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Declassified per Executive Order 13526, Section 3.3 NND Project Number: NND 63316. By: NWD Date: 2011  increased substantially, the domestic price of rice has risen. Since the end of last year Saigon merchants have reported increasing difficulty in delivering their merchandise to the villages, and domestic commerce has declined in part because of the uncertainties of the political situation. Communist sabotage of roads and bridges and Communist control of certain areas have set back the government's reconstruction and agrarian reforms and land distribution programs. Finally, although there has been an increase in the production of rubber, the leading source of foreign exchange, rubber plantations have come under increasing harassment by Communist terrorists.

South Vietnam's reliance on US grant aid has not lessened over the past several years. During fiscal years 1955–60 total economic aid amounted to about $1.4 billion, including several loans totalling about $83 million. The continued high degree of dependence derives primarily from the burden imposed on the economy by the defense establishment. Military and security costs alone were budgeted at about 5.8 billion piasters (or about $221 million at the official rate of 35 to the dollar) in 1960, an amount which exceeds the total revenue which the government is currently extracting from the underdeveloped economy.

Dependence on foreign assistance is also clearly reflected in the external trade of South Vietnam, Exports in the period 1955–60 have covered only about 28% of imports, averaging $68 million per year compared with average annual imports or $244 million. In 1960, rubber and rice furnished 89% of the exports by value, with rubber alone accounting for 57%. Consumer goods make up a significant portion of the imports, reflecting the necessity for increased development of South Vietnam's domestic manufacturing capacity. About 74% of all imports are financed by the US commodity import program whereby goods purchased with aid dollars are sold for Vietnamese piasters and the proceeds used to support the national budget and pay the piaster costs of economic assistance projects. France has remained South Vietnam's principal buyer and supplier, although its importance as supplier of imports has declined considerably since 1955. The US is the second leading buyer and supplier while Japan is becoming increasingly important as a supplier.

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