Top Banks to Study Baker’s Plan on Debt : But No Commitment Given on $29 Billion More for Third World

A group of 58 major commercial banks from around the world gave general support Tuesday to a Reagan Administration proposal that they help ease the international debt crisis by increasing loans to Third World debtors.

But the banks stopped short of committing themselves to coming up with another $29 billion in the next three years, as called for in the proposal advanced Oct. 8 by Treasury Secretary James A. Baker III.

In a statement issued through the Institute of International Finance, a Washington-based organization set up by the banks to monitor the international debt situation, the member banks called for further study of Baker’s proposal and for extended consultations with their own governments and the debtor governments.

The banks stressed that their “general support” for Baker’s plan depends on a coordinated effort that would give an expanded role to the World Bank and other international development banks, to the debtor nations themselves and to the governments of the industrial countries in which the banks are based.

Terms of Proposal

Under Baker’s proposal, issued at the annual meeting of the International Monetary Fund and the World Bank in Seoul, South Korea, commercial banks would expand their lending to the 15 largest debtor nations of Latin America, Asia, Africa and Eastern Europe by $20 billion over the next three years. U.S. banks would provide $13 billion and European and Japanese banks the other $7 billion.

In addition, the IMF, the World Bank and other international development banks would add $9 billion to their existing loan plans. The loans would be made only when the debtor nations take steps to generate new economic growth so that they can work their way out of debt totaling $437 billion.

Baker last week assured members of the House Banking Committee that the Administration has no intention of seeking money to expand World Bank funding until commercial banks agreed to act on his proposal. He said he would not “twist arms.”

Representatives of major U.S. banks such as Manufacturers Hanover Trust and Citibank, which already have substantial outstanding loans to many of the biggest debtor nations, have openly supported the Administration proposal. It is non-U.S. banks that seem most cautious about signing on.

Andre de Lattre, the French banker who directs the Institute of International Finance, said that industrial governments, which now hold about 17% of the largest debtor nations’ loans, should expand their own direct loans as well as supporting more lending by international development banks.

Of the banks represented at the meeting, 24 were American and 34 were from 14 other countries: Britain, West Germany, Japan, France, Canada, Australia, Bahrain, Belgium, Italy, Kuwait, the Netherlands, Spain, Sweden and Switzerland.