Future of I.M.F. hangs on U.S.

Press, 1 October 1983, Page 1

Future of I.M.F. hangs on U.S.

From

G. G. SHAND,

, in Washington

The untypical English banker who limped along in a scruffy pin-stripe suit probably most accurately summed up the dominant issue at the 1983 annual meetings of the International Monetary FundWorld Bank which wound up in Washington yesterday. Not surprisingly it was not New Zealand’s call for an international monetary conference.

He said “The I.M.F. is like a pack of cards. If the (United States) Congress blows too hard it will all come tumbling down.” That certainly was the nagging fear shared by most of the 8000 delegates as they left Washington. Having injected upwards of SUS2O million into the Washington economy during the last week — courtesy of lavish limousines, lunches, cocktail parties, and accommodation — how much was Washington prepared to put back into the 1.M.F.-World Bank and through it the poor and developing nations of the world?

The United States is by far the biggest contributor to both organisations and the political mood in Washington is to rebuff President Reagan by rejecting a new SUSB.4 billion quota replenishment. That is not all the bad news the United States is giving the world’s biggest financial institutions. The World Bank is hoping to spend about SUSI 6 billion in basic aid projects to poor nations over the next three years but their hosts this year are talking of slashing their contribution by 25 to 30 per cent, which means a paltry SUS 9 billion. The attitude ,in Washington among Republican politicians, many businessmen and it appears, many Americans generally, is that most Third World governments are corrupt so why should they continue to bail

them out through the 1.M.F.World Bank?

If they don’t — according to President Reagan, the United States Treasury Secretary, Mr Donald Regan, and the I.M.F.’s managing director, Mr Jacques de la Rosiere — it will mean political and economic instability throughout the world.

Congress, they demanded, must vote the funds.

These were reassuring words but not enough to remove the uncertainty of Third World and developing nations at this year’s meetings. They came away mostly angry with doubts not only over their aid assistance but also over how much longer the fund, struggling under increasingly limited resources, could continue to play its part in propping up mountainous debt burdens, endemic particularly in Latin and South America. If the I.M.F. cannot, the American banks, with so much at stake, will be forced to and as the New Zealand Prime Minister, Mr Muldoon, reminded the National Press Club this week the collapse of one or two of them would bring the realities home to American politicians. Small wonder then that this year’s annual meetings concentrated on short-term issues, not the longer term ones being raised by Mr Muldoon.

If anything, his suggestion of a second Bretton Woods conference was relegated from the back seat to the boot in Washington. However, he seemed to accept more than ever on this trip that his plans for a world conference to reform, the trade and payments sys- : - tern is going to be a slow' haul.

He said again yesterday that the Americans clearly had to get this quota increase through Congress so his conference idea must

necessarily await that decision, which is not expected until November at the earliest. Ironically, while his campaign has been mentioned by only two speakers in Washington, where it has more relevance, it has been at the United Nations where the biggest guns are lining up behind him. The Indian Prime Minister, Mrs Indira Gandhi, and the French President Mr Francois Mitterrand, have both endorsed his calls for a second international conference so that he has taken some heart from that. Mr Mitterrand said in New York on Thursday (New Zealand time), “The Prime Ministers of India and New Zealand were right to launch an appeal for international monetary cooperation.” Mr Mitterrand said the leaders of the big seven industrial nations at Williamsburg in the United States earlier this year had decided to consider the role a high level monetary conference might play in achieving reform. “This is a long-term undertaking which will require serious preparation,” he said. Mr Muldoon agrees, insisting yesterday that “there is no doubt that this is a live issue.” However, the British, Australians and Canadians have already lined up against them at Trinidad, at the Commonwealth Finance Ministers Conference, and hardly needed to address the* issue at Washington this week. To make any real headway Mr Muldoon needs , American support, and so •much depends on his meeting with the. United States Secretary of State, Mr George Shultz, in New York, which he leaves for early today (New Zealand time). I.M.F. reaction, page 3 SI3B needed, page 10