Against a background of sluggish economic growth - except in some parts of the Third World - and lopsided trade and balance of payments accounts, the World Bank and International Monetary Fund will stage their 33rd annual joint meeting here beginning tomorrow morning.
Major preliminary events actually got under way Friday and yesterday with separate sessions of the rich and poor nations' steering committees, the Group of Ten, and the Group of Twenty-Four. The joint IMF-World Bank Development Committee, which deals with the transfer of resources to the less-developed countries met yesterday and will do so again on Wednesday.
And today the basic tone and much of the content of the four-day meeting will be set by a session of the IMF policy-making group, the so-called Interim Committee, whose chairman this year is Denis Healey, British Chancellor of the Exchequer.
The Interim Committee will discuss the world economic outlook, monetary instability - including the problem of the dollar - and the two main specific issues to be decided during the meeting - a new quota increase and a new allocation of special drawing rights, two steps that would increase substantially the resources - hence the lending ability - of the IMF. SDRs - each worth about $1.25 - are a paper credit or asset created by the IMF for distribution to its 134 member countries.
Details of the Interim Committee discussions will be disclosed by Healey, andthe new managing director of the IMF, former director of the French treasury Jacqeues de Larosiere at a press conference today.
The joint sessions, with carefully planned speeches by leading finance ministers representing scores of big and little countries, then will be in the hands of Tengku Razaleigh Hamzah, 40, the finance minister of Malaysia. Major addresses also will be delivered by Larosiere and by World Bank President Roberts S. McNamara.
Preparations are being made for the probability that President Carter, fresh from his Camp David triumph on Middle East problems, will address the opening session attended by 3,500 delegates, advisers, and official guests.
Despite the slow and uneven growth of the many different economies, the threat of protectionism, high unemployment - especially in Western Europe's industrial countries - and gyrating currency movements, no new macroeconomic strategy is expected to come out of this week's sessions.
The basic approach to the world's economic problems, as established by the rich nations that dominate the IMF, was agreed upon last April by the IMF Interim Comittee in Mexico City, and ratified by the 7-nation economic summit in Bonn in July.
That calls for the two major nations enjoying large trade or current account surpluses - West Germany and Japan - to stimulate their economic growth at home. The prescription for the United States is for it to allow its economic growth rate - which had been faster - to subside, meanwhile making an effort to control inflation and reduce its enormous trade deficit.
The Interim Committee is likely to note the prospective improvement in U.S. trade, and to nod approvingly at U.S. efforts to support the dollar. There also will be pats on the back for West Germany and Japan, which have installed expansion programs. In a nut-shell, the leaders will conclude that things are moving in the right direction, but perhaps not at the optimun speed.
Healey, who consistently has urged a policy of faster economic growth to cut the increases in unemployment, is expected to reiterate on behalf of the Interim Committee the warning of the IMF Annual Report that the recovery process is slow, and that unemployment - especially among young persons - will stay high for a long time.
Inevitably, two nonagenda items will take up a lot of the time in crowded corridor talk, and in the suzzing round of dinners and receptions that always feature an IMF-Bank annual meeting. One is a hot, emotional issue, and the other is technical.
The hot issue is the question of Bank and IMF salaries. The argument, in oversimplified terms, arises out of the U.S. belief that staff salaries are too high, and an equally strong Bank-IMF conviction that they are not high enough to attract diversified talent from the ranks of international civil servants. Great bitterness exists among rank-and-filers against the United States.
The salary problem has bebeen exacerbated by the decline of the dollar - thecurrency in which staff members on duty in Washington are paid. Both IMF and World Bank officials say it is difficult to recruit new personnel from countries with currencies stronger than the dollar. It is rumored around the Washington IMF offices that both Japan and France have been making supplemental payments - against the organization's rules - to their own nationals.
The IMF and World Bank months ago commissioned a study of the salary question by the IMF executive director from Brazil, Alexander Kafka. But in a neat bit of side-stepping, the Kafka report has been delayed until Oct.23, or well after the annual meetings have broken up.
The other question, more fascinating for the technical experts, relates to the plan designed by West German Chancellor Helmut Schmidt and French President Valery Giscard d'Estaing for a European Monetary System (EMS).
The EMS would attempt to link European currencies more highly than they are now by creating a $50 billion regional fund through contributions by European countries. Europeans affirm that there is no intention to compete with the dollar, but both the United States and the IMF have some reservations about operation of the EMS.No decisions about EMS are due to come up at the IMF meeting, but there will be plenty of debate about it.
As usual, there will be much talk and no action about the decline of the dollar. Up for discussion will be steps that the U.S. government already has taken to shore up the dollar's international value.
Beyond a new report promotion program - about which there are mixed feelings - few specific additional steps are expected tp prop up the dollar. The IMF Annual Report argued that massive intervention doesn't do much good, and that greater exchange rate stability awaits restoration of greater economic stability within each big country.
The clear warning in that passage of the report was that the world should expect no magic from the new surveilance powers over exchange rates that came into being last spring with the new Article IV. In a classic understatement, the report siad: "There is still a significant difference between the objectives of the amended Articles and the state of the world economy."
On specific issues or problems, these developments are expected:
Saudi Arabia will get its own seat on an expanded 21-member IMF Executive Board, a status to which it is entitled by virtue of having passed West Germany as the second largest provider of funds to the IMF.
Despite impassioned pleas by McNamara and several of the developed and developing nations, the question of an increase in the World Bank's capital - McNamara wants it doubled - is likely to be put off until next year.
IMF quotas are expected to be increased by about 50 percent, on an "equiproportional" basis over the present level of 38.8 billion SDRs (roughly $48.9 billion). But the final decision could be put over the 1979 springmeeting of the Interim Committee.
A few LDCs (including some oil countries) might get tiny extraproportional increases in their quotas (with the extra voting power that goes along with quotas). This extra allotment would come about by dividing a "kitty" of some $400 to $500 million, representing the unused quotas of the Republic of China, Cambodia and Singapore.
In conjuction with the quato increase, a "modest" new issue of SDRs is in the works. In Mexico City, both the Germans and the French were opposed. But the Germans have relented Against Larosiere's recommendation of 4 to 6 billion SDRs a year for three years, an issue of 3 to 4 billion is likely to be approved, with approval of the U.S. sugggestion that 25 percent of any quota increase be paid in SDRs, rather than in local currencies.