491. Memorandum From the Assistant Secretary of State for Inter-American Affairs (Rubottom) to the Assistant Secretary of State for Economic Affairs (Mann)1
SUBJECT
- Ecuadoran Request for Assistance Under Development Loan Fund.
As you know, the Government of Ecuador has recently requested assistance under the Development Loan Fund on certain construction projects in preparation for the XI Inter-American Conference to be held at Quito in 1959 or 1960. I refer to Memoranda of Conversation dated November 25,2 December 4, 6, and 10, copies of which are attached.3 You will recall that Ambassador Chiriboga first broached the subject, without instructions from his Government, in his conversation with you on November 25. The Ambassador informed Mr. Bernbaum on December 4 that the Minister of Economy, J. Federico Intriago A., was en route to Washington with official instructions to make such a request. At a luncheon given in his honor by the Ambassador on December 6, the Minister told Mr. Bernbaum that Ecuador wished to obtain under the Fund a loan of about $3.5 million, broken down approximately as follows: $2 million for construction of a 250–300 room hotel, $1 million for construction of a Legislative Palace and $.4 or .5 million for expansion of radio transmission faculties, purchase of translation equipment, etc., and salaries of foreign technicians. The Ambassador stated that he was requesting more detailed data and specific figures from his Government. The Ecuadoran Government would take special measures to provide the sucre equivalent of some $3 million for local currency expenses.
[Page 997]Ambassador Chiriboga and Minister Intriago explained that Ecuador had been negotiating to obtain from the Shaw Bank of London a loan of $7 million at 9-½ percent interest for a term of 12 years. However, the promoters of the loan (a group of Italians we understood from the IBRD) were demanding excessive conditions, and the IBRD had advised Ecuador of its concern that this might strain her credit position to the point where the Bank would be reluctant to grant a loan now being studied for the Guayaquil new port project. The Bank had suggested instead that Ecuador might obtain assistance from the United States Government. Also, there has been an informal suggestion at the Staff level of the IBRD that it would welcome the participation of the Development Loan Fund in the Guayaquil port project, the IBRD to loan some $11 million and the Fund an additional $4 or $5 million.
In requesting assistance under the Fund, Ambassador Chiriboga stressed that the proposed new hotel would promote development of tourism which would in turn benefit the overall economy of Ecuador. The Ambassador also made the point that it had been said when the Fund was established that it might be used not only for economic development but for social projects.
With respect to the Ecuadoran request for assistance from the Fund on the Conference preparations, we recommend that the Fund consider granting a loan of approximately $2 million to cover foreign currency requirements for the construction of a hotel at Quito. We would also recommend that favorable consideration be given to the tentative suggestion of the IBRD staff that the Fund participate with the Bank in assisting in the Guayaquil port project. We would, therefore, appreciate it if you would, upon receipt of formal applications from Ecuador, be prepared to recommend that Mr. Dillon support the above projects.