Preliminary sessions for the joint annual meeting of the World Bank and International Monetary Fund got under way here yesterday against an economic outlook that representatives of the bloc of poor nations were calling "frightening."
Deputies of the Intergovernmental Group of Twenty-Four met yesterday under the chairmanship of G.O. Nwanko, executive director of the Nigerian Central Bank, to prepare an agenda for discussion by the G-24 ministers today.
The Ministerial Group of the G-24, headed by Nigerian Minister of Finance S. M. Eassang, is expected to put forward a series of demands for more generous aid from both the IMF and the World Bank, including an enlarged new issue of special drawing rights, the international monetary asset created by the IMF for distribution to its 140 members.
Meanwhile, the question of admission of Palestine Liberation Organization representatives as observers during the meeting is still on the tentative agenda and could trigger a floor fight. Some representatives of the Arab bloc, which wants the PLO in and of the non-Arab bloc, which wants the PLO out, are seeking ways of avoiding a confrontation. Meanwhile, other observer groups that usually attend will not be able to sit in on the joint meeting.
The poorer nations represented by the G-24 not only want the present annual distribution of 4 billion SDRs doubled to 8 billion (roughly the equivalent of an increase from $5.25 to $10.50 billion) but continue to urge that SDR creation be linked to development needs, so that the less affluent countries would get a better proportional share.
The G-24 proposal to double the allocation of SDRs for a five-year span beginning in 1982 was recommended to the Interim Committee as its meeting in Hamburg, West Germany, last April.
Since then, it was learned, the IMF staff had recommended to the Executive Directors that SDRs be issued at a rate of 6 to 10 billion SDRs a year beginning in 1982, with a supplemental allocation of 3 billion SDR for 1981, making 7 billion in all next year.
This was based on the staff's conclusion that the world economic situation had deteriorated "sharply" since the end of 1978. But although the IMF staff recommendations were supported strongly by the bloc of poor nations on the executive board, the industrial bloc that holds the controlling voting power rejected the idea of an additional 3 billion SDR for 1981 as inflationary.
As to the level of SDR allocation for the period beginning in 1982, the executive directors decided that there would be time enough to make that decision at the Interim Committee meeting in April 1981. IMF Managing Director Jacques de Larosiere has indicated in private conversations with G-24 representatives that he personally is sympathetic to the idea of a larger issue later on.
In general, representatives of the G-24 appear to welcome the new IMF initiatives that provide both enlarged access to Fund resources, lending over a longer period of time, and greater IMF-Bank cooperative efforts. But they stress, as do the industrial nations, the concern that, while most of them will "get by" in 1980, the situation for 1981 and beyond is highly uncertain.
Economic projections by the IMF show that in the aggregate, the current account (goods and services) deficits of the poor countries will jump from $56 billion in 1979 to $76 billion in 1980, and to $80 billion next year.
Triggered by the vast boost in oil prices engineered by the oil cartel since the end of 1978, the consumer inflation rate in those less developed nations that import oil has risen from 28.5 percent in 1979 to an estimated 35.1 percent this year. Projections show a drop -- assuming no further major oil increases -- to a consumer inflation rate of 26.4 percent in 1981.
There may be some sentiment within the bloc of poor nations to escalate criticism of OPEC for indiscriminate boosting of oil prices.