ATTITUDES seem to be shifting in regard to the Latin American countries' debts. Latin governments are increasingly warning their creditors that the repayment programs are going to have to give greater promise of economic growth. The sense of political strain among the debtors is rising. Here in the United States the administration promises to offer a new proposal at the annual meetings of the World Bank and the International Monetary Fund, opening in 10 days at Seoul. It will apparently involve more and faster lending by the World Bank, a useful contribution to Latin recovery, though in itself hardly sufficient.
The Latin countries are showing real strength in carrying their burdens. But their progress has been accomplished at a substantial cost. Incomes per capita currently average about 10 percent lower than at the beginning of the decade before the debt crisis began. And while economic growth is currently positive, it is still barely equal to the increase in population in most of these countries. That was true in Mexico even before the earthquake. A future in which incomes remain more or less flat indefinitely, at a level well below that of the recent past, is not a promising setting for stable democratic politics.
The world -- meaning creditors and debtors together, both public and private -- can do better than that. These debts will be the central issue at Seoul. It is not in the nature of these unwieldy meetings to produce precise plans. But a sense of movement can be established. The World Bank has been moving since last spring to accelerate its lending. With its present capital, it can accelerate further -- for a year or two. Then it will need more capital from its member governments. The others will follow the United States. Will the administration and Congress provide further appropriations for the bank?
There's another and more important thing that the United States needs to undertake. As long as the United States is sucking up $120 billion a year of other countries' investment capital to finance its trade deficit, and pulling capital out of Latin America instead of pouring it in, the Latins are going to have great trouble carrying their debts.
The Latins have responsibilities as well. They cannot expect to get healthy growth going amidst roaring inflation. Brazil's is now over 200 percent a year. And trade protectionism, a kind of political patronage for factory owners, is as harmful to Latin economies as to any other economies.
There are useful bargains to be struck between the lenders and the borrowers. The World Bank is a valuable and highly competent arbiter. Seoul is the place to move that bargaining forward.