k103 ~~~~l- : -- m - b;. ; . II THE WORLD BANK ANNUAL REPORT 1989 THE WORLD BANK ANNUAL REPORT 1989 The World Bank Washington, D.C. 20433 Photo Credits Cover: H. GruyaertlMagnum Page 12: World Bank Page 36: Ray WitlinlWorld Bank Page 107: Ray WitlinlWorld Bank Page 117: Yosef Hadarl World Bank Page 125: Tomas SennettlWorld Bank Page 131: Yosef HadarlWorld Bank Page 138: Yosef Hadarl World Bank Cover Sheep grazing near the village of Imichil, Morocco, in the foothills of the Middle Atlas mountains. A $23 million Bank loan in support of a small- and medium- scale irrigation project is seeking to increase crop and livestock production by almost 10,000 farm families and thus help slow the rural exodus fiom semiarid areas. Cover design by Joyce C. Petruzzelli ISSN 0252-2942 ISBN 0-8213-1300-2 The World Bank, the IFC, and MIGA 3 The World Bank, the IFC, and MIGA The expression, "The World Bank," as used balance of payments than would IBRD loans. in this Annual Report, means both the Interna- IDA's assistance, therefore, is concentrated on tional Bank for Reconstruction and Develop- the very poor countries-those with an annual ment (IBRD) and its affiliate, the International per capita gross national product of $480 or Development Association (IDA). The IBRD less (in 1987 dollars). More than forty countries has two affiliates, the International Finance are eligible under this criterion. Corporation (IFC) and the Multilateral Invest- Membership in IDA is open to all members ment Guarantee Agency (MIGA). The Bank, of the IBRD, and 137 of them have joined to the IFC, and MIGA are sometimes referred to date. The funds used by IDA, called credits to as the "World Bank Group." distinguish them from IBRD loans, come The common objective of these institutions mostly in the form of subscriptions, general is to help raise standards of living in developing replenishments from IDA's more industrial- countries by channeling financial resources ized and developed members, and transfers from developed countries to the developing from the net earnings of the IBRD. The terms world. of IDA credits, which are made only to gov- The IBRD, established in 1945, is owned by ernments, are ten-year grace periods, forty- the governments of 151 countries. The IBRD, year or fifty-year maturities, and no interest. whose capital is subscribed by its member The IFC was established in 1956. Its func- countries, finances its lending operations pri- tion is to assist the economic development of marily from its own borrowings in the world less-developed countries by promoting growth capital markets. A substantial contribution to in the private sector of their economies and the IBRD's resources also comes from its helping to mobilize domestic and foreign capi- retained earnings and the flow of repayments tal for this purpose. Membership in the IBRD on its loans. IBRD loans generally have a grace is a prerequisite for membership in the IFC, period of five years and are repayable over which totals 133 countries. Legally and finan- fifteen years or fewer. They are directed cially, the IFC and the IBRD are separate toward developing countries at more-advanced entities. The IFC has its own operating and stages of economic and social growth. The legal staff, but draws upon the Bank for admin- interest rate the IBRD charges on its loans is istrative and other services. calculated in accordance with a guideline re- MIGA, established in 1988, has a specialized lated to its cost of borrowing. mandate: to encourage equity investment and The IBRD's charter spells out certain basic other direct investment flows to developing rules that govern its operations. It must lend countries through the mitigation of noncom- only for productive purposes and must stimu- mercial investment barriers. To carry out this late economic growth in the developing coun- mandate, MIGA offers investors guarantees tries in which it lends. It must pay due regard against noncommercial risks; advises develop- to the prospects of repayment. Each loan is ing member governments on the design and made to a government or must be guaranteed implementation of policies, programs, and pro- by the government concerned. The use of cedures related to foreign investments; and loans cannot be restricted to purchases in any sponsors a dialogue between the international particular member country. And the IBRD's business community and host governments on decisions to lend must be based on economic investment issues. By June 30, 1989, the con- considerations alone. vention establishing MIGA had been signed by The International Development Association seventy-three countries, of which fifty-two had was established in 1960 to provide assistance also ratified. for the same purposes as the IBRD, but pri- While the World Bank has traditionally fi- marily in the poorer developing countries and nanced all kinds of capital infrastructure such on terms that would bear less heavily on their as roads and railways, telecommunications, 4 The World Bank, the IFC, and MIGA and port and power facilities, its development support of adjustment and policy reform. This strategy also places an emphasis on invest- lending supports programs of specific policy ments that can directly affect the well-being of changes and institutional and sectoral reforms the masses of poor people of developing coun- in developing countries designed to achieve a tries by making them more productive and by more efficient use of resources and thereby: (a) integrating them as active partners in the de- contribute to a more sustainable balance of velopment process. payments in the medium and long term and to In response to the deteriorated prospects for the maintenance of growth in the face of severe the developing countries during the 1980s, the constraints; and (b) lay the basis for regaining Bank inaugurated a program of lending in momentum for future growth. Contents 5 Contents Letter of Transmittal 9 The Record for Ten Years, 1980-89 10 Highlights of the Year 11 Section One: The Executive Board 13 Section Two: The Economic Scene: A Global Perspective 20 Summary 20 Events in the Industrial Countries 21 High-income, Oil-exporting Countries Increase Production 22 Low-income and Middle-income Countries Show GDP Rise 23 Declines in the Heavily Indebted. Middle-income Countries 25 Debt and Financial Flows 27 Commodity Prices and Terms of Trade 30 World Trade Volume Increase 32 Environmental Issues to the Fore 34 Section Three: The World Bank-Fiscal Year 1989 37 Commitment to Poverty Alleviation 38 Initiatives for sub-Saharan Africa 43 The Bank and the Heavily Indebted, Middle-income Countries 47 Environmental Activities 50 Private-sector Development 55 Women in Development 58 Section Four: World Bank Finances 61 IBRD Finances 61 IDA Finances 69 Disbursements by Source of Supply 71 Cofinancing 72 Section Five: World Bank Policies and Operations 78 Review of Experience with Adjustment Lending 78 Bank Lending for Emergencies 82 Reducing Poverty and Food Insecurity 84 The Research Program 88 Economic Development Institute 90 Interagency Cooperation 94 Technical Assistance 99 6 Contents Operations Evaluation 100 Internal Auditing 101 International Finance Corporation 102 Multilateral Investment Guarantee Agency 103 International Centre for Settlement of Investment Disputes 104 Section Six: 1989 Regional Perspectives 105 Afriica 105 Subregional Perspectives 107 Structural Adjustment: A Medium-term Perspective 109 Addressing the Social Costs of Adjustment 110 Longer-term Issues 111 Asia 114 Structural Reform and Economic Growth 114 Reform Challenges in India and China 116 Modest Growth in Several Low-income Countries 119 Papua New Guinea and the Island Economies 120 Reducing Poverty and Protecting the Environment 121 Euirope. Middle East, and Noirth Aftica 122 Continued Variation in Economic Performance 123 Adjustment in the Maghreb Countries 125 Adjustment Issues in Jordan 126 Adjustment among the High-income Oil Exporters 127 The Challenge of Systemic Reform 127 Bank Operations. Fiscal 1989 128 Latin America and the Caribbean 129 Export Earnings. Resource Transfers, and Debt Service 131 Public Finances, Internal Transfers. and Debt Service 135 Activities of the Bank. Fiscal 1989 136 Cooperation and Cofinancing 136 Section Seven: Summaries of Projects Approved for IBRD, IDA, and African Facility Assistance in Fiscal Year 1989 139 Financial Statements of the International Bank for Reconstruction and Development 183 Balance Sheets 184 Statements of Income 186 Statements of Accumulated Net Income-Unallocated 186 Statements of Changes in General Reserve 186 Statements of Cash Flows 187 Summary Statement of Loans 188 Summary Statements of Borrowings 192 Statement of Subscriptions to Capital Stock and Voting Power 194 Notes to Financial Statements 198 Report of Independent Accountants 202 Financial Statements of the International Development Association, the Special Fund Administered by IDA, and the Special Facility for Sub-Saharan Africa Administered by IDA 203 Statements of Commitment Resources 204 Statements of Changes in Liquid Funds 207 Statements of Condition 208 Contents 7 Summary Statement of Development Credits 210 Statement of Voting Power, and Subscriptions and Contributions 213 Notes to Financial Statements 216 Report of Independent Accountants 219 IBRD/IDA Appendices 221 1 Governors and Alternates of the World Bank 222 2 Executive Directors and Alternates of the World Bank and Their Voting Power 225 3 Officers and Department Directors of the World Bank 227 4 Offices of the World Bank 229 Text Tables 1-1 Budget of the World Bank for the Fiscal Year Ending June 30, 1990 14 2-1 Current-account Balances of the G-7 Countries. 1981-88 21 2-2 G-7 Countries: Output, Inflation, Investment, and Unemployment. 1981-88 22 2-3 Low- and Middle-income Economies: Growth of GDP and GDP per Capita, by Region, 1981-88 25 2-4 Low- and Middle-income Countries: Investment/Savings-to-GDP Ratios, 1980-88 27 2-5 Low- and Middle-income Economies: Balance of Payments on Goods, Services, and Private Transfers. 1981-88 28 2-6 Public and Private Long-term Debt and Financial Flows, 1980-88 28 2-7 Low- and Middle-income Economies: Medium- and Long-term Debt, Debt Service, and Gross Disbursements. 1982-88 30 2-8 Commodity Prices and Interest Rates, 1981-88 31 2-9 World Merchandise Trade in Volume. 197088 31 2-10 Selected Trade Performance Indicators. 1965-88 33 3-1 World Bank Adjustment Operations, Fiscal Year 1989 39 3-2 Allocations of IDA Reflows, Fiscal Year 1989 44 3-3 Net Transfers by the World Bank to Seventeen Highly Indebted, Middle-income Countries 47 4-1 IBRD Average Costs. Profitability. and Returns 61 4-2 IBRD Borrowings. Fiscal Year 1989 62 4-3 IBRD Borrowings, after Swaps, Fiscal Year 1989 66 4-4 Average Cost and Maturity of the IBRD's Total Borrowings Outstanding. Fiscal Years 1985-89 69 4-5 Capital Subscriptions, Fiscal Year 1989 70 4-6 IBRD and IDA Foreign and Local Disbursements, by Source of Supply 72 4-7 IBRD and IDA Disbursements for Goods, Works, and Services Procured from Selected Non-Part I Countries, Fiscal Year 1989 73 4-8 IBRD and IDA Foreign Disbursements, by Source of Supply 74 4-9 IBRD and IDA Foreign Disbursements, by Source of Supply and Description of Goods, Fiscal Year 1989 75 4-10 World Bank Cofinancing Operations. by Region, Fiscal Years 1988-89 76 5-1 EDI Teaching and Institutional Assistance. Fiscal Years 1984 and 1989: Annual Averages. Fiscal Years 1985-89 91 5-2 Projects Involving NGOs. by Sector and Region. Fiscal Years 1973-88 94 5-3 Aid Coordination Group Meetings Held in Fiscal Year 1989 99 8 Contents 6-1 Africa: 1987 Population and Per Capita GNP of Country Borrowers, Fiscal Years 1987-89 105 6-2 Lending to Borrowers in Africa. by Sector, Fiscal Years 1980-89 106 6-3 Summary of Economic Performance Indicators for sub-Saharan African Countries 111 6-4 Net Transfers to Africa 112 6-5 Asia: 1987 Population and Per Capita GNP of Country Borrowers. Fiscal Years 1987-89 114 6-6 Lending to Borrowers in Asia, by Sector, Fiscal Years 1980-89 116 6-7 Net Transfers to Asia 120 6-8 Europe, Middle East, and North Africa: 1987 Population and Per Capita GNP of Country Borrowers. Fiscal Years 1987-89 122 6-9 Lending to Borrowers in Europe, Middle East, and North Africa, by Sector, Fiscal Years 1980-89 124 6-10 Net Transfers to Europe, Middle East, and North Africa 127 6-11 Latin America and the Caribbean: 1987 Population and Per Capita GNP of Country Borrowers, Fiscal Years 1987-89 129 6-12 Lending to Borrowers in Latin America and the Caribbean, by Sector, Fiscal Years 1980-89 130 6-13 Net Transfers to Latin America and the Caribbean 137 7-1 Projects Approved for IBRD and IDA Assistance in Fiscal Year 1989, by Region 158 7-2 Projects Approved for IBRD and IDA Assistance in Fiscal Year 1989, by Sector 160 7-3 Statement of IBRD Loans Approved during Fiscal Year 1989 166 7-4 Statement of IDA Credits Approved during Fiscal Year 1989 171 7-5 IBRD and IDA Cumulative Lending Operations, by Major Purpose and Region, June 30. 1989 176 7-6 IBRD and IDA Cumulative Lending Operations, by Borrower or Guarantor, June 30, 1989 178 7-7 Trends in Lending, IBRD and IDA. Fiscal Years 1987-89 182 7-8 Trends in Lending, IBRD and IDA, Fiscal Years 1987-89 182 Boxes 3-1 Gender and Poverty in India 58 5-1 Adjustment and the Poor 81 6-1 The Amount and Uses of Debtor Countries' Trade Surpluses 132 Box Tables 6-1 Estimates of the Resource (Trade) Surplus and Its Uses 132 6-2 Net Transfer to Foreign Creditors, Long-term Debt 133 Text Figures 2-1 Real Six-month LIBOR Rates 23 2-2 Nominal Six-month LIBOR Rates 24 2-3 Investment-to-GDP Ratios 26 2-4 Disbursements, Debt Service 29 3-1 IBRD and IDA Lending, by Lending Instruments. Fiscal Year 1989 37 3-2 IBRD and IDA Lending to the Poorest Countries, Fiscal Years 1980-89 40 5-1 Number of Food Insecure in sub-Saharan Africa 86 9 Leffer of Transmiffal The details of events covering the period The directors express their appreciation to July 1, 1988 to June 30, 1989, are found in this the staff members of the Bank for their dedi- Annual Report, which has been prepared by cation to the institution's ideals. They note that the executive directors of both the Interna- the continued professionalism of the staff made tional Bank for Reconstruction and Develop- it possible for the Bank to respond to the needs ment (IBRD) and the International Develop- of developing countries with both flexibility ment Association (IDA) in accordance with the and imagination and to develop a robust pipe- by-laws of the two organizations. Barber B. line of high-priority projects for fiscal 1990. Conable, president of the IBRD and IDA and The Annual Reports of the International chairman of the boards of executive directors, Finance Corporation, the Multilateral Invest- has submitted this Report, together with ac- ment Guarantee Agency, and the International companying administrative budgets and au- Centre for Settlement of Investment Disputes dited financial statements, to the boards of are published separately. governors. Executive Directors Alternates Fawzi Hamad Al-Sultan Mohamed W. Hosny Paul Arlman Cvitan Dujmovic J.S. Baijal M. Mustafizur Rahman Mourad Benachenhou Salem Mohamed Omeish Gerhard Boehmer Michael von Harpe Frank Cassell J. A. L. Faint E. Patrick Coady Mark T. Cox, IV Jacques de Groote Bahar Sahin Mario Draghi Rodrigo M. Guimaraes J. S. A. Funna Jabez A. Langley Jonas H. Haralz Jorunn Maehlum Chang-Yuel Lim Robert G. Carling Andre Milongo Jean-Pierre Le Bouder Raymundo Morales Felix Alberto Camarasa Jorge Pinto Edgar Ayales Helene Ploix Stephane Pallez Frank Potter Clarence Ellis Masaki Shiratori Yukio Yoshimura Jobarah E. Suraisry Abdulaziz Al-Sehail Mohd. Ramli Wajib Le Van Chau Eduardo Wiesner Pedro Sampaio Malan Zhang Junyi Jin Liqun August 3, 1989 10 The Record for Ten Years The Record for Ten Years, 1980-89 Fiscal year P1 Pi 1I.'I 1'4' .  ' ' I-. I' I-AS 1`1S9 IBRD Loan. pIprco.ed' t.h44 .*Mlg !I I ll.94 ! I ih 3 I.I I 14 IN 14 h' 16.433 DisbursencnlC J.3 'J bt3 r. 32h h,j.SI % 51 S r.4S N.3 I13;t IeI 11.31l) Total Income 2 q" '19 , t Ji 232 - o i 4 55> h t. S - i hJ %i4) 8 274 Net `ncrnrIc '!N 61'' .9; 72 hl ! 1 1 243 ! 13 ! fl4 i.l)54 General rcerr 2. (-.111' 'n … iS' e a 'm sL. h'J 'J' ' . 42 75h New borro.'i in I 3 . Ilr.;- Si 'I III C2 '-' I I I .liNh Ill.Ii 9.1' .2I ''. 9.2836 Subsc ricd CCpI[ O ;9 C44 h.h14 -t ;,t.h '"t 5I1I9 i t.Ill 14 - 'r, O l3 ! .41 It 114..668 nuMht r Oper,aion, :pp44cd 44 1J' 1F'11 1It 1 1II1 3l 1' I 1 119 Born'' inc CoLunliIIc; 4.1 ;11 43 3 J4, 44 41 3- ;' 38 Member ri- cunrieI 35 1 1t 4 144 I4o 1s 1'' 1;1 1;1 151 Higher-! cl t tII' (nLui IbNer' .3 22 tl'3 2 ;i 3 _1' 3 t.Ir. 5th' 3.398 IDA Credit rnoun''I 3 Is 3.Js2 2.hsn 1 3.5I 3 ''l 3 .1 4'' 3 4.%f 4.J45.9 4.934 Disburscnicnt-. 1.411 I 2. 2 4'' 491 ; I 3 I.Ss 1 134'- 3S97 Usable re,ourcee CUITiuIaiOX… … … … … … … … 3'' 5 t 1-. 4 9"4 ' 1 1 331 ,1 3. 1 614 4t titi 1;St1)97 nl ti, ri JC F Oper.iori, n p ro.,& il ''3 II,t. I Iit ,lIr II| I. I iS %C4 (16 Borron" ng coun;rie, 411 J4. J4 44 41 4i 5- 3" 3o 42 Member eoun[ries 1'1 12 13' 131 1' 13 3 I 1 3 11- 3 3 a. Excludes loans to IFC of$100 million in FY1981, $390 million in FY1982. $145 million in FY1983, $100 million in FY1984, $400 million in FYI985, $150 million in FY]986. $200 million in FY1987, $200 million in FY1988. and $179 million in FY1989. b. Excludes disbursements on loans to IFC. c. Excludes $109 million in borrowings approved in FY1986 and settled in FY1987. d. FY1987 amount is as of the date of settlement. Amounts in prior years are as of date of executive-board approval. e. Higher-level staff on regular and fixed-term appointments held against authorized budget positions. f. In FY1986, as a result of an institutionwide job-grading exercise, the Bank's grade structure changed, and the definition of what constituted higher-level staff expanded considerably. g. Joint IBRD/IDA operations are counted only once as IBRD operations. Highlights of the Year Highlights of the Year 1989 1988 IBRD IDA IBRD IDA New commitments .............. $ 16.4 billion $ 4.9 billion S 14.8 billion $ 4.5 billion Cumulative commitments ........ $171.5 billion $52.7 billion $155.0 billion $47.8 billion Lending to countries with per capita income of $480 or less ... $ 5.8 billion $ 4.3 billion $ 5.0 billion $ 3.9 billion Number of loans/credits ......... 119 106 118 99 Number of borrowing countries .. 38 42 37 36 Gross disbursements to countries $ 11.3 billion $ 3.6 billion $ 11.6 billion $ 3.4 billion Net disbursements to countries ... $ 1.9 billion $ 3.4 billion $ 3.4 billion $ 3.2 billion Number of member countries 11.... I 137 151 137 IBRD net income ............... $ 1.1 billion - $ 1.0 billion - IBRD borrowings ....... ....... $ 9.3 billion - $ 10.8 billion - IBRD subscribed capital ......... $115.7 billion - $ 91.4 billion - Spread between return on total earning assets and cost of total funds (%) ....... ........ 1.89 - 1.84 - Average return on liquid investments (%) .............. 8.20 - 8.51 - . 3 . i 3 w T , , ,,,,; i _; ,,, ,.3,,, 3, ; t , , g 3 ' ' 3 g - @; , ' ,' Z ' . ' 1', t ' k ' - i,;E . !~~~~t i, ; *l | i £ > 1 3 w i ' T j ' '; ' t $ 3 J S 3,, . 3 - _ i : , , . 1-, . v ; T .} ,l $ 5 3 1 * t t h; t ~~4 1 33i|xf,i!f,f.3J$ 12 W~~~~~~i tA V A, V. Manufacturing water pumps in Bangladesh. In many countries, small-scale industries offer the best hope for increased employment opportunities. 13 Section One The Executive Board Under the Articles of Agreement of the policies; and (c) by reviewing evaluations of Bank, all its powers are vested in a board of completed Bank projects and of the Bank's governors, consisting of one governor for each experience in individual sectors and with par- member country. With the exception of certain ticular policies, and by considering proposals powers specifically reserved to them by the for future evaluation activities, the board en- Articles of Agreement, the governors of the sures that the Bank and member countries are Bank have delegated their powers to a board of able to benefit from the lessons of experience. executive directors that performs its duties on a full-time basis at the Bank's headquarters. * * * There are twenty-two executive directors; each director appoints an alternate. As pro- In fulfilling its oversight of the IBRD and vided for in the Articles of Agreement, five IDA financial and operating programs, the directors are appointed by the five members executive board approved early in fiscal year having the largest number of shares of capital 1989 an allocation of $1,004 million of fiscal stock, and the rest are elected by the governors 1988 net income to the general reserve. They representing the other members. completed the midyear review of the 1989 The executive directors meet under the fiscal year financial and operating programs chairmanship of the president of the Bank. and administrative budgets and discussed and Formal votes are rare as, in practice, most approved the fiscal 1990 budget priorities and decisions are reached by consensus. The exec- policy directions and the medium-term budget utive directors are responsible for the conduct planning framework for fiscal years 1990-92. of the general operations of the Bank. They Before the end of the fiscal year, the executive decide on Bank policy in the framework of the directors approved a fiscal 1990 borrowing Articles of Agreement. They also decide on all program of about $10 billion and set IBRD loan and credit proposals. lending for fiscal 1990 at between $15 billion The executive directors are also responsible and $19 billion, with an IDA lending program for presentation to the board of governors at its of SDR4.4 billion. They also approved a total annual meetings of an audit of accounts, an budget for the IBRD and IDA in fiscal 1990 of administrative budget, the Annual Report on $899.6 million for regular and special programs the operations and policies of the World Bank, and $21.4 million for capital programs. and any other matter that, in their judgment, In major financial-policy actions, the execu- requires submission to the board of governors. tive board approved revisions in the manage- Matters may be submitted to the governors at ment of the currency composition of loans and the annual meetings or at any time between in the IBRD's variable lending-rate system. As annual meetings. approved by the executive board, these revi- The executive board exercises its authority, sions will reduce the risk borne by the Bank under the Articles of Agreement, in three gen- and its borrowers from changes in market eral areas: (a) By its annual oversight of the conditions and make more manageable the financial and operating programs, and admin- risks that do remain. At the same time, the istrative budgets (see Table 1-1), it determines Bank's currency management will retain the the allocation of financial and staff resources fundamental characteristics of the Bank's cur- for the coming year; (b) by reviewing specific rency-pooling system and the pool of qualified policy proposals, either annually (for example, borrowings as devices for distributing ex- the allocation of net income, staff compensa- change exposures equitably and for passing tion, the research program) or periodically (for through to borrowers the interest costs of the example, the Bank's capital requirements, funding for their loans. The approved modifi- financial policies, lending terms, sectoral pri- cations in the variable lending rate will allow orities), it determines the direction of Bank the lending rate to reflect only the costs of the 14 The Executive Board Table 1-1. Budget of the World Bank- for the FiNcal Year Ending Junte 30, 1990 mimlbons ol Unimed Stares dutlarsi Budget 1991) 1lh org-anii7ational uinit Board of go% ernors ..............3.7 Executive directors and Developmient Coiniiiiiie . .... 24.8 Executive offices ................................ 1.8 Secretary's .................................... 5.7 Operations .495.5 Finanice...................................63.2 Policy. planninu. and recaiLh ............................119.7 Externial affairs and administration .......- . .............. 111.0 Legal. ICSID, and MICA . ..... ... ............ .... 17 4 Operations ev ilu,iiion stitt . .. ........... .. ..... 9.9 Adlministrative iribunal, oinbudlsiman. oun1 a-ppcds coriiTiinttCe .1.......... .... .. . L6 Subtotal ..........I. ....I......... ... 8;4 3 Continiencv. ........ .. 8 9 Subtotal . . . . .. ......................863.1 Less Reimibursemenits.......... ..... -29.8 IFC and MICA service-and-NUpport kies ... ...-7 7 Subtotal........ ..825 6 Plus Investnetiu operations . ..................I.... 10.1I Special grant programs .. .. .......... ............. 63.9 Total IBRD!IDA ...I.....I..................I..899.6 By expense category, Staff costs........ ..... ..... ..... 569 1 Operational travel ... ......... ......... . .. .. 85.3 Repiesentation.... . ........ ... ........ 2.5 Consuldtant fees ... . . ... .. ... .I... 66.8 Contractual serices (includes grants).............I.. ..... 84.0 Overhead expenses Office occiinancv.............................. 40.4 Communicati'ons ...22.2 Depreciation ...... .. .. ... . ......318.6 Other expenses ... . . . . ..... ... 39.3 Subtotal .. . . ... .....-. .....928.2 Contingency . .. ... . ...... ........ . . . . . 8.9 Subtotal ... .. .......... 937.1 Less Reimbursements..... .. -29.8 LFC aiid M[GA service-and-support fees . ..-7 7 Total IBRI)/IDA... .. .. .... ..899.6 Of which IBRD .. .. ......... ... .. .. ......... 593.8 ID)A .... ...... ......................305.8 NoTE The budget for ihe fiscal 5car ending Jujne 3,L. t9tO, was approved by, the executive directors in accordance- with the by-lawsk~ of the tBRD and tDA The executive directors, have also approved a capital budget of S21 4 million for fiscal year 1990) The Executive Board 15 currencies disbursed to borrowers on the with outstanding IBRD debt. The executive IBRD loans and allow the Bank to manage its directors also closely followed the ongoing own interest risk more effectively. The execu- negotiations on the ninth replenishment of IDA tive board agreed to continue to monitor the resources (IDA-9). Bank's currency-management system through In order to fulfill its responsibility to review a review of experience in fiscal year 1990. project evaluations and proposals for future The executive directors reviewed the Bank's evaluation activities, the board continued to experience with the investment authority that give particular attention to the operations eval- the board had approved in 1986. In light of the uation department (OED). This department, experience gained and the steadily evolving under the direction of the director-general, financial markets, the executive board ap- who is linked administratively to the Bank's proved a resolution providing for a streamlined president, but is outside the regular staff struc- and updated authority that provides a policy ture, is directly responsible to the executive framework for the investment of the liquid directors. The board considered the OED's assets of the IBRD and IDA, supplemented by report on its work program, staff budget for investment guidelines, operating rules, and an fiscal 1990, and status of current work, as well integrated risk-management system to assure as the OED's annual report on operations the appropriate prudent management of these evaluation. The executive board also discussed resources. the OED's annual review of project perfor- The executive board also considered a mance results and agreed that the review waiver of the prepayment premium on IBRD should be published for distribution outside the loans and approved the Bank's position on Bank. prepayments being guided by the following The board dealt with several issues funda- principles: (a) The Bank will encourage pre- mental to the Bank's operational priorities and payment of portions of its loans that it has not strategies, including poverty alleviation, the sold or agreed to sell; (b) the Bank will waive environment, debt strategy, and private-sector the prepayment premium on loans whenever development. In its continued involvement in the average interest rate on the loans being the Bank's policies for poverty alleviation, the prepaid is not significantly above the average board considered two task-force reports: the for the country's outstanding IBRD loans, or report of the Task Force on Poverty Allevia- for borrowing countries with above-average tion and the report of the Task Force on Food interest rates, whenever the result of the pre- Security in Africa.' payment is to narrow the difference between Throughout the year, the board was in- the country's average and the Bank's average volved in in-depth discussions on the Bank's interest rate on all outstanding loans to not less role in the debt strategy, with particular em- than twenty-five basis points; and (c) the Bank phasis on the Bank's operational strategy in will continue to waive the prepayment pre- the heavily indebted countries. The board also mium if the prepayments are made by financial discussed reports on analytical issues in debt intermediaries in respect of prepayments that reduction, implications of debt-reduction pro- the intermediaries have received from subbor- posals, and a legal analysis of the guarantee by rowers. the Bank of interest payments under debt- In addition to their discussions on the service reduction schemes as a means toward Bank's financial policies, the board also re- the reformulation of the Bank's debt strategy ceived monthly market reviews and considered in the light of discussions held by the Devel- the Bank's funding operations on a quarterly opment Committee and the introduction of basis. new, international debt initiatives. The board In financial-policy actions involving IDA, also adopted guidelines for the Bank's partici- the executive board approved recommenda- pation in debt- and debt-service reduction tions on the use of IDA reflows that include the operations.2 phasing in of IDA advance commitments made Private-sector development was also an im- against 90 percent of projected future reflows; portant issue for board deliberation. The board the use of these advance commitments to sup- discussed the report prepared by the Private plement IDA's overall operations, taking ac- Sector Development Review Group and, as a count of the views expressed by IDA deputies follow-up, considered the private-sector devel- and the IDA board and the new initiatives that opment action program.3 The board broadly have emerged since the eighth replenishment supported the thrust of the action program, of IDA resources (IDA-8) was negotiated; and the use of any annual increments of uncommit- For details. see page 84. ted reflows and investment income to supple- 2 For details, see page 49. ment adjustment credits to IDA-only countries 3 For details, see page 55. 