A high U.S. official predicted yesterday that progress would be made later this week leading toward a major expansion of International Monetary Fund resources. But he said at the same time that the situation is not desperate or urgent, and hinted that final decisions would be put off, probably until the IMF annual meeting in the fall.
Anthony Solomon, Under Secretary of the Treasury for Monetary Affairs, gave reporters a relatively optimistic appraisal of the prospective results of a meeting in Washington April 28 and 29 of the IMF's policy-making Interim Committee.
The meeting takes place at a time of virtual international consensus on the need to expand the IMF's role in international lending, and just ahead of the London economic summit scheduled for May 7 and 8.
A major topic of discussion will be a proposal by IMF managing director H.J. Witteveen for a special supplemental facility within the IMF to finance loans to member countries on strict terms.
Solomon said the world had moved from "intense and bitter negotiations" to a broad consensus on how to deal with international economic problems. A key to this consensus, he said, is the assumption that multilateral financing will be available to help weaker countries.
In briefing reporters, Solomon also revealed that the U.S. at the Interim Committee meeting would.
Oppose Witteveen's suggestion of a new quota increase ranging from 75 to 100 per cent. The U.S. is thinking in terms of an increase ranging from 20 per cent to 50 per cent. A current (the sixth) quota increase amounting to 32 per cent is now in the process of parliamentary approval.
Oppose a new issue of special drawing rights (SDRs), an IMF-created paper credit, "because we do not feel that a general distribution of unconditional liquidity is needed at this time."
Support a system of IMF surveillance of exchange rates that "would help assure there is no (exchange rate) manipulation, or (efforts) to gain unfair competitive advantage." But Solomon, like his predecessor in the Ford administration, Edwin H. Yeo III, urged a case by case approach.
Because the basic source of IMF lending authority - quotas subscribed by the members - takes a long time to put into place, Witteveen early this year developed the idea of a new pot of money in the fund, half from Organization of Petroleum Exporting Countries, half from the industrial West, to help countries that have about exhausted their borrowing potential in the private market.
Solomon yesterday publicly endorsed the principle, saying "we are prepared to participate on a significant scale if others also agree." In that case, he said, the U.S. would abandon its support for the so-called "safety-net" fund, initiated during the Ford-Kissinger era.
Other sources reported that agreement on what has come to be called the Witteveen fund is being delayed because Saudi Arabia has not made a firm commitment to contribute slightly more than 25 per cent of the money. The U.S. share would be about one-sixth.
Solomon said that the Witteveen fund might turn out to be anywhere from 8 to 14 million SDrs - from $9.3 to $16.6 billion, "and in our view, would have a definite time limit, covering needs until the next quota increase."
In response to a series of questions, Solomon said that the U.S. had no objection to Saudi Arabia obtaining a permanent seat on the 20-man IMF executive board, but that he not aware of Saudi pressure for such recognition.