World Bank President Barber Conable yesterday rejected any form of generalized debt relief for developing nations and said that the Baker debt initiative should remain the guiding principle in attempting to cope with the $1 trillion Third World debt problem.
"I am skeptical about any generalized debt relief, and I doubt that it would be possible to do it fairly," Conable said yesterday, commenting on a proposal made by Sen. Bill Bradley (D-N.J.) as an alternative to the plan proposed by Treasury Secretary James A. Baker III.
In an interview, Conable, a former Republican congressman from upstate New York who succeeded A. W. (Tom) Clausen as president of the bank on July 1, also: Revealed that the bank's net transfers of funds to borrowing nations this year will fall to about zero from about $2.4 billion in 1985. Net transfers are the amounts actually flowing to borrowing countries, after repayments of capital and interest are subtracted from disbursements. Rejected the notion that the bank's success should be measured by a guaranteed increase in loans, year after year. "I just don't want to shovel money out for the sake of shoveling money out," Conable said. The bank's sole guideline should be the need to make "quality loans" as needed by the developing world, he said. Although he would not describe the bank as "a bloated bureaucracy," as some critics have, he asserted that there will be some changes made. "I have the impression of somewhat uneven work loads, where some people work very hard, and some people who don't work as hard as perhaps they should," Conable said. Indicated he would take over direct responsibility for the World Bank's internal budget from its executive board, but promised that he would not wield "a meat ax."
The Baker initiative, launched by the treasury secretary in Seoul last October, calls for an additional $9 billion in loans by the World Bank and similar lending agencies over the next three years to 15 targeted nations, an extra $20 billion in commercial bank loans to 15 major borrowing countries and economic reforms among the borrowers.
Bradley's debt relief plan -- which Conable said the New Jersey senator had not yet discussed with him -- would slice the interest rate on loans to the 15 debtor nations by 3 percentage points and forgive 9 percent of the loan capital over a three-year period. This would reduce their debt burden by $57 billion and replace new commercial bank loans.
But Conable said Bradley's plan would require "massive government negotiations" and probably "a good deal of unhappiness as between those to whom you give relief and those you don't."
Conable refused to close the door on the use of debt relief in special circumstances, however. He said that he could consider debt relief in some areas of crisis where it may be desirable.
"Ultimately, debt is much more likely to be realistically controlled by people earning their way out of it than it is by the kind of political decisions involved in debt forgiveness," Conable said.
Recently, the Baker plan has been criticized in Congress and elsewhere as inadequate. But Conable gave the Baker plan his full endorsement.
"I think the Baker plan is a realistic assessment of the sort of thing that is needed, and it gives a very central role to the World Bank -- and for that I'm grateful," Conable said.
He noted the Baker plan recognizes that structural adjustment in the borrowing countries "is part of the wave of the future" that will lead to creating favorable conditions for economic growth in the borrowing countries.
"My impression is that it's the sort of thing we've got to do in an orderly world, and in a world where obligations mean something and where growth is the only ultimate antidote for poverty, much less for debt," he said.
In any event, the bank's chief priority is to stimulate economic development in the Third World, not to be the central manager of the debt problem, Conable emphasized.
"I'm distressed to find so many people focusing on the debt crisis as though that were the issue," he said. "The issue is, how do you deal with poverty? And how do you bring about the kind of sustained growth that will stabilize the very troubled part of the world?"
As for the debt crisis, Conable said he sees that as a joint task for the World Bank, the International Monetary Fund, the commercial banks, private investors such as multinational corporations, domestic investors in Third World countries, bilateral government lending agencies, export-import banks, and so on.
"I see the bank as having a very strong coordinating role to bring the various resources available in the world together to focus on these problems," he said.