NEW YORK -- Yugoslavia Wednesday signed a $3.8 billion multi-year refinancing package with commercial banks that calls for pre-payment of $262 million on a 1983 loan from the banks.
The multi-year agreement, known as MYRA to bankers, was approved by all of the country's creditor banks except one unnamed institution. It covers $3.8 billion of medium- and long-term debt maturing between Jan. 1, 1985 and Dec. 31, 1988.
Roughly $6.4 billion of Yugoslavia's $18.3 billion in debt is owed to commercial banks.
The $262 million early principal payment is on $600 million in new money Yugoslavia received as part of its 1983 bank refinancing and on which the first payment was not due until September, 1986.
The financing was at lower interest rates than Yugoslavia had been paying and also included lowering of the rate on its 1983 and 1984 maturities.
But the agreement has some stringent conditions, 'to give the bankers assurances they wanted,' one member of the committee said.
Yugoslavia must remain in good graces of the International Monetary Fund until its current agreement with the Fund expires in May 1986, and then submit to IMF monitoring until 1991.
Official debt, lent under the auspices of the Paris Club, must be maintained at present levels. The World Bank also has agreed to maintain its overall lending at the current $3 billion.
Donald G. McCouch, executive vice president of Manufacturers Hanover Trust, which chairs the bank committee and hosted the signing ceremonies, said he 'looks forward to the time when all banks will compete for business from Yugoslavia, whose economy is performing well.'
Vlado Klemencic, finance minister, said the signing of the agreement 'shows the bankers' confidence in the efforts of Yugoslavia ... to control economic conditions.'
Klemencic said although 'serious problems' remain, mostly with inflation, 1985 will be the third year Yugoslavia has had a surplus in its balance of payments.
'Also, we actually decreased our overall external debt by nearly $400 million in 1985, the first time in years that has happened,' the minister said.
Asked about Yugoslavia's initial negative response to the Baker Plan for resolving the Third-World debt problems proposed by Treasury Secretary James Baker, Klemencic said the country's objection was a lack of specifics.
'We are looking positively at elements of the Baker Plan, but we have too little information on the ways and means to realize it,' Klemencic said.
Although Yugoslavia's refinancing did not include new money from the banks, Klemencic noted that it has completed two co-financing agreements with the World Bank and its International Finance Corp. subsidiary.
He also stressed that Yugoslavia did not take a $50 million loan that was approved by the World Bank.
'We are very cautious about taking on new loans but if we find it necessary to do so we will assess the individual situation,' the minister said.