Third World Development and Threat Reduction Act of 1992

Third World Development and Threat Reduction Act of 1992 - Amends the International Financial Institutions Act to declare that it is U.S. policy to promote policies within the international financial institutions to encourage developing countries to: (1) reduce military expenditures and dedicate greater resources to health, education, and productive enterprises; and (2) dedicate an equitable allocation of health and education resources to meet the needs of their populations.

Directs the Secretary of the Treasury to instruct the U.S. executive directors of the international financial institutions to oppose loans, credits, or guarantees to any developing country whose military expenditures as a percentage of its gross national product are greater than its expenditures on health and education. Makes such prohibition inapplicable if the President reports to the Congress that such prohibition would: (1) result in harm to U.S. national security; or (2) endanger a democratically elected government facing armed aggression from a hostile neighboring country or from a local insurgency that presents an immediate danger to the government's survivability or is guilty of human rights violations.