The World Bank and International Monetary Fund, prodded by the United States and other major powers, formally agreed yesterday to step up the pace and volume of their aid to countries affected by the Persian Gulf crisis. But there was no readily available tally on how much that aid would total.
Treasury Secretary Nicholas F. Brady, German Finance Minister Theo Waigel, as well as spokesmen for Third World nations, had urged the two international agencies to respond quickly, and where possible, with subsidized aid.
The IMF and World Bank have a variety of resources that they "can and should use flexibly," Waigel had told the Interim Committee -- the IMF's policy board -- on Sunday. The two institutions, he said, "should not spend too much time" discussing the issue.
Meanwhile, in separate appearances before the Interim and Development committees, Sheikh Mohammed Abalkhail, minister of finance and national economy of Saudi Arabia, predicted that oil prices will retreat in the face of boosted Saudi output.
"I would like to reiterate that Saudi Arabia is maintaining its long-standing policy, which aims at achieving stability in the oil market. ... Our oil production has been increased to maximum capacity," Abalkhail said.
But Jean-Claude Paye, director general of the Organization for Economic Cooperation and Development, noted that the price of oil hit $38 a barrel yesterday, and "the economic situation is fraught with uncertainty." He said that if hostilities should break out in the Persian Gulf, "no one can tell what the price of oil or the financial situation will be."
In separate communiques yesterday from the Interim Committee and the joint IMF-World Bank Development Committee, the two agencies agreed to speed up aid. The Interim Committee said it agreed that "the fund should respond on an expedited basis to present difficulties," using all of its various resources.
World Bank President Barber Conable said the agency is initiating a program of emergency loans and credits to the several Asian countries facing the burden of resettling workers returning from Iraq and Kuwait.
He also promised that the World Bank would accelerate and boost its loans to all member countries, developed and developing alike, that are affected by higher oil prices and the loss of commerce with Iraq or Kuwait. "Beyond the immediate months," Conable told the Development Committee, "new multilateral efforts may be required" to mobilize additional loans.
Both the IMF and the World Bank expect to pay special attention to the group of Eastern European countries caught in the economic crunch between Iraq and the United Nations embargo. $RAY; Invalid basket name FI/WIRE