16 The Executive Board which reflected board discussions over the priate. In other personnel-policy issues, the past fiscal year. The board further agreed to board discussed the Bank's human-resources review progress on the action program after approach. one year. After extensive briefings, the board also The board also reviewed reports on two approved a plan for the rehabilitation of the types of Bank lending: the report on the review Bank's main complex, with an authorization of of experience in adjustment lending and lend- a capital budget amounting to $186 million. It ing by the Bank for emergencies.4 There was a was agreed that the physical work would begin general consensus among the executive direc- at the end of calendar year 1989, with the tors that the Bank's adjustment lending had project's architectural and engineering firm been moderately successful, and, as a whole, chosen through a process of international com- the board endorsed Bank support of countries petition. engaged in the unavoidable task of adjustment The board also reviewed the activities of for growth. In its discussion of Bank lending other major Bank programs, including the dis- for emergencies, for which flexibility in pro- cussion of the annual report on the Bank's gram design was urged, the executive directors research program, the Bank's activities and generally endorsed the report and its conclu- future program in the area of external affairs, sion. The report made no proposal for any and the Economic Development Institute's major departure from past practice, but it did five-year plan for fiscal years 1990-94. In ad- provide an opportunity to reinforce the lessons dition, the board discussed the outline and, of experience and refine the scope of future subsequently, the draft of the World Develop- activities in this area-with the modification ment Report 1989 on financial systems and that the Bank would take account of the impact development, as well as a paper on the short- of an emergency on a government's macro- term outlook for the global economy. The economic program. The board also considered board also held biannual discussions of their and endorsed the recommendations included in own work program, as recommended by the a report on the Bank's role in financial-inter- executive directors' steering committee, for mediation services. calendar year 1989. The Bank's regional vice presidents briefed In addition to meeting in regular and execu- the board on economic and development issues tive session, the board also convened as com- in Asia; Latin America and the Caribbean; mittees of the whole and in seminars to promote Europe, the Middle East, and North Africa; more informal discussions with management on and sub-Saharan Africa. In these informal a broad range of issues without making deci- briefings, the board exchanged views with sen- sions or providing policy guidelines. Topics ior management on a broad range of issues covered in this manner, in addition to those concerning the particular regions. In addition already mentioned, included Bank lending for to these discussions of regional issues, the state-owned enterprise sector reform, the cal- board also received oral briefings on consulta- culation of per capita GNP, Bank lending for tive and aid-group meetings.5 agriculture in sub-Saharan Africa, and policies Fiscal year 1989 was a particularly active for industrializing countries and industrial re- one for the board in deciding major adminis- structuring. The board also discussed the policy trative policies. The board convened seven framework papers for twenty-six countries that times in seminars, committee of the whole had been jointly prepared by Bank and IMF meetings, and formal board meetings to con- staffs and the countries concerned. Executive sider a new system of staff compensation to directors also attended a three-day colloquium replace the one approved by the board in 1979. on international-trade issues and the ongoing The new system, as approved by the board, round of GATT negotiations. Convened as the reflects a variety of sources, including the committee of the whole and in informal ses- report of the Joint Bank/Fund Committee of sions, . the board also discussed issues of Executive Directors on Staff Compensation Bank/IMF collaboration in assisting member (JCC). The report of the JCC was the result of countries.6 four years of effort by the joint committee of The executive directors continued their ac- the Bank and the International Monetary Fund tive involvement with the Development Com- (IMF) executive directors, which was estab- mittee, including assistance to committee lished in 1984 to review aspects of the compen- members in preparation for the meetings, con- sation system that were called into question during the board's discussion of staff compen- Details of the adjustment lending review and of lending for sation, to consider whether changes in such emergencies are found on pages 78 and 82, respectively. aspects were desirable, and to make recom- See Table 5-3 on page 99. mendations on changes that appeared appro- For details, see page 96. The Executive Board 17 sideration of the draft provisional agendas, and The committee consists of eight executive deliberation of the president's reports and directors who are appointed by the board after background papers that are used as the basis each regular election for a term of two years. for the ministers' discussions. In preparation Since November 1988, Gerhard Boehmer has for the biannual meetings, the board discussed served as chairman of the committee. papers on industrial countries' industrial poli- Committee on Personnel Policy Issues. cies and their impact on developing countries; The Committee on Personnel Policy Issues strengthening the Bank's poverty focus; prog- was established in 1980, originally as the Com- ress on initiatives benefiting sub-Saharan Af- mittee on Staff Compensation Issues. Its terms rica; and the Bank's experience with adjust- of reference mandate it to keep under continu- ment lending. The executive directors' steering ing review and, where appropriate, to advise committee also reviewed the Development the executive directors on staff compensation Committee's spring communiqud in order to and other significant personnel-policy issues ensure that the board's work program is re- and to maintain close liaison on staff compen- sponsive to the directions set out by the com- sation with the executive directors of the IMF, mittee. bearing in mind the need for parallelism be- The Joint Audit Committee (JAC). Estab- tween the two institutions. lished in 1970, the Joint Audit Committee Since its inception, the committee has ad- represents shareholders in overseeing the dressed a wide range of topics. These include soundness of the Bank's financial practices issues arising from a review of expatriate ben- and the adequacy of its operations evaluation efits; modifications in the financial-assistance and internal auditing. The committee provides program; principles of staff employment (sub- a continuous channel through which the inter- sequently adopted by the executive directors), nal and external auditors can communicate as well as draft rules implementing them on with the executive directors. In this regard, the sensitive issues such as separation and demo- committee reviewed and endorsed recommen- tion; the findings, implications, and options dations pertaining to the fiscal 1989 implemen- relating to periodic comparator market surveys tation of the IBRD's policy for loan-loss pro- conducted by an outside consulting firm; is- visioning. sues arising from the Bank's job-grading pro- In pursuing its responsibilities during fiscal gram and reorganization; and issues relating to 1989, the committee nominated a firm of pri- the Bank's human-resources strategy. vate, independent, internationally established During the year, the committee gave special accountants to conduct the annual audits of the attention to proposals for a revised compensa- Bank. The committee reviewed the scope of tion system contained in the final report of the the independent accountants' examination and Joint Bank/Fund Committee of Executive Di- their annual audited financial statements. In rectors on Staff Compensation, in particular, addition, through meetings with the Bank's on aspects relating to the definition of the senior financial officers, the committee helped comparator market, relationship to the com- to provide assurance to the board that the parator market, international competitiveness, financial affairs of the Bank were properly salary-structure design, salary administration, conducted. salary-comparatio management, and Bank/ As part of its oversight function, the com- IMF coordination. mittee undertook its annual review of the work The committee consists of eight executive programs of the operations evaluation and in- directors who are appointed by the executive ternal auditing departments. Through two sub- directors for a term of two years after each committees, it examined specific audit reports regular election of executive directors. Since to determine whether the departments had March 1986, C. R. Krishnaswamy Rao Sahib performed their functions adequately and effi- has served as chairman of the committee. ciently. In addition, the committee reviewed Joint Bank/Fund Committee of Executive numerous papers by the operations evaluation Directors on Staff Compensation. The Joint department to identify problems or policy is- Bank/Fund Committee of Executive Directors sues for consideration by the executive direc- on Staff Compensation was established in No- tors. Among the many issues examined during vember 1984 to review those aspects of the the year, the committee discussed and en- compensation systems of the Bank and the dorsed the recommendations of two Bank task- IMF that were called into question during the force reports, one on enhancing quality control discussions on staff compensation in the over performance reports on Bank projects, boards of the two institutions in June and July and the other on improving the Bank's ability of 1984. Under its mandate, the committee was to apply the lessons learned from its evaluation to consider whether changes in such aspects of system. the compensation systems were desirable and 18 The Executive Board to recommend any changes that appeared ap- Ad Hoc Committee on Board Procedures. propriate, while bearing in mind the impor- The Ad Hoc Committee on Board Procedures tance of ensuring that the two institutions were was established by the executive directors in able to continue to recruit and retain staff of July 1987 to review the board's functions and the highest caliber, the desirability of maintain- procedures, taking into account developments ing the international character of the staff, and in the international economic environment, the the need for the compensation system to rec- implications of the Bank's reorganized struc- ognize more clearly individual performance ture, and the IFC's expanded activities. The and ability. committee consists of ten executive directors; The committee's final report was submitted Pedro S. Malan served as its chairman from to the boards of executive directors of the February 1988 until October 1988, when the Bank and the IMF in August 1988. The report committee completed its work. contained major proposals for a revised com- In its 1988 report, the committee recom- pensation system. The boards of the Bank and mended that the role and procedures of the the IMF established a revised compensation board, as they related to the IBRD and IDA, be system for the two institutions that became modified. The executive board approved the effective in May 1989. With the completion of committee's key recommendations, and, in its final report, the committee fulfilled its man- light of the committee's report, also requested date. that existing board committees review their The committee was composed of eight exec- terms of reference and submit these through utive directors, four each from the Bank and the Ad Hoc Committee on Board Procedures the IMF. Since February 1986, Guenter Gro- to the executive board for review. sche (IMF) served as its chairman. The committee then turned its attention to a Committee on Cost Effectiveness and Bud- review of IFC board procedures, and, in July get Practices, The Committee on Cost Effec- 1988, submitted its report on IFC procedures tiveness and Budget Practices was established to the executive board. In this report, the in November 1986, primarily to examine cer- committee recommended, and the board sub- tain aspects of the Bank's business processes, sequently approved, a new set of streamlined administrative policies, standards, and budget project-approval procedures and additional practices that significantly affect the cost-ef- board review of IFC policies, strategies, and fectiveness of the Bank's operations. finances. With the completion of the review of During the year, the executive directors re- both Bank and IFC board procedures, the viewed and endorsed the role of the committee committee began its final task-to review the and its activities, together with a one- to two- terms of reference of existing board commit- year work program that includes the following: tees. first, a broad examination of the Bank's budget The committee's report was submitted to the processes and procedures initiated by repre- executive board in September 1988. In it, the sentatives of major administrative units ex- committee endorsed the amendments sug- plaining the budget process as it related to their gested by the existing committees in their work and objectives; second, a review of spe- review of their respective terms of reference. cific cost-effectiveness topics, with first prior- The board approved the committee's recom- ity to be given to (a) cost-sharing between the mendations that the terms of reference for the Bank and the IMF, the IFC, and MIGA, and Committee on Staff Compensation Issues in- (b) trust funds and reimbursable programs. clude review not only of staff compensation Additional topics will be addressed in a second but also of other significant personnel-policy phase of the work program. The executive issues, and that the committee's name be directors have agreed to review the continued changed to the Committee on Personnel Policy need for the committee upon completion of this Issues to reflect these added responsibilities. one- to two-year work program. The board also approved the committee's rec- The committee's activities in fiscal 1989 also ommendation that the Joint Audit Committee's included a review of management's response terms of reference be amended to include to the committee's earlier recommendations review, as requested by the executive directors with respect to the use of consultants, field or as needed by the committee in the perfor- offices, and travel policy. The management of mance of its duties, of financial issues and the Bank reported on the steps that had been policies that have an important bearing on the taken in these areas. Bank's financial position. The committee rec- The committee is composed of eight execu- ommended that no changes be made in the tive directors nominated by the board. Frank Committee on Directors' Administrative Mat- Potter has served as chairman since the com- ters and in the Committee on Cost Effective- mittee's inception. ness and Budget Practices. The Executive Board 19 With the completion of its three reports, the The committee will report to the executive committee concluded its work in October 1988. directors upon reaching definite conclusions Ad Hoc Committee on the Valuation of Bank on voting-power issues. Capital. The Ad Hoc Committee on the Val- The committee, which has been chaired by uation of Bank Capital was established by the Gerhard Boehmer since April 1988, consists of executive directors in February 1988 to review eight executive directors nominated by the the question of the valuation of the IBRD's executive board. capital in light of exchange-rate developments The Committee on Directors' Administrative in the 1980s that resulted in a substantial de- Matters (CODAM). The CODAM was estab- cline in the IBRD's "headroom," that is, the lished in 1968. It considers, makes recommen- margin between its statutory limit on lending dations, and reports its findings to the executive and the volume of loans that was disbursed and directors for their decision on administrative outstanding. matters relating to executive directors, alter- The committee's terms of reference call upon nates, advisors, and their staff. it to consider possible changes in the valuation Its terms of reference involve it in a wide of the IBRD's capital, as well as any other spectrum of administrative matters and charge steps that would help diminish the IBRD's it with responsibility for assisting executive vulnerability to fluctuations in exchange rates. directors in the formulation of policies, After reviewing several options for the changes in existing policies, and implementa- Bank's standard of value and some possible tion of such policies. Matters taken up during improvements in maintenance-of-value proce- the year included, for example, directors' ac- dures, the committee, with the exception of cess to the Bank's mainframe computers and one, has come to believe that the special databases, directors' travel to member coun- drawing right (SDR) would be the appropriate tries outside their constituencies, and compen- standard of value. However, the committee sation for directors' assistants within the re- also feels that such change in the standard of vised compensation system. The committee value should be the result of consensus among coordinates many of its recommendations with Bank members. The report of the committee a similar committee established by the execu- will be provided to the executive board in the tive directors of the IMF. In its recommenda- near future. tions, the committee tries to maintain a balance The committee consists of eight executive between the organization and administrative directors nominated by the full executive objectives of the institution and the unique board. Murray A. Sherwin served as its chair- circumstances faced by the directors in dis- man from November 1988 through May 1989. charging their dual responsibilities. Eduardo Wiesner has been acting chairman The committee meets as frequently as nec- since then. essary, normally about once a month. The Ad Hoc Committee on Voting Power of membership consists of six executive directors Smaller Members. The Ad Hoc Committee who are appointed by the board for a term of on Voting Power of Smaller Members was two years after each regular election of the established in February 1988 at the conclusion executive directors. Since November 1988, of discussions on the general capital increase. Fawzi Hamad Al-Sultan has served as its The committee's mandate is to review the chairman. issues and consider steps to protect the voting Executive Directors' Steering Committee. power of smaller member countries, which The Steering Committee, an informal advisory face dilution whenever there is a general in- body of executive directors composed of the crease in the Bank's capital. The committee's dean and co-dean of the board and the chair- terms of reference require it to take account of men of the other standing board committees, the fact that, since the large majority of the meets monthly to consult on, and review with smaller members are developing countries, any the secretary, the executive directors' work action that reduces the individual voting power program. The committee also provides a con- of small members also leads to a reduction of sultative framework on various issues. In ad- the total voting power of developing countries. dition, the committee reviewed the Develop- In an interim report to the executive board, the ment Committee's spring communique to committee outlined its main areas of inquiry: ensure that the implications for the executive the objective of voting rights, the definition of directors' work program were fully consid- smaller members, and mechanisms for attain- ered. ing the stated objectives. 20 Section Two The Economic Scene: A Global Perspective Summary economies, mostly in Asia, and the poor per- The global economy in 1988 staged a strong formance of the highly indebted, middle-in- performance following adverse shocks of late come countries, largely in Latin America. In 1987. In the industrial countries (that is, the sub-Saharan Africa, GDP growth turned posi- high-income OECD countries),' real gross na- tive after posting a negative 1.4 percent rate in tional product (GNP) grew by 4 percent, while 1987; per capita GDP growth, however, re- the corresponding figure for the middle-income mained negative. and low-income countries was 5 percent. Fastest growing among the countries in the World trade grew by 9 percent in volume. first group were China (at 11 percent) and India These aggregates mask significant differences (over 8 percent); the newly industrializing among country groups. economies (NIEs) of East Asia continued their Among the industrial countries, growth in strong growth, also over 8 percent as a group. Japan reached 5.7 percent, fueled by domestic It is also notable that a number of "second- demand that increased by 7.7 percent. The tier" NIEs-Indonesia, Malaysia, and Thai- broad-based strength of the industrial econo- land, in particular-are moving into higher- mies contributed to increased concerns about performance categories. Typically, countries inflationary pressures and triggered monetary that performed well were those that had strong tightening. investment growth in recent years, were able During the past year, there was a growing to take advantage of the global trade boom general acceptance of the need to lessen the (especially in manufactures), and were not debt burdens of developing countries in order encumbered by too heavy a burden of foreign to improve their prospects for sustained or domestic debt. growth. Latin America continued to suffer slow The 1988 Toronto summit proposal by growth, as per capita GDP declined for the French President Francois Mitterand, follow- second consecutive year. ing one made earlier by the United Kingdom's Major areas of concern in 1988 included Chancellor of the Exchequer, Nigel Lawson, trade, capital flows, debt, and the environ- aimed at alleviating the burden of official debt ment. and was directed primarily toward the more The recent buoyancy of trade should provide impoverished countries, largely in sub-Saharan an excellent opportunity for strengthening and Africa. They were put into effect for eight extending the Uruguay Round, the generalized countries by the Paris Club. More recent pro- system of preferences (GSP) scheme, and the posals, such as that put forward in March 1989 Lome Convention. However, continued trade by United States Secretary of the Treasury, imbalances (see Table 2-1) maintain the pres- Nicholas Brady, sought to address the debt sure behind protectionism. These pressures problem in the highly indebted, middle-income make progress in the Uruguay Round ex- countries. They seek to combine domestic tremely urgent. Fortunately, agreements by reform measures in these countries with agreed senior officials on several difficult and out- forms of debt and interest reduction to limit standing issues were reached in April 1989. resource outflows from the debtor countries. Significant progress on the agriculture problem Both the World Bank and the International provided a major impetus, as did progress on Monetary Fund (IMF) adopted operational intellectual property rights. Significant prog- guidelines for their support for debt and debt- service reduction, and Japan has indicated its willingness to provide supplemental funding to Australia, Austria. Belgium, Canada, Denmark, Finland, facilitate the process. France, the Federal Republic of Germany, Iceland, Ire- land, Italy, Japan, Luxembourg. the Netherlands, New In the developing countries, there were Zealand, Norway. Spain, Sweden. Switzerland, the striking differences between the fast-growing United Kingdom. and the United States. Events in the Industrial Countries 21 Table 2-1. Current-account Balances of the G-7 Countries. 1981-88 G-7 Countries 1981 1952 I,)b3 1954 19YV I 9.Yh I%.^ 7 19bS Billiowiis rf US driollars United State' b.9 - 8 ' -43 3 -107.1 -115.1 -13x.s -154.(1 -126. Japan 4.8 6.9 20.8 35.() 49.2 85 8 87.ll 79 6 ,Germans Federal Republic of -3.6 5.1 5.3 9 8 16.4 19.2 45.3 s.5 France -4 K -12.1 -4 7 -tl 9 -0.4 3 0 -4.1 -3.8 Lnited Kinadom 13.9 8.2 5 9 2.8 4 3 0.2 -4 8 -26.1 Italy -4.1 -6.2 1I -25 -17 2.5 -I -4.(1 Canada -5.1 2.3 2 . 2.1 - I 41 - 7 -E t! -9.1 Total 3.1 -4.6 - 1. - 6hl1. - 51.7 -I .6 -39 h -41.4 Other industrial countries' -19.3 - I 5 7 -3.2 1.1 1:1.8 -1.9 -'.6 -11.' All industrial countries - 16.2 -21) - 15.2 - 59.4 -49.9 - 17.' -4'.2 -'2.'1 PNrcenragi cf G G,VPiDP United States u.2 -03 -1 4 -2 8 -2.9 -3 3 -3 4 -2.8 Japan 114 il.6 1 8 2 S 3.7 4.4 3 h ' .8 Germam, Federal Republic of -(L. 1.15 (..8 1.6 2 6 4 4 4 (0 4.0 France -Ii 8 - '.2 -0.9 -0) I -). I 114 -l.i -11.4 United Kingdom 27 1.7 1.3 ( 6 0) 9 l) -n 3 -3 htalh' -2.2 - I 5 0.4 -13.6 -13.9 0 4 -I3.l -0I.5 Canada -l 7 1.9 0.rh 0.6 -13.4 -.1 -1.9 -I 9 Total .1 -0.1 -0.2 - I.I.b -0 -0.2 -0.4 -1i 4 Other industrial counitres -1.9 - I --3I 1 . -.1 -.1).I -i 6 All indu,tnial countrieS -0 2 -11.3 -0.3 -I. -11.6 -10.2 -0.4 -- 4 a. Inclcide Au.ri,.. AuItr.. Belig.um. Denmirk. Finland Iceland lifd,nd. Luwemboure he NeihcrIhnd& Nc: Zealand. Nor-am, Sp-n, Ss,edin. and S.iizerland SOULRCE O)ECD. ress has also been made in parallel negotiations multicountry initiatives, involving pollution outside the GATT (General Agreement on Tar- and toxic-waste issues, gave momentum to the iffs and Trade) on the important issue of serv- search for solutions to a number of global ices. problems in this area. Although developed and The general situation of the group of seven- developing countries may differ in their prior- teen highly indebted, middle-income countries ities respecting specific environmental issues, deteriorated in 1988, as interest rates rose and they find themselves increasingly in agreement commercial banks continued to reduce their that interaction is needed to deal with these exposure. Although there was some increase in issues. direct investment flows to a few developing countries, most of it was directed to countries Events in the Industrial Countries such as Indonesia and Thailand. Lack of In the industrial countries, 1988 was a year growth in many developing countries added to of robust growth (see Table 2-2). Growth was domestic tensions, as governments faced tight- led by fixed investment and supported by ening resource constraints and often resorted increased consumption and the expansion of to monetizing domestic fiscal imbalances. In- world trade. The growth of real GNP in the flation rates in many developing countries, industrial countries accelerated from 3.4 per- especially in those with large external-debt cent in 1987 to 4 percent in 1988, and the burdens, accelerated, inhibiting the process of growth rate for the volume of world merchan- real saving and investment. These financial dise trade rose from about 6 percent to 9 disruptions made more urgent the need to percent. Private nonresidential investment ad- implement sound domestic policies and to find vanced by some 11 percent in 1988, while viable solutions to the problem of debt. consumption grew by 3.5 percent. The year also witnessed a heightened inter- These positive developments resulted in in- est in environmental issues, and significant creased pressure on capacity in the industrial 22 The Economic Scene: A Global Perspective Table 2-2. G-7 Countries: Output. Inflation. Investment, and Unemployment. 1981-88 3.erage rnnual perceniape ch.pgc: unemplosment rates in percenhi I9S14h 1987 19", 198lh 14b' l7 1988i Real GNP GNP Je!lawr Linited Stares 3.3 3.3 3.9 3.8 3.3 3.4 Japan 4.11 4.5 5 7 1.3 -0.2 0.4 German.. Federal Republic oF 1.9 1.8 3.4 2.8 .1 1.5 France' 1.6 1.9 3.4 .'S '.9 3.2 Liniled Kingdom' 2.9 4.6 3.6 5.3 4.8 6 6 ltalh 1.8 3.') 3.9 11.9 6.1 5.9 Canada 3.3 4 ' 4.5 4.2 4.3 4.2 Totail 3.1 3.4 4.2 4.2 2.7 3l Gro.' fi-ed inteinment LUnemplorment Rates uLnited States .7. 2j) 6.1 7 5 b.2 55 Japan 3 4 1t1.3 13 1 2.6 2.9 2.5 German%. Federal Republic of 0.6 2.5 i.8 7.2 7 9 7 9 France v). 3.? 7.0 9.4 70 5 10.1 United Kingdom 5.2 8.3 11.8 10.8 1u.2 8.2 Ital. 1.2 6.8 4.9 9.4 1 1.1 II).0 Canada 0.4 9.6 12. 5 9.8 8.9 7..8 Total' 1 6 i.0 8.3 '.2 6.9 6.3 a. Preliminar) h GDP and GDP deflator i. Aggregaie f eighted on tne baii% of 1987 %Dlue of GNP'GDP e%pre,.ed In 1981i United SLaies dollar;. SLt.RcE. The %%&rld B.nl, and OECD. countries and nudged inflation rates slightly but cerns over inflation and prompted tighter mon- noticeably higher. This trend continued on a etary policy. broad front in the early part of 1989, as indi- In Japan, a relatively easy monetary policy cated by consumer prices. Capacity utilization contributed to the shift in the composition of in the seven major industrial countries rose to GNP away from net exports toward domestic about 87 percent in 1988 from an average of 82 demand. The weakness of the yen and the rise percent over the period 1983-86, while the of oil prices toward the end of 1988 paved the average unemployment rate fell to 6.3 percent way for tighter monetary policy there, while from 7.6 percent over the same period. The favorable trends in productivity and costs kept growth in compensation per employee in nom- the actual rate of inflation low. In the United inal terms in the industrial countries climbed States, signs of an acceleration in the rate of from 4.5 percent in 1987 to 5.4 percent in 1988. inflation have appeared. While U.S. growth Unit labor costs rose by 3.2 percent in 1988, seemed to be slowing toward the middle of compared with about 2.8 percent in 1987. Ris- 1989. the scope for a significant easing of mon- ing cost pressures, among other factors, pushed etary policy is generally thought to be limited. up inflation of the GNP deflator from 2.7 per- Nevertheless, slower growth in the demand for cent in 1987 to 3.0 percent in 1988. credit seems to be allowing a modest decline in Increasing growth and inflation combined interest rates in the United States. with tightening monetary policy to drive up short-term interest rates steeply in the United High-income, Oil-exporting Countries States, and less rapidly in Japan and Germany Increase Production (see Figure 2-1). The upward trend was also The high-income oil exporters' increased evident in real terms (see Figure 2-2), with their oil production from a level of about 8.4 adverse consequences for most developing million barrels per day (b/d) in 1987 to around countries. 9.5 million b/d in 1988. The weighted average In continental Europe, domestic currencies price for the group of seven countries fell to were strong to March 1988 and then began weakening in the middle of the year. This, 2 Includes Bahrain, Brunei. Kuwait. Libya, Qatar, Saudi together with strong oil prices, reinforced con- Arabia, and the United Arab Emirates (UAE). Low-income and Middle-income Countries Show GDP Rise 23 Figure 2-1. Nominal Six-month LIBOR Rates (.nnual percentaaesi 1 7 16 1; r 1 10'''s\\\\\~~~~~~~~~~- - \ Cs,,l- :r,e l;-,-lrS - S C_ _--~ --_ 4 l 9i I 1 982 19 8'3 1984 18t 3 lu 19 95 19.8 $13.50 a barrel for 1988, 20 percent below the The November 1988 OPEC agreement level for 1987. helped clarify the Iran-Iraq parity issue and Oil-export earnings for the group were about shifted the focus back to market conditions. $42 billion in 1988, 9 percent below those of As a result, prices firmed. This price rise was 1987. In spite of a fall in export earnings, amplified later by supply mishaps in Alaska imports by this group of countries were sus- and the North Sea. tained at about $38 billion, as in the year before. Preliminary estimates put the deficit on Low-income and Middle-income balance of payments for goods, service, and Countries Show GDP Rise private transfers for the group at about $7 The average GDP growth rate in 1988 for the billion; Saudi Arabia accounted for most of this low-income and middle-income countries was deficit, while Bahrain, Kuwait, and the UAE 5 percent (aggregating the data by using 1980 showed small surpluses. The sharp increase in as the base year). There were substantial the volume of crude production resulted in differences among country groups. East growth in real gross domestic product (GDP) of Asia's GDP growth rate was about 9 percent, almost 7 percent in 1988 (see Table 2-3). while the corresponding figure for Latin A number of the larger middle-income oil- America and the Caribbean was about 1.4 exporting countries, such as Nigeria and Mex- percent. On average, the GDP of sub-Saharan ico, sought to maintain their export dollar African countries rose by 3 percent, while the revenues by increasing volume to offset the developing countries in Europe, the Middle price fall. Venezuela increased its export vol- East, and North Africa registered a gain of ume, but the value of fuel exports fell by about about 2.5 percent. 5 percent. Indonesia, however, managed to Among the low-income countries, China increase its overall exports considerably by and India, in particular, demonstrated strong boosting nonoil exports. growth of output, with growth rates of 11 24 The Economic Scene: A Global Perspective Figure 2-2. Real Six-month LIBOR Rates ,annu,al rercerlujg.esi * , _Ijr,\r :II. -..I~ 1 ~~~ 1 I S~~~~~~~~ percent and 8 percent, respectively.3 Toward growing demand for imports of such goods in the end of the year, fears of overheating the the Pacific region. The demand for their ex- economy and of inflation prompted China to ports was also helped by the recent restructur- introduce a series of administrative, monetary. ing of the Japanese economy that caused it to and fiscal measures to regain price stability be driven more by domestic demand. over the medium term. Gross domestic product also increased mod- Countries with high investment/GDP ratios estly in the countries of sub-Saharan Africa, have generally grown fast. This was again the after declining in the previous year. The in- rule in 1988. As in the previous year, the best crease was not enough to effect a rise in per performers continued to be those countries on capita GDP in the face of rapid population the Pacific rim whose ratios of gross domestic growth. Growth was aided by a return to investment to GDP have typically exceeded 20 normal weather conditions (prompting, for the percent over a number of years (see Figure 2-3 most part, an increase in per capita agricultural and Table 2-4). The corresponding ratio over production), a terms-of-trade improvement the past five years has been 17 percent for the (except for the oil exporters), and by the deep- Latin America and the Caribbean region and 15 ening structural adjustments that are being percent for sub-Saharan Africa. These averages carried out by an increasing number of govern- conceal lower investment ratios for some coun- ments. In Nigeria, GDP is estimated to have tries, in which gross investment is not even risen by more than 5 percent, reflecting a 9 sufficient to cover depreciation, with the result percent increase in oil production and a recov- that such countries are becoming decapitalized. ery in agriculture. Except in Mali, which suf- The newly industrializing economies of East fered from adverse weather conditions, eco- Asia showed an average growth rate of over 8 percent. These countries offer a wide range of exports in manufactured or semiprocessed goods and were able to take advantage of the For details, see pages 116-19. Declines in the Heavily Indebted, Middle-income Countries 25 Table 2-3. Lou- and Nliddle-income Economies: Gro%uth of GDP and GDP per Capita, by Region. 1981-88 a-.erage annual ptierniaje change' 1w56 IYs.tl GDP GDP prcapiTa GCI-' Populdltin iSbillin I rrilliin,l l'O, I-_n l'JU- l'-s viS 1-s 1%? lM 7 Lv. - and middle-income economie, '.57.1) 1.S3.4 4 1 4.2 5 2 i 2.1 3 6 Rtei..ail 2,. orpi Sadb-Saharan Africat 154.3 . 2. I 114 - 1 4 3 t0 -',h -4 5 -11 4 Easl Aia h61. 1 1.48 4 S 3 ' 4 F4 h ' South A,a '9h J 1 05 i 46 h h 2.3 *, ;_ Europe. Mfiddle Eail. and Noirth Afic.1' .4S I 352 I 33 ! h 25 I I --11. ;, Latin Americ, and the C.ifibbean 649 5 (1 5 7 - 2 I 4 -O - -I 6 -ii 6 |/, . ,,t jr-upsr Lov incomen .4 hi 2'64.2 5 5 4 % 6 45 3 0h4 Nliddle Income 1.7Y'4.9 1.111 - ' 2 3.4 2 5 114 1. I l,t Hihl\ indebted couniries :24 4 5(A ' . I - 1 - I 2 -t h -11 h MIt fli*. *IL 11, Hi-h-inre'nie oNil expori-rs' 149 3 21111 -5.6 4 2 h 5 -9 3 ii 2 n .1. n .. Nut a ai1 ibir . Preliminar crd ],in! J ..n data, b EWclJd, St,-wih Unra . Include, Chin,. Fii. Indonm-., <;nap',hea. Kiaiht ii Repj,hlE cl KIr- a. L.,.-.i'lk DC ir ,tic Rcpublh al.Cc- Nal.;';i, PP,po. Nvc Guine, Philippre. ,-lImv-n 'la,nd' 1.:inc ,,. Chin, Tharlic T-.nej. \'.5'latU, VeNnl and WeUtern S.amoa d. Includce. .&igh;.irtar, .\igeri.. r: pu F F:.r GIr- cH une ,r.. ir.,n i.rd.n L ehan, n I h,., MA XI. Malt. . OIrr!nrL. F'- Iard. Ponug.I. Rc-n,nia. S:r,, TdnLil-, Turke: . Yirecn Iflrbh Rcpnbl,.c r,---plc ,Dcm3ii Rpuhmlc c-I Y':rnen. and u si.i. incluLdc. Arc.eni,nr Boli-I. Br 7il. Chile. El-MI'l 1 Ric.. Core J -.rc EC.