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

267. Minutes of a Cabinet Council on Economic Affairs Meeting¹

Washington, September 24, 1981, 8:45 a.m.

ATTENDEES:

• Messrs. Regan, Donovan, Lewis, Brock, Weidenbaum, Anderson, Porter, Wright, Sprinkel, McPherson, Hormats, Leland, Niskanen, Hopkins, Gribbin, Waldman, Nau, Cribb, Bledsoe, Hemel, Ms. Moore, and Ms. McLaughlin

1. Assessment of Multilateral Development Banks

The Council continued its review of the study assessing the performance of the multilateral development banks (MDBs).² Mr. Sprinkel’s presentation focused on the use of MDBs in stimulating private investment, the criteria for LDC performance, the need for continued and increased emphasis on strict conditionality, and alternative budget recommendations.

The discussion focused on how quickly to push graduation, levels of funding, and the most appropriate places (soft lending rather than hard lending) to sustain funding reductions.

The Council concurred in a six percent reduction in overall funding for MDBs as part of the budget reduction program.

The discussion also included consideration of the method of defending MDB budget reductions at the IMF meetings, the method of announcing the MDB budget reductions, the President’s speech before the IMF meeting³ and what it should include about our position on the MDBs, and other subjects likely to come up at the IMF/IBRD and related meetings next week.⁴

Decisions

The Council endorsed the basic conclusions in the assessment of multilateral development banks study.

The Council directed the Departments of State and Treasury and the Agency for International Development to develop:

1. Recommendations concerning the allocation of budget reductions among the various MDB assistance programs.

2. Talking points for U.S. officials to use with respect to the U.S. government’s position on the MDBs.

3. Language for use in the President’s remarks to the IMF and World Bank meetings with respect to the administration’s support for the MDBs.

[Omitted here is discussion of pension policy.]

1. Source: Reagan Library, Richard Darman Files, Cabinet Council on Economic Affairs 09/08/81–09/24/1981, Case File 018936. No classification marking. The meeting took place in the Roosevelt Room at the White House. No drafting information appears on the minutes.
2. See Document 266.
3. Reagan delivered remarks at the annual meeting of the Board of Governors of the World Bank Group and the International Monetary Fund on September 29. For the text of Reagan’s remarks, see Public Papers: Reagan, 1981, Book II, pp. 854–856.
4. The annual meeting of the Board of Governors of the World Bank Group and the International Monetary Fund took place in Washington September 29–October 2.