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Testimony of Eugene L. Bovee -10- 



June 23, 1994 



consistently large basis, and others where the consistency was not always there, but in 

 various years the utilization was high: i.e., Morocco, Tunisia, the Former Soviet Union and 

 Russia. 



I previously mentioned the large drop-off through May 6, 1994 of registrations relative to 

 allocations. It would appear that a significant reason for this dramatic change has been the 

 problems experienced in certain public sector markets such as Russia, which in 1994 has no 

 program and in 1993 had low utilization. Other issues have arisen such as in Venezuela 

 where a private sector borrower defaulted and the program was shut down for all other users. 

 This caused a cancellation of credit sales that would otherwise have taken place with viable 

 banks in that market place. Also Algeria, a large user, is currently rescheduling its debt 

 through the Paris Club and will probably not be able to satisfy all of its food import needs 

 due to the GSM programs being suspended for Algeria, pending a successful rescheduling. 

 It is interesting to note that 15 percent of total registrations through May 6, 1994 came from 

 South Korea— $284.5 million. This is a market which will probably be disappearing or at 

 least shifting its buying requirements eventually. Another issue which may affect usage 

 strongly is what happens in Mexico, which has now privatized the banks, and the Mexican 

 government may no longer provide a CGA. This will most likely reduce the total amount of 

 allocations, and thereby the support for actual exports. 



The purpose of the preceding discussion was to show that the markets are changing 

 dramatically-moving from public to private sector purchasers. Many of the public sector 

 markets are experiencing problems such as in Russia and Algeria, the two biggest allocations 

 along side Mexico, who will more than likely be undergoing a transition to a private sector 

 program. In the near future, all this will have major implications for the continued 



