Warning of a funding crisis on an unprecedented scale, the head of the World Bank appealed to the United States on Tuesday not to shirk its responsibilities to the world's poor.
World Bank President James D. Wolfensohn raised the possibility that not only the poor but also U.S. corporations would suffer under cutbacks being considered by Congress.
In his opening address to the bank's annual meeting, Wolfensohn appealed to the Republican-controlled Congress to reconsider proposed reductions in contributions to the bank's International Development Assn., which provides low-cost loans to the world's 78 poorest countries.
He said threatened U.S. cuts would probably be matched by other wealthy donor countries, resulting in a 50% loss in planned IDA loans, from a planned $6 billion to $3 billion in the next year.
"Budget cutting by the U.S. Congress has led to delays and probable large reductions in the size of the contribution by IDA's leading donor," Wolfensohn told delegates representing 179 nations.
"And for every dollar cut by the United States, IDA could lose a total of $5 as other nations reduce their contributions proportionately," he said. "Some of the ministers here today will have to abandon plans for building human resources, expanding education for girls, increasing clean water supply. . . . There are so many urgent tasks."
In a briefing with reporters, Wolfensohn said the proposed reductions in U.S. support would probably cause a replay of the retaliation by other nations against U.S. companies in the mid-1980s.
Angry about U.S. reductions in its commitments, these countries put about $4 billion worth of dams and other development projects off limits to bidding by U.S. companies.
"I cannot emphasize enough how crucial IDA is for the world," Wolfensohn said, calling the proposed congressional cuts "tragic."
Wolfensohn, an Australian-born investment banker who took over as head of the World Bank in June, said he brought up the issue with President Clinton, who is scheduled to address the annual meeting Thursday. Clinton and his family stayed at Wolfensohn's Wyoming ranch during their August vacation.
Treasury Secretary Robert E. Rubin assured delegates that the Administration "is fully devoted to meeting all of its commitments to the international financial institutions."