-., 1.an:nI.a Metico. Nlro-ec-, Niceri.. Peru, Philippine, Lr,.rt,. \ nc'ieia. .nd' u,g-'i I Includse. Eahrain. Brune tu. .i Lih-.. tli7arf. SaiLd. Xr,bil. and The liir,,d \r.bh Enir3i- SctiR I:r. Tne \ -rid Bank nomic growth improved in all the Sahelian facing increasingly difficult domestic political countries in 1988. situations that have inhibited their ability to adjust as quickly as desired and that pose Declines in the Heavily Indebted, increasing problems to sustained adjustment. Middle-income Countries Many countries have begun serious adjustment Performance in the seventeen heavily in- programs-such as Bolivia, Chile, Costa Rica, debted, middle-income countries was mixed Jamaica, Mexico. Morocco, the Philippines, overall, as it was in the other debt-distressed and Uruguay-but creditors and the countries middle-income countries, many of whom share themselves must recognize that this is only the debt burdens similar to the group of seventeen. first step in a long and difficult process of a It has been clear that even in the best of return to sustainable, steady growth. circumstances, rectifyingthe serious macroeco- As a group, the seventeen heavily indebted, nomic imbalances that have accumulated over middle-income countries were unable to the years in these countries will take a long achieve GDP growth in excess of their popu- time. Such reforms require concerted efforts lation growth rates in 1988. Aggregate growth by governments, popular acceptance, and was less than 2 percent, implying a decline of strong external support. Some countries are around 0.6 percent in their per capita income 26 The Economic Scene: A Global Perspective Figure 2-3. Investment-to-GDP Ratios ir7errCertat3gE 34 -- 3r l . in3 ee ~~~~~~~~~~~--.-_____ I 'D, 1 1J'3.1 E-15 1 , 5 1 %F: 1987 198-5 level. There was wide variance between coun- sary for production and to avoid impairing tries, however; Morocco, for example, saw its longer-run growth prospects. GDP increase by more than 10 percent. More For the low-income and middle-income critically, investment in the group of highly economies, the balance of payments on goods, indebted countries continued to fall, to 15 services, and private transfers was in deficit of percent of GDP in 1988, compared to 25 per- about $30 billion in 1988, a deterioration of cent for these same countries in 1980. Unless about $44 billion from the 1987 surplus (see these investment rates can be restored to ear- Table 2-5). This balance for the highly indebted ier levels, resumption of sustained growth will group of countries in 1988 was $11.5 billion in be difficult, indeed, deficit, compared with $8.5 billion in 1987. There are, of course, regional differences. In Much of that change was due to higher factor- Asia, domestic absorption remains strong, as service payments. The balance-of-payments investment makes an above-average contribu- deficit of the high-income oil exporters in- tion to output growth. In contrast, Latin Amer- creased by about $6 billion, as exports failed to ica's main source of growth derives from con- keep pace with import demand. sumption. Sub-Saharan Africa has declining Among regional groups in 1988, East Asia trends in investment and exports, with little experienced a fall in its surplus of close to $20 gain in consumption. The downward trend in billion, primarily due to a surge in imports, investment is particularly disturbing as this promoted actively through trade policies. For would be the normal vehicle to incorporate the entire middle-income group of countries technical change and make economies more (which includes East Asia), 1988 shows an competitive and efficient. Countries that rely aggregate deficit of slightly more than $12 on inefficient import substitution may show billion, or a deterioration of close to $45 billion short-term improvement in their balances; from the 1987 level. On an aggregate basis, the however, a certain level of imports is neces- balance of payments of the low-income coun- Debt and Financial Flows 27 Table 2-4. Low- and Mliddle-income Countries: ln,eslmenV!Sa%ings-to-GDP Ratios. 1980-88 Bi- kmokqraFihicalr Sub-Saharan Africa Gross domesilc in'.etment 2118 II N 1' 6 14 9 1 l- 12 14 h is 14 1 Gross domesiic ,a, ng' 22'' -.2 11.4 lih 11 - 112 11 3 12 4 I.X Latin Amcrica and the Caribbe-un Gross domnestic in%estment 24 2 23 6 21.4 16 9 16 7 1- ' 4 MI.' IS 7 Gro,s domestic a.avinps 22 b 22U 2) 1 '19 21 9 22. 19.8 19.7 bS 6 East Asia Gross domeslic inve.tment 29.4 28.6 28 3 2h 9 28.9 '1.4 29 S 29.8 33 2 Gross domesi.c isaings 29." - 9 2.2 28. t I) 4 ID.5 32 h 3-4 8 36 1 South Asia Grbos domestic in% e%tmenl 23.1 24 '2 22.1 2 I 22.11 244.h 2.h 21.6 2t1.7 Gross domestic tmvinrgs 1' S ou 6h IY.Q 1 '9 19 I 21 .7 19.8 1N.7 1.8 Europe. Mliddle Easi. and North .fric Gross domestic investmeni 2'.S 2- 2 1 29.u! 2b 3 26 9 2h.9 2'.9 25.8 Gro,s domestic sa% ings 3.3 4.IJ 32.3 29.4- 2'.2 'h 4 '4.' 22.5 " ' B! illnclle Izioup Lo%% income Gross domesuc inmestment '2.' 25i 1 4 2 23.9 23 S 7.1) * 2 27.0i IS.l Groess domestic sa inp 24.8 22.S 21 6 217 22 S 3 S '4.t 25.1 27.4 Mliddle income Gross dnme'tic investment 2 3 255 '4.1 232 22 - 21 2 '1.t Gross domestic savings 2 I 4.5 24 - 25 2 25 - 5.1 5 6 19.5 Lo%% and middle income Grows doniewtic inveotment 26 ' 26 1 '4 6 24 I 23. M 5 23.3 231 I 24.0 Gross domeEtie sa%ings 24 h 231 23 4 23 '4 4 24 b 24 4 24.6 24 S ., PreMmin;ar e,.mAre-. SOURCU Ihe hWorld B,nk tries in 1988 was -$17 billion, as compared to percent of their combined GNP at the end of -$18.5 billion in 1987. 1988 and showing little change from the level of debt outstanding at the end of 1987. The slow- Debt and Financial Flows down in nominal debt accumulation can be The economic situation for the highly in- attributed to three major factors: debted countries as a group deteriorated in * Debt reduction. The year saw an in- 1988. The trend in negative resource transfers crease in the pace of voluntary reduction, by (that is, net outflows), which started as far commercial creditors, of the debt of a number back as 1984, continued. For the year, total of major middle-income debtors, partly disbursements amounted to $92 billion, but this through debt-equity swaps and buybacks. was more than offset by total debt service of * Commercial-bank participation. In 1988, $142 billion, resulting in a net negative transfer lending from commercial banks to the group of of some $50 billion. Figure 2-4 shows the highly indebted, middle-income countries was trends in financial flows since 1980. $8.5 billion gross ($1.7 billion net), close to the Net flows to middle-income and low-income level in 1987. However, private capital flows to countries was at the modest level of$17 billion in this group of countries continued to be domi- 1988 (see Table 2-6). Much of this came through nated by disbursements on large concerted concerted lending following rescheduling agree- packages to a very limited number of countries ments with such major debtors as Brazil. (Argentina, Brazil, and Mexico). Smaller coun- Total debt (including short-term debt) for the tries with strong performance records have had developing countries was estimated at about a great deal of difficulty in gaining access to $1.0 trillion, an amount equal to about 50 private markets. Morocco, for example, has aL Vn I... D -; -- o~~~~~~- r~~~~~~~~~~~- Z -~~~~~~~~~~- ~~~~7 rE- ' ~~~~~~~~~~~~~~~~~~~~~~cc 3 FtC - (5*4~~~~~~~~~~~~~~~~~~~~:v C.VTC - lit. A 3~~~~~~~~~~~~~~~~T.~ n Zm '=S * w . 2~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C - . - ~~~~~~~~~~~~~~~~~ n i t a a ~~~~~~~~~~~~~~~~~~~~~~0..~~~~~e oo ~ ~ ~ ~ -0 -aC - '41.4 Sb ~~~~~~~~~~~~~~~~~~~~~~~~~~ ~~~~~ - I l i i~~~~~~~~~~~~~~~~i I IL i I - l.. c 0 C C 4- j-, ~~~~~~~~~~~C 4 C- I I -(D Vt - ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. I . --I I - I I ... C 4.. J.. C co~~~~~~~~~~~~~~~~~~~~~~~~= -.Z a C r, 3 ,' C- .3' . .~ 'C V C I -~~~~~~~~~~~~~~~~~~~~~~~~~~:I~ 7 ~~~~~~~~~ -~~~~Z r s -4 7. 7 7 ~ ~ ~ ~ C.I I .- - I I S. - XY~~~~~~~~~~~~~~~. - 3' ~~~~~~~~~~~~ 7 -L.'D. 4-. 2 'C I - - .4 ASb~ ~~ ~~ ~~~~~~~- r- 3'14 :- '. Ii 'S 3 Ii . I - I -J 3~~~~~~~ 0i 4 14 IS . C'- r-~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4 43'W Debt and Financial Flows 29 Figure 2-4. Disbursements, Debt Service jn-.l jno. nr,rei var-.ier all:i Je r -o, -. ,,,ur,MTrle ~1.') I C .- -. _ - - --S~~~~~~~~~~~~~~~~~~~~~~- S..~~~~~~~~~ -: ,- ,:.: , . not received new money since 1984 despite was slower than the 18 percent rise experi- repeated requests, and the negotiations to roll enced in 1987, although much of this may be over Colombia's maturing debt were difficult attributed to currency adjustment. Increases in and protracted, despite that country's good both years are attributed to an increase in economic and payment performance. official leriding and currency-valuation effects. * Exchange-rate movements. In 1987, close These effects tend to be more pronounced for to $70 billion of the nominal increase of total low-income countries because loans from offi- developing-country debt was accounted for by cial lenders and multilateral agencies have a the devaluation of the U.S. dollar against the currency mix weighted more towards nondol- major currencies. In 1988, exchange-rate move- lar currencies. ments were generally small and in the opposite The Baker plan, which was initiated in 1985, direction to those in 1987. The U.S. dollar emphasized the sharing of the debt burden generally appreciated vis-a-vis the other major among the adjusting debtor countries; official currencies during the course of the year, bring- lenders, who would increase their financial ing down the dollar value of the end-year stocks flows in support of adjusting countries; and of debt denominated in those currencies. private creditors, who would provide adequate These factors had different implications for amounts of new lending. In practice, the bur- the two major distressed groups of debt- den of providing finance has fallen more heav- ors-the heavily indebted, middle-income ily on official sources; their proportion of debt countries and the countries of sub-Saharan outstanding was 44.1 percent in 1988, up from Africa. Voluntary debt reduction and low lev- 40.8 percent in 1986 and 43.8 percent in 1987. els of commercial-bank lending mainly affected Out of total disbursements of $92.3 billion that the former group, whose debt remained un- went to low-income and middle-income coun- changed at about $445 billion. Sub-Saharan tries in 1988, $46.5 billion came from official Africa, however, saw an increase in lending of sources; the remainder was from private 6.5 percent, to $127 million, an increase that sources (see Table 2-7). 30 The Economic Scene: A Global Perspective lable 2-7. Low- and Mliddle-income Economies: Nledium- and Long-term Debt, Debt Seriice, and Gross Disbursements, 1982-88 ibillion; -. [is ioull,r4i All at. and middie-lncome Hihl% indebred o.Lunries courtne;' Sub*Sahardn Afrca Debt I 7 993.2' 371.3 445.7 -6. 2 126.9 Otficuil '9. I 456 0 .9 12 '9.' 46 4 86.1b PrnL'Le 4-2.6 37 2 "3 4 3 16. 29.8 40.9 Debt j - of GNP 36.9 39.8 55 6 533 4-A.4 .6 Deht %erfle'C 1tA 3 142. 50.8 S9 8 .2 Interest 52.s h,67.0 30." 37 1 2.9 4.0 Official 11. 20.4 4 .14 1.1 2.2 Pri%.ie 41.11 46.6 26 ' '9.4 .s 1 8 Amortization I5.5 '5.4 2.1 22.5 J 3 4.9 Official 13.9 24. 4.9 .1 1 2 2.' Prnate 41.6 i0.t 15.2 14 2 3.1 2.2 Debt ser ice .s '; of e\ports of goods ind services; 21 9 '23.8 40) x 41 6 I'. 19.10 A'erage irtereWLJ 6.f 7.2 8. 3 8 4 4.1) 3. Gros, dt,hur;enrcnts 953 92.3 x4.u 25.6 9.i 11.4 OtYicial 34.3 46.5 10.5 [5.3 5.0 8.3 Pnvate 61 I 45.8 23.5 1[.8 4.5 3.1 NoIE Ctasr, rp'bit, and pbilicIl, guaanteed and nonguar,nietd pn%ale debl lor the It1 Co,anineS ,n the W\orld Bank's Debtor Reportrin S% htm a. Inlude; Argentin.. Bolita. Brazil, Critile. Colombia. Co!ta Rica. Cots dl-o,re. Ecuador JaMLaJc.. tento, lloio,co. Nig:erid. PerL. Phd,plrpnes. Llrugut . Venezuela and 1 ugosl-a 1' PrThirT,nar%. ; Cash b M,i.l 1a. ±CtUal pa' menis J v er.ge inrerell ailu1ai. rtld on the out.ianding det t i-d sear SOtL RCL The h%.rId Bink. During 1988, several countries reduced their In recent operations in Bolivia, Chile, and stock of debt through debt-for-equity swaps and Mexico, however, creditors have granted the buybacks. Chile has been among the most suc- waivers necessary to permit debt-reduction cessful in using swaps, as it reduced its stock of transactions to take place. In addition, the G-7 debt by more than $5 billion over the period governments4 have formed a group to review 1985-88. There is a growing recognition by the the tax-accounting and the regulatory environ- international community of the need to reduce ment to seek ways to reduce impediments to both the debt stock and debt-service burden of debt-reduction schemes. The Bank for Interna- the debt-distressed countries. At the April 1989 tional Settlements, the International Monetary meeting of the Development Committee, mem- Fund, and the World Bank are also analyzing bers agreed that the approach should be broad- the issue. ened further, including use of voluntary market- based techniques that increase financial flows Commodity Prices and Terms of Trade and reduce the stock of debt. The nominal dollar price index of thirty- Certain legal obligations and provisions in three nonoil commodities jumped by nearly 20 debt contracts, such as negative pledge clauses and mandatory prepayment and payment- 4 Include Canada, France. the Federal Republic of Ger- sharing clauses, can inhibit debt and debt- many, Italy. Japan, the United Kingdom, and the United service reduction. States. Commodity Prices and Terms of Trade 31 Table 2-8. Commodilt Prices and Interest Rates, 1981-88 'pnces in a-eragt unnuil rjt;e of chnange. intereit rare, in annual pcrtentlgc. 14- 1 ;6 19SI LCi,lilflO,IUt pri;c hi in ioruhali i ct 'arl.rs Food and beveriges - 1.1 6.1 -16.1 IS 2 Nonfood agriculture -6 3 -9.2 24.3 x ic;ials and minerals -5 tl - 14.9 Total nunoil - 2.8 j1 ii UI Petroleum -14. -49 4 '.4 -L Crnnnoduai pricet ill redll Le, 11s% Total nonoil -4 s -14.2 -1b I1 4 Petroleum -15 -56.9 6.2 -26,8 1n1 sperieJi davi moe rit '/iA SDRt ttreng Total nonoil - 7 - 12.8 -9. 5 1 5.9 Petroleum - 13 -n9 14.6 -24.4 IiiCereF3 r/tits Si% month dollar LIBOR 11.1 6.9 '.3 8.1 In real ter-nms 6 0O 4 I 3 9 4.5 NOTE Comrrtxlti'. pnce indlices .re veighiel h%. comModitds espoil' i ,o I I. leelrnc neIounftflc a. DeNlated b' esport prces nf manufactures of m..~jor indutriAl conITr.e; b Denaled b:- the U.S GINP deflatior SOURCE The World Bank. Table 2-9. World Nlerchandise Trade in Violume. 1970X8 ipercrniage point change per annumi I QJs IJ-I-'9 I9-9-8N IMF (nE(rD iBRD World Trade Volunies h.4 3 n 9.3 87 Exporl vltolne bi i lmhn )1 £ 'imodirn' -,,r'ldp5 NManufaciuret h. 4.' 1'.' lU 11I5 Nonoil primary 2.8 4 9 S.9 nOt 4 5 Oil and product. 1.6 -I S I 7 . '. BN, ma_joe, c|li-wrr groieZps Bi nr/rXow rip Wuth-income OECD 6.6 3.8 ; .' I bf L'nited Siates . - I ' 24.1 2.7 2211 Japan 3 5 2 4.3 2 5.0 Germans. Federal Republic of 5 3.5 ' h 4.8 73 Lou- and middle-income 4.5 2.4 1 I. A.5 9.5 a Estimarer. n-. Not a%ailable SOLURCES: IMF e%timater frv.m tteld E. in.rani, O'lnOA. .Xpr,l lYS. ('LECD EC -.t. 0i,,., .. Juinc 19)9. orld Bank, June 1959 percent in 1988 after stagnating for two years terms were still about 30 percent below their (see Table 2-8). The dollar manufactures unit 1980 level-a year that was particularly buoy- value (MUV) index went up by 6.4 percent ant for commodities. Prices of tropical bever- during the year and helped to consolidate the ages, such as cocoa (down 26 percent in real increases of the previous two years. In spite of terms) and the robusta variety of coffee, which these gains, nonoil commodity prices in real are important for many sub-Saharan African 32 The Economic Scene: A Global Perspective countries, were depressed. Export revenues world became clearer during 1988. The foci of were seriously affected, and prospects for any this trend are three major blocs of countries: improvement in the near future are modest. * Asia, as Japan, the newly industrializing Exporters of minerals and metals, however, economies, and ASEAN (Association of enjoyed a price recovery in 1988. The dollar Southeast Asian Nations) countries have inten- price level for these commodities increased sified their relationships. In 1988, trade among upwards to 40 percent over the 1987 level, this bloc of countries advanced by 25 percent reflecting, in part, the acceleration of invest- in volume terms over the 1987 level; ment in the OECD area. Should supplies con- * The European Community, as trade among tinue to be tight and strong growth continue in its members rose by more than 10 percent in the industrial countries, prices can be expected volume in 1988; and to remain firm, at least in the short run. * North America, as trade flows between the For the year as a whole, average annual oil United States and Canada increased by more prices were down by about 20 percent, al- than 12 percent, while U.S. exports to Mexico though they began to recover after the OPEC rose more than 40 percent in volume terms. production agreement of November 1988. According to rough estimates, trade was Prices were also strengthened by the agree- especially vibrant among the newly industrial- ment, reached in the second quarter of 1988 by izing economies in 1988, as export volume non-OPEC oil exporters, to cut back on pro- advanced 18 percent and imports increased 23 duction by 300,000 barrels a day. The higher percent. Trade among the NIEs grew by 38 prices of manufactured goods and metal ores, percent, and the rise in imports from the highly contrasted against low prices of oil, broadly indebted countries (55 percent) and other de- tilted the terms of trade in favor of the nonoil veloping countries (28 percent) was significant. producers. Oil exporters experienced a loss of The NIEs appear to be emerging as potential 17 percent in their terms of trade, while nonoil engines for export-led growth for a broader primary-goods exporters registered a gain of 7 spectrum of countries. percent with, however, wide divergences in The momentum in world trade could be results among the nonoil group. Should the maintained by a successful conclusion of the upward trend in oil prices continue, however, current round of GATT trade negotiations (the this pattern could be offset or even reversed in Uruguay Round), scheduled for December 1989. Table 2-8 presents a summary of selected 1990. Significant progress was achieved in the global indicators of prices and costs relevant to mid term review process that began with a development. meeting of trade ministers in Montreal, Can- ada, in early December 1988. World Trade Volume Increase The meeting achieved consensus on a large In 1988, world trade increased by about 9 number of specific agenda items, including pro- percent in volume (see Table 2-9). Trade in posals for immediate implementation of conces- manufactures was particularly strong (over 10 sions by the developed countries on tropical percent), as it responded to an investment and products, strengthened rules for the settlement consumption boom in the industrialized coun- of disputes, and a new GATT mechanism for tries. Among the developing countries, the the review of trade policies. A framework for principal beneficiaries of this trade increase further discussion on services-technically not were those countries that had reoriented their under GATT-was also agreed. Because of export composition toward manufactures, to- fundamental disagreements in four key areas, gether with some metal exporters. (Exporters however-agriculture, textiles and clothing, in- of manufactures include the NIEs of East Asia, tellectual property, and safeguards-all the as well as their "second-tier" competitors, agreements were put on hold until another high- such as Indonesia, Malaysia, and Thailand.) level meeting in April 1989 in Geneva. Some Notable among those with a decreased share countries (Australia, Austria, Finland, Japan, in global trade were the exporters of tropical and New Zealand) announced that they would beverages, mostly in Africa, and the stagnating apply unilaterally their tariff-cutting offers on economies of the highly indebted, middle-in- tropical products effective immediately. come countries, largely in Latin America. Mid- Following a period of intense diplomatic dle-income economies increased their imports activity led by the GATT's director-general, by 13 percent above the 1987 level; among the progress of the Round was unblocked by these, the highly indebted countries increased agreements on the outstanding issues at the their imports by 8 percent, following two years April 1989 high-level meeting of the Trade of import contraction (see Table 2-10). Negotiations Committee. In agriculture, it was An emerging trend toward greater concen- agreed that there was to be a "substantial tration of trade flows within regions of the progressive reduction in agricultural support World Trade Volume Increase 33 Table 2-10. Selected Trade Performance Indicators, 1965-88 ataerage inrual percenltge chang' 19h'_i,, I"M'-Sh t9&' t%S' Lown- eiruil-rud :dve- er 'hhIarJE s Impor volume h tl (14 h64 114 Export volume 4 -6 2 '.99 Export unit value iSi 13 8 -4.t) 12.4 6.3 Term;s of trade 1 4 -'2.1 !9 1.1 Purchasing powevr of exports 6 2 4 1) 8.9 1 1.0 .AtiddlE .I,n,cn,e c.oi.nlrie' Import volume h I -I 3 9.' 1.s Export volume 1 ' h.1 4 Iii ' Export unit 'alue iSv 14- -4 3 129 6.4 Terms ot trade Ii - I v. I Purchasing po%%er Of exports hS 13 9 4 1 1 N Import volume t 94 - ' ' Export volume 4 4 4 4 42 Export unit t.'iue St -1.9 9 55 Terms ot trade -h -tl 7 -,, 4t 1 I Purchu%invr power of exports ' 2I 9 4 II S 3 Import %olume 5.5 -5. -0 I ,t II Export volume I I . 2 -hi Export unit alue i$S If..h -5.4 I1 l U'J Termv ot trade 3.5 -2 1 4 -t) 6 Purcha,ng potter ot export. 4 - -lz 4 I 5. 4 Sul- S a/wv: iv, -U, a Import tolume 7.5 -8' -5.I -11.3 Export %olume 0. I 5 - 3.81 S Export unit %alue iSv 13 -r 3 111.3 lIt Terms ofltrde 4 -5 I l.5 -33 Purchasing po%ter of exports 4.9 -3 - -2 4 (1.2 NoTE. Term. E tr,de are clCulalHed at iC ramat) e. c\nprl prlcc to .ripLtrrpe Pu rch.al.ng pot,vr vt etporTi; 4 CIicalIued j, the ierms o, irade rime, e pr' vorlme a. Etvima'ed 4- l end Juine 19,9v SCURCE TIhe \% 'rld Bank, and protection." The process and the timing administrative procedures under antidumping are to be determined during the remainder of laws, has grown. Relatively restrictive nontar- the Round. On trade-related aspects of intel- iff barriers cover 18 percent of industrial- lectual property rights, it was agreed to exam- country nonpetroleum imports, 62 percent of ine the rules: Only at the end of the Round will clothing imports, and 56 percent of iron and it be decided whether such rules will be imple- steel-products that developing countries ex- mented through GATT or in the World Intel- port. The income cost to the developing coun- lectual Property Organization. As for safe- tries of industrial-country restrictions may be guards, on which discussions have been in almost twice what these countries receive in progress for more than fifteen years, it was official development assistance. The Uruguay agreed to allow the drafting of a comprehen- Round, therefore, presents a major opportu- sive agreement for negotiations. nity to tackle these problems. Despite the progress on tariff-cutting in past Other developments in north-south trade in- multilateral trade negotiations under GATT, clude significant modifications to GSP schemes, many nontariff barriers remain, and the ten- with, on the one hand, modest improvements in dency to use so-called gray-area measures, product coverage, extent of tariff cuts, and such as voluntary export restraints, as well as rules of origin, and, on the other hand, the 34 The Economic Scene: A Global Perspective elimination of a number of countries from the The past year witnessed a variety of devel- benefits of the scheme. Negotiations are under opments regarding the state of the world's way for the fourth Lome Convention, and pro- environment. On the one hand: posals are before the United States Congress to * Additional evidence became available sup- expand the Caribbean Basin Initiative. porting the view that there is not only an ongoing worldwide depletion of the strato- Environmental Issues to the Fore spheric ozone shield but also "holes" in the Environmental issues received increasing ozone shield appearing seasonally in the Ant- emphasis during 1988. High-income countries, arctic and, possibly, the Arctic; in particular, showed heightened awareness of * Concern increased that global warming, the impact of environmental degradation on related mainly to fossil-fuel combustion (5.5 the quality of life, but virtually all countries see billion tons of fossil carbon were released into many of the problems in a global context. the atmosphere in 1988), as well as deforesta- The level of economic activity has grown tion. may already be under way. tenfold during this century, while population * The oil spill off the Alaskan shore dramat- increased threefold over the same period. As a ically highlighted the mutual vulnerability of consequence: the environment and economic activity. * The quality of the air, water, and soil has On the other hand: deteriorated as the process of production world- * Forty-five countries and the European wide has begun seriously to affect the ecosys- Communities signed the Montreal Protocol to tem. the Convention for the Protection of the Ozone * The volume of waste has reached alarm- Layer, which calls for a 50 percent reduction in ingly high levels, and its disposal has become a the consumption of chlorofluorocarbons by the major political, social, and economic issue in year 1999. As of early March 1989, thirty-five many countries; in particular, the rising levels countries and the European Communities had of production of hazardous or toxic materials ratified the Protocol, as well. are leading to an increasing number of serious * The governments and the European Com- accidents and are posing grave threats to hu- munities represented at the first meetings of man health and the environment. the parties to the Vienna Convention and the * There is concern that emission of pollutants Montreal Protocol, meeting in Helsinki in early is causing long-term effects, such as depletion May 1989, agreed to phase out the production of the ozone layer and climatic modification. and consumption of chlorofluorocarbons con- Industrialized countries and developing trolled by the Montreal Protocol as soon as countries often differ in their perspective on possible but not later than the year 2000, and, the environment, which leads them to assign for that purpose, agreed to tighten the time- differing priorities to programs. Environmental table agreed upon in the Montreal Protocol, problems faced by the developed and develop- taking due account of the special situation of ing countries are similar in that both face the the developing countries. degradation of air, water, and land and, to a * The 1985 Helsinki protocol to the 1979 large extent, by the same pollutants. However, Convention on Long-range Transboundary Air these problems differ in their economic source Pollution, to reduce by 1993 sulphur emissions (growth and "overdevelopment"5 as opposed or transboundary fluxes by at least 30 percent to lack of growth and poverty), as well as in of the 1980 levels, was ratified by the neces- their scope and significance-deterioration of sary sixteen countries. the quality of life as opposed to survival itself if * Some progress was made on the issue of the natural-resource base were to be destroyed. toxic-waste exports in the form of a compro- Development is thus associated with joint im- mise treaty, backed by 105 countries in the provement in both economic and environmental Basel Conference. While the treaty did not ban conditions. the cross-border transport of toxic waste, it It is also becoming increasingly clear that requires the government of any exporting preventing environmental degradation in the country to obtain a prior written permission developing countries is closely tied to alleviat- from the government of the receiving country. ing poverty, which is a priority for the World * There was increased recognition by the Bank. There is recognition that environmental international development community of the degradation results from both developmental statement articulated in Manila in early 1989 by activities and actions induced by the very lack the World Bank's president, that "the objec- of development. This view is epitomized in the statement by the late Indian prime minister, It is estimated, for instance, that between 80 percent and Indira Gandhi, that poverty is the worst pol- 90 percent of the increase in carbon dioxide levels in recent luter. decades is caused by energy production. Environmental Issues to the Fore 35 tives of sustainable economic growth, poverty tially from the industrialized-country model. alleviation, and environmental protection are Every opportunity will be taken to ensure that mutually reinforcing." For example, several renewable and nonrenewable resources are bilateral and multilateral development agencies managed efficiently. In particular, prospects are now, as a standard procedure, assessing for continued economic growth depend heavily the environmental effects of development on the avoidance of the undue energy intensity projects that they help to finance. that has characterized development in the in- The Bank is taking steps to improve its dustrialized countries. performance in this regard, putting increased The environment is clearly perceived as a emphasis on establishment of policies and pro- global resource. An important question is how cedures that will mitigate or eliminate adverse to finance the global response and execute it effects of its development projects and pro- efficiently. Greater political interaction be- grams and enable the Bank to play an increas- tween the developed countries and the devel- ingly constructive role in promoting environ- oping countries is evidently needed in order to mentally beneficial activities. Additional devise mutually reinforcing policies, both for emphasis on energy conservation and effi- financing and program implementation. The ciency and special measures to protect and Bank participates in international discussions manage tropical moist forests, encourage land in areas such as toxic wastes, global climate and soil management, and promote conserva- change, and ozone depletion that anticipate tion, are important elements in the Bank's this increased interaction. overall environmental effort. The Bank is also ready to help governments develop patterns of growth that differ substan- 36 .tH';-'~~~~~~~~~~~~7 .. i*i,d- r' ]~~~~K -= jf iv xe- Inspecting an irrigation canal in the Beni Suef area of Egypt for bilharzia-transmitting snails. 37 Section Three The World Bank-Fiscal Year 1989 The increased commitment of resources and * Increased assistance, through policy ad- instruments provided to the World Bank by its vice and lending operations, in the highly in- shareholders in fiscal 1988-through approval debted, middle-income countries that are un- of a general capital increase for the Interna- dertaking measures of adjustment; tional Bank for Reconstruction and Develop- * Expansion of assistance to the low-income ment (IBRD), the launching of an eighth (and adjusting countries of sub-Saharan Africa; largest in nominal terms) replenishment of re- * Integration of environmental consider- sources of the International Development Asso- ations into the mainstream of the Bank's policy ciation (IDA), increased cofinancing, through and operational work; and the special program of assistance (SPA), in * The launching of an action program de- support of the debt-burdened, low-income ad- signed to provide for an increased role of the justing countries of sub-Saharan Africa, and the private sector in the Bank's developing member establishment of the Multilateral Investment countries. Guarantee Agency (MIGA)-were put to use in In fiscal 1989, commitments by the Interna- fiscal year 1989 to enhance the Bank's efforts in tional Bank for Reconstruction and Develop- several key areas: ment and the International Development Asso- * The reduction of poverty in every region of ciation, and approvals by the International the developing world; Finance Corporation totaled $23,076 million. Figure 3-1. IBRD and IDA Lending, by Lending Instruments, Fiscal Year 1989 -,re:I: ~ ~ ~ I iIAi'fT or:i N f-I: _irj I o .r :Tl.-riTn-. ra Ir.. UI EnrrNrl,eern: r..TiJn .,| i ' Se.l^r-alj-xrnlerl! .