Ecuador obtained two loans from the World Bank yesterday that Reagan administration and bank officials hailed as an example of the new directions anticipated under the "Baker initiative" to alleviate debt problems in the Third World.
The bank announced a $100 million loan to support reforms of Ecuador's agricultural economy, and a $6 million loan to improve the management of public expenditures. In addition, negotiations immediately began on a third major loan to support the industrial sector.
"We see this as the first of a series of similar loans to other countries ," a World Bank official said. "If you were looking for an idea of what the bank is expected to do under the Baker plan, this is it."
Assistant Treasury Secretary David Mulford agreed that the $100 million agriculture loan to Ecuador "is a perfect showpiece" for the Baker initiative. He said that other World Bank loans are forthcoming to major borrowing nations such as Mexico and Argentina, as well as to smaller debtors such as Ecuador, Columbia and Uruguay.
Treasury Secretary James A. Baker III had proposed at the World Bank/International Monetary Fund annual meeting in October that the multilateral development banks boost their loans to 15 major debtor nations by 50 percent, to a total of $9 billion, in the next three years.
The Baker strategy called for these sectoral loans to stimulate growth in those borrowing countries that move toward market-oriented policies. At the same time, he called on the commercial banks involved in these countries to add $20 billion in new loans.
World Bank officials acknowledged that negotiations with Ecuador had begun before the Baker speech. Nonetheless, it is the first major sectoral loan for a debtor nation -- as distinguished from a project loan -- to be announced by the bank since then, and stresses the precise goals outlined by Baker.
Thus, the bank noted that Ecuador is undertaking "a far-reaching program of growth-oriented adjustment" that will generate the incentive for the bank to undertake a much bigger loan program in that country. The $100 million will finance fertilizer, machinery and equipment at a time when Ecuador has agreed to liberalize prices, cut tariffs, and reduce the government's role in the total economy, according to a bank statement.