Foreign Relations of the United States, 1955–1957, American Republics: Central and South America, Volume VII

278. Minutes of the 253d Meeting of the National Advisory Council on International Monetary and Financial Problems, Washington, December 7, 1956¹

Washington, December 7, 1956

[PARTICIPANTS]

• Mr. W. Randolph Burgess (Acting Chairman), Treasury Department
• Mr. George H. Willis
• Mr. Elting Arnold
• Mr. Philip P. Schaffner
• Mr. Thorsten V. Kalijarvi, State Department
• Mr. John Parke Young
• Mr. E. A. Lister
• Mr. Marshall M. Smith, Commerce Department
• Mr. Clarence I. Blau
• Mr. William R. Hayden
• Mr. Wm. McC. Martin, Jr., Board of Governors, Federal Reserve System
• Mr. Arthur W. Marget
• Mr. Samuel I. Katz
• Mr. Lynn U. Stambaugh, Export-Import Bank
• Mr. George Blowers
• Mr. Charles Shohan
• Mr. Walter Schaefer, International Cooperation Administration
• Mr. Hale T. Shenefield
• Mr. Frank A. Southard, Jr., International Monetary Fund
• Mr. John S. Hooker, International Bank
• Mr. Oscar Zaglits, Department of Agriculture, Visitor
• Mr. Edmond C. Hutchinson, Bureau of the Budget, Visitor
• Mr. Henry J. Bittermann, Acting Secretary
• Mr. C.L. Callander, NAC Secretariat

1. Bolivia—IMF Stand-By Arrangement and U.S. Stabilization Agreement

The Chairman informed the Council that a problem had arisen with respect to the Bolivian stabilization program, and asked Mr. Willis to explain the matter. Mr. Willis informed the Council that the Bolivian representatives had apparently been unable to obtain assurances of credit from New York commercial banks, so that the $5 million which had been hoped for from this source would have to be obtained from some other source if the $25 million stabilization fund was to be realized (see NAC Document No. 2019,² Staff Committee Minutes No. 501 and NAC Action No. 942³). On the assumption that $7.5 million would be available from the International Monetary Fund and $10 million from the International Cooperation Administration, the question was whether the Treasury should increase the amount of the United States-Bolivian Stabilization Agreement from $5 million (as approved in NAC Action No. 942) to $7.5 million so as to reach the total amount of $25 million.

The Chairman commented on the Bolivian situation, emphasizing the psychological importance to the stabilization effort of reaching the round $25 million figure, and indicated that the Treasury Department was willing to increase its commitment to $7.5 million. Mr. Schaefer reported that the International Cooperation Administration would be able to make $10 million available, and Mr. Southard reported that a $7.5 million stand-by arrangement had been approved by the Fund. After a brief further discussion the Council agreed that the Treasury Department might increase its commitment to $7.5 million. The following action was taken (NAC Action No. 949):

“National Advisory Council Action No. 942 is hereby amended to read as follows:

• “1. The National Advisory Council advises the U.S. Executive Director of the International Monetary Fund that it approves his favorable consideration in the Executive Board of the Fund of the Bolivian Government’s request for a stand-by arrangement permitting drawings up to $7.5 million.
• “2. The National Advisory Council approves favorable consideration by the U.S. Treasury Department of the Bolivian Government’s request for a United States-Bolivian Stabilization Agreement in an amount of not more than $7.5 million, with a term of twelve months. It is understood that under the agreement a carrying charge of ¼ of 1 percent per annum would be applied against the undisbursed amount and that the interest rate would be either (a) 4 percent during the first year that any drawing remained outstanding and 5 percent thereafter or (b) 1 percent in excess of the discount rate of the Federal Reserve Bank of New York during the first year that any drawing remained outstanding and 2 percent in excess of such rate thereafter.”

[Here follows discussion of unrelated matters.]

1. Source: Department of State, NAC Files: Lot 60 D 137, Minutes. For National Advisory Council Use Only.
2. Not printed.
3. On November 21 the NAC approved consideration by the U.S. Treasury of the Bolivian Government’s request for a U.S.-Bolivian Stabilization Agreement of not more than $5 million. (Department of State, NAC Files: Lot 60 D 137, Staff Committee Minutes and Documents) For further information, see U.S. Treasury, Annual Report of the Secretary of the Treasury on the State of the Finances for the Fiscal Year Ended June 30, 1957 (Washington, 1957).