811.516 Export-Import Bank/8–1247

Memorandum by the Special Assistant in the Division of Investment and Economic Development (Stenger) to the Director of the Office of Financial and Development Policy (Ness)

confidential

Subject: Agenda for Meeting of Board of Directors Eximbank August 13, 1947.

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For Consideration:

6. Ecuador–Quecedo–Manta Highway. In August 1946 Ecuador indicated that it would need $3.5 million to complete the Quevedo–Manta Highway. Ecuador earmarked $780,000 of its dollar funds for this purpose, and requested the Bank to finance the balance by making available the $1,000,000 credit, which was authorized in July 1945 to finance engineering services, and by a new credit of $1,720,000. On September 18, 1946 the Board approved the diversion of the $1,000,000 credit provided the engineering and construction services were performed by approved U.S. contractors. At that time, the Board also indicated its willingness to consider the additional $1,720,000 provided that Ecuador could support its estimate of completion costs with detailed engineering estimates satisfactory to the Bank.

This project was originally undertaken by the Ecuadoran Development Corporation under a credit of $2.5 million from the Eximbank.

This project has a long history of frustration and mismanagement for which American contractors, as well as the Ecuadorans, are partly to blame. The Department (politically) can also accept some of the responsibility for the unsatisfactory manner in which this project has been handled.

The Department and the Bank feel that there is at least a moral if not an actual commitment on the part of the U.S. Government to assist in the completion of the Quevedo–Manta Highway.

The staff recommends the approval of a credit of $1,720,000; that this credit be merged with the $1,000,000 credit previously authorized; and that Ecuador be required to finance any amount above the $3.5 million estimated cost of completion of the highway. The suggested term of repayment is 15 years with interest at 3–½%

Recommendation: The political division strongly recommends approval of the proposal. It is suggested that the Department concur in the approval.

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