Boston — ``The Baker plan, I'm afraid, is dead and buried.'' The Reagan administration would disagree with that statement by economist J. Paul Horne, concerning a plan for dealing with the developing world's $1.2 trillion debt. The plan was designed by former United States Treasury Secretary James A. Baker III.
But events at the joint annual meeting of the International Monetary Fund (IMF) and the World Bank in West Berlin this week indicate that there is growing pressure to alter the three-year-old strategy.
With an election ahead, however, the Reagan administration is not expected to make any debt policy changes. Nor are other major industrial nations likely to move beyond simply proposing solutions until a new US administration is in.
Thus, ``debtor countries are not getting the financing they need,'' says Mr. Horne, of Smith Barney, Harris Upham & Co.
The Baker initiative called for channeling some $20 billion in extra private capital to the developing nations with the most debt. In return for this growth-stimulating money, debtor countries would launch reforms to improve economic performance and help service debts.
Despite the fact that a number of debtor nations have made such reforms, commercial banks have been reluctant to expand their loans. They provide new money usually only under the pressure of debt rescheduling negotiations.
This means debtor nations, ranging from extremely poor to middle-income countries, send more interest and principal payments to wealthy industrial nations than they are receiving in new investment and foreign aid. This reverse flow amounted to $29 billion last year. Poor countries, thus, have fewer resources to expand economic activity and provide jobs for exploding populations.
In Berlin, the Group of Seven major industrial countries did take a step to help the poorest debtor nations, mostly in Africa. Because these nations' debts are primarily owed to governments rather than commercial banks and because there is little hope of their being repaid, these debts are usually considered separately from those of Latin American, East European, or most Asian countries.
Meeting Saturday, the finance ministers and central bankers of the Group of Seven adopted guidelines allowing creditor nations to choose debt relief measures from a menu, including: concessional interest rates, longer repayment periods at commercial rates, partial debt write-offs, or a combination of these factors.
This three-pronged strategy was agreed on in principle at the June Economic Summit in Toronto, and was ratified in more detail over the weekend.
Some nations, such as Canada and Britain, have already forgiven sizable debts owed by the poorest nations.
Other events in Berlin indicate a growing belief that new measures must be taken to deal with the debt problem:
Japan detailed an initiative to recycle part of its huge trade surpluses to middle-income debtor nations, such as Brazil and Mexico. Japan also explained a plan, somewhat different from the Baker scheme, for refinancing some third-world debt.
World Bank President Barber Conable said he would recommend $1.25 billion in new loans for Argentina even before the IMF has set up a program of economic adjustments with the South American nation. This controversial proposal is contrary to previous practices.
Michel Camdessus, managing director of the IMF, would like to see some debt relief and has been critical of the US-dominated management of the debt crisis, according to reports from Berlin.
Outside official circles, plans for providing some form of debt relief are also multiplying and attracting more attention.
For example, John Williamson at the Institute for International Economics has suggested World Bank guarantees for ``exit bonds'' issued by third-world debtors as replacements for loans. Banks would exchange their current claims for these bonds at, perhaps, 50 cents on the dollar in exchange for the guarantees.
David Finch, from the same institute, would like to see the US forgive - not just stretch out - loans to African nations that come forth with genuine economic reforms. Even when such loans are not collectible, the US does not cancel them because these sums would then have to be added to US spending, expanding its own deficit. ``Africa needs a more overt aid program,'' he says.
John Sewell, president of the Overseas Development Council, suggests that the IMF and the World Bank step up the volume of their own loans and that the US forgive some of the loans made for military equipment and farm surpluses.
If the US does not help revive the economies of the developing nations, he says, it will have a difficult time expanding its exports sufficiently to eliminate its international payments deficit.