Business: Cheer and Gloom at the IMF

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Hopeful talk of "convergence" and a plea for the LDCs

The annual gathering of the International Monetary Fund and the World Bank is not so much a meeting as a medium: a chance for about 3,500 bankers and finance officials to indulge in top-level gossiping, politicking and partying. At last week's session in Washington the talk, in refreshing contrast to last year's meeting, was surprisingly upbeat.

Many speakers thought some of the tension in international trade might fade in the future as the widely varying growth rates among the major countries begin to converge. There was not even much regret that the general direction of the convergence will probably be down, as U.S. growth slips, rather than up, as was once expected. The new managing director of the IMF, former French Treasury Chief Jacques de Larosiere, proclaimed that the world's major international economic ailments "are on the way to being cured." U.S. Treasury Secretary Michael Blumenthal was nearly as cheery. Despite a lingering public perception of "uncertainty and worry," he said, much progress has been made and "further improvement is under way."

About the dollar, however, the mood of the meeting was bleak. Although some experts held that the convergence of growth rates and declining trade surpluses in the nations that have them would help calm currency fluctuations and boost the buck, others reiterated that global money markets are no longer behaving rationally enough to be quieted down easily. Otmar Emminger, president of the West German Bundesbank, confessed that he had "given up hope that the markets would react to logic." Britain's Chancellor of the Exchequer Denis Healey found the entire world monetary system to be "in disarray" to the point of peril. The dollar rose a bit after the Senate's compromise on natural gas, the improved U.S. trade figures for August and Jimmy Carter's brief address to the IMF meeting pledging his "reputation as a leader" in support of the dollar. Still, delegates were disappointed by his lack of specifics about the Administration's anti-inflation and budget-cutting plans.

In one of the most forceful speeches, World Bank President Robert McNamara severely chastised the wealthiest nations for a trend toward increased protectionism that seems aimed at the rising amount of finished goods made by the less developed countries (LDCs). He noted that the rich countries still sell about five times as much manufactured products to the poor countries as they buy from them, and that the LDCs absorb fully 30% of the industrial world's exports of finished products. So rather than worrying about the LDCS' "minuscule" exports of such products, McNamara said, the richer countries would be wise to help the LDCS continue to earn the foreign currency that they need to buy the developed countries' goods. Citing a list of new import barriers erected by the U.S., Britain, Canada, France and other manufacturing nations against Third World shoes, textiles, TV sets and other products, McNamara warned that "excessive protectionism is not only unfair. It is self-defeating."