Andre de Lattre, former deputy governor of the Bank of France, has been named by World Bank President A. W. Clausen to a newly created, full-time post as the bank's special representative to oversee critical international negotiations on the new round of funding for the International Development Association.
The IDA is the Bank's subsidized-loan affiliate for the poorest member nations. It has been making 50-year no-interest loans, with just a small service fee. But IDA is running short of money, primarily because of a lagging and reduced contribution by the United States.
The appointment of De Lattre, effective Jan. 1, 1983, symbolizes the importance the Bank attaches to the process of re-stocking IDA funds for the period beginning July 1, 1984, the period known in World Bank jargon as the "7th replenishment," or IDA-7. Officials anticipate that the negotiations, at a time of continuing world recession, will be exceedingly delicate, and must be conducted at the highest political level by someone able to devote full time to the problem.
De Lattre will report to Moeen Qureshi, World Bank senior vice president for finance, who has been chairing the IDA deputies' technical sessions until now. Well known in European and American banking circles, De Lattre is expected to conduct bilateral talks with Treasury Secretary Donald T. Regan, and other donor-country finance ministers, and chair the deputies' sessions.
After a deputies' session here last week, the first of a series dealing with IDA-7, Qureshi said the talks had been "most positive." The bank's hope is to complete the negotiations in time for the late fall 1983 annual meeting of the bank and International Monetary Fund in Washington.
Qureshi issued a statement saying that every delegation, including the United States, had stressed the firm commitment of their governments to a strong IDA "as the major multilateral institution providing concessional assistance to the very poorest nations." Assistant Treasury Secretary Marc Leland represented the United States.
But at this past week's meeting, the deputies avoided serious discussion of the size of IDA-7. Clausen had indicated at the Toronto annual meeting in September that a reasonable figure might be $18 billion, up from the $12 billion originally scheduled for IDA-6. Even though this would be a real increase of 20 percent, which would allow IDA help for help to China--which wasn't a member when IDA-6 was formulated, and for the greater needs of sub-Saharan Africa.
The total figure -- and the burden-sharing among nations -- will be among the delicate problems for De Lattre to negotiate. Many countries think Clausen will be lucky if IDA-7 stays even at $12 billion -- even though anything below $15 billion amounts to a reduction in real terms.
At the deputies' session, all donor countries cited their own budget and exchange-rate problems, and said these would have to be balanced against the admitted great needs of the borrowers.
Although Clausen had said at Toronto that IDA-7 would have to assume a "new shape," including the possibility that the no-interest rule would have to be foregone, the deputies' meeting this week also indicated a reluctance to borrow money to fill up the IDA pot, which would require the imposition of at least moderate interest charges on IDA borrowers.
Tactically, the deputies suggested that the initial effort should be concentrated on getting the largest volume of grant money possible, and then borrowing as a final resort. This question will be pursued again at an early February meeting in Paris, at which time De Lattre will take over the chairmanship of the deputies' group.
Leland told last week's meeting that the Reagan administration would try to speed up the passage through Congress of final appropriations for its $3.2 billion package for IDA-6, which originally had been budgeted to be finished by the end of fiscal 1983, but now has been stretched through fiscal 1984. The United States has delivered only $1.2 billion of the $3.2 billion so far. The administration has asked Congress for $945 million this year -- not yet appropriated, and will have to ask for almost an additional $1.1 billion in the budget it send to Congress next January.
In effect, this represents a 35 percent cut in U.S. contributions for IDA-6, and since other nations were entitled to slice their shares on a pro rata basis, IDA in 1981 suffered a shortfall in total funds from $4.2 billion to $2.8 billion.