Treasury Secretary James A. Baker III said today that he will launch a new U.S. initiative next week to create "a more integrated, broad-gauged approach" to the international debt problem.
He told reporters at a refueling stop here that "strains" in the world debt and economic situations have dictated a new "integrated" debt strategy that gives a greater role to the World Bank and creates a closer relationship between the bank and the International Monetary Fund.
Baker is en route to the annual meeting of the World Bank and IMF, which begins Sunday in Seoul.
Baker refused to give full details of the new U.S. proposal, which will be unveiled in his address to the plenary session of the bank and fund on Tuesday. But he explained that some change in the case-by-case strategy now followed has become necessary because "many debtors have been unable to achieve economic growth so as to get a substantial reduction in their debt burden."
The Treasury secretary emphasized that the IMF will continue to play a critical role in helping countries adjust to the financial burdens created in the last few years by high interest rates and world economic recession.
But in calling for a substantially larger role for the World Bank, Baker said that unintentionally the "IMF has been converted to a medium-term or a longer-term agency, which was not its original purpose."
Baker said the proposal should be distinguished from another plan he will submit to the IMF and World Bank over the weekend to create a $5 billion-plus joint funding arrangement. The proposal would pool $2.7 billion each from the IMF and the World Bank to give emergency relief to the most strapped of the Third World borrowers. The IMF contribution would come from repayments into a trust fund whose original capital came from the sale of IMF gold.
The two U.S. proposals -- one on broad strategy and the other on the $5.4 billion pool -- are likely to dominate the joint annual meeting in Seoul.
U.S. officials explained that Baker's broad initiative would push the World Bank and IMF to operate virtually as a single institution in making Third World loans.
They said that although several developing countries have reduced their ratios of debt to exports, continued progress depends on expansion of economic growth in the industrial world. Reports to be issued by the IMF over the weekend show a slippage of economic growth in the industrial nations from a fairly good year in 1984, with some doubt about the rest of this year and 1986.
Joining Baker at the annual meeting are Federal Reserve Chairman Paul A. Volcker and about 25 other top U.S. government economic officials. Baker is the U.S. governor for the bank and IMF and Volcker is the alternate governor.
Several U.S. representatives said the bank and IMF lending programs need to be integrated more fully. "We can't have the IMF go into a country, come back and take four weeks to develop a program, then have the bank go in and take an equal amount of time deciding what to do," one official said.
He acknowledged that there has been talk for a long time about World Bank-IMF cooperation, with little result. But the urgency of the economic situation, this official predicted, may help generate better results this time.
The official pointed out, and Baker agreed, that there is growing concern over the new economic threat from the Third World debt crisis, which could worsen if the performance of the richer industrial nations does not improve quickly.
Baker said his new initiative would build upon, rather than cast aside, the "case-by-case" approach to Third World debt problems that has been followed since 1982.
In discussing the performance of each institution, he said, "It was never envisioned that the IMF would be a long-term structural adjustment agency. Though perhaps there is a greater role for the World Bank."
He stressed that the issues spurring the proposal are economic rather than political, but agreed that "economic well-being leads to political stability." Others have expressed fears that unless new aid is pumped quickly into some of these debtor countries, especially in Latin America, painful political and cultural dislocations may result.
Baker said that upon landing in Seoul Saturday, he will reconvene the Group of Five finance ministers, who agreed at a New York meeting two weeks ago to coordinate efforts to push the dollar down. They will discuss a range of issues.