Foreign Relations of the United States, 1958–1960, Volume V, Microfiche Supplement, American Republics

HA–19. Memorandum from Albert Post of the Office of Inter-American Regional Economic Affairs to the Assistant Secretary of State for Inter-American Affairs (Rubottom)¹

Washington, October 14, 1959

SUBJECT

• Additional Requirement for Special Assistance for Haiti for Period October 1959 - September 1960. (FY 60)

Summary and Recommendations

It is expected that Haiti will require reduced Special Assistance in FY 60 mainly owing to substantially larger coffee exports, which will increase from 270,000 bags valued at $11.5 million in FY 59 to about 580,000 bags valued at $22 million. A balance of payments gap of $5.4 million in FY 59 is now anticipated to change to a surplus of $3.6 million. However, capital flight and unreturned export earnings will sharply reduce any surplus. Since dollar reserves are now at historically low levels, it is believed that a $2 million increase in such reserves will be necessary in order to cope with anticipated low export earnings for FY 61. The IMF on September 30 renewed its standby with Haiti requiring a balanced budget, reductions in official debt, credit restriction, and a balance of payments surplus.

It is recommended that financial assistance to Haiti be made available as follows:

(1)² that a total of $5 million of Special Assistance be granted for FY 60 (compared with $8 million for FY 59) of which $3.5 million be committed from U.S. FY 60 funds ($2 million still remains available from the $4.5 originally secured) and $1.5 million from U.S. FY 61 funds. Since Haiti drew $2.5 million in FY 59 from the IMF and no drawing is anticipated for FY 60 compensatory financing will in effect decline from $10.5 million to $5 million.

(2) that the gourde counterpart of U.S. Special Assistance be used by the USOM in cooperation with GOH for sound economic development projects. In FY 59 the gourde counterpart of $6 million (G30 million) was granted for budget support; no funds should be used for this purpose in FY 60 since GOH revenues are based on a “normal” production years.

(3) that the disbursement of special Assistance funds be made by the USOM Director in accordance with previous practices and criteria established jointly which will be governed by an exchange of letters with the Minister of Finance and the President of the National Bank.

A detailed justification for those recommendations is given in the following discussion.

[Here follows eight pages of discussion of the recommendations indicated above, omitted for Reasons of space.]

1. Source: Department of State, ARA/BCP Files, Lot 64 D 353, “Various AMB Turkel Memos 1959–1960.” Official Use Only. Cleared with Wieland; sent through Harry R. Turkel, Director of the Office of Inter-American Regional Economic Affairs. A notation on the source text by Rubottom reads: “Approved. R[oy] R[ubottom].”
2. All references are to Haitian FY beginning October 1 and ending September 30. [Footnote in the source text.]