834.51/9–1545: Telegram

The Ambassador in Paraguay (Beaulac) to the Secretary of State

476. Emb report 106, Oct 7, 1944.67 Bank of Paraguay desires 10-year loan from Export Import Bank of 2 million dollars to be amortized by 10 annual payments of 2,000 each plus accrued interest. The proceeds would be used exclusively for mortgage dept of Bank for mortgage financing of industry and agriculture as provided by the organic law of the Bank. Funds for this purpose are not obtainable locally in sufficient quantity. Also any available through issuance of mortgage bonds would be at a high interest rate probably 6 percent. Bank is seeking loan at 2½ percent that it may lower relending rates now current. These are 6½ percent on good industrial and similar loans for periods up to 5 years, 8 percent on small individual loans such as those for construction of private homes and 4 percent on essential govt contracts such as cold storage plant now under construction here. Bank hopes to lower these rates to maximum of 6 percent maintaining minimum of 4 percent if loan can be provided at 2½ or 3 percent.

Argentine Bank of the Nation has offered 10 million Argentine pesos for this purpose on above terms but at 4 percent. Besides seeking lower interest rate Bank is hesitant to add commitments increasing Paraguay’s economic dependence on Argentina.

As Argentina is pressing for reply to its offer Bank of Paraguay would appreciate telegraphic advice as to whether Export Import Bank is in a position to consider request.

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