>,-,f X W :~~~~~~~~~~~~~~~~~~rrOI 38 The World Bank-Fiscal Year 1989 That amount was $2,585 million higher (13 percent from fiscal 1988 amounts (see Figure percent) than the previous year's record of 3-2). $20,491 million. Commitments by the IBRD In fiscal 1989, 131 IBRD-assisted and IDA- were $16.433 million, up II percent over fiscal assisted projects involved cofinancing funds, 1988 totals: those of IDA-some $4,934 million amounting to $9.943 million (see Table 4-10). -increased by II percent over the previous That amount was $3,536 million higher than in year (see Figure 3-1). Approvals by the IFC, the previous year. The 131 cofinanced projects some $1,709 million, were $439 million (35 per- represented more than half (58 percent) of the cent) above fiscal 1988 totals. total number of projects approved during the A total of 119 IBRD loans were distributed year. among thirty-eight countries. One hundred six IDA credits were approved for projects in forty- Commitment to Poverty Alleviation two countries. Thirty-three countries received The central goal of the World Bank is the World Bank adjustment loans and credits in reduction of poverty. Ways to achieve that goal support of their reform measures. Adjustment are at the heart of the Bank's activities lending totaled $5,279 million for the IBRD and -whether through support for adjustment mea- $1,162 million for IDA (see Table 3-1). The sures designed to lay the foundations for sus- IFC's investments were made in thirty-seven tained growth. through investment lending, or countries. through its research and country economic and Lending for energy-at $3,864 million-led sector work. all sectors by volume. Lending for agriculture Recent estimates indicate that about 950 mil- and rural development was second, at $3,490 lion people in the developing world live in million. conditions of poverty. Over half live in the Of the projects approved in the agriculture populous regions of South Asia (over 350 mil- and rural development sector, twenty-five out lion) and East Asia (about 150 million). Another of a total of fifty-one were classified as poverty 280 million absolute poor live in largely rural oriented-that is. where the majority of benefits areas of sub-Saharan Africa. Even in the Eu- are expected to accrue to the population in rope, Middle East, and North Africa region, as relative or absolute poverty. Two thirds of the well as the region of Latin America and the projects in sub-Saharan Africa (fourteen of Caribbean-despite the predominance of mid- twenty-one) were so classified. die-income countries-absolute poverty is esti- The most active borrowers from the IBRD mated to afflict about 90 million and 80 million were Mexico ($2,230 million for six projects), people, respectively. India ($2,136 million for ten projects), and In- Developing countries, with the assistance of donesia ($1,640 million for nine projects). In the international community, have done much terms of commitments, IDA was most active in over the years to reduce poverty. Significant India ($900 million for one project), China ($515 strides have been made in increasing per capita million for five projects), and Bangladesh ($423 income levels in many countries, improving million for four projects). In terms of the num- health and nutrition with positive effects on ber of credits approved, sixty-nine, or 65 per- reducing infant mortality and increasing longev- cent, went to sub-Saharan Africa. ity. increasing educational levels, and putting During fiscal 1989. gross disbursements by productive assets into the hands of the poor. the IBRD to countries totaled $1 1.3 10 million, But these efforts have not been enough. Al- down $326 million over 1988 totals. IDA dis- though it is widely estimated that the proportion bursements stood at $3,597, an increase of $200 of the developing world's population living in million from amounts registered in the previous poverty has declined in recent decades, the fiscal year. absolute numbers of poor people have in- Commitments to the group of seventeen creased. highly indebted, middle-income countries were In recent years, the World Bank has directed $8.021 million, as compared with $6,483 million its efforts to helping borrowers, particularly in in fiscal 1988. Gross disbursements to these sub-Saharan Africa and in the highly indebted, countries amounted to $4,740 million. down middle-income countries, reestablish precondi- $666 million over the year before. tions for growth. The steps the Bank has taken Commitments to sub-Saharan African coun- to assist borrowers to adjust and resume growth tries rose by 34 percent, to $3,925 million, and are essential for poverty reduction, as well. In gross disbursements to them increased from addition, many of the Bank's lending operations $1,873 million to $2,256 million. that do not have a direct poverty focus, includ- IBRD and IDA commitments to the low- ing traditional lending in sectors such as power income countries, those with a per capita GNP and transportation, contain numerous features of $480 or less, were $10.060 million, up 12 that contribute toward reducing poverty. Commitment to Povertv Alleviation 39 Table 3-1. \\orld Bank Adjustment Operations, Fiscal Year 1989 (amounts in1 USS 1il ions) World Bank finanLing Country Protect IBRD IDA I otal Sector AJdusitent Loane Aigentia Ia rade pola.v 11 300() - 300l 0 Ban,ladesh Energv sector - 175 0 175 0 Bangladesh Industrial sector (supplement) - 2 25 Bolivia Financt , sector adjustment (supplementj - 11 11 3 Bui ujid Am icultuial servitcs - 13 1 33 1 Chad Financial rehabilitation - 16 2 16.2 Chad Transport sector adjutstment - 60 0 60 0 Ghana Financial sector adjustment (supplement) - 6 6 6 6 Kenya Industrial sector adiustment (supplement) - 53.7 53 7 Kenya Financial sector operation - 12) 0 1200 Madagascar Public sector adjustment )supplement) - I 4 1 4 bNal.v'l Industrial.trade adjustMent (supplemcnt) -5 2 5.2 Nfill F ducation sector consolidation - 26 0 26 0 Mexico IlduIstrial re,tru,turing 2sO 0 - 250 ti Mexico Financial/trade sector 500l 0 - 500.0 Mexico Itidustrial sector policy 50( 0 - 500 0 NMexico Public enterprise rehabilitation 50o 0 - Si))) 0 Nl,crIa Trade and insestment policy 500 0 - oo (0 Pakistan AgrituJure s.cctur adtustment 200) 0 - 20t) 0 Paki'tjr I inancial sector adtustment 15 0 - I s0t 0 Pakistan Energy sector 11 250.( - 250 0 Pinlinpines Financial sector adtustment 300 0 - 300 ( Somalia Agricultuire sector adjustment 70 0 70 0 Tarvania Industrial'trade adjustment (supplement) 12 5 12 5 Taiizania lhidusiral'tradc adjustment - 135.0 135 0 Tunisia Agricultiure sectol adLtstMnent 11 84 0 - x4 i Venvzuela Trade policv loan 35 0 _ 3530 Tota 3,887 0 728 S 4(615 5 St) icturalA.4duwsient L'uns Benun Structural adjustment I - 45 0 45 n Cameroon Structural aditiment 1 150 0 - 150 0 Costa Rica Structural adjustment li tOlO - I) ( Gambia. The Structural adjustment 11 - 23 0 21 (t Ghlai. Niruciiiral adjustment 11 120 0 12() 0 Guinea-J3issau Stlictural idjustineni If 23 4 23 4 Hoitlilmas S ructturai adjustment I O 1) - i0 (0 Indonesia Private sector Osevlopinet 3iO 0 - s0 0 Lao Peoples Democratic Republic Structural adjustmcnt I _ 40 0 40 0 XIiroc5o Structural adjustment I 2(hO. - 2O0 0 Mozambique Rehabilitation Ill - 90 0 90 0 Nvpal Structural adiustiment 11 - tO 0 6) 0 Seoegal Structural adju'ttment 1l] (sipplemento - 5 s s Togo Structural adjustment IlI (snoplementj - 0 I t I Uganda Economic recoscis (supplinXtD) - I7 1 -7 Uganda E-coiioinic recovers (supplement) - 2s 0 25 0 Uruguay Strictural adjustment 11 140 0 - 140 0 Venezucla Stiucitiral aIjustnenit 1 402 ( - 402 0 Total I 392 )) 43 37 1 8257 Grand total 5.279 0 1 162 2 6,441 2 40 The World Bank-Fiscal Year 1989 Figure 3-2. IBRD and IDA Lending to the Poorest Countries, Fiscal Years 1980-89 iLSL rd,lrions. tiscal ',e3rsi IBRD amcrncur C IDA arnc'uriI ~.3 42*y4_316. 3ririai AFIQ i - 9. r5 r, aeq 417 3,30.7 .94.3-, sl,eTr'e v.:;re.. ::l,urr,er are .reIr,e,i % : rr,y:s e\ '.rrli p.&r C : prr ;:rr,E cr el: -1$I *;-:lrl Some of the ways in which the Bank is plicitly designed to improve conditions for assisting developing-country governments to women. reduce poverty include: * In sub-Saharan Africa, food insecurity is a *Working with interested governments, the major dimension of poverty, and the Bank is Bank is introducing a greater focus on poverty increasing its emphasis on food security as part reduction in country-assistance strategies, in- of new poverty-reducing initiatives. Working creasing the focus on operations whose direct closely with governments and the large group of objective is to promote productive employment donor agencies already active in these areas, and expanded access to health care, education, the Bank seeks to maintain an appropriate bal- and to physical infrastructure for the poor, ance between the objectives of attaining long- including increased attention to operations ex- term food security through growth-oriented Commitment to Poverty Alleviation 41 projects and short-term food security through * Supporting programs to increase the in- measures to improve the ability of households comes of the poor, such as public works or and countries to cope with transitory food inse- credit schemes. For example, Indonesia's gen- curity. eral village credit program (KUPEDES), a re- * The Bank is also helping interested borrow- cipient of $101.5 million in Bank funds, is mak- ers by expanding its economic analysis with a ing small loans (averaging less than $250) for poverty-oriented focus. Such efforts include the microenterprise development. preparation of a number of country studies The Philippines and India are examples of the designed to develop poverty profiles and iden- Bank's recent efforts in Asia to put the poverty tify policies and interventions to reduce pov- strategy in a broader context. In these coun- erty. tries, the Bank is examining the linkages be- * The Bank's operations that do not have a tween macroeconomic policies and poverty- direct antipoverty focus are being monitored to reduction programs, supporting social and see that they pay greater attention to the reduc- infrastructural programs, and seeking to im- tion of poverty even while dealing with growth prove coordination between macroeconomic, and adjustment as their primary concerns. sectoral, and microeconomic aspects of the * Efforts are being stepped up to help bor- poverty strategy. rowers ensure that the poor are better pro- The Bank is also preparing two regional pov- tected during periods of adjustment. erty-related studies. One reviews what prac- * An expansion of involvement by nongov- tices are best in providing health care for the ernmental organizations (NGOs) in Bank-sup- poor; the other seeks to identify feasible poli- ported undertakings is also under way. New cies, as well as institutional and organizational opportunities for operational collaboration approaches, to groundwater exploitation and with NGOs, within the framework of govern- distribution that will target poverty groups as ment policies, are being identified, particularly beneficiaries. with those NGOs in developing countries. In sub-Saharan Africa, most countries face The relative emphasis on these elements of severe macroeconomic imbalances; thus, the the Bank's involvement in poverty reduction resumption of growth through structural adjust- varies from region to region. ment remains the Bank's top priority in the The Bank's poverty-reduction strategy in region. With about 280 million people (29 per- Asia is comprehensive and involves: cent of the world's poor and two thirds of the * Agriculture and rural development in sub-Saharan population) living in absolute pov- poorer areas through projects such as the one in erty and with the adjustment process having China's Shaanxi province, approved in fiscal taken longer than expected, however, the Bank 1989, which aims to raise farm production and is increasingly supplementing its growth-ori- incomes of 180,000 farm families in one of the ented programs by more direct measures to country's poorest provinces through expanding reduce poverty. These include: and improving irrigated areas, raising crop * Programs to address the social costs of yields, increasing livestock and fish production, adjustment. Of particular importance is the so- and developing the agroprocessing sector cial dimensions of adjustment program, which through pilot projects. In addition, provision of is helping several African countries to design fluoride-free water will enable 75,000 people and implement-as part of their adjustment suffering from skeletal fluorosis to recover, reforms-policies and programs to foster the partially or fully, from the effects of the disease. participation of the poor in the process of * Expanding, improving, and reducing the growth and to mitigate the social costs of cost of basic services, health, education, and adjustment.' Social costs of adjustment are also nutrition for the poor. For example, Malaysia's being addressed through Bank-supported multi- second primary and secondary education-sector sector compensatory programs in such coun- project, approved during fiscal 1989, was de- tries as Chad, Ghana, Guinea, Guinea-Bissau, signed not only to improve educational quality Madagascar, Sudan, and Uganda. Thus, in and to increase the efficiency of educational Guinea, a technical-assistance credit approved management but also to give priority in new during the past year will strengthen the ability of school construction and extensions to existing the National Commission on Social Policy to schools in districts where the availability of plan and implement a series of projects in the educational facilities is below the national aver- areas of basic education, primary health care, age. Particular attention is being given to the nutrition, employment generation, and micro- country's poorer states. Similar priority is to be credit schemes. given for the use of any savings that might accrue from the construction program during project implementation. l For details, see page 45. 42 The World Bank-Fiscal Year 1989 * The food-security initiative, which, in ad- housing investment to the low-income seg- dition to ongoing efforts to increase food pro- ments of the housing market. duction, emphasizes special measures to reach * Supporting targeted programs. For exam- vulnerable groups, reduce short-term fluctua- ple, the emergency social fund in Bolivia is tions in food supply, and increase effective funding many targeted nutrition and employ- demand for food.2 ment programs primarily to mitigate the social * Programs, mostly in the social sectors, costs of adjustment.3 The northeast rural-devel- which emphasize increased service delivery to opment program in Brazil, supported by the disadvantaged groups. In Nigeria, for example, Bank over a number of years, is seeking to raise a health and family-planning project for Imo the productivity and standard of living of the state, approved in fiscal 1989, has been de- rural poor through provision of agricultural ex- signed to strengthen the capacity of local and tension, credit, agroprocessing services, pota- state organizations to plan, implement, and ble water, health care, and primary education. monitor community-based health, family-plan- The Bank has recently completed a compre- ning, and nutrition activities. Services in rural hensive poverty study for Mexico and is pro- areas will be improved by upgrading about posing a poverty strategy that emphasizes the sixty existing dispensaries and maternity importance of creating an appropriate macroec- homes into primary health clinics able to pro- onomic environment for growth and poverty vide priority maternal and child-health/family- reduction, as well as the need for distinct mea- planning services. And a human-resources sec- sures to deal with urban and rural poverty. A tor-adjustment credit in Mali, also approved poverty report for Colombia has also been com- during the year, seeks to encourage private pleted. In addition, a review of informal em- schools so that public resources can be reallo- ployment is under way to identify ways of cated toward the poor and to improve the expanding productive employment opportuni- equity of the education system by encouraging ties for the lowest income groups in the urban primary school enrollments in the poorer rural informal sector, and a special paper on social areas and among girls. programs for women in the informal sector has The Latin American and Caribbean coun- been completed. tries, in recent years, have faced serious mac- In Europe, the Middle East, and North Af- roeconomic imbalances and economic decline, rica, as in Latin America, macroeconomic im- which have constrained resources for direct balances are serious. There are also severe poverty reduction. Although average per capita concentrations of poverty-some 90 million incomes in the region are relatively high, there people live in absolute poverty (including 40 are severe concentrations of poverty, and about million in Pakistan)-and social indicators for 80 million people still live in absolute poverty. the region remain generally poor. The Bank's The Bank's poverty-reduction efforts empha- approach to poverty reduction emphasizes re- size: storing growth through structural adjustment * Improving the efficiency and equity of and addressing the social costs that may arise, social sectors. The Bank has initiated three while supporting direct measures in the social regional studies. One is assessing the status of sectors. The Bank is supporting programs to: nutrition programs with the purpose of sup- * Mitigate the social costs of adjustment. In porting improvements in selected countries. A Hungary, for example, credit is being provided second is examining the adequacy of existing for employment-generating investments in man- social-security programs and the potential for ufacturing, agroprocessing, and business serv- reform, including measures to extend cover- ices in regions suffering unemployment because age. The third is reviewing the efficiency and of industrial restructuring. Project support ini- equity of social spending in ten countries. In tially is in three northern counties affected by Argentina, public and social-sector investment unemployment caused by the restructuring of reviews have led to technical assistance and the steel and coal-mining industries. A number social-sector loans to improve the efficiency of studies are also planned or are under way to and equity of programs in health, education, study the social effects of adjustment programs. and housing. In the housing sector, the Bank's A review of institutional and policy options for involvement in the sector is the logical culmi- replacing general subsidy programs with tar- nation of several years of sector-policy dia- geted interventions is a priority in Tunisia, for logue with the government, and financial assis- example. tance is coming at a time when the sector is experiencing an acute shortage of investment funds. By supporting far-reaching reforms of 2 For details, see page 85. the sector's policies, the Bank is endorsing the 3 For details, see pages 66-67 in the World Bank's 1988 government's objectives of redirecting public- Annuial Report. Initiatives for sub-Saharan Africa 43 * Expand and improve delivery of effective The SPA establishes a framework for mobi- health, education, housing, sanitation, and wa- lizing assistance from a variety of sources to ter-supply services and enhance access of the eligible countries. The sources include in- poor to them. For example, a health project in creased adjustment lending from resources Turkey, approved during fiscal 1989, focuses provided under the eighth replenishment of on primary health care in ten underserved IDA (IDA-8); increased cofinancing and coor- provinces with a population of more than 6 dinated financing from bilateral and multilat- million. The education-sector loan to Morocco eral donors for adjustment operations: supple- emphasizes equitable access to basic educa- mental IDA adjustment credits from resources tion, with increased participation of the rural provided by a share of the investment income population and of females. A number of pov- of, and repayments to, IDA; additional re- erty-related studies have also been initiated. In sources from the IMF's enhanced structural- Pakistan, rural water supply, health, shelter, adjustment facility (ESAF); and greater debt education, and population activities are impor- relief. Within the framework, the Bank ac- tant areas of study. And, in Morocco, the Bank tively manages the first three components and is undertaking a major social-sector strategy monitors all five. review to identify priority areas for social Additional IDA-8 adjustment lending. expenditure. About half, or some $6.2 billion, of resources available under IDA-8 are slated for allocation Initiatives for sub-Saharan Africa to the Africa region. of that amount, $5,736 Since the early to mid 1980s, many sub- million is earmarked to the twenty-two SPA- Saharan African countries have strengthened eligible countries, an amount $3,171 million their commitment to reform efforts. These above commitments to these same countries in reforms are accompanied by some early signs the three fiscal years (1985-87) preceding the of improved economic performance. The establishment of the SPA. IDA disbursements World Bank, together with the international to the twenty-two eligible countries are pro- donor and creditor community, is supporting jected at $3,800 million for the IDA-8 period the region's efforts not only through its regular (fiscal 1988-90), as opposed to $2,239 million adjustment lending but also through special during the IDA-7 period. efforts within wider collaborative frameworks In fiscal year 1989, IDA commitments to the such as the special program of assistance twenty-two countries totaled $1,903 million; in (SPA). In addition, the Bank, with other do- fiscal 1988 and 1987, commitments were $1,902 nors, is sharpening its attention to the social million and $991 million, respectively.6 aspects of adjustment and development and is About half of all IDA commitments to the launching specific initiatives that concern long- twenty-two countries (46 percent) were for term development issues. adjustment operations: Some $873 million was Special Program of Assistance. Details of approved for twelve adjustment operations and the launching of the SPA were reported in the nine IDA supplements in sixteen of the eligible World Bank's Annual Report for fiscal year countries as compared with $857 million for 1988. The objective of the three-year (1988-90) twelve adjustment operations and one supple- program is to help eligible countries adjust and ment in twelve countries in fiscal 1988. grow, while restoring and sustaining normal Increased cofinancing of adjuistment. In debtor-creditor relationships. The program pro- December 1987, eighteen donor governments vides for substantially increased, highly conces- and multilateral agencies pledged an initial $6.4 sional. quick-disbursing financing, as well as billion in concessional. quick-disbursing funds debt relief on softer terms, to expand import for adjusting low-income African countries ex- capacities in adjusting countries. Donors agreed on three eligibility criteria: The PFP is a three-year comprehensive report prepared by poverty (countries could not be eligible to the national authorities with the assistance of the staffs of receive IBRD loans), indebtedness (countries the Bank and the IMF. It identifies the sources of a in which debt-service ratios of 30 percent or country's problems. describes the proposed remedies, and more would be selected for the program), and provides estimates of the associated financing require- ments and the role of the major aid agencies. efforts to adjust (countries had to be currently Benin, Burundi. Central African Republic. Chad, The implementing a policy-reform program, sup- Gambia, Ghana, Guinea, Guinea-Bissau, Kenya. Mada- ported by the Bank and the International Mon- gascar, Malawi, Mali. Mauritania, Mozambique, Niger, etary Fund (IMF), and agreement had to be Sao Tome and Principe. Senegal. Somalia, Tanzania, reached on a policy framework paper (PFP)).4 Togo, Uganda, and Zaire. By July 31, 1989, twenty-two sub-Saharan It should be noted that as of the end of fiscal 1988, only seventeen countries were eligible for inclusion in the SPA. countries were eligible for assistance under the In fiscal 1989, Chad, Kenya, Mali, and Somalia were program.5 added. Benin was added in July 1989. 44 The World Bank-Fiscal Year 1989 periencing debt problems.' These funds were to be provided through both formal cofinancing Table 3-2. Allocations of IDA Reflowvs, of specific IDA-supported adjustment opera- Fiscal Year 1989 tions and other financing coordinated closely famounLs in nidllionsi with these same operations.8 Although not all Fiical 1989 the cofinancing and coordinated financing rep- IBRD resented additional commitments or additional .1illocation, inlerest cash inflows to eligible countries, estimates at Reinon and countr, LPSI SDR i USS, the time of pledging suggested that at least half ,ltw the disbursements of those pledges could be .h-n.a h ;l. considered as an addition to what the countries KCfenld 3. '.7 41.4 90.2 would have received from these donors during Niad'agascar 1.4 1.1 2.3 the period 1988-90 in the absence of the SPA. i.1 4.0 B Z Almost three quarters of cofinancing and coor- Senege 55 4. 9.2 dinated financing has been pledged as grants, Tanz.ma i;.> 9.7 'l.i) with the remainder highly concessional loans. Togo I 0.1 0.1 By the end of calendar year 1988, donors had 7g.n1 7 1 . 9 allocated $5.1 billion for cofinancing and coor- - dinated financing of adjustment operations in Subtotal 7 h. 66.C) 145.6 the eligible countries, of which signed agree- Ofhi: r ments amounted to $2.1 billion and disburse- Bangladesh 2.i 1.9 4.2 ments totaled $935 million. Donors need to Bolrid 11.3 9.2 19.9 accelerate these commitments and disburse- Subtotal 13.8 11.1 I4 I ments to meet the 80 percent disbursement Tlal Ilio.s 7 0 169.7 target required to cover the projected financing gaps in the eligible countries during the period a. SDR rigijre. hate been rouLinded lo the nearesi hundred 1988-90. rhou 'and Supplemental IDA adjustment credits. In September 1988, the executive directors of the mitments under the SAF and ESAF arrange- Bank agreed to a proposal to allocate 10 per- ments totaled SDR3,008 million (SDRI,962 cent of IDA reflows, plus the investment in- million and SDR1,045 million, respectively), come on IDA donor encashments, to those while SAF and ESAF disbursements were IDA-only countries that had both outstanding SDR1,002 million and SDR387 million, respec- IBRD debt (for nonenclave projects) and an tively. adjustment program that was being supported Concessional debt relief. In September by IDA. The allocations will benefit qualifying 1988, creditor governments finalized agreement countries in proportion to their IBRD interest on the consensus reached on debt relief at the payments. Of the ten countries that qualified, Toronto economic summit, which represented a eight were in Africa. During the year, $101 million in IDA reflows was allocated to these ' The eighteen donors that made pledges were Austria, countries. Table 3-2 shows fiscal 1989 alloca- Belgium. Canada. Denmark, Finland, France, the Federal Republic of Germany, Italy. Japan, the Netherlands, Nor- tions, by country and amount. way, Spain, Sweden, Switzerland, the United Kingdom, lMF financing from the ESAF. Under the the United States, the African Development Bank, and the enhanced structural-adjustment facility of the European Communities (including the European Invest- IMF, established in December 1987, it is en- ment Bank). visaged that about SDR6 billion in new conces- During fiscal 1989, the SPA also began to develop several visaged ~~~~~~~~~~~~~operational procedures to strengthen aid coordination and sional resources will be made available to help donor support for policy reform, which, if fully imple- the IMF's poorest member countries under- mented. could potentially be as important as the extra take strong three-year macroeconomic and financial resources the program is mobilizing. structural programs to improve their balance- These procedures include designating working-level contacts: identifying donors' particular geographical and of-payments positions and to foster growth. operational priorities: exchanging more documentation, These resources supplement the SDR2.7 bil- including PFPs, on eligible countries and on proposed lion available under the structural-adjustment adjustment operations; participation by donors in selected facility (SAF), which was established in March appraisal, negotiation, and supervision missions; regular biannual multidonor meetings to discuss overall progress 1986. Sixty-two countries, of which thirty-four in implementing the SPA, together with special meetings are in sub-Saharan Africa, are eligible for SAF on individual countries or issues; recommending standard or ESAF arrangements. As of the end of fiscal procurement and disbursement procedures: and faster, 1989, arrangements under the ESAF and SAF fuller monitoring of donors' commitments and disburse- ments, had been approved for twenty-five of these The first five procedures are in place, and work is thirty-four countries. By the same date, com- progressing on the two remaining issues. Initiatives for sub-Saharan Africa 45 major breakthrough to reduce the burden of efforts involve developing and implementing a official debt in low-income, debt-distressed comprehensive social policy to alleviate pov- countries, mostly in sub-Saharan Africa. The erty. They also involve developing programs agreement permits a range of options to be and monitorable actions that can not only pro- drawn up on rescheduling debt-service obliga- tect the poor during the adjustment process but tions on nonconcessional debt, allowing credi- also foster their participation in the growth tors to choose among lower interest rates (but process.'° with somewhat shorter maturities), longer grace To strengthen the ongoing efforts of donors and repayment periods (at commercial rates), and African governments to deal better with partial write-offs of debt-service obligations the social dimensions of structural adjustment during the consolidation period (with the rest and economic development, a social dimension rescheduled at commercial rates and shortened of adjustment (SDA) program was launched in maturities), or a combination of these options. December 1987 as a joint undertaking of the By June 30, 1989, these options had been ap- World Bank, the African Development Bank, plied by the Paris Club to eight SPA-eligible and the United Nations Development Pro- countries: Central African Republic, Guinea, gramme." As of June 30, 1989, twenty-six Madagascar, Mali, Niger, Senegal, Tanzania, sub-Saharan countries were taking part in the and Uganda. In the early years, the impact, SDA program. compared to conventional rescheduling, will be At the regional level, the SDA program limited. But the gains accumulate progres- supports research to develop a general policy sively, which is why the consensus was more framework and empirical methods for assess- important in addressing the long-term debt ing the evolution of living conditions of various problems of these countries than in providing population groups during adjustment. The pro- immediate relief. gram also facilitates donor coordination, espe- The Social Aspects of Adjustment. Adjust- cially through joint task forces. ment-and the growth it seeks to spur-are At the country level, the SDA program is necessary to the improvement of social condi- helping governments design country-specific tions in the long run. Although growth is policies and specific action programs to protect necessary to reduce poverty, it may also not vulnerable groups and strengthen community always be sufficient to do so.9 Moreover, al- development. Operations identified as essential though many of the poor (farmers, for exam- include investments in basic physical infrastruc- ple) do benefit from the adjustment process, ture and measures to strengthen institutional the immediate effects of belt tightening have capacity for social policy planning and for mon- also raised concerns about the effects of ad- itoring social conditions on a regular basis. justment on certain other groups. These con- At the outset, a country-assessment paper is cerns have led to parallel and systematic ap- prepared to assess the poverty situation and to proaches to ensure that adverse effects of identify key issues facing the government in adjustment are mitigated as far as possible. formulating a poverty-alleviation strategy. The Parallel interventions aim to protect vulner- paper also helps define the scope of data able groups and provide for compensatory collection required to improve a country's ca- actions and transitional arrangements. Ghana's pacity to assess the effect of macroeconomic "program of action to mitigate the social costs and sectoral policies on the poor and to moni- of adjustment (PAMSCAD)," described in last tor the evolution of household living conditions year's Annual Report, is one such parallel throughout the development process. program that compensates for the short-run In fiscal 1989, country-assessment papers damage to some from the adjustment process. were undertaken for eight countries: Chad, Similar programs are under way elsewhere, as C6te d'Ivoire, Guinea, Guinea-Bissau, Mada- in Cote d'Ivoire, The Gambia, Guinea, Mauri- gascar, Malawi, Senegal, and Zaire. In fiscal tania, and Senegal. In parallel interventions, key services that benefit the most vulnerable For a report on the findings of the Bank's poverty- groups are protected from the possible adverse alleviation task force. turn to page 84. effects of budget cuts, primarily through pro- During fiscal 1989. a comprehensive review of the Bank's tecting public expenditures on key health, ed- experience with adjustment lending concluded, and the executive directors subsequently agreed, that programs ucation, nutrition, and other basic welfare designed to ameliorate the social costs of adjustment services. needed further intensification. For details of that review, Because most parallel actions are extremely see pages 78-82. costly to sustain over an extended period of Other donors supporting the project are Canada. the time, systematic efforts to reduce poverty need Federal Republic of Germany, the Netherlands, Norway, Sweden. Switzerland, the United Kingdom, the European to be included in adjustment programs-and in Communities, and the International Fund for Agricultural development programs more generally. These Development. 