Finance ministers from 127 nations held their first formal session of discussions at the Joint Annual Meeting of the World Bank and International Monetary Fund organisations in Washington on Monday (1 September).
Finance ministers from 127 nations held their first formal session of discussions at the Joint Annual Meeting of the World Bank and International Monetary Fund organisations in Washington on Monday (1 September). The day before, during a preliminary meeting, they had taken the first concrete steps towards reforming the international monetary system.
However, the two main speakers in the first formal session - Mr. Robert McNamara, the President of the World Bank, and Mr. H. Johannes Witteveen, the Chairman of the IMF - warned of the difficulties and problems ahead before the World could recover from the current international recession.
Mr. McNamara proposed that the World Bank should increase its loan commitments to 7,000 million dollars (3,500 million sterling approximately) in the current financial year. This would represent an increase of about 1,000 million dollars (500 million sterling approximately) over last year's commitments. He also said that the Bank's loan commitments over the next five years should be approximately 40,000 million dollars (20,000 million sterling approximately).
Though it represented the largest programme of financial and technical assistance ever undertaken to assist developing countries, he said, it would still fall far short of meeting the full scope of the capital needed by those countries.
Another gloomy note was struck by Mr. Witteveen when he opened the formal meeting. He pointed out that a striking feature of 1974 was that, despite a sizeable decline in output, the rapid price increases already in process not only continued but accelerated in the second half of the year to an annual rate of more than 13 per cent for industrial countries. The acceleration of price increases that actually took place made a fall in output unavoidable and led to a deepening of the recession during the first half of 1975.
Mr. Witteveen said that although the rate of price increases was likely to continue to decline during the second half of this year, there was still a real danger that the impending economic recovery on the industrial world would get under way with the rate of inflation still unacceptably high by past standards.