THE ECONOMIC SITUATION IN SOUTH VIETNAM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82S00205R000200010044-4
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 22, 2016
• Document Release Date: July 6, 2012
• Sequence Number: 44
• Publication Date: March 3, 1969
• Content Type: IR

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Declassified in Part -Sanitized Copy Approved for Release 2012/07/06 :CIA-RDP82S00205R000200010044-4
Sect
Intelligence Report
DIRECTORATE OF
INTELLIGENCE
~'he Economic Situation in South Vietnam
(meekly)
Secret
122
3 March 1969
No. 0483/69'.
I
Declassified in Part -Sanitized Copy Approved for Release 2012/07/06 :CIA-RDP82S00205R000200010044-4
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Secret
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This document contains information affecting the national defense of the
United States, within the meaning of Title 18, seetions 793 and 794, of the
US Code, as amended. Its transmission or revelation of its contents to or
receipt by an unauthorized person is prohibited by law.
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OOWN6RADIND AND
DECLABSR'iCATfON
Secret
Declassified in Part -Sanitized Copy Approved for Release 2012/07/06 :CIA-RDP82S00205R000200010044-4
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CENTRAL INTELLIGENCE AGENCY
Directorate of Intelligence
The Economic Situation in South Vietnam
Summary
Since it was organized in 1967 the Agricultural
Development Bank has rapidly increased the amount of
government credit available to farmers and plans to
expand both its volume of loans and facilities in
1969. The demand for credit in rural areas, however,
still is being met largely by loans from other sources,
often at extremely high rates of interest.
Retail prices in Saigon declined one percent dur-
ing the two weeks ending 24 February mainly because
of lower prices for nonfood items. Prices of im-
ported goods rose slightly as did free market cur-
rency and gold prices.
ANNEX: Weekly Retail Prices in Saigon (Table)
Monthly and Weekly Currency and Gold
Prices (Chart)
SECRET
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Agricultural Credit
1. Since it was established in May 1967 the
government's Agricultural Development Bank (ADB) has
achieved considerable progress in making credit avail-
able to farmers at reasonable rates. From May 1967
through the end of 1968 the bank loaned 6.3 billion
piasters (US $53 million), or more than the total of
loans made by its predecessor, the National Agricul-
tural Credit Office, during its 10-year history. The
demand for credit in aural areas, however, still is
far greater than the ADB's supply of loanable funds.
2. About 80 percent of the ADB's loans are short-
term loans fox crop production. Loans for livestock
production account fox about 12 percent of the funds,
and the remainder goes to fisheries, forestry, and
handicrafts. Short-term loans under 18 months carry
an interest rate of one percent per month, while the
interest rate for medium-term loans of 18 months to
five years is eight percent per year. During 1967 only
about two percent of the bank's loans were long-term
loans with an interest rate of six percent per year.
In the face of price inflation of about 30 percent a
year during the past two years, the rates of interest
offered by the ADB are extremely low. Since the gov-
ernment budget provides a large share of the bank's
funds, the farmers who avail themselves of the bank's
credit are in effect receiving a government subsidy in
the form of cheap money.
3. During 1969 the ADB plans to make loans
amounting to 5.6 billion piasters (US $47 million) and
will expand its banking and credit facilities through-
out the country. Fourteen province offices will be up-
graded to branch bank status and a new branch bank will
be opened in Da Nang. These changes will bring to 25
the total number of ADB branch banks, which are author-
ized to perform full banking as well as credit services.
Thirteen other credit offices or representatives are
located th-roughout the country. In almost all cases,
however, the ADB facilities are in the provincial cap-
itals and thus are not always accessible to farmers
desiring credit.
4. The great demand for credit facilities in
the countryside is clearly illustrated by the results
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of the Stanford Research Institute's Hamlet Resi-
dent Survey conducted in southern St~uth Vietnam in
late 1967. According to the survey, the farmers'
desire for credit ranks second only to their desire
to own land. The majority of those interveiewed were
in debt, and although many claimed they paid no in-
terest at all., more than half of those who paid in-
terest paid at a rate in excess of 60 percent per
year. Three fourths of the loans were obtained from
friends or relatives, while only five.percent were ob-
tained from government agencies such as the ADB.
Despite the AD$'s impressive record, it still is a
long way from its goal of becoming the principal
source of credit for farmers, but it apparently has
a tremendous market fo.r its low Cost loans.
Prices
5. During the two-week period ending 24 Feb-
ruary the Saigon retail price index declined one
percent. (Prices for the week ending 17 February
were not available because markets were closed for
the Tet holidays.) Food prices rose two percent
mainly because of higher prices for fish, shrimp,
brown sugar, and most vegetables. .Nonfood prices,
on the other hand, were down seven percent primarily
because of the Continuing sharp decline in the price
of calico. The price of kerosene, however, increased
10 percent--the first increase in the price of this
item since early 1968. (A table of weekly retail
prices in Saigon is included in the Annex.)
6. The USAID price index for imported goods
rose slightly during the two weeks ending 25 Feb-
ruary as higher prices were reported,fo~ fertilizers,
chemicals, kerosene, sugar, and cement. On l5 Feb-
ruary the government reportedly raised the import
duties on cement, refined sugar, and wheat flour.
Currency and Gold
7. Free market currency and gold prices rose
slightly during the two-week period ending 24 February.
The prices of dollars and MPC (scrip) rose two piasters
each to 192 and 152 piasters per dollar, respectively..
The price of a dollar's worth of gold leaf increased
four piasters to 282 piasters. (A graph on monthly
and weekly, currency and gold prices is included in
the Annex.)
SECRET
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Weekly Retail Prices in Saigon1
2 Jan
19b8
b Jan
19b9
27 Jan
19b9
3 Feb
19b9
10 Feb
1969
24 Feb
19b9
Index for All Items
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Index for Food Items
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Of Which:
(In Piasters)
Rice-Soc Nau
(100 kg.)
2,500
3,100
3,250
3,200
3,150
3,150
Pork Bellies
(1 kg.)
220
260
220
220
250
240
Fish-Ca Tre
(1 kg.)
230
310
330
310
290
320
Nuoc Mam (jar)
150
220
220
220
220
220
Index for Nonfood Items
~
~
21
~
~6
12
Of Which:
(In Piasters}
Firewood (cu. meter)
600
800
780
760
780
800
Cigarettes (pack)
14
22
22
22
22
22
White Calico (meter)
52
82
g2
88
78
68
Kerosene (liter)
9
10
10
10
10
11
a. Data are from USAID sourceso For indexes 1 Jan 19b5 = 100.
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 Declassified in Part -Sanitized Copy Approved for Release 2012/07/06 :CIA-RDP82S00205R000200010044-4
Declassified in Part -Sanitized Copy Approved for Release 2012/07/06 :CIA-RDP82S00205R000200010044-4