AID IN SPITE OF DEFICITS

Press, Volume CVI, Issue 31178, 30 September 1966, Page 13

AID IN SPITE OF DEFICITS

(N.Z.P.A.-Reuter —Copyright, WASHINGTON, Sept. 29. World Finance Ministers appeared today to be sympathetic towards a United States move to make it easier for wealthy countries with balance-of-pay-ments deficits to increase their aid to poor nations. Ministers from 105 nations attending the annual meeting of the World Bank and International Monetary Fund heard the proposal from Mr Henry Fdwler, the United States Secretary of the Treasury.

Yesterday Mr Fowler also made a veiled threat of “quite drastic” action to end the United States payments deficit “if surplus countries follow, whether by design or otherwise, policies that tend to preserve these surpluses.” His proposal for balance of payments protection for donors calls for those with surpluses to reduce or eliminate requirements that their aid be spent in their own markets. In extreme cases where donors were in deficit, countries with surpluses might even require that the money should be spent in deficit countries. His suggestion would make it easier for the United States, Britain and other countries to increase development aid without the worry

lof further deterioration in their financial position. Mr Fowler appeared to be directing his suggestion at the new round of pledges under way for the World Bank’s “easy loan” affiliate, the International Development Association. The I.DA. is seeking to quadruple its contributions from richer nations to 1000 million dollars annually over the next three years. United States officials would like to increase their pledges to I.DA. but want its rules changed so that when the United States is in deficit there could be some protection for the American payments position. The international lending agency works under the rule that its loans can be spent anywhere in the world.

The Australian Federal Treasurer (Mr William McMahon) was one of several delegates to object today to the so-called “double veto” powers of the 10 leading financial nations of the world. The 10 have hinted that if a new international money was established to supplement gold, dollars and pounds they, as well as the International Monetary Fund, would have to approve the move. “I strongly oppose the idea of discrimination with the world financial institutions; no group of countries can assume an exclusive right to predetermine, outside the fund, matters vital to all fund members,” Mr McMahon said. He was supported by Mexico and the Philippines, among other countries. r