329. Memorandum From the President’s Special Assistant (Rostow) to President Johnson 1


  • 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.


Approve loan3

Disapprove loan

Speak to me

  1. Source: Johnson Library, National Security File, Country File, Ecuador, Vol. I, 12/63–11/68. Confidential.
  2. Attached but not printed are memoranda to the President from Schultze, June 14, and Bell, June 7.
  3. This option is checked.