Foreign Relations of the United States, 1961–1963, American Republics; Cuba 1961–1962; Cuban Missile Crisis and Aftermath, Volumes X/XI/XII, Microfiche Supplement

80. Airgram A–191 from San Jose, June 4¹

San Jose, June 4, 1962

REF: Embassy’s Despatches 582, May 18, 1962 and 585, May 23, 1962.

President ORLICH again called me to meet privately with him and Minister of Economy HESS May 29 for the purpose of impressing upon me his sincere concern over the seriousness of Costa Rica’s current financial crisis, and to emphasize in strongest terms his hope for US assistance.

Finance Minister Hess made available to me at my request a copy of the preliminary report of the IMF team, together with his own analysis of the budgetary deficit and an outline and initial justification of planned Costa Rican measures to overcome it. The Embassy’s first reaction to both of these documents is one of disappointment; towards the IMF report because of its failure to explain the basis on which the team calculated that outside assistance should not exceed $5 million, and because it did not include a basis for assessing Costa Rica’s actual needs; and towards the proposals of Minister Hess since a cursory study of these proposals and request for $15 million of US assistance makes apparent the Minister’s heavy reliance on US aid, while it appears to us that possibly additional revenue producing measures could be considered, even though unpopular, to reduce their outside requirement.

My staff and I are giving urgent study to these reports on their immediate requirement, and will endeavor to obtain more and more basic information from Hess. I have made no commitment of any sort to Orlich or Hess. I also consider that finding a speedy but long-term solution to Costa Rica’s budgetary difficulties is of such vital importance to successful Costa Rican participation in the Alliance for Progress that we plan to obtain under AID contract US experts in the tax and budget fields to help the GOCR to bring their expenditures and resources into realistic balance. Orlich and Hess have both requested this type of assistance.

As soon as my staff and I have obtained sufficient information to come to a satisfying conclusion on the extent of the Costa Rican need for US assistance I shall forward to the Department our considered recommendations which from current indications, including the IMF findings, may well involve budget support for the GOCR, in which case I will add our conclusions as to a proper amount and a preferred means of making such assistance available.

Telles

1. Meeting between President Orlich and Minister of Economy Hess and Ambassador Telles on seriousness of Costa Rica’s current financial crisis and President’s hope for U.S. assistance. Official Use Only. 2 pp. DOS, CF, 818.00/6–362.