838.51 Cooperation Program/9–1545: Telegram
The Acting Secretary of State to the Chargé in Haiti ( Abbott )
327. Embassy’s despatch 1008, Sep 15. For Abbott and Pettigrew.30 From Dept and Exim Bank. Dept has conferred with Exim Bank re Haitian Govt proposal refinancing Haitian foreign debt including [Page 1104] Shada obligations. In response Bank proposes and Dept agrees as follows: (1) Bank is willing to consider consolidation of Public Works loan of 1938 and Shada loans and to accept notes of Haitian Govt for total unpaid balance of the two loans as of Oct 1, 1946, the principal payable over 20 years by equal quarterly amortization payments, with interest at 4 per cent per annum. This would amount to amortization on both loans of approximately $400,000 annually for 20 years compared to present $800,000 annually on J. G. White credit alone. First quarterly payment under this plan would be made Nov 15, 1946, and Bank stock in Shada will be returned to Haitian Govt at that time. (2) Refunding of private foreign debts31 is not within policy of Exim Bank and this part of Haitian proposal must be declined.
At same time re President Lescot’s views withdrawal of Bank membership from Shada Board (your despatch 967 , Aug. 27)32 Bank feels strongly it should have no representative on Board commencing Oct 1, 1945. This is in line with Bank’s and Dept’s policy in development corporations in other countries, e.g., Bolivia and Ecuador.33 This means merely that Bank is withdrawing from active participation in Board’s activities and in no way indicates that Bank is abandoning its interest in Shada’s future and success. Bank’s proposed 20 year term for repayment of Shada notes is obviously evidence of this fact.
Officer in Chargé and Mr. Pettigrew are requested jointly to convey the above to President Lescot. Officer in Chargé should also make clear at same time that if and when this plan goes into effect the Dept will expect Haitian Govt, depending on Govts annual revenues, to devote thereafter additional funds (i.e., a portion of the annual amortization saved on Exim amortization) to amortization of 1922–23 bonds. Haitian Govt would thus be able to make payments more in accord with 1922 and 1925 loan contracts with view to retiring these bonds by respective maturity dates of 1952 and 1953.
In this connection and to forestall possible Haitian objection to last point, the following three advantages to Haiti of the refunding plan should be stressed to President: (1) Reduction of present $800,000 annual amortization to Exim Bank to $400,000 (2) inclusion in this figure of Shada amortization which would otherwise constitute separate and additional charge; and (3) additional opportunity for Haiti to retire more quickly her 6 per cent obligations thus reducing heavy interest charges.[Page 1105]
Haitian Govt should clearly understand this proposal in no way changes already agreed upon amortization plan for 1945–46, as set forth your airgram A–336, Sep 12.
Exim Bank is sending further communication to Pettigrew via Embassy.