Foreign Relations of the United States, 1955–1957, Southeast Asia, Volume XXII

378. Memorandum for the Files, by the Officer in Charge of Philippine Affairs (Cuthell)¹

Washington, February 15, 1956.

SUBJECT

• Export-Import Bank Arrangements with the Philippines

At this morning’s meeting between Mr. Robertson, Mr. Prochnow and the Directors of the Export-Import Bank, Mr. Waugh stated that the Directors were prepared, subject to the approval of the Departments of State and Treasury and the ICA, to grant to Governor Cuaderno credits in the amount of $50 million. These credits would be divided into two portions:

1) $15 million, which would be additional to the $2.5 million which remains unspent and uncommitted of the extant $5 million line of credit. This would be a five-year loan or line of credit to the Central Bank (apparently Cuaderno will be offered the choice between taking it as a loan or as a line of credit). The total amount available to the Philippines under this heading is, thus, $20 million less the spent or committed portions of the original $5 million, i.e., $15.7 million. The Bank has not reached a final decision about the interest rate, but is most anxious that loans made under this heading be processed by the IDC.

2) The Bank will earmark $35 million for project loans in both the public and private sectors of the economy to be approved on a case by case basis.

In regard to item (1) Mr. Waugh said that the Bank was unwilling to raise the present ceiling of $100,000 which governs the size of loans the Central Bank may approve without Export-Import Bank pre-audit. In subsequent discussion, it was brought out that there is no objection, however, to the Central Bank making a loan by earmarking dollars in its reserves and then submitting the project in question to the Export-Import Bank for approval. The Bank would be willing to consider such projects on their merits and, if it approved them, Cuaderno could shift the loan from his reserves to the Bank. Since the Bank is willing to expedite the approval of projects (Mr. Blowers said he thought the Bank would even be willing to send a representative to Manila for the next few months) in practice Cuaderno would often be able to grant a loan from his reserves, have it approved by the Export-Import Bank and shift the loan from his reserves to the Bank without having to do more than temporarily earmark any of his own funds.²

1. Source: Department of State, SPA Files: Lot 61 D 26, Economic and Financial Policy and Planning. Confidential.
2. On March 9, the Export-Import Bank approved this proposed loan of $65 million. Additional documentation on the loan agreement is Ibid.,FOA–ICA Files: Lot 61 D 32, Box 310.