World Bank President A.W. Clausen yesterday endorsed an expansion of the lending capacity of the International Development Association from $12 billion to as much as $19 billion over its next three-year term beginning in 1984 despite clear pressure from the United States to limit the growth of such subsidized aid to the Third World.
At the conclusion of the World Bank-International Monetary Fund meeting, Clausen told a press conference that the bank "will argue" with 33 rich donor nations for "appropriate funding" of the next, or 7th, replenishment of IDA funds.
The IDA is the soft-loan affiliate of the World Bank, which makes loans on a 50-year term on a no-interest basis, with only a service charge of less than one percent.
Meanwhile, IMF Managing Director Jacques de Larosiere said there has been no change in IMF lending policies in response to U.S. pressure for stricter conditions, but acknowledged that "temptations to go into easy financing must be resisted." He noted, with satisfaction, that current IMF policies won unanimous endorsement at this meeting. Other officials suggested that the IMF management actually welcomed the U.S. pressure to be as strict as possible as offsetting demands from poor nations for more liberal loan conditions.
On other matters at the conference:
The United States won a victory by defeating the effort of Arab nations to bring to the convention floor the question of admission of the Palestine Liberation Organization as a member. The United States also knocked down a related effort by the Arab countries to refer the question to the International Court of Justice at the Hague. Instead, the whole question is referred back to the executive boards of the two institutions, and thus the question of PLO admission is put off until next year's sessions in Toronto.
The question of a $5.6 billion IMF loan to India was discussed privately and intensively, but no decisions were reached. Despite American questions about the wisdom of a loan of this size, the advance to India has strong support, not only within the IMF, but within the World Bank.
Bank president Clausen said that, merely to keep pace wih inflation, the 7th IDA replenishment of funds would have to grow to $16 billion from $12 billion, the level of the 6th replenishment, which covers the period 1981-83. "There has to be a growth in real terms; whether it is 3, 4, or 5 percent is difficult to say," Clausen told reporters.
He said that, as things stand, "there is still a cloud" over IDA-6 because the United States has stretched out what was to have been a three-year, $3.24 billion commitment over four years.
Clausen said "it is pretty clear" that donor countries will not give an IDA-7 all that it needs, and therefore the IDA may have to borrow from the rich nations on a concessional basis "to bridge the gap." He said this "would relieve the pressure" on the strained budgets of the donor countries.
He later told a reporter that IDA-7 might collect $13 billion or $14 billion on the usual basis over a three-year period, and get the rest on borrowed concessional terms. He said this might raise the IDA interest rate or service charge to about 4 percent, "which would still be pretty cheap for concessional money."
Clausen said that, in his view, "There is no alternative to an IDA-7. There must be concessional aid given to the Third World countries." He would not put an exact figure on the probable size of IDA-7, but said "we have to do the best we can, the more the merrier."
This was not the first time at the annual meetings that Clausen had put distance between himself and American views. He agrees with the Reagan administration on the need for greater involvement of the private sector in the development-aid process. But he has displayed a greater sympathy with the Third World's plight, and even refused today to concede that, despite American opposition, an energy affiliate for the World Bank is dead.
He also has resisted the most extreme pressures from the United States for "graduation" of client countries from the IDA soft-loan window to the regular rate, or hard window, of the bank itself, and from the hard window to the private sector.