The developing nations of the International Monetary Fund, said today that the policies being pursued by the rich nations are depressing the world economy.
Convening here as the Group of 24 in advance of meetings of the policy-making IMF Interim Committee and of the Joint IMF-World Bank Development Committee later this week, the poor nations attacked high interest rates and excessive budget deficits, and called for a change in the mix of the rich world's macroeconomic policies.
The demands by the poor nations were pretty much in line with their expressions of discontent over the years, and are expected to meet pretty much the same fate as in the past: a response later this week that there is sympathy for the distress in the Third World, but little the richer nations can do to alleviate the problem in view of the growing pinch of their own financial resources.
But there was one new element in the group's demands. With Argentina in attendance here, the Group of 24 discussed the Falkland Islands crisis in a somewhat muted statement noting the "serious concern of several ministers over the recent use of measures restricting the flow of trade and the blocking of financial transactions with the aim of seeking solutions to political issues." But contrary to the advance billing, the Group of 24 communique did not say that freezing Argentine assets threatens the whole international financial system, nor did it call for any specific action. The communique said merely that those ministers who raised the issue--presumably Latin Americans--"asked" for removal of the restrictions.
The Group of 24's chairman for this year is Victor Bruce, governor of the Central Bank of Trinidad and Tobago. The session was attended by World Bank President A.W. Clausen and IMF Managing Director Jacques de Larosiere. Wang Bingpian, minister of finance of the Peoples Republic of China, was a special guest.
The Group of 24 communique said the poor nations would have trouble financing their international deficits, which are forecast by the IMF to rise from $39 billion in 1978 to $100 billion this year at a time when rising interest rates will boost the cost of servicing the debt.
They called for "substantial" increases in the IMF's lending resources through increased national quotas--deposits--a subject that will come up in a preliminary way at the Interim Committee Wednesday and Thursday. U.S. Treasury Undersecretary Beryl Sprinkel already has put these sessions on notice that the United States will use its influence to keep any quota increases on the modest side.
The Group of 24 also again called for an annual allocation of the IMF's international currency, special drawing rights. Although last year's annual meeting voted against it, the Group of 24 today urged an annual distribution of 12 billion SDRs, which is equivalent to $15 billion. That appears to be a dead issue for these sessions, however.
The ministers, noting American pressure on the IMF to toughen its lending conditions, deplored what they said was already "a hardening of fund conditionality." They criticized the IMF for establishing "preconditions" before lending money on new programs.
Turning to World Bank affairs, the Group of 24 said that the subsidized loans made through the bank's soft-loan window, the International Development Association, should be continued in full force.
There was a clear and sharp criticism of the United States--referred to only as "a major donor country"--for failing to meet its commitments to the current IDA program.