Although oil-consuming countries -- including the poorer ones -- appear able to finance an aggregate $120 billion international payments deficit this year with ease, would leaders next week will discuss additional ways of financing red ink of similar magnitudes in later years.
That was the gist of a press conference held yesterday by Assistant Treasury Secretary C. Fred Bergsten to describe the agenda of meetings to be held in Hamburg by the Interim Committees of the International Montary Fund and the Development Committee.
The Development Committee is a joint responsibility of the IMF and the World Bank designed to assist poor countries.
The Hamburg sessions -- which are part of a regular series leading up to the annual joint IMF-World Bank meeting in the fall -- will be held against the backdrop of what Bergsten called "the somber world economic outlook." But he cautioned that there will be no final decisions in Hamburg.
"In fact," he said, "there are no fixed timetables, and I think it is a virtue to remain flexible on the timing of these things."
Among specific questions that will be discussed, but not settled, at Hamburg is the much-debated Substitution Account, which would allow official dollar holders to put U.S. currency on deposit at the IMF in exchange for a new form of internationally backed currency. This would be denominated in special drawing rights, the IMF-created paper money which will be backed by a mixture of national currencies and gold.
As has been reported previously, Bergsten said that the intention is to start the Substitution Account -- a voluntary plan -- at about a total of $20 billion, and let it rise to about $50 billion in a few years. It would amount to a modest shift in reserve assets away from dollars toward SDRs.
Bergsten said that the surplus generated by the Organization of Petroleum Exporting Countries this year will be about $120 billion, of which about $70 billion will reflect a deficit in the rich, developing world, and $50 billion among the poor nations.
But in contrast to the first oil "shock" period of 1973-75, the burden is being borne this time by stronger countries among the industrial nations such as West Germany and Japan and the more advanced among the poorer ones who have easier access to private capital markets.
But because OPEC surpluses are expected to continue to pile up, rather than be dissipated quickly as was the case last time, Bergsten said that countries in deficit must solve more of their problems by "adjustment" (which means depressing their economies) rather than borrowing to cover their higher costs.
He said that the IMF is in a good, liquid position to meet rising loan demands, and already had eased its strict conditions for loan applicants. Bergsten hinted that at Hamburg there will be discussions of further IMF flexibility, and that "the IMF will consider borrowing from the stronger countries."
He noted that in the first quarter of this year, the IMF already had made loans of $2.47 billion to 26 countries, or four times the entire total of 1979. l
The World Bank, meanwhile, will be studying further its pilot program to move modestly away from project lending to balance-of-payments adjustment loans, more in line with IMF activities.
Bergsten offered little new insight on world economic prospects but indicated that the main subject of the discussion in Hamburg would be inflation, which he said would remain in "the low double digits" this year in the industrial world and higher in the poorer nations.
Economic growth in the richer nations was estimated at between 1 percent and 1.5 percent, but as much as 5 per cent in the developing world. Treasury Secretary G. William Miller and Federal Reserve Chairman Paul A. Volcker will lead the u.S. delegation.