Memorandum of Conversation, by Mr. J. J. Stenger of the Division of Investment and Economic Development

Participants: Mr. Norman Ness of the Export-Import Bank Ambassador Beaulac
Messrs. Gilmore and Hoit of RPA and Mr. Stenger of ED

At the request of Ambassador Beaulac, a meeting was held in the Department to discuss the plan presented by the Government of Paraguay for the extension of the period of amortization of the two outstanding Export-Import Bank credits, as outlined in the Embassy’s despatch no. 1375, dated January 4, 1945.33

Ambassador Beaulac reviewed the situation in Paraguay and outlined the proposal of the Paraguayans, which is substantially as follows: [Page 1201]

The Paraguayan Government wishes to obtain the $425,000 still remaining under the $3,000,000 loan.
Paraguayan Government proposes to repay the two existing loans in 20 years from 1946.
The Paraguayan Government wishes to send each month, in advance, to the Export-Import Bank a specified sum of money which will be accumulated in a special account, these funds to be applied to the payment of coupons on the bonds as they fall due, the accumulated funds to bear interest at 4% which will be destined to build up a fund for the service of the loan.

Mr. Ness stated that the Export-Import Bank would not be interested in accepting the 20 year plan because in theory this would mean a 25 year credit as one of the loans has already been in existence for five years. The Bank does not wish to go beyond an additional 15 years. Mr. Ness also said that the proposal of the advance payments could probably be worked out, but this was a mechanical detail which would have to be considered. His thought was that if and when the loans were recast the terms could be changed to a monthly payment basis instead of a quarterly payment as at the present time.

The question of advancing the remaining $425,000 is one that Ambassador Beaulac wishes to consider very carefully and intends to make some suggestions as to how this credit may be used. The Ambassador mentioned the fact that he was disappointed that the Department had not consulted him prior to giving its approval for the $450,000 which was advanced in the month of September 1945.

Ambassador Beaulac briefly reviewed the present political situation in Paraguay and talked about Paraguay’s financial problems.

It was finally agreed that the Export-Import Bank would prepare a memorandum in answer to the Paraguayan proposal.

  1. Not printed.