180. Memorandum From Director of the Bureau of the Budget Zwick to President Johnson 1

SUBJECT

  • Proposed P.L. 480 Program for Bolivia

Orville Freeman request your approval to negotiate a $6.8 million P.L. 480 sales agreement with Bolivia for wheat/wheat flour and tobacco.2 Repayment will be in dollars over twenty years with 5 percent down. There will be no currency use payment under the Purcell amendment since no additional currency is needed at this time.

Last June, AID authorized a $4.5 million Supporting Assistance loan to Bolivia as the initial budgetary support for an 18-month fiscal reform and stabilization program jointly developed among AID, the IMF, and the Government of Bolivia. This P.L. 480 agreement will constitute AID’s major 1969 resource input for Bolivia and as such forms an important continuing element in the fiscal reform program.

The local currency proceeds from this agreement will be earmarked on a standby basis for budget support in CY 1969 should the need arise. Thus, the P.L. 480 agreement should eliminate the need for additional Supporting Assistance funds. If the need for budget support does not arise, the proceeds will be used in the agricultural sector.

State/AID has determined that Bolivia’s resources are not being diverted to unnecessary military expenditures to a degree which materially interferes with its development and that neither U.S. development assistance nor P.L. 480 sales proceeds are being diverted by Bolivia to military purposes.

Because this P.L. 480 agreement will support and reinforce the fiscal reform program and will substitute for dollar assistance, I recommend that you approve negotiation of the agreement. 3

Charles J. Zwick
  1. Source: Johnson Library, National Security File, Country File, Bolivia, Vol. IV, Memoranda, January 1966–December 1968. Confidential.
  2. Attached, but not printed.
  3. The approve option is checked. Rostow appended a handwritten note to a December 24 memorandum to Johnson recommending approval of the package, indicating: “Final approval by telephone, 27 December, 1968.” (Johnson Library, National Security File, Country File, Bolivia, Vol. IV, Memoranda, January 1966–December 1968)