NSDD ON U.S. APPROACH TO THE INTERNATIONAL DEBT PROBLEM

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP85-01156R000200290014-0
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 6
• Document Creation Date: December 22, 2016
• Document Release Date: August 26, 2010
• Sequence Number: 14
• Publication Date: June 9, 1983
• Content Type: MEMO

EXECUTIVE SECRETARIAT
Routing Slip
ACTION
INFO
DATE
INITIAL
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DCI
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EXDIR
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D/ICS
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DDI
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DDA
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DDO
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DDS&T
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IG
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Compt
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D/Pers
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D/OEA
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C/PAD/OEA
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To 20: Per DDC d MI &le'3le';.
represent n IG.
14 June 1983
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90596
THE WHITE HOUSE
WASHINGTON
UNCLASSIFIED
CONFI D ENTIAL
ATTACHMENT
MEMORANDUM FOR THE VICE PRESIDENT
THE SECRETARY OF STATE
THE SECRETARY OF THE TREASURY -
.THE SECRETARY OF DEFENSE
THE SECRETARY OF AGRICULTURE
THE SECRETARY OF COMMERCE
THE DIRECTOR, OFFICE OF MANAGEMENT AND
BUDGET
THE DIRECTOR OF CENTRAL INTELLIGENCE
THE UNITED STATES TRADE REPRESENTATIVE
THE ASSISTANT TO THE PRESIDENT FOR POLICY
DEVELOPMENT
THE CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS
SUBJECT: NSDD on U.S. Approach to the international
Debt Problem (U) -
The President has approved the attached National Security
Decision Directive on the U.S. Approach to the International
Debt Problem. (U)
FOR THE PRESIDENT:
Attachment
NSDD 96
UNCLASSIFIED
CONFIDENTIAL
ATTACHMENT
~0?1 UE ~ 7--
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THE WHITE HOUSE
NATIONAL SECURITY DECISION
DIRECTIVE NUMBER 96
The Senior Interdepartmental Group on International Economic
Policy has conducted a review of the U.S. approach to the
international debt problem and has reported the results of its
review in a memorandum, Approach to the International Debt
Problem Overview, dated April 25, 1983. This directive
approves the approach outlined in that memorandum and provides
implementing instructions. (C)
Orderly resolution of the international debt situation is of
major importance to U.S. economic, financial, foreign policy
and security interests. Successful management of the debt
problem will require flexible responses, tailored to the
circumstances of the individual cases that comprise the
problem at an international level, in the framework of a
comprehensive strategy having the following principal ele-
ments: (C)
o Economic adjustment by borrowing countries designed
to stabilize their economies and restore sustainable
external positions. (C)
o An International Monetary Fund adequately equipped
to help borrowers design adjustment programs and
provide balance of payments financing on a temporary
basis while adjustment programs take effect. (C)
o Readiness of monetary authorities in creditor
countries to provide short-term liquidity support,
when essential to assist selected borrowers that are
formulating adjustment programs with the IMF. (C)
o Encouragement to private markets to provide prudent
levels of financing to borrowing countries in the
process of implementing IMF-supported adjustment
programs. (C)
o Resumption of sustainable, non-inflationary economic
expansion and maintenance of open markets, both in
the industrial countries and in developing countries
facing debt problems. (C)
CONFIDENTIAL
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In this framework, the United States will give priority
attention to:
o Securing prompt Congressional approval of proposed
U.S. participation in the agreed expansion of IMF
resources. (C)
o Securing international agreement on the importance
of avoiding recourse to protectionist measures and
of laying the groundwork for future trade liber-
alization. In this connection, the United States
should pursue its efforts to bring trade and finance
officials together to consider the linkages between
their areas of responsibility; should use the
forthcoming high-level meetings to discourage
protectionist action and encourage trade liberali-
zation; and should pursue its efforts to improve
coordination among the International Monetary Fund,
the World Bank and the General Agreement on Tariffs
and Trade. (C)
o Exploring with other creditor countries possible
steps to: improve the information base in the debt
area; facilitate consultations on developments in
the bank regulatory and supervisory area, including
problems of consistency of regulatory treatment; and
strengthen coordination on-the management and
individual debt problems. (C)
An Interagency Group (IG) under the direction of the SIG-IEP
will be established to monitor the international debt situa-
tion and coordinate specific U.S. policies relating to debt..
Under Treasury chairmanship, the IG will prepare for the
SIG-IEP reports on individual problem countries, developments
in the overall debt situation and U.S. policies in the debt
area, in order to assure that senior levels of the Executive
Branch are kept fully aware of significant developments and
problems that may arise. (C)
The IG will review, on a continuing basis, the prospects for
world economic recovery; and assess the implications for the
debt situation of both substantially weaker and substantially
stronger world economic performance than now anticipated over
the medium-term. (C)
Among the questions that will be explored by the IG are the
following:
o The adequacy of U.S. resources for short-term
"bridge" financing and the extent to which multi-
lateral efforts can be expected; and the appropriate
use of Exchange Stabilization Fund, Export-Import
Bank and Commodity Credit Corporation funds in
providing financing to countries of varying impor-
tance to U.S. interests. (C)
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o The availability of private lending and the adequacy
of trade finance facilities -- particularly develop-
ments in supplier credits, bank cover and trade
receivables; whether improvements can be made in
secondary markets for trade paper (i.e., discounting
of trade receivables); and whether Export-Import
Bank, FCIA and private insurers can play a-greater
role in facilitating short-term trade transactions-
(C)
0 The availability of IMF resources, particularly
pending implementation of the proposed increases;
and the possible implications, for U.S. views on
such questions as IMF borrowing, access to IMF
resources, and SDR allocations. (C)
Th- IG will monitor the adjustment efforts of LDC borrowers to
d=tc.rmine:
o The degree to which domestic political pressures
hamper the adoption of prudent economic policies and
compliance adjustment in the short- or medium-term-
(C)
o Whether trade adjustment is taking place on a
market-oriented basis and whether import con-
tractions are reaching a-point where export-led
adjustment becomes less likely.. (C)
o Appropriate U.S. responses to debtor country pol-
icies on countertrade, clearing arrangements, and
other nonmarket-oriented trade policies. (C)
In pursuing this strategy, it is important that all elements
of the Executive Branch recognize its medium-term nature and
the fact some turbulence, both in markets and in countries
facing debt problems, must be.anticipated in the nearer-term.
(C)
Continuing assessment and flexible adaptation of policies
within the established framework will be necessary. An
outcome satisfactory to United States interests will depend on
determined commitment to implementation, over the medium-term,
of the strategy that has been adopted. (C) N
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