Evolution seen in world trade

Press, 30 April 1984, Page 8

Evolution seen in world trade

NZPA staff correspondent Washington The president of the World Bank, Mr A. W. Clausen, who will arrive in New Zealand on Wednesday says he believes improvement in the world’s trade and payments system, and international financial institutions, is “an evolutionary process, not a revolutionary one.” Mr Clausen who provided written answers to questions from NZPA’s Washington correspondent, said that he and his team were “looking forward to hearing in more detail about the concerns and suggestions that the Prime Minister, Sir Robert Muldoon, and his colleagues have with regard to current global conditions.” “It would be far more appropriate for us to express views on the ideas that Sir Robert Muldoon has after our meetings, rather than before, we age very open-minded,” he sJfl. “It is true that the multi-

lateral economic institutions are not perfect and can be improved,” he said. “We need to adapt and change the institutions and the system in line with our expectations about future changes in that structure.” A joint Ministerial meeting in Washington earlier this month of the Development fjl Committee (World Bank ' and International Monetary Fund combined) studied the relationship between trade and capital flows, Mr Clausen said. “There was strong agreement to step up efforts to seek effective solutions to the current problems in international trade relations, bearing in mind, in particular, the special needs of the developing nations,” he said. “It is ip the self-interest of developed nations to make sure that economic recovery spreads to the developing countries. They are still caught up in the recession.

“We need stronger trade, we need better mechanisms to secure adequate capital flows, we need to pay more attention to policy adjustments in nations. “We also need to strengthen awareness of the desperate plight of some of the very poorest nations and the fact that today the level of official development aid flowing to them is simply too low.” On the efficancy of the present system and institutions, Mr Clausen said that there was much that could be improved and much that needed to be examined, but that the institutions set up by the Bretton Woods conference in 1944 had played “a most valuable role” in strengthening the fabric of economic interdependence to the benefit of all nations. On development, he said improvements had been substantial in basic health cars* food supplies, and shelrer. Twenty-six nations had

“graduated” from the International Development Association, the World Bank affiliate which gave in-terest-free loans over 50 years to the world’s poorest nations, he said. “Graduation” means the countries concerned have increased per capita income to beyond SUS7SO a year, the cut-off point for I.D.A. The World Bank had recently broadened and deepened its economic dialogue with borrowing countries, Mr Clausen said. “We are helping them to take the right adjustment measures in a tough economic environment by providing not only sound advice, but also new and special types of lending, our socalled structural adjustment loans and sector loans. “We are also making efforts to enhance our role as a financial catalyst by encouraging banks to associate themselve with-vJVorld Bank loans through feo-fin-ancing arrangements"

The World Bank was itself engaged in a comprehensive review of its role over the next 10 to 15 years, Mr Clausen said. “This review is at an early stage and it would be wrong of me to prejudge its outcome.” On international debt over the next few years, Mr Clausen said, “We do not have a crystal ball. “It is remarkable to see how effective the International Monetary Fund has been over the last two years in swiftly responding to severe balance-of-payments problems...” he said. Outstanding debts of developing nations at the end of 1983 - ’’very large indeed” — amounted to about ?USBIO billion, Mr Clausen said, but so far the system had worked well. “There can be no doubt that there will be more reschedulings, perhaps a few crises here and there and quite a few severe tests as well.”