International Monetary Fund Managing Director Jacques de Larosiere said yesterday that the compromise agreement on IMF lending limits reached at 1:20 a.m. Monday would allow the IMF to continue on "a firm basis," and encourage commercial banks to maintain their activities in the Third World.
After a day-long deadlock on Sunday, the IMF's Interim Committee agreed to a two-tiered limitation on access by borrowing nations to IMF funds--either 102 percent or 125 percent of annual quotas, the higher figure being allowed countries determined, on a case-by-case basis, to have serious balance of payments problems. These figures apply for 1984, for a maximum period of three years.
Interim Committee Chairman Willy De Clerc said that the compromise of "a very delicate and complex matter is a very positive one. There are no losers, but the international community is the winner." De Clerc added: "All countries will potentially have larger access" than they do now.
But Treasury Secretary Donald T. Regan insisted that most countries will continue, in 1984, to be eligible for just about the same dollar-borrowing totals as at present, and added, "I would be shocked" if as many as 20 countries qualified for the 125 percent allowance.
Regan told reporters he was happy with the agreement. "We achieved our No. 1 objective--102 percent is now the norm, a ceiling on most IMF 'enlarged access' loans in 1984, with exceptions for small countries."
He rejected the view of major Third World countries that they had suffered "a major defeat," because as much IMF money would flow out in 1984 as in 1983. "But at least we have shut the door," Regan contended.
The three-year limits would be 306 or 375 percent of new quotas, compared with 450 percent of the old quotas. But because the new quotas are to be 48 percent larger than the old ones, 306 percent would be about equal to the 450 percent on the old basis. But 375 percent would be larger.
But both de Larosiere and De Clerc went out of their way to stress a paragraph of the communique that states unequivocally that the access limits "should not be regarded as targets." In the same way that the IMF executive board will retain discretion to exceed the 125 percent limit, on occasion, it will not automatically allow a country that needs more than 102 percent to go to 125 percent.
Regan admitted that he failed to achieve comparable limits on so-called Compensatory Financing Facility loans, a special category designed to compensate exporters for sudden losses of earnings on their commodity trade. He told a press conference that the IMF has made $3 billion of such loans through August, with the probablity that the annual rate is running about $5 billion.
"There is no conditionality for these loans--they get them as a matter of right," Regan said.
"They the IMF are going to get $30- or $31 billion in new quota deposits next year, but only about $15 billion of that is usable that is, hard currencies used for loans . They like to keep $6 billion in reserves, so if the CFF takes $5 billion of that, how much is left? And wouldn't it be ironic if CFF money started to pour out to the OPEC nations?"
When India, China, African nations and other large CFF borrowers objected to installation of any kind of ceiling on CFF loans, the Interim Committee referred the matter to the IMF executive board for decision.
Another concession by the United States, in exchange for the 102 percent basic borrowing limit for 1984, was abandonment of assurance that access would be phased down in 1985 and in later years. On Saturday, the Group of 10 rich nations had endorsed Regan's stand and recommended that the enlarged access figures be gradually phased out.
But the full Interim Committee, reflecting the fears of the poorer nations that this would be too much to decide now, merely said that access limits beginning in 1985 will be reviewed annually, depending on the availability of IMF resources and borrowing demands.
Moreover, according to the text of the IMF Interim Communique, available yesterday for the first time, an enlarged access policy could be extended, as well as phased out or terminated, depending on circumstances.
Officials had been desperately concerned throughout a tense struggle Sunday that the deadlock between a restrictive American position, and the desire of most of the other nations to take a more liberal stance, could not be resolved.
In that case, the "enlarged" access would have lapsed, and borrowing limits would automatically have reverted to 100 percent and 300 percent over three years, as soon as the current quota enlargement exercise is completed.
In effect, that would have meant an automatic reduction in loan allowance for almost all countries.
Regan yesterday rejected the characterization of the American position as "tough," saying that it should be described as "realistic," in view of the limitations being placed on IMF resources. He said he had no way of measuring the impact of the compromise on Congress, as it debates the $8.4 billion appropriation.