46 The World Bank-Fiscal Year 1989 1990, work on country-assessment papers for Environmental deterioration is a specially another eight countries is expected to be disturbing feature in many African countries. started. Declines in per capita incomes have been as- Long-term Development Problems. Adjust- sociated with accelerated desertification, de- ment is a critical first step in restoring the forestation, groundwater loss, and air and wa- economic capacity for longer-term growth in ter pollution in rural and urban areas. The the sub-Saharan region. And in countries Bank is taking steps to build a multisectoral where governments have pursued reforms vig- environmental focus into all its operational orously, there is evidence of improved eco- work. To achieve this, a multifaceted environ- nomic growth, recovery of exports, and rising mental initiative was launched in fiscal 1988. per capita consumption (see Table 6-3). One aim is to obtain accurate data on the Though essential, policy reform is not suffi- changing status of natural resources in Africa cient, however, to deal with the longer-term and to develop tools and methods for providing development problems of the region. such information to national decisionmakers in Economic recovery in sub-Saharan Africa a useful form. A second is to understand better starts from a weakened base: Savings and the technical and socioeconomic factors that investment ratios are low, real investment is on influence decisions regarding the use and con- the decline, productivity lags behind competi- servation of natural resources at all levels, tor countries, export volume is stagnating and from individual farmers and local communities export composition is narrow, bottlenecks re- to national leaders. A third is to develop and main in infrastructure, and the human-resource improve technologies that promote more effec- base lacks depth. tive and sustainable use of natural resources Moreover, the long-term trends facing the for economic development. region-among them, high population growth Six environmental assessment/action plans rates, increasing environmental degradation, (EAPs) for African countries were launched in and rising urban unemployment-are daunting. fiscal 1988, and one more was begun in fiscal In the long term, only stronger economic 1989. Several regional studies, including case growth, coupled with specific actions address- studies, were also started during the year- ing the most critical and severe constraints, involving remote sensing, environmental man- can reverse the trends now in place. To agement, the monitoring of environmental achieve this growth, more investments are change, agroforestry, tribal peoples, wildlife, needed to rebuild and broaden the economic pests, and the special problems of arid lands. base for sustained growth. The Bank is also focusing on long-term is- While the World Bank devotes substantial sues that concern agricultural research and staff and financial resources to the problems of extension, food security, education, and ways adjustment, most of its efforts continue to to strengthen institutional capacity. focus on the issues of long-term development. Research efforts are spearheaded by the For example, in fiscal 1989, Bank commit- Special Program for African Agricultural Re- ments for other than adjustment operations in search (SPAAR), a multidonor effort set up in sub-Saharan Africa amounted to 61 percent of 1985 (for which the Bank acts as the secretar- the total. iat) to strengthen research systems through While strengthening its investment-lending improved networking, information sharing, program, the Bank is giving special emphasis and direct support for national research ef- to several areas that need urgent attention, forts. By the end of fiscal 1989, working groups especially to help reverse the long-term trends were in place on networking, the SPAAR in- that threaten economic recovery and sustained formation system, forestry research, education growth. Two areas, in particular, have been and training, locust research, and small grants, targeted: population and the environment. as was a coordinating group for Tanzania. Africa's population is growing at more than 3 Extension work is propelled by designing percent a year. Unless fertility rates are projects-now in place in more than twenty brought down, many countries will approach a African countries-that incorporate the princi- rate of 4 percent a year by the end of the ples of the training-and-visit system to orga- century. While the consequences of rapid pop- nize and manage extension services more ef- ulation growth are obvious at the national fectively. Food-security action plans were level, households often perceive large families begun in eight African countries in fiscal 1989. to be economically beneficial. A major objec- They address the need to reach vulnerable tive of the Bank's efforts in the area of popu- groups not currently sharing in the growth of lation is to generate an understanding among food production, ways to tackle short-term opinion leaders, the public, and governments on the issues and relationships in this area. 12 2 For details, see page 112. The Bank and the Heavily Indebted, Middle-income Countries 47 Table 3-3. Net Translers by the W%rorld Bank ho Sie%enteen Highl) Indebled. Nliddle-income Countries inidli,or of LS doIljrr. IiS;JI ,eal l ILen]1>' > '# u' 1'4t IBRD dnd IDA .comniiIments il,i h.-lPJ ,4S) 2 s.I'!l2 1X 1.1 Gross disbur'emrenh 4.'11.8 h. .I . I 4 41lS 4734\J 'II1.49t1 Repa%vments I 1X. 2,21.' 4 3 4Y21 2 ' 3.4t X 11 4 Net dishurrements I 1 ..42 - i 1 ,. I I. l fi .i SX4 4 lnlere,i and ch .rges 1 9.4 X 1s1 _ .1 I'J 2 11.932 ') Net transfer 3 I-h I - I.2'( 4 -- I 'i e. - 2.ii9S II NI-TE- Sae le .'k 1 tot .LLr. c,i-0irrr 1..r fluctuations in food supply, and means by In fiscal 1989, twelve adjustment operations which purchasing power can be created to (including one supplement) in the seventeen match increased food supply with increased countries were approved for an aggregate effective demand for food."3 Finally, as a fol- amount of $4,056.3 million, an increase of low-up to the recent World Bank education $1,446.3 million over fiscal 1988 amounts. policy paper, twenty-five donors to African Investment operations in these countries education have agreed to take concrete steps totaled $3,965 million, as compared with $3,873 to improve coordination through task forces, million in fiscal 1988. Much of the content of the special background studies, and externally projects was oriented toward sector-investment funded action programs on the mobilization of programs, maintenance, and high-yielding human and financial resources, education sta- projects. tistics, textbooks, and school examinations Amortization payments on a growing vol- and certification. 4 Parallel and complemen- ume of outstanding debt, as well as the effects tary to this effort in the education sector, the of exchange-rate adjustments on the currency Bank is preparing to help to strengthen African pool used in Bank lending, raised the dollar capacity for macroeconomic policy analysis value of repayments. As a result of these and management. factors, total net disbursements declined from $1,913 million in fiscal 1988 to $1,194 million The Bank and the Heavily Indebted, during the past year. For the period, fiscal Middle-income Countries 1986-89, net disbursements have amounted to During fiscal year 1989, the Bank continued almost $9 billion, or for an annual average of to provide financial support to seventeen heav- $2,209 million; over the same period, gross ily indebted, middle-income countries through disbursements averaged $5,123 million. (See increased operations, particularly fast-dis- Table 3-3). bursing, policy-based lending; intensified its While the Bank's efforts in these areas have policy dialogue with these countries; main- been pursued vigorously, success in restoring tained a high level of investment-lending oper- growth ultimately depends on a debtor's own ations; continued its efforts to alleviate pov- willingness and ability to implement adjust- erty and cushion the impact of adjustment on ment programs and on the support of other the poorest groups; and increased its assis- creditors, both directly, through capital flows, tance in mobilizing financial support from com- and indirectly, through debt relief. inercial and official lenders."5 While the Bank's approaches to other highly '` The findings of the World Bank's task force on food indebted, middle-income countries (in the Eu- security in Africa are detailed on page 85. rope, Middle East, and North Africa region, as "4 See the World Bank Anntial Report for fiscal 1988, pages well as in the Latin America and the Caribbean 69-71, on the issues covered by the education policy region) correspond closely to those being un- paper. dertaken in the group of seventeen countries, 5 The seventeen countries include Argentina, Bolivia, Bra- zil, Chile, Colombia. Costa Rica, Cote d'Ivoire. Ecuador. the pace of reform in some of these countries Jamaica, Mexico, Morocco, Nigeria. Peru, the Philippines, has been variable, and, in these cases, the Uruguay, Venezuela, and Yugoslavia. While these seven- Bank's operations have been put on hold, teen constitute the base data in this section, there are other Should lending prospects improve, the Bank countries with large debt burdens that confront many ofthe same economic-management challenges and that the Bank will respond with appropriate resource deploy- is actively supporting through policy advice, adjustment ment. lending. and external-resource mobilization. 48 The World Bank-Fiscal Year 1989 The implicit "contract" in the debt strategy, favorable external environment, expanding as it has evolved since 1982. envisioned a trade flows, and avoidance of protectionism sharing of the burden: adjustment by the debt- was underscored by the board. ors, increased lending by official creditors in The directors also agreed that debt and debt- support of adjustment, and provision of ade- service reduction instruments should assume a quate resources by private creditors. The strat- significant role in the evolution of the debt egy was relatively successful in buying time; it strategy, but that these innovations should be facilitated the strengthening of the interna- implemented on a case-by-case basis and in tional financial system and reduced the risks conjunction with adequate adjustment pro- for commercial banks. But restoration of grams. This new approach should be used, growth in debtor countries has proved to be where justified, in addition to a continuation of difficult. Fiscal year 1989 brought proposals the new-money process. There was agreement -from France, Japan, and the United States- that application of new measures should not be to review and strengthen the debt strategy limited to an arbitrary list of debtors, but through stronger emphasis on voluntary debt should be open to any country that satisfied and debt-service reduction as a complement to established criteria. Small countries should new lending by commercial banks, new invest- have equal opportunity with large debtors to ment, adjustment measures, and the repatria- benefit from proposed measures, but that, in tion of flight capital. the spirit of a case-by-case approach, relief In early 1989, against the backdrop of general should be adapted to the specific needs and reconsideration of the debt strategy, the execu- situation of each participant. tive directors of the Bank met as the committee The executive directors recognized that the of the whole to discuss the evolution of the Bank should play an important role in the strategy for dealing with the heavily indebted evolving debt strategy. The Bank would con- countries and the Bank's role in that strategy. tinue to exercise its primary responsibility for A number of factors were analyzed that had helping countries design and implement struc- impeded the satisfactory implementation of the tural-adjustment programs in relation to any debt strategy from the point of view of the additional debt relief that might be offered. It commercial banks, the official sector, and the would also be expected to commit certain debtors themselves. These included divergent portions of its resources to facilitate debt and interests of banks, difficulties in negotiating debt-service reduction as appropriate. Direc- reform programs, and some unfavorable exter- tors emphasized that close collaboration be- nal factors. tween the Bank and the IMF was essential, Despite a movement toward reconsideration particularly on debt issues."6 of the strategy, the Bank stated that the four In April 1989, the Interim and Development fundamental principles of its debt strategy Committees, meeting in Washington, D.C., would continue to include: agreed that the Bank and the IMF should * One, that the primary objective is to re- provide support for voluntary, market-based store growth in debtor countries so as to re- debt-reduction transactions. verse their falling standards of living and to The framework supported by the Develop- ensure a return to normal access to interna- ment Committee represented a particularly im- tional capital markets. portant step forward in achieving a consensus * Two, that the primary responsibility rests on the role of debt reduction. The committee with the debtor governments to undertake ad- agreed that a portion of the funds allocated by equate structural-adjustment and reform pro- the Bank for quick-disbursing adjustment oper- grams to ensure the continued viability of ations in heavily indebted countries should be economic growth without excessive depen- set aside to support debt-reduction operations. dence on external resources. It was proposed that a similar portion of ex- * Three, that to be successful, effective ad- pected IMF programs also be set aside for this justment programs would require adequate net purpose. The committee requested the Bank flows of external resources in a timely manner. and the IMF to "examine the possibility of * Four, that adjustment programs and their limited interest support for transactions involv- external support would have to be negotiated ing significant debt or debt-service reduction." on a case-by-case basis, taking into account The committee also requested the Bank and the scope for accelerated debt reduction and the IMF to move expeditiously to develop and related financing arrangements. implement specific proposals to support debt- The executive board reaffirmed these funda- alleviation operations, and stressed that this be mental principles and stressed that issues of poverty alleviation and social equity could not 6 Subsequently, ajoint Bank-IMF task force was created to be ignored in the process. The importance of a speed implementation of the debt strategy. The Bank and the Heavily Indebted, Middle-income Countries 49 done in a way that would preserve the financial * General agreement was reached that the integrity of the Bank and the IMF and not funds to support debt and debt-service reduc- adversely affect other members. tion would normally be made available as com- Following up on the Development Commit- ponents of adjustment rather than investment tee's request, in late May, the executive direc- loans. There would be flexibility in the alloca- tors discussed and approved initial guidelines tion of these funds among tranches of adjust- and procedures to be used in preparing IBRD ment operations in order to promote efficient, operations in which the Bank would provide market-based solutions. Significant 'frontload- support for debt and debt-service reduction. ing" would be considered only where there was * It was agreed that all member countries strong economic performance and a clear need that had a clear need for debt or debt-service in terms of the debt-reduction program. In cases reduction to achieve reasonable medium-term in which the Bank did not have a substantial growth objectives and that had adopted a adjustment-lending program, Bank support for sound medium-term economic policy frame- debt or debt-service reduction would generally work would be eligible for Bank support. Sup- be provided through special operations devoted port would be decided on a case-by-case basis, to debt reduction that would have appropriate taking into account the strength of the medium- policy conditionality. term adjustment program, the severity of the * The executive directors' approval of the debt burden, the scope for voluntary market- Bank's support of a debt or debt-service reduc- based operations, the medium-term financing tion operation would be required in all cases. plan, and the potential benefits from Bank Upon approval, the member country con- support, particularly for investment and cerned would be authorized to draw on the growth. Bank for support for debt and debt-service * Second, although the level of Bank sup- reduction in accordance with the terms agreed port would also be determined on a case- with the Bank. by-case basis, it would involve a figure of * Although it was expected that the resources around 25 percent of a country's adjustment- from the Bank and the IMF would be, in aggre- lending program over a three-year period or gate, of broadly comparable size, and be pro- around 10 percent of its overall lending pro- vided under mutually consistent modalities, gram where the Bank was concentrating its each institution's contribution would be deter- support on investment lending and where the mined by its own judgment arrived at through country had an acceptable medium-term eco- established decision-making processes. nomic-policy framework. Directors also * It was understood that, as a contributor to agreed that, where justified, additional re- the financing of the debt-reduction program sources up to 15 percent of the overall three- under negotiation, the Bank needed to be sat- year lending program could also be made avail- isfied that its own materiality criteria were able. While the additional amount of 15 percent being met. These criteria would require, in would be regarded as a limit, it would be particular, that transactions supported by the possible to exceed it on the basis of special Bank should result in a substantial discount justification if the excess amounts were de- leading to a significant reduction in the present ducted from the lending program so that such value of future debt-service obligations. an excess would not result in a further increase Directors emphasized the importance of the in the net commitment of the Bank. Additional Bank obtaining assurance that there was ade- lending by the Bank would not be more than $6 quate financial support for a country's adjust- billion for the three-year period, fiscal years ment program in order to be confident that its 1990-92. own contribution would be used effectively in * The set-aside funds would be used to sup- concert with other support to achieve the ob- port operations involving significant principal jectives of the medium-term program. It was reduction, and the additional funds would be recognized, however, that the Bank may con- used for interest support in connection with tinue its adjustment-lending activities where a debt reduction or debt-service reduction. country is on track on its adjustment program * It was also agreed that the Bank should but not in servicing its obligations to private provide support for debt and debt-service re- creditors, and where a significant delay in duction primarily through direct lending ar- Bank disbursements would seriously set back rangements, on normal IBRD terms, that the the country's adjustment program. borrower would use for approved debt-reduc- Directors also stressed the importance of tion and credit-enhancement programs. Guar- ensuring that debt-reduction operations sup- antees of interest payments would not be used ported by the Bank would release resources for unless there were exceptional circumstances investment and other uses that would make a providing strong justification. material contribution to a country's develop- 50 The World Bank-Fiscal Year 1989 ment prospects. Program objectives should proceeds for debt reduction under similar include measures to promote domestic savings terms and obligations. and investment, complemented by appropriate policies to encourage direct foreign investment Environmental Activities and capital repatriation. Recognizing that Bank Considerable progress was made in fiscal resources for debt and debt-service reduction year 1989 in integrating environmental con- were limited, directors agreed that every effort cerns into the mainstream of the Bank's oper- should be made to mobilize additional support ational and policy work; these concerns now from other sources, including from the debtor pervade Bank operations, policy and research country's own resources. evaluation, training and information activities, In setting the guidelines, the executive board and, through increasing the availability of en- stressed that debt-reduction operations should vironmental information about its projects and not, in any way, adversely affect the availabil- programs, external relations. ity of Bank resources to other borrowers, Operational activities. A major thrust of many of whom also had debt burdens but had the Bank's environmental policy has been the succeeded in maintaining market access. The introduction of more explicit considerations of Bank should seek to provide other forms of environmental issues into its country program- support for these countries. In this context, the ming and economic-policy dialogue. As a directors noted that the proposed program means of fostering this process, environmen- could be accommodated in the current capital tal-issues papers (EIPs) are being prepared for structure of the Bank and reiterated that no each of the Bank's borrowing member coun- country should be disadvantaged as a result of tries. This process is intended to heighten the program. awareness within the Bank of environmental The approaches that were introduced broke issues, to clearly delineate responsibility for new ground for the Bank and will be adapted addressing them in country operations, and to flexibly and with particular care to the special achieve a consistent approach to their solution. circumstances of individual borrowers. The The papers are intended to be internal docu- executive directors, therefore, agreed that it ments that identify key environmental prob- would be important to closely evaluate the lems, to be assessed within the context of guidelines and conduct an initial review toward planning overall country strategies. the end of the calendar year. Environmental-issues papers were prepared for about seventy borrowing countries during * * * the year. Several papers had been completed in fiscal 1988, and the remainder are scheduled to In mid June, three adjustment loans to Mex- be completed in the early months of fiscal ico-in support of reforms in the public-enter- 1990. Priority topics identified in the EIPs prise, financial, and industrial sectors-in the include all the major issues in the environmen- amount of $500 million each were approved. tal spectrum: watershed erosion and upland The loan documents covering these three op- degradation, deforestation, loss of biological erations provide that a $125 million amount be diversity, soil and land management, air and set aside under each loan, separated from the water pollution, urban sanitation and waste normal tranching arrangement, to support a disposal, environmental health, the protection debt-reduction plan acceptable to the Bank to of cultural property, marine and coastal zone be agreed by mid December 1989. If no debt- protection, and water-resource management in reduction plan acceptable to the Bank were general. Some factors aggravating environ- agreed upon by that date (or such later date as mental problems have been identified in many requested by the borrower and approved by of the papers, and include population pressures the Bank), the set-aside amount would be on resources and legal and policy constraints. restored to the second tranche amount. Insecurity regarding property rights, distorted Also in mid June, two adjustment loans to economic incentives, and lack of existing insti- Venezuela-for structural adjustment and in tutional capacity to tackle major problems are support of trade-policy reforms-were ap- often mentioned, as well. proved in the amounts of $402 million and $353 Complementing the EIPs are a number of million, respectively. The former includes pro- in-depth studies of selected key environmental visions whereby up to 25 percent of quick- issues in particular countries. The original disbursing funds ($100 million) may be used to goal-completion by the Bank of thirty such support a debt-reduction plan approved by the studies by the end of fiscal 1992-is well ahead Bank once conditions for second-tranche re- of schedule. Bearing in mind that integration lease had been fulfilled. The latter loan also into routine operations of the Bank is the provides for the use of 25 percent of the ultimate objective, evidence of progress in this Environmental Activities 51 regard is to be found not only in specifically sues is required. The complexity of the subject identified environmental activities, such as en- and the heavy staffing requirements for ad- vironmental action plans (EAPs) or country- dressing a variety of environmental problems wide environmental studies, but more impor- are illustrated by a study on Indonesia, still tant, in the explicit or implicit treatment of the under preparation, that, stressing the tight link- environment in the Bank's lending operations. ages between environment and development, While a national EAP provides an overall focuses on four of the most important environ- strategy, it also makes recommendations for mental problem areas in the country: deforest- specific actions, outlining the environmental ation, land degradation, water shortages, and policies, legislation, and institutions required water pollution. A major theme in the report is for implementation. The EAP, which is ex- that many resource conflicts can be resolved pected to be prepared by interested govern- by increasing the potential of existing re- ments in collaboration with the Bank, is in- sources through intensification and greater ef- tended to provide a framework for integrating ficiency in resource use. environmental considerations into a nation's Several regional studies are under prepara- overall economic and social-development pro- tion, and include the capital cities cleanup grams. EAPs also identify a country's most project for the Asia region. This is a regional urgent environmental needs and assist deci- initiative, supported by the United Nations sionmakers in determining priorities and allo- Development Programme (UNDP), that aims cating limited resources; by their nature, there- to arrest and begin reversing the process of fore, EAPs examine the trade-offs involved environmental degradation that is taking place between investments and the environment for in major cities of Asia under the impact of sustained development. In each of the action rapid urbanization, industrial pollution, and plans developed to date, participating govern- general environmental neglect. A study for the ments have emphasized one theme: To be Asia region, highlighting key economic and successful, environment must be fully incorpo- environmental issues related to forestry is also rated into all their major programs. under way, as is a study of agroforestry prac- In Africa, based on strong interest expressed tices in sub-Saharan Africa. at the country level and among donors, work The environmental program for the Mediter- began on six EAPs in fiscal 1988 and contin- ranean (EPM), a regional study that began in ued, with one more country being added, in January 1988, is funded jointly with the Euro- fiscal 1989. EAPs in early stages of preparation pean Investment Bank (EIB). The first phase of include those for Burkina Faso, Ghana, the study, which builds on extensive work by Guinea, and Rwanda. EAPs for Lesotho, Mad- the United Nations Environment Programme agascar, and Mauritius are at a fairly advanced (UNEP), consists of an assessment of environ- stage. mental problems and priorities in the Mediter- In Madagascar, the first country where the ranean region-encompassing eighteen coun- Bank assisted in developing an EAP, the pro- tries-together with a plan of action covering cess has already induced modifications in cur- policy reform, institutional development, and rent field operations, such as the introduction investment needs. The second phase will in- of environmental-impact assessments and clude the discussion of the EPM findings with more concern with soil and water conserva- the countries concerned and with international tion. The EAP has also paved the way for the agencies. The third phase is proposed as a preparation of a major investment program- three-year program of studies, institution- the Environmental I project-in addition to the building, training activities, and project prepa- elaboration of legal and policy changes. The ration to assist the developing countries of the investment program is to include watershed Mediterranean to move ahead in addressing management, protection and management environmental needs. The third phase would be of the Malagasy patrimony of biological diver- funded by the UNDP, the EIB, and other do- sity in association with the development of nors, as well as by the Bank, and would be fully tourism, the development of environmental- coordinated with UNEP. information systems to improve resource man- Lending operations. About a third of all agement, institution building, and the develop- projects approved during the year contained ment of human resources. significant environmental components. Envi- Although not labeled EAPs, a number of ronmental issues were particularly significant studies, conducted during the year in the con- elements of agricultural and energy projects, text of normal operational work, addressed and they were frequently dealt with in other similar issues. Comprehensive countrywide sectors, as well. EAPs are less appropriate for larger countries, Some three fifths of the agricultural projects where greater selectivity of environmental is- approved in fiscal 1989 contained environmen- 52 The World Bank-Fiscal Year 1989 tal components. Across regions, some of the rehabilitation and upgrading of water-supply or more frequently found environmental elements sewer systems, the expansion of distribution in agricultural projects included land and soil networks, drainage, institutional reforms, management and conservation, pesticide han- training, and technical assistance. dling and use and the introduction of integrated The Bank has traditionally taken steps to pest-management techniques, forest protection ensure that its industrial projects are designed and management, wildlife management, drain- to minimize adverse environmental effects. age and irrigation rehabilitation, institutional This continued in fiscal 1989, as exemplified by support, and development of research. an industrial-finance and technical-assistance More than half of all energy and power project in India. Through relending by partici- projects approved during the year contained pating financial institutions to subborrowers, a environmental elements. These ranged from multiplier effect stressing the incorporation of provisions of environmental-impact studies to strong environmental objectives will be pro- full environmental projects. Globally impor- duced. The project also includes the provision tant environmental issues in this sector are of technical assistance to the major govern- pollution control, resettlement, and institu- ment steel company in designing pollution- tional strengthening. As in previous years, control measures. virtually all energy projects contained loan Sectors such as urban development, as well conditions aimed at improving pricing policy, as population, health, and nutrition, also con- with a view to enhancing efficiency in energy tain projects with significant environmental consumption. Components or measures to components. The case of population, health, ameliorate adverse environmental effects are a and nutrition is particularly important: Al- feature of most energy projects. though lending in this sector may not appear to The energy sector management-assistance be strictly environmental, population, in fact, program (ESMAP) also contains significant is a fundamental factor in any consideration of operational environmental components. The environmental problems and their solution. ESMAP is supported by the Bank, the UNDP, Project review and supervision. Environ- and other UN agencies, as well as bilateral mental monitoring is an important element of donor agencies, and is designed to identify, operational work. All projects, for example, analyze, and propose actions to address the require clearance from regional environmental most serious energy problems in developing divisions. If projects have to be modified, or countries. ESMAP activities encompass insti- even abandoned, it is obviously preferable that tutional, financial, policy, and social issues this should happen at as early a stage as affecting energy use and provision, energy possible. Environmental activities take place efficiency, traditional and modern fuel at all stages of the project cycle-from identi- sources, and renewable energy resources. fication to supervision, completion, and eval- Environment, therefore, is a central theme of uation. The place of environment is perhaps the overall program. Activities in fiscal 1989 changing most dramatically at the early stages included the identification and preparation of of identification and preappraisal. This can be potential projects in Ecuador in the area of seen in the increasing number of free-standing industrial-energy conservation; in India, in the environmental projects in the pipeline. Over identification of the most promising sites for twenty free-standing environmental projects large-scale windfarm development; improved are at various stages of the project cycle and charcoal-kilns production in Burundi; and a are expected to be submitted for executive cooking-efficiency project in Ethiopia. board approval over the next three years. In the transportation sector, ports projects, Many others also have significant environmen- in particular, tend to include environmental tal elements. issues in project formulation. Three such port Sometimes, unexpected environmental prob- projects were approved during the year, one in lems need rectification at the supervision stage. Algeria and two in China. Pollution reduction In the Punjab urban-development project, ap- caused by port activities is usually an impor- proved in fiscal 1988, urban environmental- tant consideration, as is the minimization of protection issues were given special attention at the effects of dredging. the supervision stage. It was agreed to develop Almost all projects approved in the water a program for addressing these issues, including supply and sewerage sector during the year water pollution, solid-waste management, air contained environmental components. This is and noise pollution, the institutional frame- to