364. Memorandum of Conversation0

SUBJECT

  • Philippine Economic Mission

PARTICIPANTS

  • Mr. Sison, Acting Minister of Finance of the Philippines
  • Mr. Calingo, Minister, Philippine Embassy
  • The Secretary
  • Mr. Bell, Director, Office of Southwest Pacific Affairs

Secretary Sison expressed Philippine appreciation for the “wonderful reception” his group had received in Washington.1 He especially mentioned the long hours of overtime put in by the IMF and IBRD to help meet the early Philippine deadline. Mr. Sison said that he felt his group was making real headway and mentioned that there would be further consultations in Manila next week with an IMF team. Mr. Sison asked the Secretary how far the United States could go in helping them in trying to obtain a $100,000,000 stabilization fund from the U.S. Government (to be used in conjunction with funds they hope to receive from international agencies and private banks). The Secretary replied that he was not prepared to give a specific answer in the way of figures but that we were very interested in social and economic development in the Philippines. In this connection he said that we were also trying to put our house in order so that we might act more promptly on matters of this kind.

Mr. Sison explained that the need for quick action was due to the fact that Macapagal did not control the Philippine House of Representatives and that in order to put the final phase of decontrol into effect he would have to act before the Philippine Congress meets January 22. Mr. Sison informed the Secretary that he was going to New York tonight; would leave Thursday for the Philippines, arriving there Saturday morning; would hold a meeting of the Monetary Board Saturday afternoon. President Macapagal would issue the order for decontrol measures on [Page 791]Sunday, January 21. Mr. Sison said there was no question of Macapagal’s legal ability to put decontrol into effect prior to the opening of the Philippine Congress. He said that the Philippine desire to have available a large stabilization fund prior to decontrol was in part because of the psychological impact it would have and the consequent deterrent effect on wide fluctuations once decontrol had been instituted.

The Secretary assured Mr. Sison that he would try to get an answer for him before Mr. Sison’s group left the United States.2

The Secretary asked about the Philippine balance of payments. Mr. Sison said that the Philippine balance of payments situation had been unfavorable but that he felt the new program on which the Philippine Government was now embarking would correct this.

  1. Source: Department of State, Central Files, 033.9611/1–1662. Confidential. Drafted by Bell and approved in S on January 17. The time of the meeting is from Rusk’s Appointment Book. (Johnson Library)
  2. Sison headed a special mission sent by President Macapagal to obtain U.S., IRBD, and IMF help for a new program of decontrol of trade and exchange transactions, and virtual unification of existing multiple exchange rates into a single fluctuating rate to be determined by market forces. This economic program required a stabilization fund to assure public confidence and prevent panic. Sison and his group discussed their plan with Department of State officials prior to this meeting with the Secretary (Memorandum of conversation, January 16; Department of State, Central Files, 411.9641/1–1662)
  3. On January 17, representatives of the various U.S. agencies and the IMF discussed loan contributions to the Philippines for its decontrol program. (Memorandum of conversation, January 17; ibid., 896.10/1–1762)

    The same day Avery Peterson sent a memorandum to Rusk recommending a reply to Sison that had been approved by interested U.S. agencies. The reply assured Sison that the United States was prepared to provide assistance from the Treasury Stabilization Fund in association with arrangements to be worked out between the Philippine Government and the IMF. AID was prepared to make loans of $50 million over the next 18 months to support development projects meeting its criteria, and the Export-Import Bank of Washington would provide additional credits of $25 million. Rusk approved the letter and it was transmitted to the Philippine Embassy. (Ibid., 896.13/1–1762 and 896.10/1–1762)