837.51 Cooperation Program/222

The Ambassador in Cuba (Braden) to the Secretary of State

No. 5661

Sir: Supplementing the Embassy’s air mail despatch No. 5205 of November 22, 194321 (file No. 851), and previous correspondence in the matter, I have the honor to report that according to Treasury sources, the proceeds from the taxes established by Law No. 31 of November 22, 1941, for the service of the $25,000,000 Export-Import Bank credit, which became effective on January 1, 1942, totalled 12,237,511 pesos during the first two years of their existence. Of these collections, 10.5 million pesos which were in excess of loan service requirements were transferred to the 1942 and 1943 regular Cuban budgets.

[Page 259]

On the basis of present estimates as to the size of the 1944 Cuban sugar crop, it is expected that collections from the taxes under reference will exceed 7,000,000 pesos during 1944. If so, total collections for the years 1942 to 1944 will exceed 19,000,000 pesos, or over 75 percent of the entire credit.

In view of the foregoing, the question is frequently raised, especially in the opposition press, why the Cuban Government did not undertake the several public works and agricultural diversification projects to be executed from the proceeds from the $25,000,000 credit out of current income, instead of saddling the Cuban people with an increase in Cuba’s foreign indebtedness. While this question is a logical one under the circumstances, it could, of course, hardly be foreseen in 1941 that economic conditions in Cuba would improve so materially and that the taxes would therefore produce the very large revenues collected to date. Moreover, according to the Embassy’s observations the rank and file of the Cuban people doubtless prefer to have the projects executed under the safeguards established by the Export-Import Bank (regardless of the resultant increase in Cuba’s foreign debt), in view of the assurance that the money will be spent for the purposes for which it is intended. They realize that had the Government undertaken the execution of the projects out of current income, only a fraction of the money appropriated would, in keeping with the usual practice, probably have been spent thereon, and the benefits which Cuba’s economy would have derived therefrom would at best have been problematical.

Respectfully yours,

For the Ambassador:
Alfred E. Nufer

Counselor of Embassy for Economic Affairs
  1. Not printed.