818.51/7–1245

The Secretary of State to the Ambassador in Costa Rica ( Johnson )

No. 196

The Secretary of State refers to Embassy’s despatch no. 736, dated July 12, 1945, enclosing a copy of a letter sent by the Minister of Finance Alvaro Bonilla Lara to Mr. Wayne C. Taylor,32 and transmits herewith for the information of the Officer in Charge a copy of Mr. Taylor’s reply33 to the aforementioned letter.

The Department was consulted by the Export-Import Bank on the proposed extension of the $5,000,000 credit and agreed in principle to the text of Mr. Taylor’s reply to the Finance Minister. The Department informed the Bank that it was prepared to recommend approval of the postponement of the amortization of this loan under the conditions as outlined in the letter from the Bank, and that this action was influenced by the fact that the Finance Minister indicated that the proposed reform laws would be enacted.34 Although the postponement of the amortization will not be dependent on the enactment of the three fiscal reform laws, the Department feels that the passage of these laws in substantially the form recommended by Mr. Kekich in 1943 is essential to any real improvement in the financial situation in Costa Rica.

  1. Neither printed.
  2. Letter to Bonilla Lara, August 13, supra.
  3. Laws No. 199, 200, and 201, enacted September 6, 1945, known respectively as the Organic Budget Law, Organic Center of Control Law, and Organic Law of the National Treasury and National Purveyance (818.51/12–345). These laws (1) established, effective January 1, 1946, a new fiscal organization designed to secure control over the administration of and accounting for public funds; (2) began the refunding of a floating debt of 18.8 million colones (3.3 million dollars); and (3) turned over the administration of direct income and land taxes to the state-owned Banco Nacional with the expectation of increased tax rates (818.51/2–146).