WASHINGTON - The International Monetary Fund, a
fortress of conservative world monetary policy, faces a challenge
from Third World nations that want new ways to deal with their debts
totaling $900 billion.
In recent years the IMF has been providing outside help,
protection from creditors and has offered reassuring though often
unpleasant advice to member nations that can't pay their debts or
fall behind on interest payments.
But in just the last few weeks, challenges have been mounted to
the IMF's program of economic austerity for countries that are given
its permission to stretch out their debt payments.
%E -President Fidel Castro of Cuba, no longer a member of the
fund, urged Latin American countries to stop repaying their debts.
He had previously arranged delays in repayment for Cuba's own debts
to the Soviet Union and other countries.
%E -President Alan Garcia of Peru said he will pay banks in the
United States and elsewhere no more than $1 out of every $10 that
Peru can earn by selling its goods in other countries. That would
mean about $300 million in payments this year instead of the $3.5
billion or so that creditors expect.
%E -The dean of Latin American economists, 85-year-old Raul
Prebisch, proposed that debtor countries put aside money to pay their
debts but turn over only half of it to the creditors, keeping the
other half for investments at home. Prebisch comes from a more
important debtor country, Argentina, and has been a trusted adviser
of President Raul Alfonsin.
%E -Latin American leaders meeting privately in Mexico discussed
similar plans. A cap on payments would especially worry the
international financial world if it came from Mexico, the No. 2
debtor after Brazil. A plan carefully crafted by the fund has
already put off some of Mexico's repayments for as long as 14 years,
and Mexico's handling of its financial problem has been held up as a
If debtor countries start bypassing the fund and its plans, many
experts say, banks and the rest of the international financial system
will lose an anchor that they see as important in preserving monetary
stability. By requiring austerity policies in return for its help,
these experts say the fund puts the debtor nation in better shape to
repay the debts.
The problems extend past Latin America.
Nigeria, the largest African country, has resisted devaluing its
currency as well as a deal with the IMF to reschedule its debt