Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, May 8, 1990 TAG: 9005080605
SECTION: NATIONAL/INTERNATIONAL PAGE: A/3 EDITION: EVENING
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
At the insistence of the United States, the IMF's Interim Committee linked the $60 billion increase in member nations' capital contributions, called quotas, with a plan to pressure 11 poor countries who are $4 billion behind on their loan payments.
Debtor countries had opposed the link, but U.S. officials believed it was crucial to getting approval for the quota increase from Congress, where many members are skeptical of foreign aid.
In exchange for the link, the United States agreed to begin consideration of a quota increase in 1993, two years earlier than it sought originally.
"Despite reservations that a number of members had on certain individual elements of the package, we recognize this was a consensus. . . . Everybody had to give in order to achieve a compromise," said Canadian Finance Minister Michael Wilson, chairman of the 22-member Interim Committee.
The quota change, which must be approved before the end of 1991 by nations representing 85 percent of the fund's voting power, will raise the fund's resources from $120 billion to $180 billion.
The plan aimed at delinquent countries employs a carrot-and-stick approach.
Delinquent countries that agree to economic reforms will be eligible for money from a special fund within the IMF. However, nations in arrears could lose their voting rights. Also, the agency could sell 3 million ounces of gold, roughly equivalent to the members' original contributions, to meet the obligations of defaulting debtors.
The 11 nations in arrears are the Sudan, Zambia, Peru, Costa Rica, Honduras, Guyana, Somalia, Sierra Leone, Cambodia, Vietnam and Panama.
by CNB