Foreign Relations of the United States, 1981–1988, Volume XXXVIII, International Economic Development; International Debt; Foreign Assistance

202. Memorandum From the Under Secretary of State for Economic Affairs (Wallis) to President Reagan¹

Washington, April 9, 1986

SUBJECT

• Second Briefing Package on the Tokyo Economic Summit

[Omitted here is an introduction to the memorandum.]

1. Debt Problems

Continued growth and falling interest rates in the Summit countries are having a positive impact on growth prospects for the developing countries. However, many heavily-indebted developing nations have yet to adopt the economic policies necessary to come to grips with their problems. We will be seeking Summit endorsement of the U.S. “Program for Sustained Growth,” which calls for growth-oriented structural reforms in debtor countries supported by increased World Bank and commercial bank lending. This proposal (along with related issues) has been one of the major topics for discussion at this week’s IMF Interim Committee meeting.² A background paper is attached at Tab 1.³

The Summit should also welcome the recent approval in the IMF and World Bank Executive Boards of the U.S. proposal for close IMF/World Bank cooperation to support market-oriented policy reforms in their poorest member countries.⁴ Under this proposal, the two institutions will jointly negotiate “comprehensive policy frameworks” with eligible member countries, and each institution will then provide financing to support the agreed policy reforms.⁵ These and other actions will form a positive context for the May 27–31 UN Special Session on the Critical Economic Situation in Africa (at which Vice President Bush will probably represent the United States). Summit countries will be looking for ways to show support for Africa, without kindling unrealistic expectations or demands for still more new programs or facilities.

[Omitted here is briefing material on multilateral trade negotiations, energy policy, and education issues.]

1. Source: Reagan Library, Alexander Platt Files, Friday Reports 11/01/1987–12/31/1987; NLR–429–4–38–6–4. Confidential. Sent under an April 12 covering memorandum from Poindexter to Reagan recommending he review the briefing memorandum from Wallis. Reagan approved the recommendation with his initials and a checkmark.
2. The meetings of the Interim Committee of the IMF and the Development Committee of the World Bank and IMF took place April 9–11 in Washington. Baker delivered a statement before the meetings entitled “The International Debt Situation: Improving the Prospects for Growth.” A copy of his statement is in the Department of State, Bureau of Economic Affairs, Office of Economical and Agricultural Affairs Files, Official Economic Summit Files, 1975–1991, Lot 93D490: The Trip of President Reagan to Indonesia/the ASEAN conference and the Tokyo Economic Summit. In an April 21 memorandum to Danzansky, Farrar reported on the meetings, relaying that there had been some criticism at the meetings that resources for the Baker Plan would not be adequate. According to the memorandum, Baker responded by insisting planned amounts “should be adequate” but that the U.S. was “prepared to consider a World Bank GCI if there is a ‘demonstrated increase in demand for quality lending’ above levels now projected.” (Reagan Library, Stephen Farrar Files, Chronological File, Farrar Chron April 1986—04/16/1986–04/30/1986)
3. Tab 1, an undated paper entitled “U.S. Debt Initiative,” is attached but not printed. Tab 2, an undated paper entitled “New Round of Multilateral Trade Negotiations,” and Tab 3, an undated paper entitled “Energy Issues” are also attached but not printed.
4. See Document 200.
5. In the Tokyo Economic Summit Conference Declaration, issued on May 6, the G–7 Heads of State reaffirmed the “continued importance of the case-by-case approach to international debt problems” and welcomed the “progress made in developing the cooperative debt strategy, in particular building on the United States initiative.” For the text of the declaration, see Public Papers: Reagan, 1986, Book I, pp. 558–562. A copy of the minutes of the May 5 afternoon Heads of State meeting is in the Reagan Library, Stephen Danzansky Files, Administrative File, Attention 05/01/1986–05/05/1986; NLR–733–23–12–7–2.