Day 2 Manila 2012 45th Annual Meeting of the Board of Governors ADB
Minister Mark Brown today joined the remaining Governors of the ADB in the first plenary session of the ADB. The Governors were given a presentation on past currency issues and an overview of where currency markets are headed particularly in light of the recent difficulties in the US and Europe.
Later, the Cook Islands delegation met with representatives of the ADB Treasury to discuss the possibility of consolidating the outstanding loans with the ADB.
Currently, the Cook Islands has 16 loans with the Asian Development Bank which are valued at 63 million, these are denominated in Special Drawing Rights (SDR), a weighted currency basket of four major currencies consisting of the Euro, the US dollar, the British pound, and the Japanese yen. Some of these loans extend back to 1980.
Both parties agreed that there would be administrative savings to be realised by consolidating the loans into one. ADB Treasury officials were keen to assist the Cook Islands as they were keen to demonstrate the ADB’s flexibility to ensure benefits to members are maximised.
Minister Brown outlined confirmed that MFEM officials and ADB Treasury Officials will shortly commence negotiations on consolidating the loan and investigating the possibility of denominating the loan in New Zealand dollars.
“We should be looking to take advantage of the recent gains in the New Zealand dollar and investigating whether it is now appropriate to denominate our debt with the ADB in New Zealand dollars. This would lock in some recent gains which are significant as well as provide us with greater certainty with our debt servicing payments going forward.”
Financial Secretary Richard Neves will be setting up a small team in MFEM to work on the negotiations with the ADB.
“This will be a great opportunity for our staff, it is not every day that you get to consolidate and convert a national debt portfolio. Reading it in books is one thing, getting your hands dirty and learning on the job is quite another.”