A top U.S. Treasury official said yesterday that commercial banks cannot be expected to extend loans to debtor nations at interest rates that are lower than the banks' cost of funds.

In a speech to the annual meeting of the Inter-American Development Bank in Costa Rica, Deputy Assistant Treasury Secretary James Conrow said that banks must be assured of at least some profits both in refinancing outstanding loans or making new funds available.

Conrow's statement appeared to be a direct challenge to major Latin American debtor countries, which last month said that banks might have to lend at a loss because the nations are having increasing difficulty paying their foreign debts and, at the same time, making essential investments and buying imports required to keep their economies functioning.

The countries, meeting in an emergency session to assess the impact of plunging oil prices on debtors like Mexico and Venezuela, said they would give support to a debtor nation that unilaterally reduced the interest it would pay because of a sudden adverse shift in economic conditions, like the oil price slide.

Late Monday, Mexican Finance Minister Jesus Silva Herzog told reporters at the Costa Rica meeting that Mexico would not seek below-cost financing from its bank lenders, but that other means must be sought to reduce the payment burden on Mexico.

Silva Herzog was not specific in what steps might be taken to reduce the debt-payment burden on Mexico -- which has seen the price of oil plummet from $26 to $13 a barrel in the last three months. He talked in vague terms about selling securities linked to the price of oil, but said he had no firm suggestions.

Mexico announced that its key commercial lenders agreed to postpone for six months a $950 million principal payment that was due next month. The extension was granted because of the decline in the price of oil, which accounts for 70 percent of Mexico's foreign earnings.

Although Mexico -- with nearly $97 billion in foreign debt -- is facing the most critical debt-repayment problem, nearly all debtor nation's are chafing under four years of economic austerity and slow economic growth. Because of a steady decline in the price of nearly all commodities, debtors are finding it difficult to pay their debts and buy imports and make essential investments.

U.S. Treasury Secretary James A. Baker III last October announced a U.S. initiative to make it easier for major debtor nations, most of them in Latin America, to grow -- calling on commercial banks to boost their lending by $20 billion over the next three years and multinational lending institutions like the World Bank and the IDB to increase their lending by $9 billion. Baker said debtors would have to make internal economic reforms in return for the increased lending.

Conrow, in his speech to the IDB, said that most commercial banks have indicated their willingness to participate in the Baker plan, but they need to have "favorable earnings on assets" if they are expected to put up new funds to help Latin American debtors grow.

Debtors say the Baker plan does not offer enough new money to solve their problems and that they are wary of adding to their $370 billion debt burden anyway. They are happy that the United States is playing a role in the nearly four-year-old debt crisis after arguing for years that the problem was mainly one between banks and debtor nations.

The World Bank said yesterday that it expects to approve more than $2.2 billion of loans to Latin American nations during the next five weeks -- loans that are designed to stimulate economic growth as called for in the Baker proposal.