World Bank President A.W. Clausen, foreshadowing an almost certain policy confrontation with the United States, warned the world's rich nations yesterday not to cut concessional aid to poor nations.
Clausen's warning came as the Reagan administration prepared to issue its long-awaited report on multilateral lending institutions, which is expected to call for an across-the-board reduction in subsidized aid.
The report, prepared by the Treasury for release today, is expected to call not only for a reduction in subsidized aid through the bank's soft-loan affiliate, the International Development Association (IDA), but also for reductions by the Inter-American Development Bank and similar institutions.
The Reagan administration wishes to place more emphasis on the role of the private sector in development aid and to reduce the drain on the federal budget for the multilateral institutions.
The Treasury report also will call for a more stringent "graduation" process at the World Bank group by which countries are moved more quickly out of their status as clients of the IDA to become customers at full loan rates at the bank itself, and ultimately away from any government assistance and into the private sector. The U.S. policy, were it to be adopted, would push some developing countries--notably in Latin America--out of the subsidized loan arena.
On the other hand, the Treasury report rejects some of the strongest criticism of the World Bank offered by conservative organizations such as the Heritage Foundation. It does not advocate--as had an earlier draft--phasing out callable capital for the World Bank, but questions the wisdom of actually paying in 7 1/2 percent of that capital as is presently the case.
Clausen said in a speech to a group of foreign diplomats at the State Department that the bank's future borrowing capacity could be ensured by "further general capital increases with again a like, modest, paid-in portion from our member governments and with the bulk of the funding coming in the form of callable capital."
Clausen said that "we do not believe a change in the gearing ratio is warranted," which he said "might undermine" the bank's relationships with its bondholders. The gearing ratio now limits the bank's lending, dollar-for-dollar, to its capital total. Clausen at one time considered a more liberal ratio originally proposed by former president Robert S. McNamara as a way of expanding the bank's lending potential.
Clausen, who did not mention the report expected today, nonetheless took firm positions on issues likely to be contested by the Treasury. In respect to the levels of IDA lending, he complained that, contrary to U.S. assurance that it is meeting its present commitments, there has been "a shortfall in the United States' contributions this year that has triggered similar cuts from other donor nations."
He said that "we must keep IDA at realistic levels if the poorest nations are to be brought fully onto the international economic and political stage." The fiscal 1982 U.S. contribution to the IDA was to have been $1.08 billion, but it has been cut to $700 million.
That triggered cuts from other donor nations, so that the total IDA program for fiscal 1982 has been reduced from $4.1 billion to $2.6 billion. "This is a heavy blow, without doubt," Clausen said.
It is been rumored for a long time that the Treasury would recommend cutting the annual U.S. contribution to the IDA from roughly the $1 billion mark to $750 million. Sources said yesterday that the Treasury report speaks of reductions in all concessional aid lumped together that implies an IDA cut of about that magnitude.
On the critical issue of "graduation," Clausen said yesterday that "we see the process as an evolutionary one," implying that poor nations should not be pushed out of IDA as a way of saving money.