World Bank, IMF take action on some key money problems
Washington — World finance ministers and central bankers tidied up some of the globe's messiest economic affairs this past week, but there's much tidying still to be done.
The Argentine debt problem was settled - for the time being at least - and an economic-aid package for troubled sub-Saharan Africa was launched.
Discussions over the future role of the World Bank were initiated, and overall ''North-South'' economic relations were again up for discussion. So were macroeconomic problems such as foreign-exchange rates, budget deficits, and overall world economic expansion. But resolving such problems is another thing.
The most crucial decision was an agreement between Argentina and the International Monetary Fund on an anti-inflationary program for that country. The agreement should make available billions of dollars of new credits for Argentina from both the IMF and commercial banks.
Because of political difficulties arising from the transition from military to democratic government, the new Argentine government had delayed a decision on its anti-inflation program for months. Some banks were forced to take losses on their loans, and the hassle cluttered up the gradually clearing world debt situation. The only major debtor that has not yet made a deal with the IMF is the Philippines, and that is in the works.
The top financial officials of almost 150 nations, gathered here for the annual joint meetings of the IMF and the World Bank, considered other key concerns, although resolution of many of these is still in the future.
For example, they tackled the problem of economic stagnation, declining living standards, and worsening famine in southern Africa. This proposed World Bank program, however, appears mostly to coordinate existing or already planned African aid programs. Whether it will raise the volume of new money the World Bank says is needed in Africa remains uncertain.
A quick sweep of the broom was given to another issue troubling the developing nations for years. They want a full-scale resumption of their ''dialogue'' with the industrial nations. For instance, a summit of nonaligned nations in New Delhi last year called for an international conference on money and finance. That plea was renewed by the ''Group of 24'' developing countries at a meeting here last week. They called for ''a thoroughgoing reform of the international monetary and financial system which would secure the objectives of sustained growth, exchange and monetary stability, and adequacy of resources for investment, particularly to meet the special needs of developing countries.''
In response, the industrial nations agreed to add a day to the usual one-day meeting of the Development Committee, a joint body of the IMF and World Bank, next spring.
''However hard we try to overcome these problems through ad hoc and special solutions, we are unlikely to make sustained progress unless there is a more basic review of international monetary and financial issues,'' Pranab Kumar Mukherjee, India's finance minister and chairman of the Group of 24, contended.
The industrial nations, though, are afraid of adding to the international economic clutter rather than cleaning it up. Most of them prefer pragmatic small steps, scrubbing one mess at a time. They want the problem of debtor nations to be tackled case by case and prefer evolution of the international monetary and economic system - not a sweeping out of the old with an unknown new.
Indeed, there is some question as to what that spring meeting can accomplish in regard to debt or international monetary affairs. Officials here hope the meeting may clarify the role of the World Bank to some degree. This powerful institution, making loans for development purposes to poorer nations, has been undergoing something of a ''mid-life crisis,'' as one official put it.
The bank has launched a study on ''The Future Role of the Bank,'' with a report due by early next year. Discussion of the issues involved already began at the annual meeting this week.
One sensitive issue is whether the bank should use its money to encourage governments to reform economic policies, possibly withholding it if they refuse. A number of finance ministers of developing countries voiced objections to this idea. Already, nations in balance-of-payments difficulty face such policy intervention by the IMF when it makes loans. Politicians do not like this interference with their policy prerogatives.
West Germany's financial leaders tried to clean up another mess - the ''overvaluation'' of the US dollar - with more or less success, depending on the viewpoint. The Germans think their intervention in foreign-exchange markets during the past week to strengthen the deutsche mark made market participants sufficiently anxious to deter a further excessive run-up in the price of the dollar. Critics, however, claim the Bundesbank action was a failure, that the market just trampled over the central bank in climbing to a higher level for the dollar.
The financial officials also pushed some issues under the rug. They decided the IMF should not issue, for the time being, any more special drawing rights (SDRs) - an international money used by central bankers. Disappointed developing countries had urged the creation of about $15 billion of them and could have used a small portion of them to pay bills. A few industrial countries also favored the idea.
But the United States, the United Kingdom, and West Germany thought the new SDRs were unneeded and possibly inflationary. And they have sufficient voting rights in the IMF to block any move they disapprove of.
Some issues were raised without the prospect of resolution:
* Many nations complained about large US budget deficits, reckoning that these help cause high interest rates, and called for deficit-trimming moves after the US election. President Reagan spoke of his sympathy for the world's poorer countries - but he appeared to offer words, not more money than already planned.
* Almost everyone at the conference worried about rising protectionism - but no one pledged to cut back on specific obstacles to imports.