'OIL SAID TO ADD TO POOR NATIONS' AID NEEDS

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP91-00561R000100070023-9
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 1
• Document Creation Date: December 22, 2016
• Document Release Date: February 9, 2012
• Sequence Number: 23
• Publication Date: September 2, 1979
• Content Type: OPEN SOURCE

Declassified in Part - Sanitized Copy Approved for Release 2012/02/09: CIA-RDP91-00561 R000100070023-9 STAT
.P RT I CL'y APPE.I 'D
ONPCE
THE NEW YORK TIlIES
2 September. 1979
Gil Said to A dd to Fbor N~tio'Aid Needs
Afghanistan, Nicaragua, Jamaica and
Guyana will face drastic cuts in their al-
ready low standards of living.
The study, prepared by officers at the
Central Intelligence Agency and the State
Department, concludes- tthat existing
commitments by financial institutions
and aid requests will cover most of the
additional aid and the larger overall defi-
cit of the developing countries this year,`;'
"We see no apparent need at ibis time
for additional special funds, such as the
$3 billion oil facility set up by the Interna.
tional Monetary Fund after the jump in
oil prices in 1973,"a Government official
said. He added that-such a conclusion as,
sumed that there would' be no more ad-
verse economic developments this year;
such as a major drought.
concludes, all of the sub-Saharan African-
states and such.countries as Sri. Lanka,.
to determine the economic impact of this
year's oil-price increases on developing
countries has concluded that several bil-
lion dollars in special aid to the world's
poorest countries will be necessary in the
next 18 months. - .=.
Without such assistance, the analysis
By ANN CRITTENDEN such new oil exporters as Mexico and The American study has not been sum.
A United States Government analysis Malaysia, will have a combined balance- marized for high-level Government;
f
New I.M.F. Facility to Be Used
The International Monetary Fund is ex-
pected to meet much of developing coun-
tries' need for special financing. Earlier
this year it set up a $10 billion supplemen-
tary financing facility to help countries in
balance-of-payments difficulties. Al-
though this facility was not specifically
designed to meet problems from the oil-
price increases, the timing of its creation
means that it will be the principal institu-
tion for financing the burgeoning oil-re?.
lated deficits. Some analysts expect that
in the next 18 months the facility will be
asked to lend as much as half of its re.
sources to developing countries.
.According to the Government's ,fore-
cast, the developing countries that do not
produce oil, a category that excludes
o
:payments deficit in 1979 of M& billionif
they do not make,policy changes to cut
their losses. This is about $U billion more
than was expected before the oil-price in-
Policy adjustments are expected to re?
duce the combined deficit to $31 billion.
These adjustments include borrowing, in-
creasing exports and reducing imports,
spending foreign currency holdings, re-
ceiving foreign aid and belt tightening.
Most analysts, including those involved
in the Federal study, assume that many
of the countries most seriously affected
by higher oil prices will be able to use a
combination of these measures to avoid
drastic cuts in consumotion.
Jamaica Faces,SevereHardship-
Nevertheles9l after all= possible ?pah
responses-are made; CI-A: and 9tatel)-
partment analysts calculate, a number of
the developing countries will still face se.
verehardships..:.
One of-the couiltsies~ia=the Weste ii I Sty to expend expor-..-.-i-4 Hemisphere facing the greatest difficultyis Jamaica,- Even- before the latest oil-
price increase-the country was plagued
with slow growth and a serious balance-
of-payments deficit. To tackle these prob.
lems, - the Government adopted an eco-1
nomic program that sharply increased
unemployment and lowered living stand-
ards.
The oil-price increase has magnified
these difficulties. United States Govern-
ment analysts estimate that the coun-
try's, current-account deficit in, IM,
previously estimated at $170 million, will
increase by $110 million.
In June, Jamaica increased its borrow- i
ing from the I.hf.F. to $338 million during
the next two-years; malting the country
the largest user of the new facility: Since
credits- under- this facility- are granted
only under the strictest conditions, such
borrowing. means that.Jamaica is com-
mitted to evert more stringent economic
policies in the future. ,
policy makers, but its conclusions were
outlined by one of the economists working
on the project.
He said it was an effort "to try to idea-i
tify the countries that will need speciali
attention from the various aid and lend-i
ing agencies."
About 110 developing. countries were
examined. Estimates were made of their j
payments deficits in 1979 and 1980. theirs
likely policy responses and their tradi-!
tional sources of capital. Of the 110, about
45 were expected to have an increase of
more than 10 percent in their-1979
balance-of-payments deficits because-of
the increase in oil prices this year. Of those 45, more than 2l) are thought to
be in a poor position:: to cope: with, the.
added burden. The- judgment' was, based!
on the quality of,thenations-t=nomic
management, levels of reserves, access
to private financial markets, ability to re-
duce dependency on. foreiga oiLand abil-,
Declassified in Part - Sanitized Copy Approved for Release 2012/02/09: CIA-RDP91-00561 R000100070023-9