The Reagan administration yesterday served notice on the World Bank that it may end its support of the bank's subsidized Third World aid program after the present U.S commitment expires in two years.
In his budget message to Congress for fiscal 1986, President Reagan said the administration "intends to honor existing commitments" to the International Development Association, as well as to the Asian Development Fund and the African Development Fund.
Reagan added, however, that, "In light of the current severe fiscal pressures, the administration is not budgeting at this time for the future replenishments of these particular institutions."
The bank's concessional program is carried on through the International Development Association, an affiliate that the United States helped launch in 1961.
Despite the inclusion of the phrase "at this time," World Bank officials yesterday took a sober view of prospects in view of the general attitude of the Reagan administration over the past four years.
"We take this seriously," said Senior Vice President Moeen Qureshi in an interview. "Signals by the United States have a tremendous impact on other countries, which understand that IDA is a burden-sharing program.
"If the United States took the position that it wouldn't contribute, it would be difficult to negotiate with other donor countries," he said. "It could spell the end of IDA."
In his budget, the president asked for $750 million as the second annual installment of a three-year pledge of $2.25 billion for the current IDA program, known in development-aid circles as "IDA-7" (for the seventh successive replenishment of the funds). The United States will owe one more $750 million payment in fiscal 1987.
In the normal course of events, preliminary discussions of an "IDA-8" program would begin sometime in calendar 1986.
The IDA program, the largest source of multilateral aid extended on concessional terms, has been the subject of sometimes bitter contention between the World Bank and the United States since the start of the Reagan administration.
The United States in the Reagan years has shown a preference for bilateral, rather than multilateral, assistance and, in any event, would rather rely on assistance through the private sector where possible. India has been a major recipient of IDA aid in the past, and China will be a major client in the future. The Reagan administration's view is that both should rely less on subsidized aid.
Although World Bank President A. W. Clausen and representatives of most of the donor governments had urged a minimum commitment of $12 billion over the three years of the IDA-7 program, former Treasury secretary Donald T. Regan insisted that a $9 billion program represented the largest total the United States thought wise and feasible.
That meant a maximum $2.25 billion commitment from the United States -- $750 million a year -- based on an approximate 25 percent share of the total. At the beginning of the IDA effort, the United States assumed 42 percent of the burden, but began to reduce its percentage after 1968.
In addition to insisting on an IDA-7 program below the level recommended by the Clausen management, the U.S. commitment to IDA-6, which had been budgeted by the Carter administration at about $1 billion a year, was effectively reduced by stretching out the payments over five fiscal years instead of three. Other nations increased their payments in this period, partially making up the U.S. shortfall.
As to the other soft-loan development banks mentioned in the budget, the impact of an end to U.S. support, while severe, would be less so than in the case of IDA, for which the United States is the single largest donor. The others are more in the nature of regional banks: Japan has the largest supportive role for the Asian Development Fund, and the European countries are the heaviest contributors to the African bank and fund.
In other parts of the international affairs sections of the fiscal 1986 budget, authority for the economic support fund, which is used for loans and grants to friendly governments, was reduced by $1 billion, in part due to deferral of any funding request for Israel.
And authority for the Agency for International Development, which carries out bilateral aid programs in Africa, Asia and Latin America, was cut from $2.3 billion to $2.1 billion, "consistent with fiscal restraint."