399. Memorandum from Hamilton to Rusk, November 171

[Facsimile Page 1]


  • Request for Economic Assistance

This memorandum answers your inquiry concerning the number of requests for financial assistance outstanding and indicates when decisions will be reached on these requests.

As you are aware, the aid program is developed in a manner which precludes a simple listing of requests and U.S. responses. The program develops through the annual budgetary process, commencing with field requests for assistance which are refined here, presented to Congress, and acted on by that body. Our request to Congress for economic [Typeset Page 1650] assistance, representing requirements presented from our country teams and other sources, amounted to $2,921,000,000 for FY 1962. Since a considerably smaller amount, $2,373,000,000, was made available, it was necessary for AID to review all programs and relate existing requirements, in each appropriation category, to funding availabilities. Although this review process is of a continuing nature, the initial funding plan for FY 1962 was completed on October 10, 1961.

This funding plan provided for the reservation of funds to meet those requirements judged to be of highest priority. Judgment as to priority was influenced by numerous exchanges of correspondence between the field and Washington and by discussions with the State Department Regional Bureaus. All but about $255.0 million of the funds available to AID were reserved to meet these requirements.

In addition to those priority requirements for which funds were reserved, there are a number of other possible requirements representing requests of lower priority. These possible claims initially totalled [Facsimile Page 2] approximately $730 million. Since that time we have become aware of yet other claims. These are of various degrees of firmness: some will materialize as firm or probable requirements during the course of the year, while others will disappear or be funded from non-AID sources such as the Export-Import Bank, the IDB regular lending authorities, Social Progress funds or other sources.

A distinction was made within the requirements for which funds were reserved. A substantial portion of the funds were approved for immediate implementation. However, in a number of instances it was considered necessary to review the composition of programs further. Such a review was deemed necessary to insure that these programs adhere to the new AID criteria (e.g., self-help, program concentration, etc.). This review not only will effect FY 1962 programs but the direction of our endeavors in subsequent years. It is not possible to predict with precision the amount of time required for careful review of individual country programs, but I can assure you every effort will be made to complete this process quickly.

A brief summary of the status of each economic assistance appropriation category reflected in the initial funding plan follows:

Development Loans. Initial requirements for development lending exceeded the availabilities of $1,112,500,000 by approximately 50 percent. The current forecast of loan activity by region is as follows: Far East $123.0 million, Near-East-South Asia, $653.1 million; Africa $111.1 million; and Latin America, $225.0 million. Lending in any specific instance will depend upon the priority nature of the activity, the formulation of sound project loan applications, the refinement of [illegible in the original] plans, the mounting of self-help efforts and the interest in the projects to other available funding sources. A substantial portion [Typeset Page 1651] of the funds have been committed to accommodate requirements in India, Pakistan, and Brazil. However, unlike other categories of economic assistance, development lending activity is not firmly programmed on a country to country basis.

Development Grants. A total of $296.5 million was appropriated. All but approximately $14.5 million has been reserved to meet programs approved for implementation ($111.1 million) or other probable requirements. Other possible requirements of $90 million were recognized.

[Facsimile Page 3]

Supporting Assistance. Funds available total about $465 million, including new obligational authority of $425 million and the carryover of unobligated balances. The account was fully programmed and, in addition, $30 million in Contingency Funds were reserved to meet firm or probable requirements. Approximately 50 percent of the funds to meet Supporting Assistance requirements have been approved for implementation. Other possible requirements amount to approximately $200 million.

Contributions to International Organizations. The $158.4 million available is fully reserved to meet requirements. Other possible claims of approximately $35 million are recognized, although it appears unlikely that all such claims will materialize.

Other Programs. Availabilities include approximately $48.5 million for AID Administrative Expense, $3 million for State Administrative Expense, and $1.5 million for Investment Surveys. No appropriations were made available for Refugee and Migrant programs including the Cuban Refugee operation. Administrative Expense availabilities are extremely limited. Problems cannot be refined specifically until the organizational structure is further refined. Contingency Funds must be used if Refugee and Migrant programs are to be accommodated. Possible requirements total about $25 million.

Contingency Fund. To the maximum extent consistent with U.S. interests, the Contingency Fund will be used only for requirements not included in the Congressional presentation. As indicated above, $30 million has already been reserved of the $284.2 million available to accommodate Supporting Assistance requirements. Another $13,560,000 has been approved to implement Cuban Refugee requirements, leaving an unprogrammed balance of $240.6 million.

The funding situation will be subject to constant change during the course of the year as new requirements materialize. In order to accommodate changing circumstances, it is my intention to review the total funding plan on a monthly basis. This review will result in the periodic modification of our plan. Provision will be made for financing new requirements or for approving as firm requirements programs currently listed as only possible claimants on available resources. [Facsimile Page 4] Dur[Typeset Page 1652]ing this year of transition to the new AID criteria, there is a need for providing centralized program direction and control of fund availabilities. I recently have issued instructions concerning the routing of aid requests to insure that decisions as to the validity of program requests subsequently presented can be made with a minimum of delay.

Fowler Hamilton
  1. Status report on outstanding requests for assistance. No classification marking. 4 pp. Washington National Records Center, RG 286, AID Administrator Files: FRC 65 A 481, State Department, FY 1962.