be expected, as, by their nature, activities in work, public awareness, and training needs. this sector are geared toward the improvement This review was an important step in the iden- of environmental services. Typical compo- tification of a new environmental-protection nents of water and sewerage projects are the project currently under preparation. Environmental Activities 53 The effect of structural- and sectoral-adjust- level soil-conservation measures in the uplands ment lending on the environment, complex as of Java. Other products included a manual on it is to assess, is potentially considerable. By safe disposal of hazardous wastes, two books their very nature, adjustment loans go beyond (Environmental Accounting for Sustainable the limits of single projects, to affect wide- Development and Environmental Management ranging price, subsidy, export, and other poli- and Economic Development), and a working cies, which, in turn, may directly or indirectly paper addressing the "commons" problem. influence environmental variables. Although it While ENV provides leadership and general is difficult to generalize about the overall im- guidance, much-indeed, the bulk-of policy pact of adjustment operations, work of this and research work being done in the environ- nature does require specific attention to possi- mental area is conducted by other departments ble environmental effects. What is often, of the Bank. The attention given to environ- though not always, lacking in such lending is ment in the policy and research work of the an explicit reference to the likely effects on the industry and energy department is particularly environment. Much environmental policy large. That department's fiscal 1989 program work and research is already incorporated into included a study of the policy implications of nonadjustment lending, and lessons learned the greenhouse effect for the energy and indus- from these experiences can be integrated into try sectors, a handbook on windpumping, a structural-adjustment and sectoral-adjustment methodology for assessing the true cost of loans. biomass resources, a review of environmental Environmental objectives or issues were ex- aspects of past Bank power projects, and plicitly addressed in five adjustment operations guidelines for energy and use-efficiency pro- approved in fiscal 1989-in The Gambia, grams and projects. Ghana, Guinea-Bissau, the Lao People's Dem- Other sector departments are also address- ocratic Republic, and Pakistan-while, in ing environmental issues in their policy and other cases, certain loan conditions were in- research work. While the population and hu- corporated that are likely to have environmen- man-resources department work program con- tal implications. In addition, of the twenty- tains few activities explicitly related to envi- eight policy framework papers completed ronment (exceptions include research on during the year, almost three fourths contained public policy and environmental health, and on explicit reference to environmental or natural- population growth and water-resource supply resource issues. Issues raised most often re- and demand), it is generally accepted that lated to forestry, energy efficiency, and popu- control of population growth is fundamental to lation pressures on natural resources. the achievement of successful environmental Policy and research. Fiscal year 1989 also management. The emphasis upon population, witnessed an increasing integration of environ- as well as upon other programs with a direct mental concerns into the Bank's policy and bearing on it, such as women's issues and research work. Activities of the environment primary health care, make the department's department (ENV) revolved around three main program as a whole of central importance to categories: natural-resource management; en- the Bank's overall environmental effort. vironmental quality and health; and environ- The infrastructure and urban development mental economics. In addition to numerous department has a considerable environmental in-house papers and reports, publicly available program, geared primarily to issues such as books, and guidelines or state-of-the-art re- municipal solid-waste management, sewage and views, an interagency report on Conserving waste recycling, and low-cost sanitation alter- the World's Biodiversity (in collaboration with natives. Environment also features in its trans- the International Union for the Conservation portation work, and guidelines have been pre- of Nature and Natural Resources, the World- pared on environmental considerations in port wide Fund for Nature, and the World Re- and harbor development, as well as for road and sources Institute) was prepared, as well as a rail transport. The agriculture and rural devel- review and set of policy recommendations on opment department is also heavily involved in dryland management, a review of priority tech- environmental work. Fiscal 1989 activities in- nical and policy-research needs for containing cluded a book on innovations in resource man- tropical deforestation; and a staff operational agement and the sustainability of agricultural directive on lending for dams and reservoirs, systems; guidelines on dam safety and the envi- with special attention to environmental consid- ronment; and analysis of the effect of an import erations. Sixteen ENV working papers have ban on tropical-forest products; guidelines on been published to date and address issues such the use and applications of pesticides; and a as environmental degradation in frontier devel- study of the environmental impact and sustain- oping economies and the economics of farm- ability of irrigation investments. 54 The World Bank-Fiscal Year 1989 Evaluation, training, and information. provide electronic access to economic and Studies in the operations evaluation depart- sector studies through an environmental/eco- ment are carried out at three levels: individual nomic bibliography. System development, audits, impact evaluations, and special studies. planned to take place over several years, has Environmental issues are now addressed in the begun in all three modules. course of performance audits and in reviews of During fiscal 1989, the development of project-completion reports. In addition, work ENVIS continued, and the system was ex- commenced during the past year on two coun- panded. Data on Bank projects for fiscal 1989 try-specific studies of environmental issues, were progressively entered, and the files for the for Brazil and Nepal. The Brazil study exam- previous two years were completed. Promotion ines how, and how well, the Bank has per- of ENVIS and training of potential users will be ceived and dealt with environmental issues and expanded in 1990 when three full years of Bank problems in the context of several large infra- environmental data will be on file and a user's structure and regional-development projects guide will have been completed. located in several Brazilian states. The overall The Bank is continuing to cooperate with approach paper for this study has been final- international agencies, donor and borrowing ized, and field work has been completed for governments, and nongovernmental organiza- some of the case studies. tions (NGOs). Ongoing consultation and/or During fiscal 1989, the Economic Develop- collaborative work has been maintained with ment Institute (EDI) continued to help broaden several United Nations agencies, as well as understanding of natural-resource manage- with the Asian and Inter-American Develop- ment by bringing together environmental spe- ment Banks, the Organisation for Economic cialists, development practitioners, and policy- Co-operation and Development, and bilateral makers to share experiences, problems, and donors. The Bank is also an active participant solutions concerning policies and programs in in meetings of the Committee of International developing countries. In this context, a re- Development Institutions on Environment. gional seminar in Latin America was organized The Bank is also increasingly asking the during the year. NGO community for its views on the Bank's Continuing EDI's work in energy planning approach to its environmental work. As part of and policy analysis, seminars were held in this process, ENV and the Bank's regional Zimbabwe and Senegal in October 1988 and environment divisions have held meetings with June 1989, respectively. These seminars con- NGO groups at headquarters and elsewhere to sidered the environmental effect of current and keep them informed and obtain their advice on future consumption on renewable-energy re- Bank activities. sources in Africa. The Bank participates in a number of inter- During the year, seventeen major training national meetings on global environmental is- sessions, reaching about 450 World Bank staff sues. On the issue of toxic waste, for instance, members, were undertaken. These sessions in- the Bank's interest was first formally ex- cluded seminars and workshops on the implica- pressed by its president at a meeting in Oslo in tions of climate change; environmental econom- July 1988. Several meetings followed-in Lux- ics; environmental and safety aspects of large embourg, Geneva, and Basel-where the Bank dams; remote sensing and natural-resource was represented in observer status. The Basel management; dryland management; pesticides; meeting ended with the final text of the toxic municipal and industrial-waste management; waste convention being adopted for signature and natural and industrial hazards. by developing and industrialized countries. To accomplish the integration of environ- On the Montreal Protocol regarding the use ment into the range of Bank activities, a major of chlorofluorocarbons, the Bank is repre- requirement is the existence of affordable and sented on the international economic panel on accessible information. Starting in September the ozone layer. A first meeting, under the 1987, the Bank began developing an environ- auspices of the European Communities, was mental-information system (ENVIS), drawing held in Brussels; a second meeting, hosted by upon both internal and external sources. The the United States Environmental Protection objective of ENVIS is to provide Bank staff Agency, was held in Washington. with a central source of information about the The Bank is following the efforts to under- Bank's activities in environmental fields, as stand and control the phenomenon of global well as a tool for analysis, project design, and warming and the greenhouse effect. Both are policy development. ENVIS's three modules under the purview of energy department staff, are designed to monitor and track Bank envi- as well as the senior advisor on science and ronmental projects, provide country-by-coun- technology. Staff have attended several inter- try sources of environmental information, and national meetings on these issues and are pre- Private-sector Development 55 paring policy papers that will be widely dis- litical, and social objectives, as well as private seminated. sectors at varied stages of development; di- verse approaches. therefore, tailored to indi- Private-sector Development vidual country circumstances, would be A high-level task force's recommendations sought. Thus, the Bank Group's overall focus on ways to strengthen the private sector's would continue to be on efficiency. contribution to development in the World Second, although possibilities exist to pur- Bank's developing member countries has led sue private-sector development in virtually ev- to the formulation of an action program that ery sector and subsector, the program seeks to intensifies the combined efforts of the Bank focus on those priority areas in which the and the IFC, together with the newly founded Bank. the IFC, and MIGA could make the MIGA, in pursuit of that goal. "7 greatest difference. The action program was based on the rec- Third, since the program calls for action that ommendations of the report of the Private can be taken in the short and medium term, it Sector Development Review Group, a twelve- focuses on tasks that could be expanded or member panel chaired by J. Burke Knapp, a initiated quickly, and which are based on al- former senior vice president of the Bank. 8 The ready-known techniques. group, which included prominent individuals Fourth, private-sector development involves from the private sector, as well as Bank staff, not just more private activity but also ex- was formed in fiscal 1988 to assess the private- panded competition and increased government sector activities of the Bank and the IFC. In capacity to correct abuses and regulate wisely. forming the review group, the Bank noted that Private-sector development should not be as- there was a "growing recognition" in develop- sociated with private monopoly power and rent ing countries of the important role private- seeking, but with greater use of competitive sector development can play in contributing to markets and increased efficiency. economic development. Improving the economic climate. Improve- The action program, which focuses on activ- ments in the economic environment are an ities that can be undertaken in the short and essential component of any strategy for pri- medium term, seeks to move quickly in support vate-sector development. With the expansion of private-sector activities in four priority areas: of policy-based lending, the Bank has in- * improving the economic environment for creased its emphasis on policies designed to the private sector; improve the efficiency and competitiveness of * public-sector restructuring and developing- the private sector and the economy as a whole. country efforts either to promote public-sector Improvement takes places not only through efficiency, to privatize enterprises, or to assist macroeconomic and sector policy reform, but interested member countries to expand the pri- also through legal and regulatory reforms vate sector's role in infrastructure and services (most notably cuts in red tape and the stream- in cases in which expansion could help ease lining of regulations), revisions in commercial financial constraints and increase efficiency; codes, and reform of investment and export * financial-sector development and expan- rules and incentives, as well. sion of the transfer of resources to the private Under the action plan. World Bank adjust- sector in developing countries; and ment operations in support of economic policy * a program of research and policy work to reforms will increasingly support policies, reg- lay the basis for future Bank operations. ulations, and legal reforms directed specifically Although the Bank has emphasized for a at improving the environment for private- long time the advantages of market discipline sector development. and private initiative in promoting efficient Depending on country circumstances, such development, its approach did not evolve sys- operations will, where appropriate, work to tematically over time. The action program was remove barriers to entry and exit, revise labor designed to fill in the gaps in the Bank Group's laws (in cooperation with organizations such as activities in private-sector development. inte- the International Labour Organisation) to re- grate private-sector development into Bank duce distortions and the excessive costs of job operations, identify areas in which efforts should be intensified, and focus on ways to improve coordination and joint action among the Bank, the IFC, and MIGA. Four considerations helped shape the pro- 17The three institutions, together, are often referred to as Fouram consi derations.helped shapethepro- the "World Bank Group:" this is the meaning of the term gram's final design. "Bank Group." as used in this section. First, the Bank's membership is composed W'world Bank, Developing the Private Sector: A Challenge of countries that have different economic, po- for the Wolid Bank Group (Washington, D.C., 1989). 56 The World Bank-Fiscal Year 1989 creation, simplify and improve the tax system order to give more room for private activities, to make it more transparent and less distortion- and, generally, improve the efficiency of public ary, change titling laws and procedures to institutions. make it easier to establish property rights, While noteworthy successes have been improve antitrust legislation, streamline proce- achieved in some areas, in others progress has dures for registering and licensing businesses, been slower than expected. Divestiture mea- reduce the role of public monopolies by ex- sures, in particular, have proved difficult to panding competition, improve business ac- implement. Progress has been slower than ex- counting and auditing practices, and strength- pected for a number of reasons, including the en governments' capacity to regulate (rather absence of a framework for deciding on a than intervene) and to encourage competition divestiture strategy, a lack of indigenous pri- and initiative. vate entrepreneurs able to acquire and manage Considerable country economic and sector the enterprises, weak or nonexistent capital work has already been completed, or is under markets, the difficulty of maximizing the effi- way, to identify key regulatory and legal con- ciency gains from private ownership without straints to private-sector development and de- first creating an appropriate competitive mar- velop programs of reform. This prior work will ket, procedural and legal obstacles, strong permit a rapid and broad increase in adjust- political sensitivities to foreign ownership, and ment components focusing on specific regula- opposition from groups losing economic rents tory and legal reforms to improve the eco- through the reform process. nomic environment. In order to enhance efficiency and competi- In addition to these general reforms, many tion, the Bank Group, through the action pro- developing countries wishing to encourage di- gram, will expand its support to countries that rect foreign investment will need to address have made clear their wish to develop an specifically the barriers and constraints facing appropriate framework and favorable environ- foreign investors. To assist its member coun- ment for successful privatization. It will also tries secure the advantages of foreign direct take a more direct role in assisting implemen- investment, the IFC and MIGA, in October tation, including financing of programs of staff 1988, moved to make the foreign investment retraining and seed capital to start new activi- advisory service (FIAS) a joint program. Staff ties. assigned to FIAS, which was set up in fiscal The IFC's recently created corporate fi- 1986 in the IFC to help developing-country nance services unit will work closely with the governments that seek its advice to create the corporation's investment departments to in- framework of policies and institutions neces- crease the IFC's privatization activities, which sary to encourage and regulate direct foreign include offering advice on preparing privatiza- investment, will double by fiscal 1991. tion deals, locating investors and conducting Furthermore, the Bank, the IFC, and MIGA negotiations, as well as making investments in will assist heavily indebted countries in ex- privatized firms. In addition, the Bank and the panding their use of debt/equity conversions IFC will cooperate closely to increase support (the Bank through advice and, possibly in the of the restructuring process prior to sale, in- future, operations; the IFC through investment cluding bringing in prospective shareholders to operations and promotion and underwriting of participate in the restructuring, or, alterna- equity investment funds that make use of con- tively, assisting buyers to restructure the versions; and MIGA through insurance against newly privatized enterprise. MIGA will sup- noncommercial risk for equity resulting from port divestiture programs by insuring both debt conversion), thus permitting additional direct and portfolio equity investments in opportunities for foreign direct investment. privatized enterprises against noncommercial Public sector restructuring and privatization risks. of enterprises, infrastructure, and services. The Bank Group is also prepared to assist Many developing countries are reexamining interested member countries to expand the the role of the state in their economies, and private sector's role in infrastructure and so- increased interest in enhancing both public and cial services in cases in which such expansion private efficiency is being extensively sup- could help to ease financial constraints and ported by the Bank Group. In conjunction with increase efficiency. Bank assistance would government directives and in the interests of include helping governments establish an ap- improving efficiency, the Bank Group has sup- propriate legal and contractual framework, ported divestiture and liquidation of public identifying investments currently in public in- enterprises, an end to public monopolies, an vestment programs that are suitable for private increase in budget discipline, the concentration involvement, and analyzing the financial and of public expenditures on high-priority tasks in economic viability of proposals. Private-sector Development 57 The IFC would provide both direct financing markets. Progress will be gradual, however, and advice and, in some cases, help attract for if the basic preconditions for efficient mar- investors and put together the commercial fi- ket operations are not in place, too-rapid liber- nancing packages. MIGA could also help to alization could have disastrously destabilizing encourage expanded private involvement by effects and lead to massive misallocation of providing protection against noncommercial resources. Over time, however, Bank-sup- risks. ported financial institutions, whether publicly Financial-sector development and resource or privately owned, will have to withstand the transfer. The ability of the financial sector to test of the market. mobilize an adequate volume of savings and * Because the scarcity of equity capital is a channel resources effectively to their most key constraint to private-sector development in efficient uses is one of the most important developing countries, the IFC will expand its ingredients for successful private-sector devel- capital-market work through the establishment opment. A modern, efficient, market-based and strengthening of domestic capital-market economy is inconceivable without an efficient institutions, support of links between domestic financial system to mobilize savings and chan- and international capital markets, and advice to nel them to their most productive end uses. help create appropriate regulatory frameworks. World Bank adjustment operations have con- The Bank and the IFC will collaborate closely sistently promoted reform of interest and ex- to develop systematic programs-employing change rates, and although considerable prog- Bank adjustment lending and technical assis- ress has been made, these policy reforms have tance and IFC investments and advisory not always generated the expected supply re- work-to promote capital-market development. sponse, in part because of rigidities and inade- MIGA can insure new investments made in quacies in the financial sector. At the same market growth funds located in a developing time, the Bank's operations in support of local country against noncommercial risk. financial intermediaries have sometimes tended * The Bank Group will expand its efforts to to focus too narrowly on meeting the credit increase the transfer of resources to the private needs of particular end borrowers and may not sector, acting both as a catalyst to promote have given due attention to the requirements private-to-private flows and as a provider of and importance of overall financial-sector de- direct financing through the IFC. Catalytic velopment. The situation has been changing in activities could include MIGA guarantees, recent years, and that change, under the action FIAS advice, the promotional effects of IFC's program and the forthcoming review of devel- own investments, and an expansion of IFC opment finance intermediaries, will be consoli- activities in underwriting corporate issues of dated and formalized. securities by companies in developing coun- Operations that involve the financial sector, tries. The IFC, the Bank affiliate most respon- either as the object of the operation or as the sible for direct financing of private industry, vehicle for transferring resources to other sec- will also increase its operations. tors of the economy, will be designed and *Researchandpolicywork. Whilefirstpri- carried out within the context of coherent, ority will be given to increasing rapidly its country-specific strategies for financial-sector operational focus on private-sector develop- development. Consistent with country strate- ment, the Bank Group will also undertake the gies, the Bank will emphasize four specific and necessary research, policy work, and opera- closely related areas: improvements in the tional guidelines to create new ways to develop policy and institutional environment affecting the sector and improve existing lending instru- financial-sector development, a strengthening ments. Topics to be studied in these three areas of bank and nonbank financial institutions, will include strategies for regulatory reform, promotion of capital-market development, and including specific sector policy papers; the role increases in the transfer of resources to devel- of the private sector in the delivery of public oping-country private sectors. Thus: services in each economic sector; reviews of * The Bank will expand its operations in experience with privatization; and issues of support of financial-sector restructuring and re- banking regulatory policy, bank restructuring form, and the IFC will expand its collaboration and patterns of corporate finance, and parame- with the Bank in this financial-sector work by ters for financial-sector adjustment lending. helping to review policy and regulatory issues and identifying ways to fill institutional gaps. * In its support to, and use of, specific financial intermediaries, the Bank will ensure The executive directors of the Bank and the that its activities are consistent with the overall board of directors of the IFC considered the strategy of encouraging greater reliance on private-sector development action program 58 The World Bank-Fiscal Year 1989 and endorsed its general thrust; directors par- assessment, outlining specific actions planned ticularly welcomed the effort that had been for the next three to four years; the more made to take a pragmatic approach to the detailed WID strategy for Kenya (details are action program. It was agreed that, in one reported on in both the 1987 and 1988 Annual year's time, a report on the progress of the Reports) has led to operations in agricultural action program would be prepared. extension; education; population, health, and nutrition; and, more recently, in credits that Women in Development increasingly involve women in development. The Bank's initiative to help women in de- Detailed WID strategies for Bangladesh, India, velopment (WID) advanced considerably dur- and Pakistan are nearing completion. Exten- ing the past fiscal year, and several signs of sive work is also under way elsewhere, includ- progress can be discerned. ing Cameroon, Colombia, The Gambia, Indo- Each country department director of the nesia, Mexico, Morocco, Nigeria, Zaire, and Bank has been asked to prepare a brief WID Zimbabwe. Bin 3-1. Gender and Poiern in India Earls on sit the course of prepiring the counrr- tion provth and hewter child sur-i.ali in ihe action plan lor addrew,ing kes women-,n.devel. longes term. In [he productike sector,. ihe report oprment isues in the Bank' wvork in India. a recommends a combination of policies to pro- -Arong. but eomples Inlge emerged bet.ween mote overallemplo)mentrgrowthanddirect meia- women and po%crix \\omein are preponderant sure, so en-ure that w%omen hate access to the among thy poor. and poor household, are more productive resources they need to partake of that dependent on v.onien , earninc>. Gi%en she long- groih. Among the specific recommendations 4ttiiding concern bs the goternment ofInda \ sibh ure prokvison of diiect atce,s ti institutional pot erls alle\.Ltion and the focu, of the Banksi credit. orientational and operaijonal modifica- countr; economic memorandum tin po L-rt,s. em- tions in she daricultural-research and aericultural- plo%trenm. and social ,erices, this linkage be- exten-ion \items 1hepromotionofdirectmem- c.mreone of the mator themes ofa recentl\ is'ued her5hip in %able producer cooperasises. and draft a,se,rment leport n, and Pitr,l- ri urganization of uomen into groups that pro\ ide India - . -iei uand ODppn.riiefs Contutralita them j legitimate Forum be\ond she private do- it in .Z n ate riinsi an f/ic I,id In terms ol mcsnic sphere and a more audible koice in de- education. empto, ment. wage,. health-care us- m:tndmng ser% ice, and inputs. age and mvrialst rate,. and a range of olther The o%erall thru,i L1 the report is thai such indicator,. It Vs c,.ident from the report that measure, to enhance wvomrnrs access tO produc- wosisien a5a group are more sulnerable tilan men tie resources are cntical as direct and self- so the e.trernme ofposers and 'tL conseq4uences. targesing means to reduce po%en; . Thirt%-fi\e At thte iame time. it i, tiio clear trial tor poor- percetit of indian household, helowt the po%ers hou,eholds a .womrii\ capacits to w,ork. her tine are headcd bi uonen and. in nmost cases. are healih. her knowledge. rnd her skill endomnient, thu, dependent esclusi%eh on female income. are ofien the onlh re'ource, lo call upon for Even %here there is a m.Ale earner women's sur' ial \% omen', labor-fbrce participation and earning, form a major part lf the income of poor their rel.iil e contribution lo soi3l fairtl incoime househol Nhiforeover. women coninihute a are higher in households dith lowser econormic liger share of w%hal they earn than do men to status. Thi, meann that the poorest families are ba,ic Idmili maintenance. and increases in wont- ihe moi dependent upon svomen's economic en's incomre translate more direcil into better producis jit. It also mean, that. in addition to child health and nutrition. siew inc, omesnta, a ke\ tarcet group for posed- Nliaking women more productne and. hence. alle iation progranis. antiposen; policies need to more efectlve inconse earners. wkill nol mereh recognize ;,nd harncs, the itrategic potential of reduce their dependenc; and enhance their sttus Women a, critical pla)ers in the proce,- of mo\ - and securit\ in the family. bus also increase inc their familles out ol poVet t% jggregate ldbor producti. it; and accelerate The maior emphas-i in the assessmeni report. growth in sector. such a, agriculture. where therefore. s; on w%omen a, economic agents and \somen constitute neJrly half the labor force. on idcntidf sin ihe genderSpecific constraints that increase househoiid incomies especiall\ tn fami- limit iheir products' ir and hence lhe rabilhi to lies below the posertv line: increase the shaLre oL eis.pe potenr From ihis persPectise. Improke- famtln imnome allocated to prosiding food and mcnrt, m v omcn education. he,1tth. and :blit' health care to children: improse male and female to regulase their o n ferilt:s are * iei ed not child sunrial and increase famils ine'tment in simpldi a welfare benefiss. hut a, ke\ inpult so education tbr their daughters. and reduce fertility higher lemale pri-dctlusit\ sand reduced popul.