Report Outline
Payments Problems from Oil Prices
Elements of World Monetary System
Prospects for Restoring Stability
Payments Problems from Oil Prices
Nounting Deficits for Petroleum-Lmporting Nations
A year ago, the world's money managers were close to a state of panic at the enormous imbalance in the international monetary system. The oil-producing countries had decreed huge increases in the price of petroleum, from an average of about $2.40 a barrel to more than $10. There seemed no way that oil consumers—the poor countries in particular—could afford to pay for their energy supplies, and no way that oil producers could spend their expected surpluses. On every hand, there were predictions of chaos and impending collapse of existing world monetary arrangements.
Somehow, the international community limped through 1974, and the sense of panic seems to be subsiding. Optimistic statements about the resiliency of the world monetary system are being heard once again. Early this year, Secretary of the Treasury William E. Simon told Congress that he believed “the international financial aspects of the oil situation are manageable.” The sense of relief may be premature, however. Among economists, there remains a deep concern about the condition of the monetary system; it is still subject to severe strains. Many experts warn that a protracted imbalance of payments, such as is being currently experienced, will inevitably slow economic growth in the industrial countries, bankrupt the less-developed countries and throw the world into a massive recession or depression.
The member countries of Opec, the Organization of Petroleum Exporting Countries, rang up a spectacular $97 billion foreign-exchange surplus in 1974. Exports by members of the cartel tripled in value during the year to $133 billion, according to a report released by the International Monetary Fund (IMF) on March 9. In that period, the industrial countries registered a $67 billion trade deficit, three times larger than in 1973. The less-developed countries saw their deficit more than double to $26 billion. |
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