Support for IMF finally gained

Press, 21 April 1984, Page 22

Support for IMF finally gained

NZPA-NYT Washington The International Monetary Fund, after more than a year of negotiations is about to receive a fresh infusion of SUS 6 billion to help it fulfill its lending obligations. European monetary officials say the money is to be used for loans to such debtor countries as Argentina, Brazil and Mexico. The fund will borrow $3 billion from Saudi Arabia and some from a number of non-Communist industrial countries, but not the United States. The Bank for International Settlements in Basel, Switzerland, which earns income from services it performs for major nations’ central banks, is also contributing to the loan.

It was decided early in 1983, American officials said, that the United States would not participate because it was doubted that Congress would go along. The Reagan Administration had great difficulty last year in persuading Congress to appropriate an $8.4 billion increase in the American subscription to the IMF. On the new six billion dollar loan, the final hurdles were cleared with agreements that call for the money to be lent to the International Monetary Fund for two and a half years at market-related interest rates, now about 10 per cent the European officials say. An IMF board meeting will approve the final ar-

rangements “certainly within the fortnight” one official reported. A long stalemate in the negotiations was caused by the insistence of Saudi Arabia which pursues a cautious international monetary policy on a “gold guarantee” against any possible losses when it is repaid. The IMF refused to give such a guarantee but finally agreed on a guarantee of another sort, the officials say they will not provide details.

The IMF’s managing director, Jacques de Larosiere, is the driving force behind the replenishment. He argued that the money was needed to fill a “commitment gap,” which is the difference between the fund’s borrowed resources and what it had agreed to lend to troubled countries.

The gap has narrowed because some borrowers, such as India, will not draw as much as they planned. The IMF has two categories of resources from which it makes loans; its basic capital funds and the borrowed resources from states such as Saudi Arabia.

The IMF has already negotiated financial aid for such major Third World borrowers as Mexico and Brazil, and it is negotiating with Argentina, Peru, Nigeria and the Philippines.

It is uncertain how long the money will last. Some monetary officials predict that the IMF will have to borrow another six billion dollars in 1986.