Tanzania's finance minister, Amir H. Jamal, was smiling, but his words weren't. "The United States can't run the world, you know," he said. What was bothering Mr. Jamal was the US drive to toughen conditions under which the International Monetary fund (IMF) makes loans to nations to help them pay their bills to other countries. In the jargon of this 143-nation institution, this loan-term issue is called "conditionality."
For some two or three years, the emphasis at the IMF has been toward easing its loan conditions -- not demanding so much austerity in monetary, fiscal, or other economic elements. Poor nations especailly, it was felt, should be given more time to adjust their domestic economic situation to recduce balance-of-payments deficits.
In 1979, the emphasis at the IMF was on flexibility. "Conditionality must be adapted to changing circumstances and specific cases; it cannot be a rigid and inflexible set of operational rules," the official IMF Survey noted a year ago.
Even before the IMF and its easier institution, the World Bank, opened their joint annual meetings here on Tuesday, however, US Treasury Secretary Donald T. Regan had launched a drive to stiffen the backbone of the fund. "We think the UMF could be a little more strict . . . [with] some of the larger developing countries and some of the more prominent less-developed countries," he told a press group last week.
The Treasury did a study of recently completed IMF loan arrangements and, according to one press report, found that 14 of then were "seriously deficient" in the belttightening measures required.
The IMF managing director, Jacques de Larosiere, in his speech to the fund's governors Tuesday, in effect denied such allegations. "During the past two years some three-fourth's of the fund's new lending commitments have involved high conditionality, under programs requiring vigorous adjustment policies.
Perphas Mr. Regan overstated IMF softness. In any case, the United States has already made its point. The so-called Interim Committee of the IMF met for two days over the weekend and in a communique Sunday stated:
"The committee stressed that strong and comprehensive adjustment policies had to be implemented in order to reduce the present unsustainable current-account imbalances. The committee observed that many developing countries had already made sustantial adaptations to the harsh external environment in which they now find themselves, but recognized that further progress was needed."
That diplomatic jargon means: The world is a hard place economically, but the IMF must be tough anyway."
At a press conference early Monday, West German Finance Minister Hans Matthofer sounded a bit softer by saying there was no necessity for the IMF to "change drastically" its application of "conditionality." He said the fund should take into account not only economics, but social and political considerations.
But Tanzania's Mr. Jamal complained that whereas the Carter administration had been willing to make exceptions to tough conditionality when some of the poorest countries got into bill-paying trouble, the Reagan administration was not so inclined. It is casting a stern eye on all loan applications. And since the US remains the most powerful force in the IMF, that's important.
Actually, the issue of conditionality has always been a tug of war within the IMF. Sometimes the industrial countries pull the poorer nations toward tougher loan conditions; other times the developing countries exert a stronger pull.
On occasion effects of IMF loan terms have led to street riots and the overthrow of government. The somewhat obscure terminology used here usually boils down to a cut in living standards for people in a nation until it gets its international payments in better balance. Such economic stringency is politically difficult.
Moreover, the economic difficulties of the poor nations are not always their fault. As Edward M. Bernstein, a leading consultant on international monetary affairs here in Washington, pointed out, many developing countries have been hurt by the slack demand for their exports as a result of economic slowdowns in the industrial nations. The IMF index of 35 agricultural and mineral commodities has declined 18.7 percent in US dollar terms in the year ending August 1981. The decline in prices is not so severe in terms of West German marks or French francs or British pounds. Nonetheless, he noted, "that gives you some notion of the problems."
Moreover, many of the developing countries have huge bills for imported oil.And the interest costs on their massive foreign debts have grown much higher.
The rich, industrialized countries can finance their oil bills by the inflow of funds from the surplus in the OPEC nations. West Germany's Mr. Matthofer said: "We have no problem in financing our deficit by importing OPEC capital" and putting it to productive use in West Germany.
But poor countries prefer to send their money to the generally more stable industrial nations. A large chunk of these petrodollars has been recirculated by commercial banks to the better-off developing countries.
Recognizing the special payments problems of third world nations, the IMF has a compensatory drawing facility to help countries suffering from poor crops or commodity price declines. It has some $6.6 billion in loans outstanding. There's also an oil facility which has made some $6.9 billion in loans, about half to the poor countries.
But when these facilities run out of money or are not appropriate, nations, must borrow from the IMF's general funds. It is here especially that the question of conditionality comes up.
Despite the US campaign here, the IMF probably can't be as stern as it used to be in the 1960s. Nonetheless, at the moment the industrial countries are winning their tug of war in the fund and countries with payments problems won't like the conditions for future IMF loans.