Magazine article American Banker

Volcker Lauds Third-World Debt Plan

Magazine article American Banker

Volcker Lauds Third-World Debt Plan

Article excerpt

WASHINGTON -- Federal Reserve Chairman Paul A. Volcker, in his first public remarks on the Reagan administration's third-world debt initiative, Tuesday praised the plan for a consortium of major commercial banks to join with the International Monetary Fund in providing new loans to developing countries.

Because of economic improvement among these nations, the plan provides for "opportunities unprecedented in my working lifetime," Mr. Volcker told a group of international securities analysts gathered here for a conference sponsored by the American Stock Exchange.

Mr. Volcker also sought to quash renewed rumors that he might be moving to the World Bank to succeed World Bank President A.W. Clausen. Mr. Volckrt said he plans to remain at the Fed. "I'm here, I'm staying," he said, though he added, "nothing is forever."

On the new lending plan, outlined Oct. 8 by Treasury Secretary James Baker at the IMF meeting in South Korea and backed by Mr. Volcker, major American banks would hike their lending to the 15 major debtor nations by $20 billion over the next three years.

Terms of the new commercial loans would include promises of internal economic reform among the debtors, Mr. Baker explained in his remarks at the meeting in Seoul.

On Tuesday, the Fed chairman also stressed that many developing nations will need to adopt strict new internal policies if new credit is to be extended.

Mr. Volcker termed the initiative a "global bargain" that makes clear to developing countries the terms "so they can plan" for growth and repayment of their debt. …

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