US embassy cable - 05LIMA1331

UNCLAS LIMA 001331 
 
SIPDIS 
 
DEPT FOR WHA/EPSC, WHA/AND, EB/IFD/ODF 
 
E.O. 12958: N/A 
TAGS: EAID, ECON, EFIN, SOCI, PGOV, PE 
SUBJECT: DISCUSSING U.S. VIEWS ON DEBT RELIEF, MCA WITH 
PERUVIAN FOREIGN MINISTRY 
 
REF: STATE 31823 
 
1.  Acting EconCouns delivered on March 15 reftel demarche, 
outlining U.S. views on debt relief for poor countries, to 
Minister Counselor Cesar de las Casas of the Office of 
Commercial Promotion at the Ministry of Foreign Relations. 
De las Casas was accompanied by Vivian Weiner of APCI, the 
Peruvian Agency for International Cooperation. 
 
2.  Acting EconCouns passed to the officials and explained 
the U.S. proposal in reftel favoring up to 100 percent 
relief for IDA and AfDF debt for eligible HIPC countries and 
opposing recent UK proposals on debt relief and creation of 
an International Financing Facility (IFF).  De las Casas, 
who had not heard of the proposals, thanked Acting EconCouns 
for the information.  Weiner was aware of the proposals.  De 
las Casas had no immediate comment on the U.S. plan, other 
than to express approval that it would not affect 
multilateral lending to non-HIPC countries such as Peru.  He 
added that he would share the information with other Foreign 
Ministry officials. 
 
3.  Acting EconCouns then turned the conversation to 
Millenium Challenge Account (MCA) progress, passing to the 
officials the press release announcing the signing of the 
first MCA compact March 14 with Madagascar.  He reviewed MCA 
funding trajectories and explained how Peru would become an 
MCA candidate country in FY-06, noting that, according to an 
analysis conducted by USAID and shared with the GOP, Peru 
barely meets a majority of MCA criteria in each of the three 
policy categories of ruling justly, investing in people and 
economic freedom. 
 
4.  Weiner responded that APCI and the Prime Minister's 
office have been working with USAID on the topic of the MCA. 
As a result, the GOP has formed an interagency MCA working 
group on the topic.  The group met for the first time March 
14, and decided to conduct an inventory of where Peru does 
and does not meet existing MCA criteria, and discuss 
possible projects that could be included in an MCA compact. 
She related that the working group is led by staff from the 
Prime Minister's office, while she represents APCI and is 
the working group's executive secretary.  Also participating 
are representatives from the Ministry of Economy and 
Finance, the Minister of Women and Social Development, the 
National Competitiveness Council and the Peruvian Congress. 
Weiner added that the next working group meeting on March 
28, and future meetings, would likely be open to outside 
participation. 
 
5.  De las Casas asked how long countries are taking to 
qualify for MCA funding, given that the first compact has 
only just been signed.  He explained that it would be a 
great political boost to the Toledo government to complete 
an MCA compact before President Toledo's term ends in April 
2006.  Weiner expressed skepticism that this was possible, 
and Acting EconCouns agreed that this is uncertain.  Both 
Peruvian officials underscored that the GOP is working hard 
to ensure it will be a strong contender for MCA funding next 
year. 
 
STRUBLE