Office of the Historian

271. Minutes of a Cabinet Council on Economic Affairs Meeting1

Washington, January 29, 1982, 8:45 a.m.

ATTENDEES:

  • The Vice President, Messrs. Regan, Baldrige, Donovan, Lewis, Weidenbaum, Anderson, Porter, Davis, Lyng, Sprinkel, Hormats, Leland, Ikle, Kudlow, Savas, Gray, Bailey, Baroody, Cicconi, Dederick, Freierson, Garrett, Hopkins, Hudson, Michalopoulos, Bledsoe, Cribb, Hemel, Ms. Dyke, and Ms. Williams

1. Multilateral Development Bank Assessment

The Council reviewed a paper assessing U.S. participation in the multilateral development banks in the 1980s.2 The paper included an executive summary of a lengthy, comprehensive study undertaken by the Department of the Treasury in coordination with the Department [Page 682] of State, the Office of Management and Budget, and the International Development Cooperation Agency.3

Mr. Sprinkel’s presentation focused on the role of the multilateral development banks (MDBs) in increasing the flow of capital to less developed countries (LDCs) noting that MDB funds represented only 6–7 percent of total flows to the developing world, that the rates of return on projects were relatively high, and that on the whole their operation was cost effective. His presentation also explored the role of the MDBs in correcting LDC market imperfections, U.S. objectives with regard to MDB performance, the record of the MDBs in coordinating policies with the International Monetary Fund, and the merits of funding MDBs through callable capital allocations versus replenishments.

The Council’s discussion centered on the role of federal budgetary constraints in determining U.S. contributions to MDBs in the coming years, the consistency of the study’s recommendations with the President’s pledges at Cancun,4 the role of the MDBs in stimulating LDC demand for U.S. products, potential congressional opposition toward new U.S. contributions to the MDBs, and the most appropriate language to use in the budget section of the report.

Decisions

The Council approved the eight specific policy recommendations in the study5 relating to market forces, promoting policy reform, sector allocation, graduation, maturation, paid-in capital, U.S. participation in real terms in the soft loan windows, and U.S. budget priorities.

The Council suggested several clarifications in the language of the budget section of the report, so that it accords more closely with the policy recommendations.

[Omitted here is discussion of Polish debt.]

  1. Source: Reagan Library, Office of Policy Development, Cabinet Councils, Other Cabinet Councils, Cabinet Council on Economic Affairs III. No classification marking. The meeting took place in the Roosevelt Room at the White House. No drafting information appears on the minutes.↩
  2. Attached but not printed.↩
  3. See footnote 2, Document 266.↩
  4. See Document 75.↩
  5. An unknown hand underlined “approved the eight specific policy recommendations in the study” and wrote “CD” in the left-hand margin.↩