DISPUTE MAY DELAY DECISIONS ON THE FUTURE OF LATIN BANK

DISPUTE MAY DELAY DECISIONS ON THE FUTURE OF LATIN BANK

The Inter-American Development Bank's future is not now but next year, perhaps.

The 44-member nation agency, which for years has been much of Latin America's biggest provider of economic aid, begins its annual meeting here today. Among the delegates, there is fatigue but also hope.The bank is floundering, because of a policy dispute between the United States and Latin American governments. Its lending last year sank to $2.3 billion, the third successive year of decline, and the bank took $100 million more from its borrowers than it disbursed to them, a report released this weekend shows.

If this persists for a number of years, the need for the (agency) would be in doubt from the point of view of both the developing nations and the industrialized country stockholders, says Reuben Sternfeld, a former top executive of the bank.

The bank, he told a House Banking subcommittee last week, could only operate in the smallest countries on marginal projects.

Besetting the bank are demands by the United States, its largest member, for major policy and organizational reforms in the agency.

The bank, says David Mulford, an assistant treasury secretary, has to change with the times . . . .You can't solve Latin America's economic problems by approving purely project-based loans.

The United States proposes that up to one-fourth of the agency's lending support economic policy reforms in the borrower countries. For that to work, U.S. officials say, the bank must reorganize itself to focus on the national policies of its borrowers.

The United States also insists that the bank set stiffer conditions for its loans. The Latin Americans have been using the bank to lend to themselves, Treasury officials argue. They voice distress over the quality of much of the bank's lending.

With these reforms in place, the Reagan administration would propose to contribute $9.3 billion to a $27 billion boost in the bank's resources, enabling the agency to almost double its annual lending to about $6 billion.

Administration officials want to be sure, however, that the reforms are carried out. They demand a near-veto authority to delay, if not outright kill, bank loans they do not favor.

Latin American nations have agreed, at least in principle, to the proposed reforms, except for the U.S. demand for increased voting clout. The voting rights impasse has meant no more new funding for the bank.

The administration even has decided not to ask Congress to approve paying the remainder of the $272 million the United States owes the bank from past pledges.

Without new funds, the bank seems fated in the foreseeable future to lend not much more than $2.5 billion a year, a level it had exceeded by the early 1980s.

But there is hope of a breakthrough, perhaps in a few months.

On April 1, Enrique Iglesias, who distinguished himself as Uruguay's foreign minister, becomes bank president.

One of his first tasks, he reportedly has told U.S. officials, is that he will try to develop a consensus among the bank's Latin American nations on the bank's future.

We're ready to reopen the negotiations (with the Latin Americans) when he's ready, says Treasury's Mr. Mulford. This may take two to three months, he estimates.