817.51/2608
The President of the Export-Import Bank of Washington (Pierson) to the President of Nicaragua (Somoza)
Excellency: I have the honor to refer to your communication of this date to the President of the United States.
The Export-Import Bank of Washington will undertake either directly or through United States commercial banks to provide credits for the National Bank of Nicaragua in order to assist it to attain the expressed objectives of the Government of Nicaragua of encouraging the development of Nicaraguan foreign commerce and economic relations with the United States by meeting promptly at all times commercial obligations to United States nationals and concerns and eliminating unusual fluctuations in the rate of exchange of the cordoba and those resulting from the seasonality of major export crops. The total amount of such credits shall not exceed $500,000 at any one time, and such credits are to be utilized from time to time as required prior to June 30, 1941.
To permit the National Bank of Nicaragua ample opportunity to liquidate its obligations under the credit it is proposed that each availment thereunder shall be payable in equal quarterly installments during a period not exceeding thirty-six months, and the rate of interest shall be 3.6% per annum. Details and other conditions of the transaction will hereafter be arranged between the Export-Import Bank and the National Bank of Nicaragua, but it shall be understood that all obligations under this arrangement shall be liquidated on or before June 30, 1944. Availments under the line of credit shall have [Page 731] the approval of the National Bank of Nicaragua and the Export-Import Bank.
To aid in improving Nicaragua’s transportation facilities and the development of other projects designed to increase the productive capacity of the Nicaraguan people and their trade with the United States, the Export-Import Bank will cooperate with United States manufacturers and exporters and with the Nicaraguan Government in arranging for the financing in the United States of equipment, materials and technical services not available in Nicaragua. It is envisaged that the construction program may entail the extension of credits by the Export-Import Bank of as much as $2,000,000 prior to June 30, 1941.
We are informed that available engineers of the Bureau of Public Roads will be detailed by the President to the Government of Nicaragua to furnish engineering advice and supervision, but that in order to carry on the proposed construction, they must be supplemented by the employment by the Government of Nicaragua in agreement with the Export-Import Bank of additional engineers and other technical assistants.
We understand that individual expenditures under the construction program shall follow examination of the feasibility and utility of particular projects and certification as to their necessity by the Government of Nicaragua and the Export-Import Bank.
To permit the improvements under consideration to be carried forward as rapidly as is consistent with sound financial policy it is contemplated that the credits will take the form of discounting, under conditions to be agreed upon by the Government of Nicaragua and the Export-Import Bank, of serial notes to be issued from time to time by the Government of Nicaragua bearing interest at the rate of 5% per annum and maturing over a period of seven years.
During the time the Export-Import Bank is in position to assist in providing or arranging for these credits, and to the extent that its funds may be available for this purpose it will be pleased to cooperate as indicated above with the Government of Nicaragua.
Sincerely yours,