838.51 Cooperation Program/9–2646
The Acting Secretary of State to the Ambassador in Haiti (Tittmann)
282. Following is text of reply to Haitian Govts request for moratorium, which Emb may, at its discretion, present as note:
“I have the honor to refer to Your Excellency’s note dated September 16, 1946,67 requesting that my Government obtain agreements from the creditors for a 1-year moratorium upon service of the obligations described in the note mentioned, and to Your Excellency’s note dated September 26, 1946,66 stating that the moratorium requested would apply to amortization payments on the Series A and C bonds and to both interest and amortization payments on the Public Works obligations of 1938 and the so-called SHADA obligations.
“I am instructed to inform Your Excellency that my Government is unable to accede to the request of the Haitian Government as described above. My Government is unable to perceive any reason that the Haitian budget for 1946–1947, prepared in the manner set forth in the Executive Agreement of September 13, 1941, between Haiti and the United States, should not provide for interest and amortization payments on the Series A and C bonds as described in the Executive Agreement mentioned and on the Public Works obligations of 1938 as described in the contract now in effect relative to these obligations, inasmuch as no special arrangements for payments of different amounts have previously been made by mutual consent of Haiti and the creditors. My Government believes that it might be able to induce the representatives of the bondholders to accept amortization payments of $700,000 in the Haitian fiscal year 1946–47 upon the same basis as such payments were made in 1945–46, but in view of the resources available to Haiti from 1945–46 and the outlook for Haitian revenues in 1946–47, and in consideration also of the spirit and purpose of the requirements for interest and amortization payments described in the Executive Agreement of September 13, 1941, my Government is not prepared to suggest that the bondholders accept amortization payments in 1946–47 totaling less than $700,000. My Government further believes that, in the light of the resources and [Page 935] revenues probably available to Haiti in 1946–47, the Export-Import Bank should not be asked by Haiti to accept payments for interest and amortization on the Public Works obligations less than those provided in the contract between the Haitian Government and the Export-Import Bank now in effect. With reference to the SHADA obligations, my Government is unable to understand on what basis the Haitian Government now requests a moratorium, since SHADA is a corporate entity in its own right and the Government’s contingent liability for payment of SHADA’s obligations does not assume importance unless and until SHADA is unable to meet them. No information has been received by the Export-Import Bank from SHADA that the latter is unable to fulfill its commitments and this Government knows of no reason that payments should not be made pursuant to the agreement with the Export-Import Bank.
“My Government strongly believes that it is to the best interests of Haiti that its financial prestige be maintained on a high level by payment of service on its obligations to the fullest extent within its power. In periods of high government revenues, like that of the present time, this policy presents an opportunity for reduction of the cost of public debt service by a program of regular amortization which would diminish the cost to be met in future periods, when revenues may be considerably less. My Government is confident that at the present time Haiti will be able to meet its obligations faithfully and at the same time to carry out a reasonable program of public improvements.”
Sentence mentioning $700,000 to be included only as last resort if Emb is convinced full contractual payment will not be forthcoming.
Dept authorizes Emb present foregoing as note or at its discretion, convey substance to Haitian Govt in formal note and supplement such note with informal conversation designed impress on Govt advantages reducing debt while revenues still high.
Foregoing will serve as reply to urtels 377 Sept 12, 394 Sept 23, 406 and 407 Sept. 26, and despatch 1697 Sept 19.68
Reurtel 407 Sept 26 it is duty of Bank Board to formulate 1946–47 budget and set aside funds for debt service in accordance with terms Executive Agreement 1941.
[The Haitian Foreign Office, in a note dated October 9, offered the following counterproposal for the 1946–47 fiscal year: 1) Payment in full of interest on both the AC and public works loans amounting to $468,408.21; 2) amortization payments on AC bonds amounting to $350,000; and 3) amortization payments on the public works loan amounting to $400,000.]