190. Letter From the Deputy Secretary of the Treasury (Darman) to the Deputy Secretary of State (Whitehead)1
Thank you for your letter of September 25th.2 I am pleased that we agree on the importance of an IMF/World Bank Joint Facility to address the economic and financial needs of the lowest income countries. As you point out, such a facility will allow these countries to undertake necessary policy changes to provide the basis for long-term growth and development.
Regarding funding of U.S. participation, we are in agreement on the approach for FY 1986, whereby the monies allocated to the African Economic Policy Initiative from ESF funds will be closely associated with the operations of the new facility. In order to seek funding for direct U.S. contributions for fiscal years 1987–91, we are prepared to join you in seeking the necessary budget authority in the ESF account from OMB.3 If, however, it does not prove possible to secure Administration agreement on the need for additional funding authority, we understand that you would be prepared to reallocate other ESF funds as necessary in order to finance U.S. contributions to the facility. As you know, Treasury is not in a position to include a separate request in its own budgetary submissions for this purpose.4
On the basis of these understandings, Secretary Baker will be prepared to move this proposal forward using the following language in his Interim Committee statement. (A draft of the complete statement is attached.)5
The United States is convinced that such a facility could make a real contribution in addressing the severe economic problems of the poorest countries. We are prepared to seek to use $75 million in bilateral assistance in close cooperation with the operations of the facility in fiscal 1986, and to seek to assure roughly equivalent amounts in direct contributions to the facility in fiscal 1987–91,6 provided other donors also make equitable contributions. In our view, an effective response by all major donors could result in direct new donor contributions for the full period in excess of $1 billion, which could be supplemented by other World Bank funding sources.
If you do not concur in this understanding of our agreed position, please advise me by close of business today, as Secretary Baker leaves for Seoul early in the morning. He has indicated that if we do not have an understanding on this basis, he will be unable to table the proposal in Seoul.7
Sincerely,
- Source: Department of State, Executive Secretariat, S/S–I Records, Official Correspondence of Deputy Secretary John C. Whitehead, July 1982–Jan 1989, Lot 89D139: JCW—Memos To/From other agencies 85. No classification marking. The initials “MS” along with an arrow were circled at the top of the memorandum.↩
- Date is in error. Presumably a reference to Whitehead’s letter dated September 30. See Document 189.↩
- Whitehead placed a star in the right-hand margin next to this sentence.↩
- Whitehead highlighted “the need for additional funding authority, we understand that you would be prepared to reallocate other ESF funds as necessary in order to finance U.S. contributions to the facility” and the subsequent sentence in the right margin.↩
- Baker’s draft statement, dated October 6, is attached but not printed.↩
- Whitehead placed a star in the right-hand margin next to this sentence and underlined “and to seek to assure roughly equivalent amounts in direct [Page 497] contributions to the facility in fiscal 1987–91.”↩
- Whitehead replied in an October 3 letter, delivered to Darman by special courier on October 3 at 6:50 p.m., in which Whitehead wrote: “Per our phone conversation, your understanding is essentially the same as ours, and we therefore concur in the overall approach.” (Department of State, Executive Secretariat, S/S–I Records, The Executive Secretariat’s Special Caption Documents, Lot 92D630: [no folder title])↩
- Darman signed “Thanks, Dick” above his typed signature.↩