Foreign Relations of the United States, 1964–1968, Volume XXV, South Asia

533. Telegram From the Embassy in Afghanistan to the Department of State¹

Kabul, May 13, 1965, 1215Z.

679. Ref Embtel 675.² Embassy Econ Counselor saw IMF team for one hour just prior team departure Kabul. After very difficult discussions last forty-eight hours, including lengthy meeting with PM Yusuf, team left with signed letter committing RGA to program fiscal and financial reform, which team feels will be acceptable to Fund directors as basis extension standby facility. Team felt that commitments obtained were well above minimum latitude their instructions and were unani mous in expressing opinion that acceptable commitments would not have been forthcoming without US–FRG “pressure” position linking in tying consideration future extraordinary assistance to favorable outcome IMF consultations.

Despite tough negotiations and undoubtedly painful concessions made by RGA, Afghan sources report that team earned respect of Afghans and that Ministry of Finance officials are privately saying that IMF visit will result in enactment of reform measures which they have long advocated but never had sufficient political strength to carry out.

Team plans to file RGA statement of undertaking and their report immediately upon return Washington this weekend, and estimate that if Fund directorate approves RGA proposals, agreement could be reached within three weeks and drawings commence soon thereafter.

CT comments on consultations and recommendations for subsequent U.S. action now under preparation.³

Brewer

1. Source: National Archives and Records Administration, RG 59, Central Files 1964–66, FN 10 AFG/IMF. Limited Official Use.
2. Dated May 13. (Ibid.)
3. On May 15 the Country Team in Afghanistan recommended consideration of a commodity assistance loan. They commented that the IMF team had succeeded in establishing fiscal responsibility as a condition for additional aid and that acceptance by the Afghan Government of IMF controls represented a victory for the advocates of a Western presence in the country. (Telegram Toaid 1331 from Kabul, May 15; ibid., AID (US) 9 AFG)