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consistent with our obligations continue our efforts to help make democracy a reality throughout the entire hemisphere.

Document III-81

United States $50 Million Loan to Brazil Under the Alliance for Progress in Support of Brazil's Stabilization, Development, and Reform Program: ANNOUNCEMENT OF AN AGREEMENT, SIGNED IN NEW YORK, JUNE 24, 1964 34

Document III-82

Operations of the Inter-American Development Bank During the Period January 1-June 30, 1964: REPORT OF THE NATIONAL ADVISORY COUNCIL ON INTERNATIONAL MONETARY AND FINANCIAL PROBLEMS, SUBMITTED JANUARY 29, 1965 (EXCERPT)

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From its own resources and from the resources of the Social Progress Trust Fund, the Bank in the current 6-month period authorized loans totaling approximately $52 million for economic and social development in Latin America. This compares with a total of $116 million in the last half of 1963. Loan disbursements increased from $84 million in the last half of 1963 to $98 million in the current period. In January, increases in the authorized capital stock of the Bank and in the resources of the Fund for Special Operations 37 became effective. To increase its Ordinary Capital resources, the Bank sold a $50 million issue of its bonds in the United States in April.

FIFTH ANNUAL MEETING

The Board of Governors of the Inter-American Development Bank held their Fifth Annual Meeting in Panama City, Panama, from April 13 to 17, 1964. The U.S. delegation was headed by Secretary of the Treasury Dillon, U.S. Governor of the Bank, and included John C. Bullitt, Assistant Secretary of the Treasury and Temporary U.S. Alternate Governor, Tom Killefer, U.S. Executive Director of the Bank, Members of Congress and ranking officials of the Departments of State and Treasury, the Export-Import Bank, and the Agency for International Development.

In his statement to the Board of Governors,38 Secretary Dillon reviewed the activities of the Bank during its third full year of operations and noted the Bank's successful efforts in mobilizing private capital in the industrialized countries for economic development in

"Department of State Bulletin, July 13, 1964, p. 59.

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*H. Doc. 70, 89th Cong., Feb. 2, 1965, pp. 23-29. Part VI of the NAC report. See American Foreign Policy: Current Documents, 1961, pp. 372–380. "See ibid., 1959, pp. 448-451.

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Text in the Department of State Bulletin, May 4, 1964, pp. 717–722.

Latin America, and in attracting significant amounts of domestic capital in its member countries. He noted also that the increase to $2,150 million in the authorized capital stock of the Bank, which became effective in January 1964, would enable the Bank "to maintain an accelerated rate in its lending and technical assistance activities.” The Board of Governors proposed for action by member governments an increase of $900 million in the resources of the Fund for Special Operations (FSO), to be paid in over a 3-year period. The U.S. share of the increase would be $750 million, on the understanding that no additional funds will be provided by the United States for the Social Progress Trust Fund.

IDB LOAN COMMITMENTS AND DISBURSEMENTS

Ordinary Capital resources

In support of economic development in its member countries, the IDB, in the first half of 1964, authorized seven new loans in six countries in the equivalent of $29 million from its Ordinary Capital resources. (See table 13.) These loans ranged in amount from $1.7 million to assist in financing an irrigation project, which is expected to reclaim for agricultural purposes about 70,000 acres of desert land in Peru, to a loan of $6 million to help finance a $60 million industrial development program in Chile, and a loan of equal amount for a 5year national highway program in Ecuador.

In the current period, the Bank also approved four lines of credit totaling $11 million to assist in financing exports of capital goods from Argentina, Brazil, Chile, and Mexico. These revolving creditsthe first approved by the Bank under the export financing program adopted in September 1963 are intended to stimulate the development of a capital goods industry in Latin America and to encourage economic integration through an expansion of regional trade. To be eligible for financing under the program, goods must originate in the Latin American member countries of the Bank. To finance the program, the Bank authorized an initial allocation of $30 million from its Ordinary Capital.

Through June 30, 1964, the Bank had authorized 89 loans from its Ordinary Capital in the total net equivalent of $413.5 million, approximately 80 percent of which were made in U.S. dollars. Total disbursements in U.S. dollars, local currencies, and Italian lire increased to $147 million.

Fund for Special Operations (FSO)

In contrast to loans from the Bank's Ordinary Capital, which are subject to conventional banking terms and are repayable in the currency loaned, the resources of the Fund for Special Operations are available for loans on terms and conditions adapted to meet special circumstances arising in specific countries or with respect to specific

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See American Foreign Policy: Current Documents, 1963, p. 366.