- dnd slow population groitb Women in Development 59 Operational activities vary widely according * Labor markets in industry, but also in to country circumstances but tend to focus on agriculture and services, are often quite seg- ways to improve women's productivity, partic- mented by gender, with women typically con- ularly through agricultural extension (Kenya, centrated in fewer, more traditional, and less Nigeria, and Somalia, for example), agricul- remunerative lines of work. tural credit (several operations are in early * Investments in human capital for women stages in this subsector where experience is have a high payoff, but women and girls often more limited), primary and secondary educa- get less than men and boys when the costs to tion (examples include Morocco and Pakistan), families of education, health care, and even and population, health, and nutrition (with food are high. examples in every region). Mexico prepared, * Improving opportunities for women can and the Bank has helped to finance, a free- lead to more effective use of natural resources. standing WID project that combines provision * The most effective combination of mea- of clean water (which saves women consider- sures for reducing birth rates includes ex- able "fetching time") with efforts to promote panded income-earning opportunities and earning capacity. Attention is also focusing education for women, in conjunction with fam- increasingly on women in "poverty lending"- ily-planning programs and health care. treating women as key contributors in success- These guidelines offer some findings that ful strategies to reduce poverty (as in Bang- Bank staff can use as a start in identifying and ladesh). Similarly, in addressing the social analyzing issues concerning women in country dimensions of adjustment in Africa and else- economic and sector work, as well as in project where, more attention is being paid to the role design. They emphasize measures to include of women (for example, in Zaire). women in development that will contribute to On the policy front, "overview" guidelines economic performance, family welfare, pov- have been drafted, outlining some key issues erty alleviation, slower population growth, bet- for economic and sector work and suggesting ter use of natural resources, and other broad operational approaches. These are being sup- development objectives. These measures gen- plemented by more detailed sector-specific erally fall into two classes: some (such as in guidelines (the forestry guidelines are out and agricultural extension or credit for women those on agricultural extension, credit, and without assets) equip poor women immediately education are under way). The guidelines em- to improve productivity, while others (such as phasize that: ways to keep girls in school) build the human * Women already contribute economically capital that enables people, in the longer run, far more than is usually recognized in official to break out of old molds and seek broader GNP statistics, particularly through agricul- choices. ture, home-based production, and care of the The implications for Bank analysis and lend- family. ing are obvious in human capital (education * Women's capacity to work is often partic- and training; health and nutrition; family plan- ularly constrained-and their productivity re- ning). Perhaps less obvious are the important duced-by culture and tradition, both of which implications for poverty alleviation and basic are sometimes codified into law or policy. development strategies; employment; agricul- Culture and tradition, for instance, may limit ture and forestry: and household energy. There their access to information and technology, to are some indirect implications for infiastruc- education and training, to credit and resources, ture (water. roads, and transport). The impli- and to markets. cations are more tenuous but not entirely * Investing in women is often a cost-effec- absent for the basic macro policy fields-mon- tive route to broader development objectives etary and fiscal, trade, privatization, and pub- such as improved economic performance, re- lic-sector management. Because adjustment duction of poverty, greater family welfare, and programs can affect the entire economy, their slower population growth. effect on women can and ought to be consid- * Women tend to be disproportionately rep- ered. Finally, attention to women matters cru- resented among the poor. cially in analyzing population and the linkages * When women's productive capacity is between economic progress, population constrained, it is important not merely to "get growth, and environmental sustainability. the prices right'-to establish appropriate in- "Women in development" is still a new field, centives-but also to improve women's capac- its analytic base narrow. As experience and ity to respond, through investment programs analysis accumulate, understanding will im- and policy changes, especially in agriculture, prove, and the guidelines will be refined. In the home-based production, and the small-scale or meantime. enough is known to outline key informal sector. issues, based on the operational experience of 60 The World Bank-Fiscal Year 1989 the Bank and other agencies, as well as on country-specific plans usually requires a care- existing analytic evidence on economic issues ful look at who the women are, what work they affecting women in development. do, what constraints they face, and why. This These guidelines are basic enough to apply will suggest probable benefits from improving broadly in most countries. But country circum- women's opportunities and effective, afford- stances vary, and development of practical able approaches for doing so. 61 Section Four World Bank Finances IBRD Finances Taible 1-1. IBR{D Ai^erage C'osts, Fiscal year 1989 was another year of strong PrTaltabiliBRD and Returns financial performance for the IBRD. (See Ta- r*e I -1-.i.>: r. -o.j I : ,rhc r *e dur cC ri.. Ix *1 (.l ble 4-1.) It strengthened its reserve position in F , I two important ways. One was through an in- -________ crease in the absolute level of its reserves j''8 I4J;M sufficient to raise the reserves-to-loans (R/L) -,., ,,,,, ratio to 10.2 percent at June 30, 1989. from 9.3 \cri,ee - percent a year earlier. Another was through Nh. hi,Iro..' I n) -'l changes in the currency composition of the rof,ldkhr .III i,jnlino 4 s reserves, which will make the R/L ratio much T,,.il lund-, dilebv ,nd cquit.' ir .h h. less vulnerable to changes in exchange rates. F, ..d-,i The IBRD also adopted policy changes that AI :cr.Ac IeL[rn, c,r will reduce the variability in the effective cost L.-un, ji,hhu ;d nd of loans provided to its borrowers and diminish o94 qmnd.nL - ' t ,t the IBRD's own exposure to market risks. l d in, ln.nientf,' 5 I s 'I! Moreover, capital subscriptions from twenty- Tt,i.,1 earnong S t s31, . :. seven countries of $21.4 billion, including paid- p, .. in capital of $643 million, were received in this Srptemd r1-enern retUIin oIn w.ot.M first year of subscriptions to the $74.8 billion c.Lrn.ng ato,w .ind cCiot tt a.1; general capital increase authorized in April IXn4 j. 1988. Total subscribed capital at June 30, 1989. I,n- was $115,668 million out of total authorized * .\, ipercent.,g of :j%er.igee capital of $171,362 million. Finally, the IBRD eCl4il"' - .9 , " completed its borrowing program of $9.3 bil- A . iJ iercentrne .ot .,ge lion equivalent, while maintaining its high I.qLujd a nd loLns II !I01 credit standing and the benchmark status it v,,`1t,1,, ,I,, .f I. I..' I -I III.. ,,, IiI enjoys in most markets. (See Table 4-2.) Rti.:oo re..r' e; to loan I - i 4 1 It, 2 The increase in the R/L ratio resulted prin- R.otio ol ..tndng toari to cipally from full allocation of the previous 5 eu I 5. in I year's net income to reserves and a slowdown R..o ,-n uu.r:ndin Jebtr to in net disbursements, caused chiefly by pre- tqitYf h61 i.46l1 payments from three borrowers. The improved .l- prep.ii ratio was achieved despite the addition of a t r lll .k 3 r'IIi,n | ci ninth country to nonaccrual status, with the h E .wa .i.j d .ir..i- rbjid-in rr.pii..I. . attendant reduction in interest income and r,d .u.,WW. r.lt Iflncfe addition of provisioning expenses. e. !ni,re i en ioii; I, A p-rcenr.age .- -er,ge j.bo-.^d The IBRD achieved its funding objectives by .mJe .nlianjini: lo!- borrowing $9.3 billion in the world's leading .1 iridrl rc,I-d pit.1 *.,n.. markets at an average cost, after swaps, of 7.73 e In-lud,.t.i.rmF11 i luF.9i re re.i,el. ,.'2'nhil.n percent and an average maturity of 7.8 years. It nd '2r' nmillirn. ,o vnIni,rn,ni tee *.n i,nJdi,bjrLIVC oan maintained its high credit standing in all major hr.e-. in *,d.rl,. i. l.ibLrn. *rI I- quI.i 'ni e.irn,cnJ .ini markets as a result of its prudent financial practices and the continued support of its member countries. During fiscal 1989, several important poli- the risk and cost features of loans offered to its cies were reviewed by the executive directors, borrowers. The IBRD adopted changes in its and a number were revised in order to improve currency-management policies designed to 62 World Bank Finances Table 4-2. IBRD Borrowings, Fiscal Year 1989a (in millions) Cur rcncs US-dollar Tvpe Is.ue ot issue eqilivalci-its Aledhum- and long-entr pubhli offi riwng Finland 9.625%cset en-veir notes. due 1995 FNIK 300.0 Th 7 9 75% five-year notes. due 1994 FMK 300 0 70 0 Gciman. Federal Republic of 6 0% ten- e.rr bondr, due 1998 DM 5000 276.5 6 625% eieht-vear bonds, due 1997 DM 150 0 79 6 6 759' ten-year bonds. due 19'J9 DM 150 0 78 2 Hong Kone 10 125%7- six-Near bond-. due 199)5 HK$ 500 0 64 0 Japan 5.25% ten-year boaid, due 1908 V 50,001) 1 375.1 5 0°/% ten-year bonds. due 1998 V 35,000 0 280.40 5.375% ten-year bonds. due 19'J9 y 10,0()0.0 71 30 Luxembourg 7 625'% seven-year bonds. due 1996 Lu\F 1.000 0 25.5 Spain 10 625'% ten-ve.i bonds, due 1998 Ptas 111.000 t) 80.7 10 375%' ten-year bonds. due 1998 Ptas 15,0(0 0 127 4 11.75'i fivc-Near bonds, due 19)4 Ptas 10,000.0 86.2 12.375%/, fivc- car bonds. diue 1194 Pias 10,000.0 79.2 SWIt7erland 5.0%, fifteen-year bonds, due 2003 SwF 153 0 94.4 5 5S, ten-year bonds. due 1999 SwF 125 0 76.6 Eurobond Market 9 0' fie-year notes, dlue 1993 S 300 0 300.0 9 25% ten-year notes, due 199)8 S 300 0 300 0 9 62i% ten-year notes. due 1999 $ 500.0 500.0 9 75% sexen-year notes. due 1996 $ 300.0 9 0% fifteen-year notes, duie 21)04 s 300.0 300.0 12.75',c five-year notes, dire 1993 SA 150.0 119.2 10.125% five-year notes. due 1993 CanS 150 0 125.1 Zero-coupon notes, due 1996 CanS 102 0 84,5 8 75% six-sear noles. due 1995 F 1.000.0 146.9 II t0 five-year notes. dtue 1993 Lit 150,000.0 107.0 10.75%¢ five-year notes. due 1994 Lit 150.000.0 111.7 10.0% ten-year bonds. due 199" £ 100.0 173.2 4.875?% five-year honds. due 1993 'r 50,000.0 403.5 6 25%" ten-year bonds, dire 1998 f 300.0 152.4 7.1254% ten-year bonds, due 1999 f 300.0 132.6 14.0',c five-year notes. (:ue 1)94 YNZ 75 0 45 5 10 5% five-Near bonds. due 1993 SKr 51)) 0 82.3 10.5%', live-vear bonds, due 1993 SKr 500.0 73.9 7 375%, five-year notes. due 1993 ECU 100.0 114.0 7.5', five-year noats. due 1993 IEC U 100.10 118.2 Total medium- and .ong-term public offerings 5.625.8 .Aledniun- and rong-ternm placements nitih (eanital hbank-s tcuud . diUe l1l1JS It 11 lit(i tl 49'4'. hond.ns. duej 1*X9h4s Nttll 1.|8 ki 9Yl".' h*nd,. uijc 1,44Ct St 11111.1 ll Linilvd Ki;ngdom II i - lo in zt,ok duLe 'IhI a 1-l 35 LIniied SIlte. , Connnu''ushl O(fered LonLcr iernl Securnien ProgrdnI, 1t0i_S) 53 X 4. X Intern:,iOnul 4 7' hond-. du¢ 1993 II 1 illi II I v2'! :. homnd,. IJle 1'49-45,lll 1 '. ; " L tondi ttlj 19L44 1,lw S loltal niedtium nd Ion- lerm othel plIcemenr ' 1r h Centi.11 hank :i,ihlt . 114.9 5114 9' ('rinnuouil Oittered I'f, nint Rieht, In S-xis; Franc4 COPS' i - WO P.11 S - Tol,dl t1orrottilnc-, fiscal 19N9 .' E%CILIde. k ?4 billirn i-.Aill rn,illon LqUI.Acral .,r I %en -o1.- ..hn.h ;o.re rr-pj.I in] rI.nidi ..n- b BW],d on e han,.e ra.e. dl Ihe mnin of : illeniln ;. Rtpre;era. o\c-, of ictilncfln. v .L!r prcp,lild rw.url[ d Net proeed, lr zero C.ohpon ,nlI, -Il .Ifr. mILin, in ti. 1.IF.dC ,,{ .,r ' llUc e. Th-.c is- .%vere rpkeed - Ich >nirdI r*,nl,, .2' errin-',r. i .g.fl ^ ,,;d . ith iri,v,-fr n . , , ,! ,-ir,. I Mlaturelri ulthin ,nmc e.r a Infrelle in jm.uni Ot UtLHIndinp it Wurw 3'. IA' '. er fnio,.nc i ,ndinic vi Jur. III tl.SN make its lending practices more transparent effectively enabled all IBRD borrowers to and manageable for borrowers and to better share equally the exchange risk imbedded in enable it to manage interest-rate and exchange IBRD loans. Nevertheless, the currency com- risk. These changes include: targeting the cur- position of the pool was not predictable. Also, rency composition of the loan-currency pool to because the share of U.S. dollars in the pool provide an approximate balance among the was relatively small, debt service on pooled major currency blocks; adopting a new lend- loans, measured in U.S. dollar terms, was ing-rate system that ensures that the lending highly sensitive to exchange-rate movements. rate will reflect only the currencies outstanding The IBRD now has improved the predictability on loan; and recalling, on a pro-rata basis, of the pool by targeting a specific currency major currencies out on fixed-currency loans composition, which is expected to be achieved committed prior to the introduction of the by the end of fiscal 1991. By then, the pool's loan-currency pool in 1980. composition will be in a ratio of 1 U.S. dollar During the year, the financial complex con- for every 125 Japanese yen and 2 Deutsche tinued the pilot program of financial technical mark (or the equivalent in a composite of assistance to developing countries. It initiated Deutsche mark, Swiss francs, and Netherlands training programs based on its experience in guilders). These three groups will comprise 90 asset and liability management for India, Ma- to 95 percent of the pool's value, with the laysia, and Poland concerning the use of remainder in other currencies. The increased swaps, options, futures, and rate caps to man- share of U.S. dollars will give borrowers a age interest-rate and exchange-rate volatility. more balanced currency exchange risk. Targeted currency-pooling system. The cur- The IBRD directors decided that this rough rency-pooling system adopted in 1980 has balance among the three major currency 64 Worid Bank Finances blocks was worth the cost of a somewhat will decline to waive the prepayment penalty, higher nominal lending rate that might result thereby recouping for the membership as a from a greater proportion in the loan pool of whole a portion of the financial advantage real- U.S. dollars, which, in recent times, have had ized by the prepaying country. a comparatively high nominal interest rate. Waiver of the commitment fee. Another The targeted balance represents a realistic cur- matter considered by the executive directors rency structure in terms of the IBRD's borrow- was the appropriateness of waiving a portion of ing opportunities, and also enables borrowers the 0.75 percent commitment fee on undis- to calculate what their exchange-rate exposure bursed loan balances. It was determined that is so that they can predict and plan for future the commitment fee should be reduced, con- debt service in terms of the three major cur- sistent with achieving a build-up of R/L ratio to rencies and, if appropriate, manage and/or near the top of the 10 percent-to-Il percent hedge such exposure. range, in view of (a) the decline in funding risks Changes in the lending-rate system. The for the loans now that all loans committed IBRD made two changes in its variable lend- since 1982 have variable lending rates and (b) ing-rate system. First, borrowings funding in- the inequitable incidence of the fee, which vestments will be excluded in calculating the raises the effective cost of slow-disbursing currency-by-currency borrowing cost. Second, projects even if the borrower is implementing the currency weights applied to each curren- the projects in line with agreed plans. Taking cy's costs will be the share, during the past account of these considerations, and after eval- semester, of each currency outstanding in the uating risks to the IBRD's prospective income loan-currencv pool. The new lending-rate sys- from market factors such as interest and ex- tem will be applicable to all loans for which change-rate volatility and from credit risks, the invitations to negotiate have been issued on or directors approved a one-year reduction in the after May 18, 1989, and to previous variable- commitment fee, effective July 1, 1989, which rate loans converted at the request of the will save borrowers about $200 million during borrower to the new system. In the absence of the year. such request for previous loans, the variable Benchmark rate of provisioning for loan loss- lending rate will continue to be calculated es. The provisioning policy adopted in June under the old system. 1988 calls for review of the current year's Currency composition of reserves. The expense for loan-loss provisioning and the set- IBRD also decided to take steps to bring the ting of the benchmark monthly provisioning currency composition of its reserves and accu- rate for the next year. The IBRD determined to mulated net income into line with that of loans, continue provisioning 1 percent per month of and thereby diminish the vulnerability of the principal outstanding on all loans to, or guar- R/L ratio to exchange-rate movements. By the anteed by. countries that are in nonaccrual end of fiscal 1991, it expects that the currency status. Provisioning expense of the IBRD was composition will essentially match that of its $358 million in fiscal 1989, and, at year's end, outstanding loans, and, from then on, align- the cumulative provisioning was $800 million, ment will be managed so as to insulate the or 25 percent of principal outstanding on such relationship of reserves and loans from ex- loans.' change-rate movements. Impact of new financial policies. The Prepayment of IBRD loans: waiver of prepay- changes in the IBRD's financial policies-the ment premia. The directors also reviewed the targeting of the currency pool, the conversion criteria for the IBRD to waive the prepayment of reserves and unallocated net income to premium. While the IBRD has a basic policy in match the currency composition of loans, favor of prepayment by borrowers, a distinction changes in the lending-rate system for new arose between prepayments that are consistent (and converted) variable-rate loans, and possi- with the IBRD's cooperative approach to loan ble waiver of a portion of the commitment pricing and those that are not. The executive fee-will tend to reduce net income in the board decided that where loan prepayments future. apply to loans having an average interest rate in line with the average interest rate on all out- standing IBRD loans, the premium would con- tinue to be waived. If, however, a borrower exercises its right to selectively prepay loans 'In November 1988. a support group of eleven countries, carrying higher-than-average fixed-interest chaired by the Canadian executive director of the Interna- rates, then-except in cases where the borrow- tional Monetary Fund. was set up to assist Guyana in solving the problem of repayment of arrears to multilateral ing country has a very high average interest rate financial institutions. Similar arrangements are under way on its total IBRD loans outstanding-the IBRD for Zambia. IBRD Finances 65 The increased share in the loan-currency pool Borrowing operations. The IBRD carried of U.S. dollars, with their expected above- out $9.3 billion equivalent of new borrowings average nominal interest rates, compared to the -exclusive of the refinancing of both short- other targeted currencies in the pool, may re- term borrowings and prepayments of debt. The duce the profitability of those currency-pool reduced size of the borrowing program, com- loans that bear fixed-interest rates. Further, the pared to $11 billion last year, was primarily a conversion of reserves and unallocated income response to prepayments to the IBRD from its to match the currency composition of loans will borrowers. tend to decrease nominal investment income The program emphasized a substantial in- because of the proportionate increase of low crease of U.S. dollar borrowings, which ac- nominal-yield currencies in investments. An- counted for 62 percent, after swaps, of the other restraint on net income is that, unlike the borrowing program, compared to 29 percent in original variable lending rate, which was based fiscal 1988. These U.S. dollar borrowings en- on the cost of total IBRD borrowings, the new abled the IBRD to increase that currency's lending rate will not exceed 50 basis points over share in the loan currency pool to 23 percent at the IBRD's cost of currencies on loan. the end of fiscal 1989, compared to 15 percent However, part of net income in the past a year earlier. years was required to offset the effect of ex- Among the longer-term objectives guiding change-rate changes on the R/L ratio. Without the IBRD's borrowing and swap operations reference to the reduced volatility of the R/L have been maintaining: diversification of bor- ratio, comparison of net income figures may be rowings in a large number of markets and inappropriate. currencies, both for the inherent long-term Even at current levels of provisioning ex- value of diversification of funding sources and penses for, and of interest not earned on, for the associated swap arbitrage opportuni- IBRD loans in nonaccrual status, the IBRD's ties; the IBRD's benchmark status in those earning capacity remains strong, and its R/L markets; and traditional borrowing relation- ratio increased from 9.3 percent to 10.2 percent ships with official sources and with certain at the end of fiscal 1989. In addition, its return investor groups. on assets (net income over average earning In fiscal 1989, as in recent years, swaps were assets) increased from 0.98 percent to 1.09 used to achieve after-swap funding objec- percent. tives at substantial savings relative to direct Developments in asset management. The borrowings of target currencies. At the same IBRD executive board also approved a number time, swaps enabled the IBRD to diversify its of changes in the investment authority govern- funding sources to encompass a wide range ing management of liquidity. Among these of markets without being required to retain changes were reducing the lower limit for the the variety of currencies in its after-swap port- weighted average duration of the investment folio. portfolio as a whole from three months to zero; The major thrust of the currency-swap pro- expanding the use of futures and options be- gram during fiscal 1989 was to swap into U.S. yond the U.S. and U.K. markets; making dollars, for which twelve different swap vehi- foreign currency-denominated government ob- cle currencies were used. Swaps out of non- ligations acceptable investments if rated AA or dollar vehicle currencies into fixed-rate dollar better (previously such investments were lim- liabilities were generally accomplished through ited to AAA-rated obligations); and making a two-step process-a cross-currency swap investment authority for managing IDA's liq- into floating-rate dollars, followed (or occa- uid assets identical to that for managing the sionally preceded) by one or more U.S. dollar IBRD's. The realized return on investments interest-rate swaps that produced the desired was 8.20 percent in fiscal 1989. fixed-rate funding. The two-step process en- Allocation of fiscal 1989 net income. The abled the IBRD to delink the timing of the IBRD's executive directors also annually re- cross-currency swap from that of the associ- view its net income and financial prospects to ated interest-rate swaps. This allowed the decide on allocation of net income to the IBRD to pursue and execute swap-driven cap- general reserve and make a recommendation to ital-market transactions at times of attractive the board of governors on distribution of any cross-currency swap arbitrage, while, at the remainder. At the end of fiscal 1989, the same time, giving it the necessary flexibility to IBRD's directors concluded that, in fiscal convert the floating-rate dollars into fixed-rate 1990, $994 million should be added to the funding at appropriate points in time. Cross- general reserve and recommended that $100 currency swaps into dollars totaled $2.1 billion million be contributed to a debt-reduction fa- during the fiscal year out of a total of $2.6 cility for IDA-only member countries. billion in currency swaps. (See Table 4-3.) The 66 World Bank Finances Table 4-3. IBRD Borroviings. afler S%%aps. Fiscal * ear 1989 Bcorc i :r ler .a r !NI,,IInhr Sr..,p.' C^ a,r.inr*,itrr1 l lI .~r *rilrr.. \rrl.dijr . -i, \I.-l IId;- *. {.vD r. Ge.'-r , . rr ! L'S drilhri I 1.1- 4 I' 2. fl 't 3 54 .7 5 9.12 J.,panese icn 2 11 2 I - 1 1.'46 4 19 5. 24 S tvi- t rdin, :Sf i , I .i f '.9 bh. -1 11) t I Deui;che m rxI 'l * , 4 -44.4 hih,. ' .I 2 r)iher* 2. '4.`4' '4 .1 - 2.1 Ibr 4 1 311 5 I 9 32 SIDE'Ld * .4-U.' 94 3.1 - .2. 44. ' q44 7 hS 5jl.r,,j.ht,r,, /i,;,..r1, : ! Cenir:.d h-onk tiL, L S dJlldt s 14 ' 5 1.0 - mt14 '1 i S.97 C,i IIF'S IrSv-.r i- r;n.ir 31 -3. 4 5s; ThaI )uM ..~' Ss lull - Ig-;n .1' 2 - . 1g 7.71 NI -1 *I Del II 1 A. . -I -1 dv i.- 1x -1 A, h, -uc 1 C lro.ndfijq . : p r *n -.r.i r.s i 1 I ,. .i 12 1i .11 llrr.n F. nDc rJ-1 I| an I.i 0 h1 ,-lzn o|1 reri-rw.rinc. t iA : hmlr,-t.l1cd Rr.rie.eni. tr .rrr. r r. ri1 n PIu [ , 'Jr. lr.ii i IS ' n.r1i,roril Jir ollarm dcdIr.. i2ri 2 r.rlilr.-nr. EtLi U .I minIIwnr. F.rini,h Ir.kr, 61411' millioni Fren,r ir,n,., r$IJ. 4 millrin, H;np Knr, ,n dollr, it1i1 ii aililrr Iijl.n lire o'rlsS- niffliori. Lii *.r.r urr .i .. rritti m ir.rl. NClihCri mnd o0,de,, $'ri II ml,l:rr. Nc. 7':.dI,iJ d.arli.i 4 , -l^ 4 milliL... plrirnd .k rI!ir,: I r I,- fll, .,ri. fip.n - ih r 4-.I I u, v. milor.r-n arid S%,,di,h h,-..nor II it, ' !h.on, ri .Cno nulin .j.. ..i1r,rci pd.Ai-11 lie .'i l t S. swap arbitrage resulted in an average savings commercial paper available in the Swiss of 38 basis points compared to the prevailing money market. The program is intended to cost of direct borrowings of U.S. dollars. provide the IBRD additional flexibility in the In addition, the IBRD also had a limited management of its Swiss franc funding opera- currency-swap program among the Deutsche tions and responds to investor demand for such mark bloc of currencies that involved swaps out short-term assets. At the end of fiscal 1989, of Deutsche mark and Netherlands guilders into SwF62 million ($37 million equivalent) of Swiss francs for an aggregate volume of $380 COPS were outstanding. Another development million. in the fiscal 1989 borrowing program included The IBRD borrowed a total of seventeen expansion of the IBRD's program of continu- currencies. About 99 percent of its borrow- ously offered longer-term securities (COLTS) ings, after swaps, were in U.S. dollars, yen, in the United States' medium-term note mar- Deutsche mark, and Swiss francs. The borrow- ket. This was the first full fiscal year in which ings of thirteen other currencies, which en- COLTS were sold through the expanded group abled the IBRD to maintain its diversified of fourteen U.S. regional agents and three sources of funds, accounted for 24 percent of Canadian agents, as well as five primary agents borrowings before swaps and I percent after based in New York city. COLTS transactions swaps. totaled $833 million. Reflecting the stronger The IBRD engaged in its first public issue of emphasis of COLTS sales to smaller institu- Hong Kong dollars and was the first nonresi- tions and large retail investors, the average dent borrower in the Hong Kong domestic size of COLTS sales declined from $5.5 million market. It also engaged, in the Euromarket, in in fiscal 1987 and $2.8 million in fiscal 1988, to its first public issue of New Zealand dollars. $1.3 million in fiscal 1989. and was the first issuer of Swedish kronor in Income, expenditures, and reserves. The the Euromarket. IBRD's gross revenues totaled $8,274 million In October 1988, the IBRD initiated in Swit- in fiscal 1989, down $275 million or 3.2 percent zerland its continuously offered payment rights from the previous year. The outstanding loan (COPS) short-term borrowing program in portfolio, after translation adjustments on non- Swiss francs with maturities of up to one year. dollar assets, totaled $77,942 million equiva- COPS constitute the closest alternative to lent in forty-two currencies at the end of fiscal IBRD Finances 67 1989. The average interest rate on disbursed Net income for fiscal 1989 was $263 million and outstanding loans was 7.86 percent, pro- lower than it otherwise would have been as a ducing interest income of $6,394 million. In result of interest income not accrued for these addition, commitment charges of 0.75 percent countries. on undisbursed loan balances produced $272 Other expenses include interest and issuance million. Altogether, the IBRD's income from costs on borrowings, administrative expenses, loans was $6,666 million, for a total return on and $60 million in contributions to special average loans during the fiscal year of 8.20 programs. Expenses totaled $7,120 million, percent. down 5 percent from the previous year. Costs At the end of fiscal 1989, fixed-interest rates associated with IBRD borrowings-interest of applied to $38,266 million of disbursed and $6,140 million and bond-issuance charges and outstanding loans and to $2,178 million of other borrowing expenses of $156 million- undisbursed loans, while disbursed and out- were by far the IBRD's major expenditures. standing variable-rate loans totated $39,676 Administrative costs totaled $462 million, after million, with $47,799 million of variable-rate deducting $259 million for the management fee loans undisbursed. charged to IDA, $3.5 million for the service- At June 30, 1989, liquid assets aggregated and-support fee charged to the IFC, and $19,360 million net of commitments for settle- $311,000 charged to MIGA. ments and cash collateral received on loaned All of the $1,004 million of net income securities, a decrease of $157 million from a earned in fiscal 1988 was allocated in fiscal year earlier. Liquidity was at 52 percent of 1989 to the general reserve. This made a major projected net cash requirements for the next contribution to the improvement of the IBRD's three years at the end of fiscal 1989, up from 50 R/L ratio from 9.3 percent to 10.2 percent. percent at the end of fiscal 1988, primarily as a The IBRD's principal financial statements result of prepayments by three borrowers. The are expressed in U.S. dollars. Translation ad- IBRD's liquidity, targeted for at least 45 per- justments at market rates of exchange gener- cent, is designed to assure flexibility in its ally affect the IBRD's stated loan balances and borrowing decisions and to permit it to meet other assets and liabilities, as well as the gen- adequately its cash requirements in case bor- eral reserve. Because the translation adjust- rowings are temporarily affected by adverse ment to loans was in rough proportion to that conditions in the capital markets. to reserves in fiscal 1989, the IBRD's R/L ratio Liquid assets in fiscal 1989 yielded a realized was little affected by exchange-rate move- rate of return on average investments of 8.20 ments. percent and generated $1,586 million of invest- Loans: IBRD. As of the end of fiscal 1989, ment income, including a net loss of $96 million the IBRD held $127,918 million of loans. This from sales of investments. An additional $22 included $14,972 million of loans that had been million of revenues was derived from other approved but not yet become effective and income, including $6.5 million in net gains from loans to the IFC of $1,077 million. Disbursed the sale of loans. and outstanding loans, including $695 million Net income of $1,094 million was 1.09 per- to the IFC, totaled $77,942 million, a decrease cent of average assets, up from the prior year's of $3,849 million since June 30, 1988. The loan 0.98 percent. The IBRD's R/L ratio improved balance would have been $5,788 million higher to 10.2 percent from 9.3 percent, and, as a but for translation adjustments. result, the IBRD enjoyed a stronger financial Gross disbursements on loans to countries position with greater disposable income than a totaled $11,310 million in fiscal 1989, compared year earlier. with $11,636 million in fiscal 1988. Since the Pursuant to the benchmark provisioning rate IBRD began operations, it has disbursed of 1 percent monthly of the outstanding princi- $112,021 million to its borrowing member pal balance on nonaccruing loans, $358 million countries. Net disbursements dropped from (before $58 million in translation adjustments) $3.4 billion to $1.9 billion due to large prepay- was added to provisions for potential losses on ments by some members. These amounted to loans to nine countries that were six months or $2.6 billion, including $1.3 billion by Romania, more in arrears on debt service to the IBRD. $0.7 billion by the Republic of Korea, and $0.3 This brought accumulated provisions to $800 billion by Thailand. million, or 25 percent of nonaccruing loans. Including prepayments, total repayments of During fiscal 1989, one additional country went principal on the IBRD's loans, based on ex- into nonaccrual status, raising the volume of change rates at the time of repayment, nonaccruing loans to $3,193 million, just over 4 amounted to $9,454 million. Cumulative loan percent of the IBRD's loan portfolio. This com- repayments as of June 30, 1989, based on pares with 3.6 percent at the end of fiscal 1988. exchange rates at the time of disbursement, 68 World Bank Finances were $43,933 million: $40,671 million to the ment institutions, and central banks. Of the 710 IBRD and $3,262 million to purchasers of medium-term and long-term new borrowing loans. operations that the IBRD conducted during Borrowings: IBRD. Borrowings in interna- fiscal 1989, including 656 COLTS transactions, tional capital markets provide the major por- 703 were in the private sector throughout the tion of the funds for the IBRD's lending oper- world and accounted for $7,758 million, or 84 ations and are supplemented by the other percent, of total new funds borrowed. The principal financial resources of the IBRD, other medium-term and long-term issues, total- which are its usable paid-in capital, accumu- ing $986 million, or 11 percent of the new lated earnings, and loan repayments. Total borrowings, were placed with official sources borrowings by the IBRD settled in fiscal 1989 at market-based rates. consisted of $8,744 million of new medium- Short-term borrowings outstanding on term and long-term borrowings, plus incremen- June 30, 1989, net of unamortized discounts, tal short-term borrowings totaling $542 million totaled $5,164 million: $2,528 million in the (consisting of $505 million through the central discount-note market ($40 million less than the bank facility and $37 million equivalent amount outstanding at the end of fiscal 1988); through the COPS program). The comparable $2,600 million in official borrowings through the fiscal 1988 amount was $10,832 million (see central bank facility (an increase of $505 million Table 4-2). This fiscal 1989 total does not over the amount outstanding at the end of fiscal include $3,019 million of yen-denominated re- 1988); and $37 million in the new short-term financings of prepaid issues or rollovers out of Swiss franc borrowing program (COPS). This short-term U.S. dollar borrowings that were increase accounted for 5.8 percent of the fiscal outstanding at the end of fiscal 1988-some year's program of new borrowings. $2,568 million in short-term notes and $2,095 The IBRD's securities have been placed million in the central bank facility. Those refi- with investors in more than 100 countries nancings brought the IBRD's gross borrowings throughout the world. Diversity in access al- for fiscal 1989 to $16,968 million, some $2,629 lows the IBRD flexibility in selecting the mar- million under fiscal 1988 totals. kets that will allow optimum borrowing condi- Direct short-term, medium-term, and long- tions; the same diversity lessens its depen- term borrowings in U.S. dollars contributed dence on any specific market. the largest share (39 percent), before swaps, of A total of $8,139 million equivalent of debt, the total borrowing program for fiscal 1989. not including short-term notes, matured during The balance of the borrowing program con- the year. Additional debt, not including short- sisted of direct borrowings of Japanese yen (22 term notes, aggregating $3,513 million, was percent, excluding refinancings), Deutsche retired by means of sinking-fund and purchase- mark (8 percent), Swiss francs (7 percent), and fund operations, and exercise of prepayment thirteen other currencies (24 percent). rights. After taking into account currency swaps, The IBRD's outstanding debt, net of dis- which changed the "effective" currency struc- counts and premia, decreased by $4,165 mil- ture of the borrowing program, the borrowed lion to $80,249 million as of June 30, 1989. currencies in fiscal year 1989 were United These obligations were denominated in States dollars (62 percent), Japanese yen (19 twenty-three different currencies and currency percent), Swiss francs (11 percent), Deutsche units. A summary classification of outstanding mark (7 percent), and other currencies (1 per- borrowings, by currency, at June 30, 1989, is cent). set forth in the Summary Statements of Bor- Swap transactions. Twenty-nine currency- rowings in the IBRD Financial Statements. swap transactions were settled in fiscal 1989, (See page 192.) aggregating $2,570 million. Cost of borrowings. The cost, after swaps, Of the swaps completed during fiscal 1989, of new borrowings by the IBRD in the fiscal 82 percent were into U.S. dollars; the remain- year, weighted by amount, was 7.73 percent. der were 15 percent into Swiss francs and 3 The equivalent figure for the $16,968 million percent into yen. The currencies swapped out of gross borrowings (new borrowings plus the (vehicle currencies) reflect continued diversifi- refinancing of $4,663 million of short-term debt cation. (See Table 4-3.) and $3,019 million of yen-denominated prepay- Sources of borrowings. The IBRD sells its ments) was 7.64 percent. The average cost, securities primarily in the private sector-mar- after swaps, of total borrowings in fiscal 1989 is kets where assets are offered to investors categorized as follows: fixed-rate medium- through public offerings, loans, and private term and long-term borrowings of $8,744 mil- placements. It also employs direct placement lion cost 7.68 percent, and incremental short- with official sources-governments, govern- term borrowings of $542 million cost 8.67 IDA Finances 69 (IDA-9) were launched with a meeting of IDA Table 4-4. Average Cost and Nlaturilt deputies in Washington, D.C., in February of the IBRD's Tolal Borro%%ings 1989 under the chairmanship of the Bank's Outstanding. Fiscal *-ears 1985-89 senior vice president, finance. The IDA depu- A.e"13Se A%er.t- ties, the representatives of the donor coun- princIp.,I A f,: rn)JII.r,r tries, reviewed IDA's programs as they had ow%rjn ing ,, ..r2 -,end evolved in recent years as a basis for consid- Y-ia i LISS mdlim~ 1recnijr ering the role of IDA during the IDA-9 com- 19- S 4h.06Vh 'i mitment period, fiscal years 1991-93. 