161. Memorandum From the Director of the Office of East Coast Affairs (Bernbaum) to the Assistant Secretary of State for Inter-American Affairs (Rubottom)1
SUBJECT
- Argentine-Export-Import Bank Negotiations2
I attended a meeting at the Export-Import Bank this morning. The following were present: Sam Waugh, Vance Brand, Walter Sauer, Lynn Stambaugh, other Bank officials, the Argentine Minister of Finance Donato Del Carril, the Argentine Financial Counselor Emilio Llorens and Gonzalez del Solar.
Del Carril stated that he expected to reach a final agreement with the International Monetary Fund this coming Friday, December 12, with the objective of having an announcement on December 15 or 16. He hoped that the announcement would include United States Government participation, including Export-Import Bank plans for development loans. Del Carril described the problem as follows: the IMF will authorize a drawing of $75 million, of which only $42–1/2 million [Page 522] will be available for utilization in 1959. This will be the emergency stabilization component. In accordance with IMF estimates and recommendations, an additional $112–1/2 million will be required to compensate for the anticipated budget deficit of seven billion pesos. Del Carril’s talk in New York with sixteen banks indicated the likelihood of a commercial bank contribution of $60 million of which $10 million each will be contributed by Chase, First National and the Bank of America. He conceded the possibility of an additional $10–$ 15 million from these and other banks. Assuming, however, that only $60 million will be forthcoming, of which $16 million will be used to repay existing debts to commercial banks, the balance required will be $68–1/2 million. Del Carril expected that this amount would be furnished by the U.S. Treasury Department and by the Export-Import Bank.
Sam Waugh stated that the Export-Import Bank already had $218 million in Argentina and had loan applications of slightly more than $100 million. He frankly admitted that the Bank was pretty close to the limit of its lending facilities for Argentina and that the Bank very definitely preferred the pending economic development projects to balance of payments aid. He added that any balance of payments aid made by the Bank would have to be deducted from pending economic development projects.
Mr. Waugh then suggested that the Minister consult as soon as possible with Secretary Anderson to highlight the urgency of the Argentine problem. Del Carril agreed to request an appointment for this afternoon.
Following a telephone discussion with Mr. Dillon, Mr. Waugh told Del Carril that he, Waugh, and Mr. Dillon would arrange to see Secretary Anderson tomorrow morning to reach a final determination on how the Argentine package would be financed. He indicated the possibility of a $25 million contribution by the DLF on the basis of the criteria established in the loan to India.
DLF loan criteria and their applicability to the Argentine situation were discussed later with Del Carril in Vance Brand’s office. Tentative agreement was reached that the Argentines would find it possible to utilize the DLF loan pari passu with disbursement of the IMF drawing for purchases on a project basis of equipment which the Argentine Government was in any way going to make regardless of the loan. Projects discussed included the railways, Somisa and similar enterprises.3
- Source: Department of State, Central Files, 835.10/12–958. Confidential.↩
- In a memorandum of conversation at the Department of State with Rubottom and others, October 22, Argentine Minister of Economy Del Carril stated “that he had come to Washington to continue the conversations which he had had in New Delhi with officials of the United States Government and of the international agencies.” (ibid., 835.10/10–2258)↩
- On December 29, the U.S. Government, in conjunction with 11 private financial institutions cooperating with the International Monetary Fund, announced a development program of $329 million to help the Argentine Government in its efforts to facilitate stabilization and economic development. U.S. credits included $54 million by 11 private banks; $125 million from the Export-Import Bank; $25 million by the Development Loan Fund; and a $50-million agreement with the U.S. Treasury. That same day, it was announced that the United States and the Government of Argentina had signed a $17.7-million P.L. 480 loan agreement relating to the disposition of funds accumulated under an edible-oils sales agreement concluded in December 1955. For additional information on both accords, see Department of State Bulletin, January 19, 1959, pp. 105–107.↩