World Bank scouts new sources of loan funds
The World Bank is knocking on some new doors. It is trying to drum up support for an increase in its lending to developing nations which have been hurt by the worldwide recession and by a reduction in commercial bank lending.
In seeking assistance, bank officials have gone beyond the customary visits with bankers and finance ministers and have started calling on church officials. Top bank officers recently met with Pope John Paul II and with the Archbishop of Canterbury, seeking help to build interest in lending to poorer nations. All of the countries that borrow from the bank have per capita incomes of less than $2, 650.
''We've made our plea to them unabashedly,'' says Munir P. Benjek, the bank's vice-president for external relations. ''If ever there was a field destined for church interest, it is . . . what you do about poor people in the world.''
The pitch for support comes amid a flurry of meetings of top Western economic officials, who will be together five times in the next two months. One of the topics they will address will be what additional steps, if any, the industrialized countries should take to assist developing nations. Last week the joint development committee of the World Bank and the International Monetary Fund asked the bank to develop proposals for increasing its lending and for boosting the institution's capital base, or lending resources, which are contributed by industrialized nations.
In the 12-month period ending in June, the bank will lend $11.2 billion. The largest share of its lending goes to finance investments in agriculture and energy projects, although it also helps countries build dams, harbors, and other so-called infrastructure projects.
World Bank president A. W. Clausen said the bank would need ''at least'' an additional $40 billion by 1985 to continue expanding its loans to developing nations.
But the richer countries are coping with budget problems and are generally not eager to provide a massive infusion of funds. ''The world is characterized by some degree of aid fatigue,'' notes Anne O. Krueger, the bank's vice-president for economics and research.
And after a meeting of finance ministers from industrial nations last week, US Treasury Secretary Donald Regan said that ''most of us would discourage Mr. Clausen from expecting that kind of money.'' Development officials argue that it is in the self-interest of the industrialzed nations to ensure that the economically developing nations grow, since they purchase supplies from more developed economies.
''Developing nations can and will act as kind of a locomotive for the rest of the global economy,'' argues Shahid Javed Burki, the bank's director of international relations.
While the health of Western economies has a major effect on developing nations, the link works in the opposite direction as well, Mr. Burki asserts. For every 1 percent increase in developing-country output, the output of developed nations grows by one-quarter of 1 percent, he says.
As a result of the recession and falling commodity prices, however, ''we are going through a period in which developing countries' [economies] are not growing,'' says Nicholas C. Hope, chief of the bank's external debt division. ''They haven't grown for two years.''
A continued recovery in industrialized nations is needed if developing economies are to be able to rebound. ''Unless we get a substantial recovery in the industrialized world, developing-country prospects in 1984 do not look good.''
World Bank economists are not terribly optimistic that the recovery in the West will continue long enough to help developing nations. And if industrial nations add to existing protectionist barriers, ''recovery won't mean anything in the developing countries,'' since they would not be able to expand sales, contends Nicholas Ardito-Barletta, the bank's vice-president for Latin America and the Caribbean.
The forthcoming meetins among Western finance minister, including next week's meeting of the Organization for Economic Cooperation and Development and a joint meeting of trade and finance minister, may lead to some new action to deal with protectionism.
In the meantime, developing nations are struggling to cope with a much tougher borrowing climate. Last year, says Mr. Hope, commercial bank lending to developing countries probably declined, after growing at an annual rate of 39 percent during the 1970s. The commercial banks cut back on lending after several countries experienced problems repaying debts in the wake of depressed export earnings.
''In the last two or three years countries have been conducting a holding operation, borrowing to support the service of existing debt,'' Mr. Hope says.