In assessing the murky international economic situation at this time perhaps one should not make too much of the recent spate of price decreases announced by oil-producing nations or the failure of OPEC to agree on a production cutback.But in this connection international bankers do note a positive development: developing nations may be doing a better job than recognized of adjusting their balance-of-payments problems in the light of past oil transactions and heavy debt borrowing. If so, this may be well be one of those momentary glimmers of sunshine on the world economic horizon that should not be overlooked.
At the moment there are both downward pressures on prices and an oil surplus. What is to be hoped is that this price-and-supply readjustment will serve as a "time of grace" for third-world nations to help further adjust and discharge their massive internal debts and loans from the international lending community -- loans resulting in large part from past oil price increases.
In a speech to international bankers at Lausanne, Switzerland, last week, Citibank chairman Walter Wriston was upbeat in arguing that less developed nations have done surprisingly well in adjusting to oil price hikes and debt borrowing. He cited World Bank statistics indicating that "the oil-importing countries' balance-of-payments deficit on current account rose from about 2.3 percent of gdp [gross domestic product] in 1970 to over 5 percent in 1975, but by 1978 it had been brought back to where it was in 1970." There is no reason, he said, why that successful adjustment would not continue in the years ahead.
Mr. Wriston also challenged the assumption that US commercial banks are too dangerously committed to third-world loans. The outstanding loans are "equivalent to less than 5 percent of the banks' total assets," he commented, and added this encouraging observation:
"The proposition that commercial banks cannot continue to finance the developing countries is really a disguised way of saying that the developing countries are not going to be successful in adjusting to the new challenges facing the world economy and therefore will not continue to be creditworthy. That is not a statement of fact, but a prophecy -- and a prophecy that has no basis i n recent history."