Office of the Historian

546. Telegram From the Department of State and the Development Loan Fund to the Embassy in Thailand1

Washington, March 11, 1960—11:27 p.m.

2454. Ref: Emtel 2446 [2466], Deptel 2108.2

1.
Appreciate interest TG and Embassy re local currency financing problems. Glad TG accepts in principle use U.S. dollars for purchases capital equipment in U.S. Under recent DLF loans providing dollar financing for large local currency costs, Loan Agreement included provision wherein central bank covenants that the U.S. dollars it receives in exchange for local currency disbursed in connection with the DLF loan will only be used by payment for capital goods procured from the United States. The central bank also agrees to take steps satisfactory to DLF to assure compliance with such covenant. Exact terms of such agreement probably best be worked out at time loan agreement is negotiated. At that time question of type of account, time period over which dollars to be spent, type of procurement, etc. can be discussed and negotiated.
2.
Re local currency portion this project to be funded by borrower, Emtel 2108 clearly indicated (paragraph 5) that exact amount local currency contribution by borrower subject to negotiation. This determination to be made at time loan application evaluated and reviewed by DLF Board Directors. The $4 million local currency figure (paragraph 5) was used only for illustrative purposes and in no way reflects order of magnitude of TG local currency contribution this project. If this problem already discussed with TG, TG should be advised accordingly DLF approach.
3.
To date, TG has not decided on approach to highway project, (e.g., by-pass, toll road) nor has formal application for Bangkok–Nakorn–Pathom highway been submitted to the DLF. However, understand that TG has employed Charles Upham and Associates to [Page 1117] assist in preliminary engineering for project. DLF will await TG ascertain plans and specification of highway and overall costs (both dollar and baht), before taking further action this project.
Herter
  1. Source: Department of State, Central Files, 792.5–MSP/3–1160. Confidential. Drafted in DLF and cleared with FE and E.↩
  2. See supra.↩