ECONOMIC

The general assessment of the experience gained so far, following someinitial uncertainty about the potential effects of the IMF's sales and aboutmarket interest and participation, is that the IMF's sales program has beenquite successful. All of the auctions were oversubscribed, and the IMF wasable to obtain prices on each occasion that were very close to prices prevailingin the market. The absence of a definite timetable for sales, however, gaverise to questions about the timing and amounts of auctions, and has raisedneedless questions and speculation in the market about the IMF's intentions.The IMF's announcement in late 1976 of a definite schedule of dates andamounts for auctions over the next few months should remove any remaininguncertainties about the periodicity of IMF sales or the amounts to beoffered.ADEQUACY OF OFFICIAL FINANCIAL RESOURCESDespite the fact that official financial resources were augmented considerablyduring 1976, there is some question about the adequacy of such resourcesfor the period ahead. As noted earlier, the financing of external deficits,except in a few instances, was managed relatively smoothly during 1976.Extension of bank credit remained large, although during the year there wasa growing perception of the need for banks to become increasingly selectivevis-a-vis their debtors, and this was reflected in a growing desire on thepart of private lenders to see commitments backed by some kind of conditionallyin terms of adequate economic policies. As a result a number ofauthorities may have become less reluctant to draw on their credit with theIMF.Since the large increases in OPEC's export price of oil, external debtlevels in nominal terms have cumulated well beyond historical highs formany countries. The OECD has estimated that current account deficits forthe OECD area since 1974, the first year of the high oil prices, have cumulatedto $56 billion. The comparable figure for non-oil LDCs is $72 billion.In a number of instances debt levels are such as to make private lendersreluctant to extend further credit.It is important that countries which have adopted satisfactory adjustmentmeasures to deal with underlying external disequilibria and high externaldebt positions have access to international financial resources to carry themthrough the adjustment period. The need for such bridging financing isobvious because adjustments cannot take place quickly. Furthermore in theabsence of such financing there is a growing risk that political pressures toinstitute trade restrictions cannot be resisted.But, in addition, because of the continuing need to adjust to higher importprices for energy, further financing may need to be available. As long asOPEC surpluses persist, there can be no reversal in total debt positions. Onthe contrary, external debts will continue to grow. In the interest of internationalequilibrium and the continuation of economic growth worldwide, it132