Big-debt nations on arduous but promising course

Bankers and governments don't want to engage in a costly game of falling dominoes. With the Mexican debt crisis in the background, they are taking action to safeguard their financial positions and not let foreign debts - owed or lent - get them into trouble.

''The problem is not being ignored,'' noted Leif Olsen, the chief economist at Citibank. ''Efforts are proceeding . . . to repair the system and find solutions to the problems. And there is good reason to expect that these efforts will meet success.''

But, he warned, these moves ''will not be easily done and they will not be painless.''

That was evident from recent news around the world:

* Brazil prohibited the importation of hundreds of items, including machinery , equipment components, and raw materials. The state oil company, Petrobas, temporarily suspended the import of all equipment for producing and refining petroleum, chaneling orders instead to domestic capital-goods industries whenever possible.

Moreover, the government has imposed financial stringency on the nation - despite elections in November. The austerity measures are designed to reduce Brazil's massive international payments deficit. The nation is expected to borrow $4 billion to $6 billion this year, with its total external debt growing to almost $80 billion.

The government of Gen. Joao Figueiredo is trying to avoid a Mexican-style debacle and being forced to go to the International Monetary Fund for help. Also , to turn over some of its external debt, it must demonstrate to foreign commercial bankers its ability to put its domestic economic house in order. Reports from London last week indicate Petrobas has won support for a $100 million bank loan, and Brazil was able to raise some foreign funds - a difficult task since the Mexican scare.

* Argentina began detailed negotiations with the IMF last week on a stringent program to reduce its three-digit inflation and its balance-of-payments deficit. The financially troubled nation wants a ''standby'' credit of more than $1 billion from the fund. Commercial banks often look to such agreements with the IMF as an indication that a nation has taken the necessary steps to get back into financial shape and is thus suitable for continuation of their lending programs.

Argentina has foreign debts of more than $39 billion, of which some $12 billion needs turning over in this second half of 1982. Any belt-tightening program is expected to cause a political storm in the nation.

The Argentine government put strict controls on imports in April at the beginning of the Falkland Islands crisis.

* Yugoslavia's new head of government, Prime Minister Milka Planinc, has been introducing an austerity program to deal with its foreign debt problem. It also asked Western central banks last month for $500 million in credits to help it service its $18 billion in foreign debts.

* As for Mexico, its leaders are negotiating an agreement with the IMF on a program of economic restraint. A $10 billion package of bailout loans from the IMF, the Bank for International Settlements in Basel, Switzerland, and from private banks hangs on the success of the talks.

Looking at such actions, Citibank's Mr. Olsen sayssuch traditional methods of correcting international payments problems have succeeded in the past and should do so again.

Deliberate default by a nation on its external debts, he notes, would impose ''far more severe austerity'' on a nation. It would be unable to borrow abroad and be forced immediately to put its international books into balance. It could find any external assets seized in retaliation.

More concerned about such economic restraint is C. Fred Bergsten, director of the Institute for International Economics and a former Treasury official. Such programs, he warned, will put ''further downward pressure on the world economy.''

Thus he calls for a reorientation of the basic thrust of economic policy in the industrial countries toward expansion. For instance, he calls for ''a prudent easing'' of monetary policy in the United States and Western Europe (but not Japan, because of exchange rate effects). If done circumspectly, he believes , it could bring down short-term interest rates another 2 percent, followed by some decline in long-term rates. This would ease the servicing burden of the developing countries, with a total of more than $500 billion outstanding in external debts.

Moreover, he wants the IMF to create ''yesterday'' an emergency fund of $20 billion to $25 billion that could be used to make loans to nations with international payments problems. This would tide the IMF over until its quotas could be boosted (in 1985) to more than $100 billion. The US wants a much smaller increase in IMF quotas - its basic financial resources.

Mr. Olsen, though concerned about the international debt situation, points out that ''the international financial system has repeatedly demonstrated its resiliency and ability to cope'' - citing as an example the concern in the 1970s over huge oil surpluses in the Organization of Petroleum Exporting Countries.

''There is a great temptation to speak vaguely of breakdowns and defaults without offering any specific explanation of what happens,'' he said. ''Well-meaning people are raising fears beyond what is realistic.''

He's confident that the present monetary policy in the US is bringing about economic recovery - recovery that will help developing nations, since it will stimulate US imports and provide other countries with the means to pay their debts.

Further, the corrective programs of developing countries should restore the confidence of bankers and thus their willingness to continue making loans. For the moment, international lending has slowed. The Bank of England has just reported that bank loans to the main overseas lending centers grew by only $39 billion in the first quarter of this year, compared with $115 billion in the last quarter of 1981.