BAKER SAYS U.S. MAKING PROGRESS REFORMING IADB
U.S. Treasury Secretary James Baker said
he was making progress negotiating reform of the Inter-American
Development Bank with other member nations.
    In a speech prepared for delivery to the annual meeting of
the IADB, Baker said, "We are making progress in negotiating
reforms."
    And he added that if succesful, Washington would be ready
to put up an additional nine billion dlrs to the seventh IADB
four-year capital replenishment, an increase of 75 pct.
    It was not immediately clear what the overall size of the
capital replenishment would be if the U.S. went ahead with such
a capital increase.
    But Baker's statement that he had made progress in
negotiating reforms came after a weekend meeting of the bank's
policy making board of governors at which the reform issue was
put off until next June because of deep differences between
Washington and Latin borrowing countries.
    Baker said the U.S. increase would account for 70 pct of
the bank's useable financial resources.
    Currently Washington is only allowed to vote 34.5 pct in
IADB board meetings considering loans to Latin American
countries.
    But the Latin borrowing nations control 54 pct of the vote
and frequently approve loans to which economic reform
conditions are not tied.
    Baker pointed out that Western nations which provide 95 pct
of the bank's financial resources represent just 46 pct of the
vote.
    Baker said the U.S seeks a greater say in bank decisions
for itself and other creditor countries.
    "In view of this imbalance we don't believe it is
unreasonable to ask for a change," Baker said. He said the
changes sought by the U.S. would require loan approval by a
greater majority of shares than a simple majority.
    But he stopped short of reaffirming the original U.S.
position that veto power should exist with a 35 pct vote.
    Enlarging on reforms Washington would like to see, Baker
said he wanted the IADB to play a much greater role in the U.S.
debt strategy for promoting inflation free economic growth,
open markets and a reduced government role in the economies of
debtor nations.
    Under reforms he said the U.S. wants the IADB to adopt a
major program of lending to specific economic sectors in debtor
countries on condition the countries carried out policy reforms
in those areas of their economies.
    Such reforms would include, among other things, more
concern for natural resource management.
    Baker said this lending should help debtors make a
transition to more open economies and freer markets.
    He also said the bank could double its current lending
volume from capital and triple its concessional loans to the
poorest nations.
    The Treasury Secretary also called for the IADB to improve
its analysis of the policies of debtor countries, strengthening
its process for assessing the specific needs of debtor nations.
He urged a wholesale reorganization of bank personnel. Baker
said, "We simply believe that more discretion and policy
influence should lie with the parties which contribute the
lion's share of resources."
    He pointed out that despite tight budget problems the
Reagan administration has asked Congress to finance the IADB
and other multilateral development banks.
    Pointing out that such funding was difficult today in the
best of circumstances, he said it would be impossible if
Congress did not have confidence in bank lending policies.
 Reuter
