FIE yEC-4 CONFIDENTIAL Public Disclosure Authorized This report is limited to those members of the staff to whose work it directly relates.I INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized PUBLIC EXTERNAL DEBT OF LUXEMBOURG Public Disclosure Authorized November 25, 1952 Economic Staff Prepared by: Andrew C. Huang Public Disclosure Authorized Reviewed by: James J. Lynch Table of Contents Page I. Debt Outstanding 1 II. Service Payments 2 Table A-1: External Public Debt of Luxembourg Table A-2: Estimated Contractual Amortization and Interest Payments on the External Public Debt of Luxembourg (This report was prepared by Andrew C. Huang and reviewed by James J. Lynch.) PUBLIC EXTERNAL DEBT OF LUXE1BOURG I. Debt Outstanding As of December 31, 1951 Luxembourg's outstanding long-term public external debt was estimated at the equivalent of $19.3 million. Nearly 60% (or 11.4 mil- lion) of this amount was represented by the IBRD loan. The structure of the in- debtedness, detailed in Table A-1, is summarized below. In units equiv. to US$1,000 1) U.S. Dollar Debt a) Bonds 552 b) IBRD loan 10,568 c) MSA loans 3,000 Sub-total 16U,120 2) Swiss Franc Bonds 4,251 3) Belgian Franc Debt IBRD loan 829 4) Sterling Bonds 66 Grand total 19,26 1) U.S. Dollar Debt a) Bonds The25-year 3% dollar bonds of Luxembourg issued in 1947 are outstanding in the original amount of *52,000, Amortization began in June 1952. The loan contract stipulates that service may be made in local currency at the current exchange rate at the option of the bondholders. b) IBRD loan The ,12 million IBrD loan to Luxembourg for the purchase of steel mills and railroad equipment, of which about $238,000 had been cancelled and about $246,000 already repaid as of December 1951, matures in the period 1949-72. The loan carries 3 1/4 interest plus 1% commission per year. c) U.S. Government loan The 3 million MSA loan is repayable over a 35-year period with interest payments of 2 1/2% starting in 1952 and the repayment of principal begin- ning in 1956. The loan agreement provides that under adverse economic conditions service payments may be postponed by mutual consent of the U.S. and Luxembourg Governments. 2) Swiss Franc Bonds The 4% 1948 Swiss franc loan was issued to convert a 5% Swiss loan of 1932. The principal outstanding amounts to Sw fr 18.6 million ($4.3 million); only Sw fr 380,000 ($87,000) are held outside the country. The contract provides that service may be paid in local currency, at the bondholders' option, at the fixed exchange rate of Sw fr 1 = Lux fr 10.14. -2- 3) Belgian Franc Debt The debt represents the portion of the IBRD loan disbursed in Belgian currency. As of December 31, 1951 the amount outstanding was B fr 41.4 million, equivalent to $829,000. 4) Sterling Bonds The 25-year sterling loan of 123,475 (265,730) was issued in 1947. It is now outTtnnding in t4c ori.in-irl 'mount -nt i-, anricebcl in local currency at the current exchange rate at the bondholders' option. The entire amount of the loan is reportedly held within the country. II. Service Payments There is no record of default on any public external obligations except during World Viar II when service on the external loans was suspended. Complete service was resumed in 197 and full payment was made on all arrears. Service payments on the foreign debt of Luxembourg for selected years during 1952-76 are given in detail in Table A-2 and are summarized below. Projected Total Service Payments on the Public External Debt of Luxembourg (expressed in thousands of U.S.$) T o t a 1 D e b t Service payments by currency Debt out- Payments during year standing Amorti- Inter- Swiss Belg. Ster- Year Jan.1 zation est Total U.S.$ francs francs ling 4 1953 18,789 l92 717 1,209 907 237 61 1954 18,297 510 701 1,211 907 238 61 5 1955 17,787 527 681 1,208 904 238 61 5 1965 11,107 816 411 1,227 926 238 58 5 1971 5,565 1,031 192 1,223 926 238 55 4 1972 4,534 1,017 152 1,169 876 238 55 1973 3,517 289 119 408 170 238 1976 2,631 309 89 398 160 238 As shown above, total service payments amount to about $1.2 million per year between 1953 and 1972; thereafter they decline to about $400,000 annually be- tween 1973 and 1976. However, the amountsactually payable in Swiss francs and sterling are substantially smaller than the preceding estimates, since the bulk of the Swiss debt and the entire sterling debt are reported as being held in Luxembourg itself. Table A-1; LEMBOURG - EXTERNAL PUBLI6 DEBT National and Gowornment gu4.anteed Debt (In thousands) Pace 1 Debt outstanding December 31. 