US economy gets mixed reviews

The Latin American debt crisis has become more politicized. When finance ministers of Argentina, Brazil, Colombia, Mexico, Venezuela, Peru, and Ecuador meet today and tomorrow in Cartagena, Colombia, to see if they can work out a common strategy for dealing with their creditors, their foreign ministers also will be present. Chile, the Dominican Republic, Uruguay, and Bolivia have sent observers to the meeting.

''There are mass popular pressures on the governments to get a better deal,'' notes Richard E. Feinberg, vice-president of the Overseas Development Council in Washington.

In creditor nations, governments have asked commercial banks to ease the terms on debts of those countries, such as Mexico, that have tackled seriously international payments problems. This, Mr. Feinberg says, is ''government intervention in private markets.''

At the London economic summit, the seven national leaders declared jointly that ''in cases where debtor countries are themselves making successful efforts to improve their position,'' they would encourage more multiyear rescheduling of commercial debts and ''stand ready where appropriate to negotiate similarly in respect of debts to governments and government agencies.''

William R. Cline, an economist with the Institute for International Economics in Washington, regards it as ''highly unlikely'' that the Latin American leaders will decide on any radical action, such as a joint moratorium on their approximately $300 billion in external debts.

One reason is that two key countries, Mexico and Brazil, have been making ''a good deal of progress'' in solving their debt problems, Cline says. Indeed, these two nations may urge Argentina to reach an agreement with the International Monetary Fund on an economic reform program. Argentina owes Mexico billion. Argentina is strongly resisting an IMF austerity package in return for new loans.

Brazil's Finance Ministry is reportedly fairly confident that the Latin American debt situation can be handled successfully as world economic recovery continues. But the Foreign Ministry in Rio de Janeiro is said to be concerned about political destabilization in neighboring countries, such as Bolivia and Argentina.

Mr. Cline's guess is that the Cartagena participants will conclude with a statement that a reduction in United States' interest rates is imperative, that creditors offer lower spreads between the cost of their funds and the interest rates they charge, that debt maturities be lengthened and grace periods extended , and that the IMF take greater consideration of the political difficulties of the debtor nations.

Behind the controversy is a serious economic burden for the Latin debtors: their interest payments are so large that they have had to slow and even reverse their economic growth. Last year, these nations forked out about $50 billion to service their debts and got only $20 billion in net new loans from the commercial banks, resulting in a net outflow of $30 billion.

Mr. Feinberg argues that this net outflow must be reduced to ''a more politically sustainable level.'' This could be done either by stepping up the inflow of money from, say, the IMF and World Bank, or by reducing the outflow through limiting interest payments, stretching out the loans, and other techniques.

Mr. Cline cautions that some net outflow must continue for four or five years for Latin debtors to reduce their debts relative to their annual exports to a more manageable level for the long run. At the moment Brazil's debts are about four times its exports. This ratio, Cline says, should be reduced to about two.

Many of the Latin debtors have already suffered from political explosions as a result of austerity programs. There have been riots in the Dominican Republic, with more than 50 killed; a 30-day state of emergency in Peru to calm labor unrest; and an effort by labor unions in Bolivia to stop debt servicing payments. Demonstrators have marched in Brazil.

Both Ecuador and Bolivia have suspended debt payments - on $247 million and $ 750 million respectively.

Nonetheless, the 20 largest debtor nations last year reduced their external deficit to about $20 billion from $50 billion in 1983. ''Remarkable progress,'' says Cline.

Debtors should be helped by the solid US economic recovery, an increasing rate of recovery in other industrial nations, and by a 16 percent hike in commodity prices since 1982. Brazil increased manufacturing exports 40 percent in the first five months of this year campared to the same period last year. Mexico's and Brzil's economies are turning up again - ''but not enough to reverse the general image of catastrophe,'' says Cline.