U.S. Supports Fund Rise for World Bank

Treasury Secretary James A. Baker III said today that the Reagan Administration now supports a general increase in funds to enable the World Bank to boost lending to Third World countries.

Baker’s announcement represented a change of position for the Administration, which for some time had opposed boosting the capital funds of the World Bank, contending that the need for more money had not been demonstrated.

Baker told reporters today that the Administration was pleased with actions the World Bank has taken since the fall of 1985, when he unveiled the so-called Baker plan to meet Third World debt problems.

Since that time, Baker said, World Bank lending to major debtor nations had increased by more than 40%.

“Under the able leadership of (World Bank) President Barber Conable, the bank has been doing an excellent job in promoting the types of investments and types of policy reforms that we think are essential to achieve sustained economic growth in the developing world,” Baker said.

Baker refused to divulge what type of increased funding the United States would be willing to support but he indicated that it would be in the range of figures that Conable has said the bank needs.

Conable has suggested that the increase should be between $40 billion and $80 billion shared among industrialized countries of the world.

The World Bank’s general capital used to support lending now stands at $94 billion.

Conable has been campaigning for a substantial general capital increase for the bank to enable it to boost lending to an annual level of around $20 billion by the 1990s, up from around $17 billion now.

Asked why the Administration was now supporting an increase in funds for the bank, Baker said, “We have always said the United States would be there when the need was there. We think the need is there now.”

The initiative is coming on the eve of the annual meetings of the World Bank and its sister lending agency, the International Monetary Fund, which will be held next week in Washington.

Any increase in funding for the World Bank, which provides loans to poorer countries, would only occur after agreement by the member nations of the bank. Baker predicted that the new money would probably not start flowing to the bank until September, 1988.