World Bank, IMF to aid nations hurt by embargo

September 19, 1990|By Stephen E. Nordlinger | Stephen E. Nordlinger,Washington Bureau of The Sun

WASHINGTON -- Responding to growing concern over the economic impact of the Persian Gulf crisis, the World Bank and the International Monetary Fund intend to step up their aid to countries severely injured by trade losses and the rapid climb in oil prices, according to administration officials.

The wealthy industrial countries and the oil-producing nations that have gained a windfall from the steep rise in crude oil prices were reported to be planning to use the two international lending agencies to channel funds to nations whose economies are being severely damaged by the crisis.

Finance ministers from the United States and its six major industrial allies -- Japan, West Germany, Britain, France, Italy and Canada -- will review the needs of these poor countries at a meeting here Saturday.

The high-level gathering precedes the annual session of the 151-nation IMF and its sister agency, the World Bank, at which the economic effect of Iraq's invasion of Kuwait will be the primary topic. President Bush will address the opening joint meeting next Tuesday.

"It is one of our primary responsibilities to help these countries overcome such crises," Michel Camdessus, the IMF's managing director, said in a speech last week. "And one of our essential responsibilities is to ensure that in all cases courageous growth-oriented programs are not interrupted because of external shocks."

Officials said the World Bank has been asked by Japan to direct the flow of $2 billion in emergency aid it has pledged as its share of the cost of the crisis.

Much of the concern over the economic jolt from the crisis focuses on Jordan and Egypt, devastated by the loss of trade with Iraq and a sharp drop in revenue from workers who had remitted funds to those countries from jobs in Iraq and Kuwait.

The administration estimates that those two nations and Turkey, which has suffered heavy losses of fees from an oil pipeline previously used by Iraq, will lose $3.5 billion this year and $7 billion to $8 billion in 1991, should the crisis last through next year.

Countries outside the Middle East also have been severely hurt by the rise in oil prices and the return of workers from Iraq and Kuwait, including India, Pakistan, Bangladesh, Morocco, Somalia and Sudan.

Aside from the industrial nations, aid to countries damaged by the crisis could come from major oil producers including Saudi Arabia, Mexico, Venezuela and Ecuador. The IMF and the World Bank also have substantial resources of their own that could come into play for emergency assistance.

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