THIS IS AN unhappy time to be the finance minister of a Third World nation. A near-collapse of the international banking system has dried up the supply of loans to developing nations from commercial banks. World trade patterns have stagnated as the American dollar swells. And the International Monetary Fund (IMF), an organization created to facilitate trade among some 150 members, has slapped a set of "austerity controls" upon 46 developing nations, restricting their imports and ordering anti-inflationary budget measures at just the wrong moment.

Along with its sister organization, the World Bank, the IMF has for 40 years drawn developing nations into greater trade with the world's bastions of industrialization--Europe, Japan, and the United States. But by all accounts it has disappointed both the North and South in its efforts to bring the Third World economic independence. Plagued by a harmful international currency structure, worldwide inflation in the 1970s, and the weakness of economic development theory, the fund's "dependent" partners have been unable to profit from trillions in Northern aid.

This year's push for austerity, though, goes against the grain of most modern development strategies. Essentially, the IMF is telling the world's poorest countries to tighten their belts by cutting government deficits, raising exports, and keeping up payments on a morass of debts to Western banks. These conservative edicts seem to be inspired more by frustration with past approaches--which resulted in negligible growth and huge debts for most of the Third World--than by any renaissance in development economics. Even President Reagan has discovered that economic growth rarely takes place without extensive deficit spending by the government, and, as a recent New York Times critique pointed out, it is hard for any country to raise exports when no one else is supposed to be importing. Indeed, the new IMF austerity seems to reek of Northern cynicism: industrial nations want to collect as many overdue loans as possible and then get out.

The looming Third World debt--estimated at more than half a trillion dollars--has dominated recent discussions of development issues. As well as intimidating the IMF, awareness of the debt has also cramped U.S. foreign aid and cooperation among European nations. Last year's nationalization of Mexican banks dramatized just how much many foreign governments depend on Northern banks, as Mexico appeared to slam the brakes on its economic growth program simply to appease the directors of Citibank and Chase Manhattan.

Fearful of another Mexican scenario, the banking community has begun to press for the collecton of overdue loans throughout the Third World. Although many banks have refinanced old debts (sometimes at exorbitant new rates), new lending has disappeared almost entirely while foreign aid from the U.S. and Europe has dropped sharply. The motives are clear for such backing off; because most nations cannot repay loans written before the inflationary explosion of the mid-70s, bodies like the IMF have lost confidence in older development strategies and retreated to a policy of withdrawal.

YET MUCH OF the South's problem can be traced to the state of the industrial world. Since the world moved to flexible exchange rates in 1971, efforts by a Third World country to raise its exports have run into a brick wall of currency inflation. This has retarded trade and made repayment of foreign loans far more difficult. Now, with the American dollar in its strongest position in decades, most nations have seen the real value of their currency dwindle nearly to nothing. Keeping up payments on loans thus becomes impossible, financing schemes offered by banks only postpone an inevitable repudiation of debts.

The IMF has been caught up in this fiscal struggle. Since the bulk of its funding and policy input comes from the North, it has aceded to the retreating strategies followed by both banks and legislatures in the industrial world--surely not the relationship Keynes had in mind when he designed the IMF as a community of "partners" in 1944.

Despite these forces, the call for austerity has come at the worst possible time. Inflation is down in the United States and has slowed almost everywhere else. The U.S.'s impressive start toward full recovery suggests that Europe will soon experience the same rejuvenation. Thus the Northen market for Third World exports looks better than it has in years, and developing nations should be "priming the pump" for a renewed program of industrial building.

The IMF has asked for $8 billion from the U.S. next year, but Congress has proved reticent and has even hinted at broad cutbacks of aid to the World Bank. But with the dollar at such a high value in relation to other currencies, foreign aid will never again be as cheap for Congress, and probably never carry as much good will. Since the only plausible path to repayment of Third World debts lies in real economic growth, it is in the industrial world's interest to step up, rather than contract, the activities of the IMF.

Bankers are by nature a conservative breed, and their apparent sway over the IMF seems to be part of a lackluster plan to cut their losses and then get out of the Third World for good. With the potential for real growth still as large as it over was--and the need for it still to pressing--the IMF needs to remain an advocate for the ability of Northern assistance to spur worldwide development. With patience and persuasion it must silence the North's banking interests and rethink what appears to be a mindless swing towards conservatism. Then Third World finance ministers could sleep easier.