Reagan touts capitalism to IMF
President Reagan has taken the free-enterprise gospel to the world's top central bankers and economic and finance ministers, Monitor business editor David Francis reports.
In an address to the joint annual meeting of the World Bank and the International Monetary Fund, Mr. Reagan praised the virtues of capitalism. (Some of the high officials listening could undoubtedly muster similar enthusiasm for socialism, and in a few cases, communism.)
He also indicated a need for firm economic policies in both the industrial and developing nations. "The most important contribution any country can make to world development is to pursue sound economic policies at home. . . . Unless a nation puts its own financial and economic house in order, no amount of aid will produce progress."
Reagan got considerable support for both positions from the sister institutions. The World Bank's new president, A. W. Clausen, echoed Reagan's emphasis on the use of private enterprise in the economic development of poor countries. In fact, he suggested the creation of a "unilateral investment insurance mechanism" to overcome the reluctance of the private sector to invest in developing countries and to provide some security against certain kinds of political risk.
IMF managing director Jacques de Larosiere gave solid backing to the stern economic measures of the Reagan administration and of some other industrial nations: ". . . The industrial countries have the growth of their monetary aggregates under better control today. Nevertheless, the burden being placed on monetary policy is undoubtedly excessive. To be effective, monetary policy must be supported by a coherent, sound fiscal policy." That's the same basic argument the Reagan administration has been using in seeking further spending cuts to reduce budget deficits.