272. Memorandum From the President of the Cuban National Bank (Pazos) to the Embassy in Cuba1
Havana, April 7,
1959.
- 1.
- —Around the middle of February three officials of Banco Nacional de Cuba visited Washington for several days and held exploratory talks in the International Monetary Fund, the International Bank for Reconstruction and Development and various Departments and Agencies of the United States Government. The visit took place at the initiative of Banco Nacional de Cuba with the knowledge of the Cuban Government and had as its purpose to explore the possibilities of obtaining financial assistance to restore and strengthen confidence in the Cuban peso, which had been undermined by the severe depletion of our international reserves [which] occurred during the Batista régime. The financial support sought was mainly in the form of currency stabilization agreements with the International Monetary Fund and the United States Treasury Department.
- 2.
- —Our officials found in Washington a most warm and sympathetic reception, and returned to Cuba deeply impressed with the sincere spirit of understanding and cooperation they found in every quarter. But the talks were not pursued for two reasons: first, because the lack of confidence in the currency which was the concern which prompted our request did not increase, but rather subsided, [sic] And second, because at the time of our talks in Washington, we were not prepared to commit ourselves to the specific economic and financial policies and measures required by the International Monetary Fund, to whose action the United States Treasury Department had tied its own assistance.
- 3.
- —The circumstances and the conditions in the light of which we made our approach have changed since then. On the one hand, world demand for sugar has declined, and, on the other, domestic unemployment has increased. The resumption of public works will, in the next few months, reduce the current amount of unemployment, but before the 1957–58 levels of employment are attained our balance of payments may be seriously strained. Even with the best economic, financial and fiscal policies, we cannot achieve the necessary rate of expansion out of our own savings and at the same time maintain full convertibility of the currency.
- 4.
- —The explanations given above of the change in conditions since our officials visited Washington last February are designed to indicate that, should the occasion of the visit of Prime Minister Castro to Washington this month give opportunity for the resumption of talks regarding financial assistance and cooperation from the United States, such assistance should not be contemplated now as designed to provide a psychological support for our currency with stabilization funds not to be used, but rather as assistance for allowing our economy to recover its gear and to develop on a sound basis at a reasonable rate.
Should the opportunity for such discussions present itself during the coming visit of Prime Minister Castro, they could usefully cover, among other subjects, the following possibilities:
- a)
- A balance of payments loan which would make possible a certain degree of deficit financing to alleviate the immediate unemployment problem.
- b)
- A credit line to finance development projects as they are prepared and presented for approval to the financing agency.
- c)
- A long-term loan to increase the capital of the Agricultural and Industrial Development Banks which will emerge from the separation of the two branches of Banfaic.
- d)
- A long-term loan for improving sanitary conditions through the construction of sewers and aquaducts.
- e)
- A long-term loan for improving agricultural productivity and standards of living (agricultural machinery, seed and varieties, research and development, agricultural extension service, storage and refrigeration facilities, agricultural schools and medical and sanitary stations).
- Source: Department of State, Central Files, 033.3711/4–959. Official Use Only. Transmitted as an enclosure to despatch 1140 from Havana, April 9. Also summarized in telegram 1158 from Havana, April 8. (ibid., 033.3711/4–859)↩