World Debt Crisis

Archive Report

Jeopardized Repayments

Administration's Shift on IMF Lending

In a quiet but significant reversal of U.S. policy, Treasury Secretary Donald T. Regan announced in early December that the Reagan administration would support large increases in the International Monetary Fund's lending resources.1 The shift in the U.S. position cleared the way for the world's leading industrial nations to reach preliminary agreements on a “substantial” increase in IMF quotas.2 Just three months earlier, when the IMF and World Bank held their annual meeting in Toronto, the United States stood virtually alone in opposing a 50 to 100 percent increase in IMF quotas. President Reagan told the delegates that the “magic of the marketplace” would take care of world debt problems.

The reasons why Reagan and Regan reversed U.S. policy are ...

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