329. Memorandum From the President’s Special Assistant (Rostow) to President Johnson1
- Emergency Budget Support for Ecuador
Dave Bell, with the concurrence of Charlie Schultze and Joe Fowler, requests your authorization to negotiate a loan of up to $10 million to Ecuador to help meet its budgetary needs for the balance of this year. Their memoranda are attached.2
The background to this request is:
- The two-month old interim civilian government of President Yerovi inherited a serious budget problem from the ousted military junta.
- Despite its belt-tightening efforts, it still confronts a deficit estimated at $15 million. Any further belt-tightening would be at the expense of its badly needed development and reform program. This should be avoided.
- Last month you authorized negotiation of a loan of $4 million. This authorization recognized that $4–6 million more might be necessary. The Yerovi Government declined the $4 million loan, considering the amount inadequate and the self-help conditions proportionately too stiff.
- Since then the Government has taken several self-help measures on its own and worked out assistance arrangements with the IMF ($13 million standby) and some New York banks ($11 million to meet foreign exchange needs).
- Our $10 million loan would be tied to additional self-help measures and released in installments based on performances.
I consider this a good loan from an economic and political standpoint. President Yerovi has established a realistic schedule for returning the country to constitutional government by the end of the year. He needs our support for constitutional, as well as economic, recovery.
Speak to me