TABLE 13.-Inter-American Development Bank loan commitments, by country, terms, and purpose, Jan. 1 to June 30, 1964

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The interest rates on loans from the Ordinary Capital resources includes the 1-percent special commission allocated to the Bank's Special Reserve. In addition, some loans are subject to a commitment fee of 3⁄4 of 1 percent or, on more recent loans, of 1 percent on all or a portion of the undisbursed balance of the loan, Interest and amortization are payable in the currencies loaned.

* Repayable in periods and under conditions specified in credit documents issued by the obligor. Increases in earlier loans.

'Joint financing with the IBRD, the IDA, and the U.S. Agency for International Development. Stated amount represents IDB portion.

Source: Inter-American Development Bank.

projects. Loans from the FSO, therefore, may be made on terms which may include lower interest rates and longer maturities than those from the Ordinary Capital and may be repayable in local currency. As indicated in table 13, the Bank in the period under review, approved loans from the FSO totaling $4.9 million for a water supply system in Haiti ($2.4 million), a hydroelectric plant in Paraguay ($2.1 million increase), and to help finance preinvestment studies relating to the development of iron ore deposits in Argentina ($400,000).

Through June 30, 1964, the Bank had authorized 39 FSO loans in the equivalent of $126.5 million, about 90 percent of which were made in U.S. dollars. Disbursements amounted to $39.1 million.

SOCIAL PROGRESS TRUST FUND (SPTF)

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Under the terms of a Trust Agreement executed in June 1961 between the Bank and the United States, the Bank administers the resources of the Social Progress Trust Fund, the original amount of which was $394 million. In December 1963, the United States appropriated an additional sum of $135 million for the Special Inter-American Fund for Social Development, established by the United States under the Act of Bogotá. Of this amount, $131 million was allocated in February 1964 to the Social Progress Trust Fund, thereby increasing the total resources of the Fund to $525 million. The increased resources will permit the Bank during 1964 to continue its important. role in providing loan and technical assistance in support of the efforts of the member countries to initiate or expand measures toward greater social progress and balanced economic growth. Terms and conditions of loans are such as are considered to be most effective in achieving the purposes of the Fund in each country. Interest rates are 114 or 234 percent, plus a service charge of three-fourths of 1 percent per annum, payable in dollars, with maturities of up to 30 years.

As indicated in table 14, the Bank during January-June 1964 authorized eight Social Progress Trust Fund loans in five countries totaling approximately $19 million. These loans were for improved land use in Colombia and Costa Rica ($11 million), for community water supply programs and sanitary facilities in Chile, Costa Rica, and Peru ($4.3 million), and for advanced education and training in Bolivia, Colombia, and Peru ($3.4 million).

Through June 30, 1964, 81 loans totaling $386.3 million had been authorized from the resources of the Social Progress Trust Fund and approximately $118 million had been disbursed.

COMBINED LENDING DATA

Total loans authorized by the Bank through June 30, 1964, from its own resources and from the resources of the Social Progress Trust Fund, which is administered by the Bank, aggregated in excess of $926 million. These loans, numbering over 200, have assisted in financing economic and social projects and programs with an estimated cost much greater than the amount of direct assistance involved. Most of the additional cost represents the direct participation of local governments, firms, and individuals. Total disbursements through June 30, 1964, increased to $304 million from $122 million a year earlier.

SECURITY ISSUES AND SALES OF LOANS

The Bank in the current period continued its efforts to raise capital by the sale of bonds for economic development purposes in its member countries. On April 1, 1964, the Bank sold in the United States $50 million of 42-percent, 20-year bonds through a nationwide syndicate 40 Text ibid., 1960, pp. 293–299.

of 102 commercial banks and investment banking houses the third issue placed by the Bank since it began operations in 1960.41 Earlier issues were sold in Italy ($24.2 million equivalent) in April 1962 and in the United States ($75 million) in December 1962. The net proceeds of the current bond issue will be included in the Ordinary Capital resources of the Bank. Additional funds have also been obtained through sales of participations in Bank loans and some projects have been undertaken on a joint financing basis. At the end of the period under review, participations, all without guaranty by the Bank, amounted to about $19 million.

TABLE 14.-Loans authorized from the Social Progress Trust Fund, total through June 30, 1964, and by country, terms, and purpose for the period Jan. 1 to June 30, 1964

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1 In addition to the interest rate shown, all loans carry a service charge of 4 of 1 percent per annum, pay. able in dollars, on principal amounts outstanding.

Source: Inter-American Development Bank.

"In July 1964, the Bank floated a bond issue for 60 million Deutsche marks ($15 million equivalent) in the Federal Republic of Germany; and in September 1964, the Bank also borrowed 3 million pounds sterling ($8.4 million) in the United Kingdom. A $100 million issue was sold in the United States in October 1964. [Footnote in source text.]

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Doc. III-82

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