1827. On the breaking up of the Central American Federation, Costa Rica assumed one-twelfth of the Federal Debt (£163,000), amounting to £13,500. 1840. In this year Costa Rica paid off her portion of the above Debt at about 85 per cent. in cash. 1871.-A Six per Cent. Loan for £1,000,000, with a Two per Cent. Sinking Fund, was issued by Messrs. Bischoffsheim & Goldschmidt in two instalments of £500,000 each, the first at 72 per cent. and the second at 74 per cent. 1872.-A Loan for £2,400,000 was brought out by Messrs. Knowles & Foster at 82 per cent. bearing 7 per cent. interest and I per cent. Sinking Fund. The amount originally allotted was £2,089,000, but of this £1,426,500 was apparently bought in on behalf of the Government previous to allotment, only £662,500 remaining in the hands of the public. Bonds sufficient to bring the total in circulation up to £1,483,600 seem to have been taken and disposed of by the Agents and guarantors, whilst the balance of £916,400 was mainly pledged for advances. 1874-Both Loans went into default. 1875.-The Loans formed the subject of a Parliamentary Enquiry. 1885.-An Arrangement was entered into through the agency of Mr. Minor C. Keith for the settlement of the Debt on the following terms : (1.) Creation of a New Consolidated External Debt for £2,000,000. (2.) Reduction of the principal of the two Loans by 50 per cent. The total outstanding was £2,691,300 (viz., 1871 Loan, £941,200, and 1872 Loan, £1,750,100). The difference between this amount reduced by one-half and the total New Issue (viz., £2,000,000) to be used for payment of interest for the first two years, the expenses of the Arrangement, Conversion, etc. (3.) The New Bonds to be divided into two Series, viz., Series "A" to the amount of £525,000, and Series "B" £1,475,000; interest to be paid by Mr. Keith from Ist January, 1886, to 1st January, 1888, at the rate of 5 per cent. on Series "A" and 4 per cent. on Series "B," after which the Government to pay 5 per cent. on both Series, but the interest on the "A's" to be paid preferentially. (4.) A Sinking Fund of 1 per cent. to be applied in 1898 by half-yearly Drawings at par. (5.) For the interest in arrear on 23 Coupons amounting to £649,428 on the 1871 Loan, and on 24 Coupons amounting to £1,470,084 on the 1872 Loan, fully paid up Shares in the Costa Rica Railway Company, Limited, to be given at the rate of £22. 10s. of Shares for the arrears on each £100 Old Bond. (6.) As security for the payment of the interest on the New Bonds, the Government to issue at the beginning of each year, from 1st January, 1888, "Customs Notes" for the total amount of the interest on the New Debt in each year, these Notes to be accepted in payment of Import and Export Duties, payment in money not being allowed until the Customs Notes were first realised. (7.) The Old Bonds of the 1871 and 1872 Loans to be deposited with the Council of Foreign Bondholders until the 1st July, 1894, as a guarantee for the carrying out of the Agreement. In the event of a default on any Coupon on the New Bonds up to and including July, 1894, the Bondholders to revert to their rights under the 1871 and 1872 Loans. 1894.-The Old Bonds of the 1871 and 1872 Loans were handed over to the Costa Rica Government. F 1895. The Government again went into default, the January, 1895, Coupon not being paid. 1897.-An Arrangement was made on the following terms : (1.) Principal to remain unchanged. (2.) Interest on the "A" Bonds to be reduced to 3 per cent., and on the "B" Bonds to 2 per cent. per annum, to commence from 1st April, 1897. (3.) The arrears of interest to 1st April, 1897 (amounting to £275,000), to be liquidated by the sum of £131,562. IOS. Of this sum £31,562. Ios. to be paid on completion of the arrangement, and to be appropriated to expenses. Certificates to be issued in exchange for the five Coupons (Nos. 14 to 18 inclusive) in arrear, at the rate of £5 Certificates for each £12. 1os. of overdue Coupons. The Certificates to be redeemed by drawings by the application of £5,000 per annum for twenty years (=£100,000). (4.) From 1st October, 1917, a non-accumulative Sinking Fund, of £10,000 per annum, to be applied by tenders to the amortisation of the principal of the Debt. (5.) The sum required for the service of the Debt to be remitted monthly. (6.) The existing Bonds to be called in and stamped with the new conditions. (7.) If the service of the Debt remains in suspense for six consecutive months, the rights of the Bondholders under the 1886 arrangement to be revived. (8.) Payments to be provided preferentially over those in respect of any further loans the Government may contract. 1901. Default was made upon the October Coupon. The Government asked for a suspension of payment for two years from April 1st, 1901, undertaking at the end of that time to resume the Debt Service in full in accordance with the 1897 Arrangement, and to pay off at par the arrears accumulated during the two years in a period of five years. REPORT. The Council regret to state that the External Debt of Costa Rica still remains in default. No reply was received to the letter addressed by the Council to the New President on the 18th April, 1902, which was reproduced in the Council's last Report. Subsequently, however, an official intimation was received through the Financial Agent of the Government in London to the effect that the Government intended to submit a proposal towards the close of last year, but this proposal never came to hand. More recently it was stated that Mr. Minor C. Keith was about to visit London, with a view to effecting a settlement of the Debt, and the Council were requested to await his arrival. Seeing, however, that Mr. Keith had not come to London or communicated with the Council, and that the period for the suspension of payments, originally demanded by the Government, had expired, the following letter was addressed to the President of the Republic on the 30th June last : COUNCIL OF FOREIGN BONDHOLDERS, 17, Moorgate Street, London, E.C., HIS EXCELLENCY SEÑOR DON ASCENSIÓN ESQUIVEL, SIR, We wrote to your Excellency on the occasion of your accession to the Presidency in April, 1902, pointing out that the External Debt of Costa Rica had then been in default for upwards of a year, and we urged your Excellency to favour us with your views and to submit a proposal which would be satisfactory to the Bondholders and honourable to Costa Rica. We regret that, although more than fourteen months have elapsed since our letter was written, no proposal for a settlement has been made, while our letter has not even met with an acknowledgment. ! |