Fresh Funds Revive Threatened U.N. Agricultural Loan Agency

The most successful of the U.N.-sponsored agricultural lending agencies, which had been facing collapse because of American sluggishness in committing new funds, won a reprieve Friday when the United States and 140 other nations approved funds to continue its operations through 1987.

The Rome-based International Fund for Agricultural Development, which has been widely praised for the success of its small loans to poor farmers, fishermen and rural development projects in Third World countries, announced that its governing council had approved a $500-million replenishment of the agency’s lending fund.

The activities of the fund, founded in 1977 with $1 billion raised from the developed Western countries and the Organization of Petroleum Exporting Countries, had been sharply reduced since late 1983 when the United States objected to OPEC’s reluctance to shoulder a greater share of the costs.

For more than two years, it appeared that the agency would collapse unless a compromise could be reached between the OPEC members, who wanted to reduce their contribution because of falling oil revenues, and the United States, which wanted the oil producers to continue to contribute on a basis of equality.

“Finally, I think everybody agreed that under present conditions the OPEC countries had objective difficulties and that the longer we postponed an agreement, the less would be their ability to contribute,” the fund’s president, Idriss Jazairy, said Friday.

Although the United States had sought a more even balance in the contributions, it settled for the 60-40 ratio that it has balked at over the past two years. Under the new agreement, the Western countries will provide $300 million and the OPEC countries $200 million. The U.S. share of the Western contribution will be about $80 million.

Loans, Costs Cut

Jazairy conceded that the total was less than the fund sought when the replenishment negotiations began in 1983. In addition to the $1 billion with which it was founded, the agency had received $1.1 billion for the three years beginning in 1980. Since 1983, when the replenishment negotiations stalled, it has cut back on loans and on its relatively modest administrative costs.

Explaining the agency’s relief at receiving the replenishment, Jazairy said: “The debate was not about the question of getting more or less money, but about the question of whether IFAD was going to survive or not. Now we know it is going to survive.”