A sentence in Sunday's story on the Group of Seven meeting omitted key words. It should have read: In another surprise move, the G- 7 specifically and brusquely told Brazil to resolve the issue of its overdue payments to commercial banks before expecting to get a new loan from the IMF. (Published 9/25/90)

Despite the twin risks of inflation and lower economic growth triggered by the Persian Gulf crisis, the financial leaders of the seven largest industrial nations said yesterday that recession in their countries would be averted, and the Group of Seven's "expansion is expected to continue next year."

But they conceded that many smaller countries are extremely vulnerable to the economic consequences of higher oil prices, and called on the World Bank and International Monetary Fund to step up their efforts to help them.

After a day-long meeting at Blair House -- a preliminary to the meetings today and next week of the IMF and World Bank -- the ministers conceded that avoiding the twin risks of inflation and low economic growth would require a delicate balancing of economic policies in their own countries.

The United States, Japan, Germany, France, Britain, Italy and Canada make up the G-7.

The communique by the G-7 finance ministers and central bankers stressed that the financial markets, including the exchange markets, had reacted to the gulf crisis in "orderly" fashion, despite global uncertainties. Treasury Secretary Nicholas F. Brady stressed that the financial leaders "had tried to convey a sense of stability, which is the case."

Declines in stock markets, Brady said, have been no worse than expected, "and all in all, there has not been a precipitate decline in stocks, bonds or currency markets." Exchange rates, the communique said, "were now broadly in line with continued adjustment of external balances."

The meaning of the latter phrase is that the major powers, especially the United States and Japan, are satisfied that the yen has appreciated about enough, and the dollar has depreciated sufficiently -- and all the powers pledged to continue the economic coordination process aimed at keeping the present balance in exchange rates.

On the question of economic and financial strategy needed to adjust to the risks posed by higher oil prices, the communique said that the finance ministers and central bank governors "consider that stability-oriented monetary policies and sound fiscal policies constitute the correct policy response."

Sources said that Brady, who had been pressuring the Federal Reserve Board to lower interest rates prior to the eruption of the gulf crisis, had resisted a push from European members for a flat statement that it now would be bad policy to respond to the crisis with lower interest rates.

Instead, the communique used the oblique phrase "stability-oriented" moves, which suggests that attention will be given to inflation control. But it enabled Brady, at a press conference, to insist that he would stick to his prior policy of urging the Fed to lower interest rates, in conjunction with a budget agreement to reduce the federal deficit.

"It doesn't change anything I've said before {about the Fed}," Brady told reporters. He insisted that the two risks mentioned in the communique were of equal importance, "and government's job is to manage between those two risks."

The communique "encouraged the United States to bring the budget summit to a prompt and successful conclusion in order to make meaningful and lasting reductions in the fiscal deficit." Brady said "that was a strong statement on their part."

The G-7 communique endorsed the current efforts of the World Bank and IMF to pump financial help into affected Third World countries, especially for the so-called "front-line" states of Jordan, Turkey and Egypt, caught in the economic crunch resulting from the worldwide economic embargo of Iraq. But the G-7, in an unexpected move, urged both institutions to expedite the use of their subsidized resources in this crisis.

In another surprise move, the G-7 specifically and brusquely told Brazil "to resolve" the issue of its overdue interest payments to the IMF before expecting to get a new loan from the agency. This represents a victory of sorts for commercial banks that have complained the IMF has been ignoring their complaints on this issue.

Meanwhile, the Group of 24, representing Third World member nations of the IMF, said in a communique after a two-day meeting that they viewed the Persian Gulf crisis as "temporary" and "reversible." Nonetheless, the G-24 -- chaired by S.M.H. Adeli, the central bank governor of Iran -- called, as did the G-7, for additional subsidized help for the nations most affected.

Adeli denied that there were any differences in the G-24 meeting between oil-importing countries -- which feel the negative impact of higher oil prices -- and those countries exporting oil, "because even the oil-producing countries are affected in other ways by this crisis. They are not very happy, they hope to see {a} normal {situation} as soon as possible."

The Iranian governor also said the G-24 had not been informed of any proposal by IMF Managing Director Michel Camdessus to solicit contributions from the better-off oil producers for a fund that could be parceled out among the hard-hit importing nations. Camdessus had said Thursday that such a proposal, on a voluntary basis, was under consideration.