435. Telegram From the Department of State to the Embassy in the Philippines1
519. Your 515, Deptel 449.2 Despatch 100 received.3 Department glad to have team analysis and agrees with Embassy regarding importance balance payments problem and danger piecemeal devaluation and other measures not getting at root basic economic and fiscal difficulties.
Department has discussed matter of IMF survey mission with US Director IMF and with Treasury. Terms of reference survey mission visualized by Embassy may be beyond customary role IMF missions. IMF annual consultations with Philippines under Article XIV have for past two years been held in Washington with Cuaderno personally. IMF now plans tell Cuaderno that instead of quick consultation here IMF this year desires consultation Manila. Consultation would be after election. Terms reference as well as ordinary three weeks duration such mission could probably be expanded somewhat. Fact finding would be completed by IMF and checked by Philippines in advance arrival mission thus entire time available policy discussions.
Since IMF is getting in touch immediately with Cuaderno regarding consultation in Manila Department believes preferable, as suggested in Despatch 100, let this matter develop as normal IMF procedure rather than Embassy stimulate request for special mission. When matter has been agreed with Cuaderno there would then be time to make terms reference as broad as feasible. Department concurs that question subsequent IBRD mission to conduct full-scale [Page 729] review economy can be considered later. Embassy should not divulge to Philippines its knowledge re IMF plans.
Embassy comments invited.