The White House has told the Export-Inport Bank to put a lid on its budget over the next four years, despite repeated statements by the Carter Administration that it planned to spur exports by liberal financing.
According to the current issue of Ex-imbank Report, a weekly newsletter, the policy was stated in a pointedly worded letter to Ex-Im Bank Chairman John Moore from President Carter's budget director, James McIntyre.
"The bank has been ordered by OMB (Office of Management and Budget) to hold its budget for the next four years at levels which may result in an actual decrease after adjustment for inflation," Eximbank Report said.
Sources close to the bank say that the administration's correspondence was quietly passed along to exporters, who are calling administration officials to complain about the new policy.
The disclosure comes at an embarrassing moment for the administration.
In Paris this week, U.S. negotiators are meeting with European government representatives to seek agreement on export interest rates.
The Americans have long complained hat some European governments, particularly the French, have been subsidizing exports, especially aircraft, by cutting interest rates on loans to foreign buyers.
The Ex-Im Bank, which supports U.S. exports by lending money to foreign buyers of American products on favorable terms, has lowered interest rates on those loans to well below 10 percent to match the French and others.
At the Paris meetings, the Americans hoped to get the Europeans to agree to a more sensible interest rate policy, especially with rates rising worldwide. But the fear is that, with word out that Ex-Im Bank's budget has been curtailed, the Americans will be negotiating with a weak hand.
The exchange between McIntyre and Ex-Im Bank's Moore began when the budget chief set the limits for directing lending by the bank through fiscal 1985. The limits ranged from $5.2 billion in 1982 up to $6.9 billion in 1985. 1
According to Eximbank Report, the bank immediately appealed the decision. On Aug. 11, McIntyre wrote again to Moore saying he had taken his case to President Carter.
"We outlined to the President the budgetary problems faced by Ex-Im Bank in 1980-1981, including your estimate that, under current policies, demand for direct loans and guarantees will be as much as $1.5 billion above the approved budget availabilities for the two-year period."