this occasion, I find it in place to dwell on this problem.

In fact, our loans come in two types; past loans (those of the past administration) and the loans of the present administration. There is a line of demarcation here; that being 30 June 1966.

All loans, or all debts, incurred prior to 30 June 1966 are old debts and those incurred on 30 June 1966, or afterwards, are new debts or loans. Old debts, incurred prior to 30 June 1966, come in several types. Among them are the debts categorized as “debts incurred as compensation for nationalization”; these were incurred mostly in relation with the Dutch. In 1966, an agreement was reached with the Dutch government that the compensation for nationalization would be paid off within forty years.

Then there are other debts amounting to about $2.1 billion. Of this $2.1 billion, around $1.7 billion is the principal and $0.4 billion, the interest. This is just an approximation. The $2.1 billion in debts come from about thirty different countries, some small and some large.