I.M.F. ‘running dry’

Press, 28 August 1982, Page 12

I.M.F. ‘running dry’

NZPA Washington The International Monetary Fund was running short of cash for short-term loans, said a private research group. A report released in Washington by the group, the Institute for International Economics, recommends that I.M.F. quotas for member countries be raised from the equivalent of SUS 67 billion to the equivalent of SUSIIO bil : lion to provide for loans in the latter half of the 1980 s. That represents an increase of 64 per cent, and would raise New Zealand’s quota from 348 million special drawing rights, which converted on yesterday’s exchange rate comes to about SUS3B2 million, to 571 (about SUS62B million). The quota is a formula, based on global wealth, on which members’ contributions to the fund are based

and which determines their voting strength and the amount of money they can borrow. The institute said that a quota level equivalent to SUSIIO billion would still leave the fund below the level agreed when it was established in 1944, and a quota increase will be a main topic at the fund’s annual meeting in Toronto next month which the New Zealand Prime Minister, Mr Muldoon, will attend. The Americans, by far the biggest contributors to the fund, will argue for a relatively modest increase. Negotiations on quotas are likely to continue long beyond that meeting, however, and new quotas will not be struck until 1985. A main drain on I.M.F. funds is likely to be a loan to Mexico, which is asking for SUS 4 billion over a three year period, plus SUSBOO

million from a special I.M.Fn fund. The LM.F.’s short-term? funds would be exhausted byt another loan that size, said’:, the group. ' ’ . ■ The Institute for Inter-', national Economics is? headed by Mr Fred Bergsten, a former assistant Secretary, of Treasury in President-!! Carter’s Administration, and? funded by the German Mar-Ji shall Fund of the United*? States. ' I; In another report,, the-. International Finance ? Cor-| poration, a World Bank afflli-5. ate that helps finance pro-j!. jects through the private sec* tors of developing countries* said that developing would find it hard to borrow,} in the next -year or two) because of the state of the? world economy and the con* elusion by many commercial, banks that they had reached! their lending limits in soma countries. J