The Soviets Abancon hucuih-
During Salvador Allende's last year as President, the Soviet Union failed to provide the massive financial assistance so desperately needed to bolster Chile's staggering economy. Inllende traveled to Moscow in search of untied convertible currency credits or cenvnodity assistance to relieve Chile's balance of payments crisis. Instead Moscow granted more long-terra credits, largely to financo the import of Soviet machinery and equipment, and offered advice to set Chile's economic house in order.
During his first two years in office, Allende frittered away tho inheritance from the Frei years. Continuing trade deficits and large capital outflows caused Chile's net foreign exchange reserves to plummet8 million inhe month Allende was elected, to9 millipn in
Mounting trade deficits reflected both increasingond falling export earnings. In contrast to5 million trade surplus2 trade deficit7 million. Much of the increase in imports was due to the massive foodstuff purchases abroad, as food itnpor tripled0 million. Agriculturalfell more2hile Allende's policies encouraged growing demand.
With Chile's poor international credit rating and its lack of convertible currency, Allende turned to the Soviet Union for assistance in obtaining desperately needed foodstuffs, petroleum, spare parts and other commodities. In tha face of these needs, Moscow's response was clearly inadequate. , the Soviet Union authorized short-term creditsillion and long-term supplier's credits amounting0 million, but Chile was able to utilize little of either line of credit. Moscow may have failed to grant larger credits because it was already supporting Cuba at great cost and agricultural difficulties at homo were causing the Soviet Union to import substantial guantities of wheat from tha United States.
During the first eight months3 the Soviet Union refused to grant additional credits, despite continuing deterioration in the economy. Agricultural production fell from2 low, necessitating food imports0 million. Industrial output continued its decline. Copper production, which accounted for most of Chile's foreign exchange earnings,-also began to drop.
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USE Gii'J
Table 1
Imports of Foodstuffs
Millions US S
rade Balance
Millions US S
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et Foreign Exchange
Millions US S
December September December December
Table 4
Annual Percentage Increase in Cost of Living (December to December)
a. Computedew index.
Table 5
Percentage Changes in Gross Domestic Product
a/
January-September
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Original document.
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