Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, May 8, 1990                   TAG: 9005080323
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A2   EDITION: METRO 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

IMF NEARS LOAN RESOURCE AGREEMENT

Delegates to the spring meeting of the 152-nation agency expressed optimism that the IMF's policy-setting interim committee will reach an agreement by today, ending two years of debate on the issue.

The increase would boost IMF resources from $120 billion to $180 billion, making $60 billion more available to support economic reforms in Poland and other emerging democracies in Eastern Europe.

The additional funds would also be used to support Treasury Secretary Nicholas Brady's strategy of reducing the financial burden on debt-strapped Latin American countries.

The increase would require a $12 billion contribution from the United States. The increase is certain to draw opposition in Congress from critics of American foreign aid efforts.

The increase received a big boost Sunday with the approval of the world's seven largest economies. The United States, Japan, West Germany, Britain, France, Italy and Canada, known as the Group of Seven, endorsed the 50 percent increase, making final approval by the IMF highly likely.

The Bush administration, however, has tied its support for any increase to a change in the IMF charter that would allow the fund to suspend the voting rights of any country behind in its loan payments. At present, 11 countries - Sudan, Zambia, Peru, Honduras, Guyana, Cambodia, Vietnam, Liberia, Panama, Sierra Leone and Somalia - owe a total of $4.2 billion in back payments.

"These arrears pose a fundamental challenge to the IMF's financial integrity and its central role in the world economy," Brady said in a speech to the 22-member committee as it debated the issue.

Delegates from debtor nations on the committee objected to the United States' get-tough approach. A coordinating group for Third World countries said in a statement that suspending voting rights would not "serve a useful purpose and is not acceptable."

The loan resource increase was also tied up in the ticklish issue of how to rearrange the rankings and voting powers of rich nations.

Under the plan expected to win final approval, the United States would remain the No. 1 shareholder in the IMF with little more than 19 percent of its voting power. Japan would move from No. 5 to No. 2, a spot it would share with West Germany. Each country would hold a 6 percent voting share.

Britain would drop from No. 2 to a tie for No. 4 with France, with each country holding a 5.5 percent voting share.

John Major, Britain's chancellor of the exchequer, told reporters he believed the question of rankings was almost resolved.

A third issue under debate was the length of time the higher loan resource level would be in effect. The United States is pushing for a five-year period before the IMF again takes up the issue. Other countries lobbied for a readjustment after three years.