19'21 Identification Dcme 1'15 In currency Exioressed in of payment U.S, dollars TOTAL NATIONAL AD GOVIR1NM1T GUARANT2ED DEBT 19,266 ./ DOLLAR, DEBT, Uotal dollar debt $l1i,10 14,120 Dollar securities - Grand Duchy of Luxembourp external 0%, 1947-1971 $ 552 552 Loans from international organizations IBRD 4 1/41, 1947-1972, U.S. dollar portion of $12,000,000 loan 2/ $10,568 10,568 U.S. Government loans ERP 2 1/2%, 1948-1983 $ 3,000 3,000 SWISS FRANC DEBT Grand Duchy of Luxembourg external 4%, 1948-1983 2/ Sw fr 18,572 / 4,21 BELGIAN FRANC DEBT IBED 4 1/4, 1947-1972, Belgian franc portion of $12,000,000 loan 2/ Bfr 41,428 829 STERLING DEBT Grand Duchy of Luxembourg external 3%, 1947-1971 i21 J 66 Debt Summary by Currency (Expressed in thousands of U.S. dollars) Debt outstanding December 31, 1951 Amount Percent National and government guaranteed debt Total . 19,266 100,00 U.S. dollars 14,120 73.30 Swiss francs 4,251 22.06 Belgian francs 829 4.30 Pounds sterling 66 0.34 Exchange rates: Z1 = $2.80; Sw fr 1 - $0.228898; Bfr 1 = $0.02, Table A-l, LUXMBOURG - EXTENAL PUBLIC DZBT (Continued) Page 2 1/ This does not include the following debts; (In thousands) Amount outstanding Amount outstanding December 31, 1951 June 30, 1952 In currency Expressed in In currency Expressed in of payment U.S. dollars of payment U.S. dollars Amount payable to Belgium-upon the dissolution of the Belgium-Luxembourg Economic Union (interest free) Bfr 1,625,001 32,500 Bfr 1,625,001 32,500 National Bank of Belgium short-term creditp Intcrost at the - - Bfr 300,000 6,000 official discount rate of the Bank The status of this loan as of December 31, 1951 and July 31, 1952 was as follows: (In thousands) Amount disbursed and still outstanding December 31, 1951 July 31, 1952 In currency Expressed in In currency Expressed in Currency of payment U.S. dollars of payment U.S. dollars Total 11397- 1 1 U.S. dollars $ 10,568 10,568 3 10,210 aj 10,210 Belgian francs Bfr 41,428 829 Bfr 40,029 bJ 801 ja Of this amount $559,000 had been sold by the I-ank, withouV,the Bankis guarantee 1 Of this amount Bfr 7,734,900 had been sold by the Bank, without the Bank's guarantee. Of the original 412,000,000 authorized, '238,017 have been cancelled. jj/ Payable in Swiss francs or Luxembourg francs at Sw fr 1 = Lux fr 10.14. / Of this amount only Sw fr 380,000 are held outside the country. j The entire amount is held within the country. IBRD - STATISTICS SECTION August 29, 1952 Thble A-2; LUXMBOURG - ESTIMATED CONTRACTUAL AMORTIZATION AND INT7RST PAYMENTS ON THE EXTERNAL PUBLIC DEBT (Expressed in thousands of U.S. dollars) Page 1 Dollar securities Loans from int'l. organizations U.S. Government loans Year Debt out- Payments during year Debt out- Payments during year Debt out- Payments during year standing Amorti- Interest Total standing Amorti- Interest Total standing Amorti- Interest Total January 1 zation January 1 zation January 1 zation 1952 552 21 16 37 10,568 358 437 795 3,000 - 75 75 1953 531 21 16 37 10,210 370 425 795 3,000 - 75 75 1954 510 22 15 37 9,840 382 413 795 3,000 - 75 75 1955 488 23 14 37 9,458 394 398 792 3,000 - 75 75 1956. 465 23 14 37 9,064 407 )81 788 3,000 55 74 129 1957: 442 24 13 37 8,657 420 364 784 2,946 55 73 128 1958 418 25 12 37 8,237 433 346 779 2,891 55 71 126 1959 393 25 12 37 7,804 448 327 775 2,837 27 71 "98 1960 368 26 11 37 7,356 463 307 770 2,809 27 70 97 1961 342 27 10 37 6,893 479 288 767 2,782 82 69 151 19622 315 28 9 37 6,414 494 267 761 2,700 82 67 149 19633 287 28 9 37 5,920 510 246 756 2,617 82 65 147 19644 259 29 8 37 5,410 526 224 750 2,537 82 63 145 19655 230 30 7 37 4,884 544 202 746 2,455 82 61 143 19666 200 31 6 37 4,340 562 178 740 2,373 135 58 193 19677 169 32 5 37 3,778 580 154 734 2,238 135 55 190 19683 137 33 4 37 3,198 598 130 728 2,103 135 52 187 1969, 104 34 3 37 2,600 619 104 723 1,969 135 48 183 1970- 70 35 2 37 1,981 639 77 716 1,834 135 45 180 19771 36 36 1 37 1,342 661 51 712 1,699 135 42 177 1972 681 681 22 703 1,564 135 38 173 1973z 1,429 135 35 170 19744 1,294 135 31 166 1975" 1,159 135 28 163 1976& 1,024 135 25 160 Table A-2: LUXEMBOURG - ESTIMATED CONTRACTUAL AMORTIZATION AND INTEREST PAYMENTS ON THE EXTERNAL PUBLIC =EBT (Continued) (Expressed in thousands of U.S.