IMF predicts slowdown in world economic growth. Prospect worries less-developed countries trying to repay large debts

The world economy is slowing. In its annual report, ``World Economic Outlook,'' the International Monetary Fund (IMF) predicts that world output this year and in 1986 will grow at a 3.4 percent annual rate, somewhat less than last year's estimated 4.3 percent.

That slowdown worries the developing countries, especially those trying to service large external debts through exports to industrial countries.

At a meeting here Tuesday, the so-called Group of 24, which represents the developing countries, urged the industrial nations to shift the emphasis of their policies from fighting inflation to expanding the recovery.

In a communiqu'e, they also asked the industrial countries to roll back protectionist measures, open their markets further to exports from developing countries, lower interest rates, and liberalize access to their capital markets.

The meeting preceeded a semiannual gathering of two policymaking bodies of the IMF and the World Bank: the Interim Committee and the Development Committee respectively. Also, the Group of 10, the major industrialized nations' counterpart to the Group of 24, met Wednesday.

Slower growth in the United States and Japan will be the prime reason for the more modest world expansion, the IMF economists figure. They anticipate some speedup in Western Europe and in the developing nations.

The IMF predicts that the developing countries will grow at an average 4 percent rate this year, up from 3.7 percent last year, but well under their 6.2 percent average annual rate in the 1967-76 period. They predict a further acceleration to 4.5 percent in 1986.

When the Interim and Development Committees met last September, this week's meeting was billed as a revival of the ``North-South dialogue'' between the richer and poorer countries. But it is not shaping up as well as the developing nations would have liked.

The meetings will be longer and more informal than in the past. Instead of reading prepared statements, the finance ministers and central bankers will discuss issues without the usual entourage of other government officials. In addition, the meeting will last an extra day, through Friday.

There is little expectation, however, that the meeting will yield anything of substantial economic value to the developing countries.

David C. Mulford, assistant Treasury secretary for international affairs, emphasized that the meetings were not for negotiating, but ``to air the issues.''

The Group of 24 communiqu'e, in 11 pages of text, spelled out a long list of concessions the developing countries seek from the rich, industrialized nations. The list was similar to one the group issued in September.

But one observer described the document as ``a declaratory statement, not a negotiating position.'' In other words, developing countries do not expect much, if any, new help from industrial nations. Their statement was probably as much aimed at their home audiences as at the ministers from the industrial countries.

Faced with huge budget deficits in most cases and trying to rein in spending at home, the industrial countries are in no mood to make any fresh expenditures for the developing countries. Even if a developing-country proposal is costless from a budget standpoint, the industrial countries are not as a group going along.

For instance:

1. The Group of 24 would like the IMF to issue $15 billion in special drawing rights (SDRs) per year. Developing countries would use some of this type of international money to service debts or buy imports.

But the US, West Germany, Britain, and Japan have blocked any new issue of SDRs. They say issuing more SDRs could be inflationary and could reduce the pressure on developing countries to get their economies in better shape.

France, with a serious balance-of-payments problem of its own, supports the call for more SDRs.

2. The Group of 24 want ``fundamental reform of the international monetary and financial system.'' They would like the system altered in their favor, including more credits so they could grow faster.

The French have also been proposing reform. And last week at a ministerial meeting of the Organization for Economic Cooperation and Development in Paris, which has the noncommunist industrial nations as members, US Treasury Secretary James A. Baker III offered to host a ``high-level meeting'' of the major industrial countries to consider improvements in the monetary system.

Mr. Mulford made it clear the US was thinking of only modest changes. ``We don't think there is a need for a major overhaul from top to bottom,'' he said.

The developing countries are concerned that the industrial nations will make up their minds on changes and submit them to the IMF, which would approve them in a rubber-stamp fashion. The poorer nations want to have their voice in the process.

Their emphasis is on the availability of more money and resources; the industrial nations insist on restraint and discipline, at least for the developing countries.

With the US suffering from massive federal deficits, debtor nations were able to turn the tables somewhat. They called for stronger IMF ``surveillance.''

The IMF can put extreme pressure on debtor countries to impose austerity programs to improve their economies. The IMF cannot do the same with nations such as the US that do not borrow from the fund.

In theory, stronger ``surveillance'' would enable the IMF to put more pressure on industrial nations with severe deficits or other economic distortions. In fact, under a floating exchange-rate system, it will be extremely difficult for the IMF to apply such pressure. -- 30 --{et