19h86 (..8I1 , 25 h. Ir In their discussions, deputies focused on 1987 's.7 - IDA's role in adjustment lending, poverty re- 19NIS 1.269 ,.4' 6.54 duction, the environment, human-resource de- 1489 19'.34 3M Ah.'l velopment, aid coordination, and the alloca- tion of IDA resources among countries and regions. They noted with approval the adapta- percent. In addition, refinancing of short-term tions that IDA had made over the past four borrowings outstanding at the end of fiscal years to the changing needs of its borrowers. 1988 cost 8.77 percent. All deputies agreed that it was important to In recent years, the IBRD has used variable- reach a timely agreement on an adequate IDA- rate and short-term borrowings to take advan- 9 so that resources would be available by July tage of lower interest rates at the short end of 1990, the beginning of the IDA-9 commitment the yield curve in U.S. dollars. In fiscal 1989, period. however, the IBRD engaged in no new vari- The second meeting of the IDA deputies was able-rate borrowings. held on May 17-18 in London to consider The after-swap cost of the IBRD's average issues related to the allocation, eligibility, and outstanding borrowings was 7.38 percent, the size of the ninth replenishment. With re- compared with 7.47 percent for fiscal 1988. gard to country allocations, deputies took the The average cost of total funds to the IBRD view that performance criteria should be ap- (debt plus equity, that is, usable capital, re- plied universally. In addition to country size, serves, and retained earnings) was 6.31 per- relative poverty, and lack of creditworthiness, cent, compared with 6.46 percent for the prior performance should be a key determinant of year. The cost, after swaps, of the IBRD's allocations to individual countries and perfor- average outstanding borrowings for each of the mance criteria ought to include the quality of past five fiscal years, as well as their average economic management and policies for pov- maturities at fiscal-year end, is summarized in erty reduction and sustainable development. In Table 4-4. addition, there was general agreement among Prepayment of borrowings. Prepayments the deputies in support of the proposal to were made by the IBRD of $3.4 billion equiv- increase emphasis on human-resource devel- alent on selected issues of its securities, pri- opment. Deputies also emphasized IDA's role marily in Japanese yen ($3,085 million), in in supporting growth-oriented poverty reduc- Austrian schillings ($47 million), in Belgian tion, population planning, environmental pro- francs ($76 million), and in Swiss francs ($179 tection, institutional development, and women million). The IBRD refinanced $3,019 million in development. of the yen prepayments, resulting in savings in Three further meetings were planned for the present-value terms of $217 million equivalent remainder of calendar year 1989. The first was for prepayments of which notice was given scheduled to take place in Copenhagen on during fiscal 1989, and $296 million equivalent July 6-7; the second was planned for Septem- for prepayments settled in that year. The other ber. to coincide with the annual meetings of the prepaid borrowings (those not refinanced) IMF and the Bank; the third was slated to be would produce notional present-value savings held in Kyoto in November. It is expected that of about $15 million over the remaining life of negotiations would be concluded at the Kyoto the borrowings, based on the estimated or meeting. actual refinancing costs at the time of the IDA financial policies. With the maturing of prepayment decision. IDA's portfolio and an increasing number of Capitalization. Capital subscribed in fiscal credits reaching their twentieth year, a year in 1989 is shown in Table 4-5. which amortization accelerates, repayments of IDA credits are expected to rise rapidly-from IDA Finances $188 million in fiscal 1989 to almost $900 IDA-9 negotiations. The negotiations for million in fiscal 1999, making $5.4 billion avail- the ninth replenishment of IDA resources able over the period. 70 World Bank Finances Table 4-5. Capital Subscriptions, Fiscal Year 1989 Amount Amount iSDR (SDR Type and countrt milllon>) Type and countr% millions) General capittal in ea se of 1980 Benin 0.1 Benin 2.5 B-azil 23.5 Cape Verde 11.8 Burkina Faso 0.9 Comoros 1.5 Burundi 0.2 Djibouti 25.6 Cameroon 3.6 Guinea-Bissau 3(08.9 Cape Verde 0 4 Kiribati 25 0 Central Afncan Repubhc 0.2 Madagascar 2 9 Chad 0.1 Mauritania 11 0 Colombia 6.6 Poland I S Comoros 0.1 Subtotal 390 7 Cole d Ivoire 10.0 Ecuador 9.4 Gefnes al capital increa e of 1988 Egypt, Arab Republic of 37.0 Australia 788 0 Gabon 7.4 Austna 485 4 Guatemala 6.3 Barbados 41.6 Guinea 1.2 Belgium 472 0 Guinea-Bissau 0 I Botswana 27 0 lHaiti 1 0 Canada 2314 India 130 5 Chile 304 1 Indonesia 7.1 Denmark 449 8 Iraq 70 7 Finland 75 1 Italf 529.8 France 828 0 Korea, Republic of 166.4 Germany. Federal Republic of 3.176 7 Lesotho 1.0 Hungaiy 353.2 Mali 0.9 Iceland 5S 2 Mauritania I I Indonesia 131 4 Mexico lo(' 0 Ireland 231 3 Nlorocco 4 2 Japan 4 114.4 Netherlands 2i4.4 Kenva 108 0 Nigeria 13 6 Lu\embourg 14 5 Oman I 0 Mvanmar' 18 1 Paraguay 4 5 New Zealand 63.5 Poland 278.4 Norway 113.5 Seychelles 0.2 Portugal 239.6 Sierra Leone 0.3 St Lucia 24.2 Somalia 1.3 Svweden 657.0 Spain 23.5 Turkex 323.8 Tanzania 2 7 United Kingdom 3,045.0 rhailand 21 4 United States 1.381 6 Turkey 44.0 Subtotal 17.793 4 Uganda 3.4 Yemen Arab Republic 11.8 Otlhei icreascs in sah sriptions Zambia 5.2 Algeria 43.7 Subtotal I.941.3 Argentina 62.4 Grand total 20.087.4 Austialia 17.8 Bangladesh 2 9 a Formest\ Burnma Disbursements by Source of Supply 71 In the past, the Association made credit com- tributions and advance reflows. Against these mitments against reflows only as they were resources, the Association approved 106 cred- actually received. This practice was continued its totaling SDR3,738 million. until fiscal 1984, when the executive directors Special Facility for sub-Saharan Africa. The decided to set aside reflows to help meet a facility was established on May 21, 1985, by a resource shortfall under IDA-5 arising from resolution of the IDA executive directors. The unfavorable movements of exchange rates. The facility mobilized two types of resources: funds IDA-5 shortfall has been fully covered, and provided as direct contributions (60 percent) reflows have become available for other uses. If from thirteen bilateral donors and in the form of this past approach of committing reflows only special joint financing (40 percent) from six as they were received had been continued, in bilateral donors. The IBRD also participated future years, as the volume of reflows became with a contribution to the facility of $150 mil- much larger, IDA would have had an exces- lion. sively high level of liquidity. The facility is administered by IDA, and the On September 23, 1988, the executive direc- resources made available in the form of direct tors approved the use of future repayments to contributions are kept separate from the re- increase the Association's commitment author- sources of IDA. The contributions to the facil- ity in advance of their actual receipt. They ity were fully committed by the Association for approved annual commitments of SDR525 mil- facility credits by the end of June 1988. Since lion for the period fiscal 1989-93 in the form of its inception, the facility has extended credits, advance commitments. In addition, annual allo- financed from direct contributions, special cations may be made out of investment earnings joint financing, and accumulated investment on donor contributions and the 10 percent of income, totaling SDRI,540 million, to twenty- reflows that are not being committed in ad- five countries in sub-Saharan Africa. As of vance. The latter represents a supplement to June 30, 1989, about 88 percent of the facility's IDA resources that are being made available in commitments had been disbursed; the balance the form of fast-disbursing adjustment credits to is expected to be disbursed in fiscal 1990. support IDA-only countries that are not only implementing agreed adjustment programs, but Disbursements by Source of Supply have outstanding IBRD debt, as well. (For a Projects financed by the World Bank require complete list of those countries receiving IDA foreign and local expenditures to achieve proj- reflows in fiscal 1989, see Table 3-2 on page 44.) ect goals. Disbursements are made to cover IDA Commitment Authority. During fiscal specific foreign costs and, in addition, are 1989, the Association received additional IDA- often made to finance some local expenditures. 8 notifications of participation representing The specific procurement rules and proce- about 11.5 percent of the IDA-8 basic replen- dures to be followed in the execution of a ishment from the following donors: Belgium, project depend on the circumstances of the Brazil, Colombia, Italy, Luxembourg, Poland, particular case. Three considerations, however, Saudi Arabia, Spain, and Yugoslavia. At June generally guide the Bank's requirements: the 30, 1989, only Argentina had not submitted its need for economy and efficiency in the execu- formal notifications of participation in IDA-8. tion of the project; the Bank's interest, as a Its share in IDA-8, at rates agreed upon in the cooperative institution, in giving all eligible bid- IDA-8 resolution, is 0.21 percent. ders from developing and developed countries Because of the temporary shortfall in com- an opportunity to compete in providing goods mitment authority at the beginning of fiscal and works financed by the Bank; and the 1989, donors were requested to advance the Bank's interest, as a development institution, in release of their IDA-8 second tranche prior to encouraging the development of local contrac- the scheduled release date of November 1, tors and manufacturers in the borrowing coun- 1988. Donors that responded to this request try. included Austria, Denmark, Finland, France, In most cases, these needs can be best Greece, Hungary, Iceland, Ireland, Japan, the realized through international competitive bid- Republic of Korea, Kuwait, Mexico, the Neth- ding, properly administered, and with suitable erlands, New Zealand, Sweden, Turkey, and allowance for preferences for local or regional the United Kingdom. The IDA-8 second manufacturers of goods, and, where appropri- tranches eventually became effective on No- ate, for local contractors for works under pre- vember 30, 1988, when the United States sub- scribed conditions. mitted its IDA-8 second installment. Through the end of fiscal year 1989, 64 The overall resources available for commit- percent of IBRD and IDA disbursements cov- ment in the fiscal year amounted to SDR4,319 ered goods and services provided directly by million. This amount included both donor con- suppliers located outside the borrowing coun- 72 World Bank Finances Table 4-6. IBRD and IDA Foreign and Local Disbursemenits, by Source of Supply n, unIriev 4iS1 452t 3.MI9n^ 333566 l45112 27525 4961.5 1. t- urnnillli. C tumulrITe Junre In i 4 y Fi-3 196 , 1-,%: l I2m F .I l Pigs FIi.,4 1 ll S Ine 1 ) 1990 Nrn .E,ni A ML'.u ni - MOLint - Am"1rt unt niouni A mount BRD r. , . Li s1,1 II ,11 li I "art I upphl irig couniries 411.b'65 45 I.'A19 3 11 i.f, 6 32.4 5.1J2i 125 i'.22 1.94,9 W.65i 412' Non-P,r! I vupp' IrEi cktinlrles 4 . 16 t) 1,i 9S 49 2 I 5 3 ' 1 14 I 1 1(.72( 7. T.AalI4 4..I1 Ai 4.1136 39.6 7.19 2xIS 4 h ,-9S 44 3 2.73 4501 7U.9435 4X,' P.Lri I tnp.)ing co!uniriII. 12 1.i4 15 1 1 9I.4'' 12i 1,4' I' 63.S 1 92.-1 ll 4 1.1'1 6.5 94064.11 NoDn-Rir I dI,6un;.Lmenii1 42. 34 '; I;4 t,4 4 '.91 _.373 3ri.4 b.If 2 391. ' )97 3ni , 53.1.5 36.2 Tir an. IiI 11A2 I Illi 11.48111111 1 ' . 1 . S33 lllI I51k 4Y ll 6l t 4'l 1).1 Sp . l.i.iI F .9' ti 1.~. ^1 jS.)r ' .i II.lh 1i 4,n 2. . e l., id4 2 im;ren l In i-. ' 4 iJ Ih hr 2i 2- .2 iJeal mr. i tBRy. Wil IodA folmhur s ienn d4,e.vele4 mem> b 6e,r1 cu ti fo4rgt di. s. b 9.r1s ents 4 f,ort go od 94works and4, IHRD awd IDsA T u t e o i d195,disbrenm e1n94t to t4 e 4supp,iers it I In.a4 6nci' ng t. o.79 3.001 '46.0 (armontd to 78 1pr1cn 1D.4un iscalll. 14ye Iar Theto 1ta vl 1m11e11 I nanci. ng)Ol 11 4antic Ipatedin 1989.f tRhe lamrun ewas,,oe 1i3.-9r-n,cpro c n 1su3p. p.o rht IFC and K ' IWorl.d, IDA ficurti indadc Sted o Ip Frtio ap- 'spv,Ill F-,Il,l 1 ,f ul^- S-Alr;, frr\Jrl ~redll .,rld \:1AIJlI e-.hh .:L iwtrnleni, In D,1 145" Leilas m: not A,i. r., -[zl 1V:.J r.,rl!n try. While most foreign procurement comes Table 4-9 is a record of IBRD and IDA from suppliers in developed member countries foreign disbursements for goods, works, and and Switzerland, developing-country suppliers services from Part I and selected non-Part I have become increasingly effective in winning countries in fiscal 1989. contract awards. Through the end of fiscat 1985, disbursements to these suppliers Cosoinancing amounted to 7.8 percent. During fiscal year The total volume of cofinancing anticipated in 1989. the amount was 13.9 percent. support of World Bank-assisted operations ap- Table 4-6 shows consolidated foreign and proved in fiscal 1989 reached an unprecedented local disbursements to the end of fiscal 1985, $9.9 billion. For the first time ever, more than for each of the next four fiscal years, and to the half of all World Bank-assisted projects and end of fiscal 1989. programs attracted some form of cofinancing Locale4 produced goods and services usually (see Table 4-10). By regiono 31 percent of the include a significant foreign-exchange compo- cofinancing volume was for operations in Asia, nent. Cumulative local disbursenrents in- 26 percent in Africa, 22 percent in Latin Amer- creased from 34.2 percent at the end of fiscal ica and the Caribbean, and 21 percent in the 1985 to about 39 percent at the end of fiscal Europe, Middle East, and North Africa region. 1989. Table 4-7 shows disbursements made in In terms of operations, the distribution by re- fiscal 1989 by the IBRD and IDA for local gion indicates that 45 percent was in Africa, 26 procurement from selected non-Part I coun- percent in Asia, 15 percent in Latin America tries and disbursements made for goods, and the Caribbean, and 14 percent in the Eu- works, and services procured from them by rope, Middle East, and North Africa region. World Bank borrowers. The largest source of cofinancing continued Table 4-8 shows IBRD and IDA foreign to be official bilateral aid agencies and mutti- disbursements by supplying Part I and selected lateral development institutions, which, to- non-Part I countries. gether, accounted for $5.7 billion. Export- Cofinancing 73 Table 4-7. IBRD and IDA Disbursements for Goods, Works, and Services Procured from Selected Non-Ilart I Countries, Fiscal Year 1989 1.-IIt'iiiit\ in U>s miiillions ewwasaleno) Percentage Local foreign Total of total Non-Putt I c.ilitr eS r-ocuremcnt p:.'curemcn( alinint disbursemrnita India 1,165 67 1,232 8.2 lndonstia 767 62 830 Brazil 561 217 779 9.2 Mexico 626 33 659 4.4 (Chinia 31ut 174 483 3.2 Korea. Republic of 313 169 483 3.2 A\gecntina 138 217 355 2 4 Colomhta 167 44 212 1 4 Pakistan 16S 33 201 1 3 Morocco 181 13 194 1 3 Singapore 1 192 193 1.3 Yugoslavia 65 III 176 1.2 Chile 116 27 142 0.9 .\1alaysia 96, 43 13" 0.9 Pliippitncs 10 5 Ill 0.7 I raq - 103 103 0.7 TLiikey .IS 55 103 0.7 an-gladesh 88 13 101 0 7 I hailand 64 23 86 0.6 Spain 76 76 0.5 C6te d'lvoire 57 17 75 0.5 Iutl tuga. 33 26 59 0 4 NIacria 23 35 58 0.4 Tuni,sta 51 4 55 04 Jordan 26 12 37 0 2 Romania 1 34 36 0.2 Papua New Guitea 35 - 35 0.2 Bolivia 26 8 34 0 2 IKenwa 19 Is 33 0.2 Sri Lanka 28 3 30 01.2 P1(land - 29 29 0.2 Caincmooii -5 28 0.2 l lungary 5 23 27 0.2 Senegal 16 1 2 2' 0.2 Niger 26 1 27 0 2 Saudi Arabia - 26 26 l 2 Leuador 24 1 26 0 2 Molawl 22 2 24 0 2 Filliopi: 22 1 23 0 2 Oman 8 12 20t 0.1 Tot..l 5,426 1.942 7.367 4,C9 \F rF 1) ails may not ai.l to totals he,ause ot roundig a Re^.r, to developrig-couniry shares of total disbursements. 7 World Bank Pinances Table 4-8. IBRI) and IDX I Foreigl Disburwsnents. by SoIIrce of Supply (amounts in US$ millions equivalent) IPRI) cumulati%e IDA cinimutitive to to June 30. 19's IBRD Fiscal 19S9 June 30, 1988 IDA fiscal 1989 Amount 'c Amount 2u - I -5 .4 4.80I3.9 I rIS I '.h211 I tI I I 4 I 202 ' U It { rxJ4 I I .I44.t1 6.5 54 U l:SS 23 .S ir 2s;. >4 S ' s ,C I iis (I 361.4 5759.2 11159 14 U1i94 I 1 ,I XS ' I4 S3 1, 2 -9 I., 1.9I - 4415.2 14.432.4 I- iJnrrp Nlvi,]dle F. >i . .rnd Ni,rih Mlrk;r Its I I I Is 2f,S¢ X 1 .2 i l . 14i.1 A 4113.11 1 35. I 2 45;. 1 I .676. Lafin \nienC:., and ICe C Lirrhhb:rn uI > - 0'.ill t) 44i. 2 rili I I 2 iU i 'i`4 1 42.11 2 oS; 1 Ius,S j I' 2.141 .4 4 9!:.i U v 1.I ih.4 U 11 L II f ;,4LI.I 11117 IS 06b2 4 I"sS 1lid r1..4(t' I N S 1 2. Is 4 6 h;' 1 A 2.6 t.' 9 Is.2'4 1 H 'J.'142.) 1 21. i h.65 .l 21 1. I'nA, | .(i5 9. '4-.4 1.5114.4 15i.A1 4 Na.tE ,r 1 r-~. 1i-ure. .. I,':Vvl r r -r p,.r. limp.r ,nI rl.~r I. rn , I- .....,d rre-n.tr ,ion nid ire lubkrqrenil, I I drid i. - ri1,I i a.li.i I rir, ri, ..nrrrrnIr .. 1,:. I n.: ,i rrI1 1 I, urnIrr r. i . r irf rh; rI N ina- I ZL(in r,rm: II5 ourz is grcier thar, Ire nl,u.lih.:i oi p-...,,i ir n,.i C .,,c riu-r .n: prin.o.r .mr. ..,Irn.,r,ce. I' ,rc rh.r-. -- a-r.: LVir..rlk mr., nor .dd I-i Am, A r jT Jn .I,.e ...rr c-, i ur.n n,nc.i I.rri, Tfr.m Irc E Ir.ni,ori Bon l ri I,r,n credit flows increased significantly over the vided to the group of twenty-two countries volume of recent years, reaching an estimated eligible for SPA funding. $3.2 billion. including approximately $1 billion The government of Japan has appointed the from the untied loan facility of the Export- Bank as administrator of a Y30 billion untied Import Bank of Japan. Commercial-bank cofi- grant facility. These untied grants are intended nancing accounted for $1.1 billion. mainly for technical assistance in project pre- In fiscal 1989. the volume of cofinancing paratory and implementation work in countries with official aid agencies reflected a large in- that are borrowers of IBRD funds. Japan has crease in commitments from the whole of the contributed a total of Y25 billion to the facility. donor community, as the Bank continued ef- Over the past three fiscal years. the untied forts to coordinate its lending activities with loan facility of the Export-import Bank of those of other multilateral and bilateral donors. Japan has been particularly important for the Cofinancing consultations were held with rep- World Bank's cofinancing program. Under this resentatives of eleven such agencies during the facility, the Export-Import Bank of Japan pro- year. To date, consultant trust funds have been vides capital to developing-country borrowers established with twenty-two donors. Under on an untied basis. To date, thirteen loan these agreements, donors have committed agreements have been concluded between the about $28 million in grant funds to support Export-Import Bank of Japan and World Bank World Bank operational work. Discussions borrowers for a total of $3.9 billion equivalent with other prospective donors for establishing in cofinancing, of which five agreements, for a consultant trust funds are under way. total of $1.2 billion equivalent, were concluded Fiscal 1989 was the second year of the in fiscal 1989. A number of additional opera- three-year, multidonor special program of as- tions are under active consideration for a sim- sistance (SPA) in support of adjustment pro- ilar volume of cofinancing in fiscal 1990. grams in sub-Saharan Africa. In addition to the The enhanced contacts between the World fiscal 1989 cofinancing amount of $2.620 mil- Bank and export-credit agencies over the past lion to the Africa region as a whole, some $1.1 few years have contributed to the adoption by billion in coordinated financing (quick-disburs- these agencies of policies that are increasingly ing financing administered by donors) was pro- more helpful to the adjustment efforts of the Cofinancing 77 highly indebted, middle-income countries. The support for private-sector initiatives in devel- last meeting (in May 1988) of the Bank with oping countries. Possible modalities for such industrial-country export-credit agencies ex- collaboration are currently being discussed by plored a new area of possible operational col- Bank staff with a working group set up by the laboration to facilitate greater export-credit Berne Union. 78 Section Five World Bank Policies and Operations Review of Experience with the investment/gross domestic product (GDP) Adjustment Lending ratio for nearly two thirds of the group of A comprehensive review of the World Bank's thirty. experience with adjustment lending' concludes * Inflation fell in about half of the group of that, by and large, average economic perfor- thirty countries. mance during the 1980s of countries that re- * External-debt indicators improved for ceived support for adjustment-as measured by about half the recipients of adjustment lending, a number of indicators-was moderately better especially among the low-income ones. than that of countries which did not.2 * The dozen "adjustment-intensive" coun- The study noted that the average improve- tries improved their relative performance in 62 ments in growth and the resource balance were percent of the cases for low-income countries greater for adjusting countries than for nonad- and 63 percent for middle-income countries. justing countries. In addition, the improved Nane Improved thet r posgtion on external bal- performance was noteworthy because adjust- ance and eight on GDP growth and debt ser- ing countries faced larger external shocks than vice. did the nonadjusting countries during the ad- The Bank study cautioned, however, that, justment process. because it was not possible to isolate the The review, which was undertaken by a effects of adjustment lending from other fac- team under the leadership of the Bank's vice tors (such as external shocks and prevailing president for development economics and distortions), its conclusions about the effects chief economist, also reaffirmed that, given the of adjustment lending had to be based on high economic and social costs of rapid forced incomplete evidence. adjustment to the severe shocks of the decade. The study also noted that, despite the pres- quickly disbursing loans should continue to be ence of indicators showing relative improve- a major form of Bank assistance-but with ments. several factors continue to bring the refinements and clarifications in their design sustainability of adjustment programs into and implementation so as to strengthen their effectiveness. Measuring Adjustment's Successes. To mea- World Bank, Adjuistment Lending: An Evaluation of Ten sure the success of adjustment operations. the Years of Experience. Policy and Research Report I (Wash- Bank study compared the experience of thirty ington. D.C.. March 1989). adjusting countries that had received Bank 2 Structural-adjustment lending was initiated in 1980 in re- adjustment loans before 1985 (and, more par- sponse to the serious balance-of-payments prob- lems-stemming mainly from a sharp deterioration in ticularly, of twelve that had received three or terms of trade and from a legacy of weaknesses in domes- more such loans before 1986)3 with a control tic policies and institutions-affecting many developing group of sixty-three countries that had not. countries. Among the group of thirty, which, on the It was initially expected that structural-adjustment averag, face large extenal shcks thn did loans to a country would continue for three to five years. average, faced larger external shocks than did Adjustment lending has intensified, however, rather than the group of sixty-three, several aspects of disappeared, as developments in the 1980s departed performance stood out: greatly from what was expected at the start of the decade. * The relative growth of about half the re- The terms of trade for most developing countries deterio- rated further, real interest rates increased, the debt crisis cipients of adjustment lending improved. and worldwide recession spread, and industrial-country * The real exchange rate depreciated more growth remained below the levels of earlier decades. for about two thirds of the thirty countries, Moreover, the scope of adjustment lending widened with mirrored in the relative improvement for ex- the introduction of less comprehensive sectoral-adjust- ports and the current account. ~ment loans. ports and the current account. ~Brazil, C6te d'tvoire. Ghana, Jamnaica. Kenya. Republic of * The burden of adjustment fell heavily on Korea. Malawi, Morocco, Pakistan, the Philippines. Tur- investment: There was a relative worsening of key, and Zambia. Review of Adjustment Lending 79 question. Investment ratios have declined, and was deemed to be "substantial" were also budget deficits are higher in the highly in- included. debted and sub-Saharan African countries. Al- * There was great variation, however, in though current-account deficits have been re- implementational success. Policy changes duced, debt-service ratios, and especially debt- were clearly implemented quite successfully in export ratios, have increased. It is not some areas (exchange-rate management, en- possible, therefore, to conclude that the adjust- ergy and agricultural pricing, financial-sector ing countries are growing out of debt. reforms, and budget/public-expenditure poli- In addition, progress has slowed in nutrition, cy). Changes in other areas (industrial policies, infant mortality, life expectancy, and primary tax reforms, and some aspects of public-enter- school enrollments, giving rise to the proper prise reforms), however, were slower or less concern over the "social costs of adjustment." successful. Although there have been clear gainers pro- * Performance in implementing conditional- duced by adjustment programs-typically, ag- ity did not vary sharply between groups of ricultural producers and exporters-scattered countries. and anecdotal evidence suggests that their sta- * Performance on adhering to key conditions bilization components have often initially hurt -those four or five program elements on welfare, especially in low-income countries, which governments and the Bank put particu- generally, and sub-Saharan African countries, lar emphasis because they are expected to in particular. make a significant contribution to stabilization Program Design and Implementation. Gov- or adjustment in the short run-was, on bal- ernment programs supported by adjustment ance, better than performance in adhering to lending have tended to have three distinct all conditions (68 percent as compared with 60 elements. percent, respectively). First, the programs have set out a number of The review of adjustment lending also reit- broad objectives to be achieved over the me- erated findings from previous years-that ad- dium term. These objectives have included justment programs were better implemented in targets for key macroeconomic variables (sav- those cases in which governments "owned" ings rates, current-account deficits. and aggre- the program, and hence, were committed to gate or sectoral growth rates, for instance) and carrying it through. Thus, progress towards for important sectoral variables (such as crop adjustment was most marked in Asia and Latin diversification and the development of export America. the two regions in which governmen- industries or domestic energy sources). tal involvement in the design of programs was Second, the programs have included a broad the greatest. set of measures to be introduced in the medium Conversely, progress was weakest in sub- term in support of those objectives, such as Saharan Africa, where, although countries increasing the scope of taxation or cost recov- were in urgent need of resources, specific ery, as well as improving incentives for exports knowledge of what reforms were both desir- or agricultural products. able and feasible was often poor. The report Third, the programs have detailed a set of notes, however, a growing consensus among specific actions that the government planned to these countries and the Bank about the essen- undertake over twelve to eighteen months and tial problems and specific remedies, and, as that the Bank would monitor. reported elsewhere in this Annual Report (page To facilitate monitoring and to ensure that 106), nearly thirty sub-Saharan African coun- progress is appropriate, adjustment loans gen- tries are now implementing programs of struc- erally have been tranched; disbursements of tural adjustment, with encouraging signs of remaining commitments (the second or third progress. tranche) depend on satisfactory compliance Future Directions in Adjustment Lending. with a number of key conditions and with the Because of the continued need for physical and implementation of the program in general. human infrastructure in its developing member According to the Bank's review, a detailed countries, the Bank will continue to rely on examination of the experience in implementing projects for the majority of its development conditionality in fifty-one adjustment loans in lending. Adjustment lending remains a valu- fifteen countries supports several generaliza- able operational vehicle, however, and al- tions: though adjustment lending is a high-risk activ- * About 60 percent of the conditions in ity, risks can be reduced, rewards improved, structural-adjustment loans and sectoral- and effects strengthened. adjustment loans were implemented fully, or To this end, the review carried a number of more than fully. That rate increased to more recommendations to guide further lending for than 80 percent if conditions on which progress adjustment. Discussion of these by the execu- 80 World Bank Policies and Operations tive board yielded five areas of general agree- ways to lower the social costs of adjustment. ment: This will require both a better understanding of On the importance of meeting prerequisites. the effect of adjustment policies on the poor Adjustment loans providing quickly disbursing and on the design of programs and interven- finance for general imports should be under- tions to help the poor. Support for programs taken only when three prerequisites are satis- designed to ameliorate the social costs of ad- factorily fulfilled: that, in addition to agree- justment should be intensified. ment on the specific actions that are conditions On monitoring the macroeconomic frame- for effectiveness or tranche release, there work for sector-adjustment operations. The should be an understanding with the govern- reforms supported by structural-adjustment ment on its overall structural-adjustment pro- loans normally include specific measures that gram; that governments "own" the program; can be expected to contribute to reducing, over and that the adjustment process be realis- the medium term, the macroeconomic imbal- tic-that is, sufficiently restrictive to be con- ances that gave rise to the need for loans for sistent with the available financing, but not so balance-of-payments support. restrictive as to prove socially and politically This may not be the case for sectoral-adjust- unacceptable and therefore unsustainable. ment loans, however. Instead, they may focus On the establishment of key conditions. In on other important concerns-including rela- formulating adjustment loans, there should be tively longer-run efforts to improve economic a continuation of the trend towards fewer efficiency or the effectiveness of government conditions that are so clearly defined there can programs in the area concerned. To insist that be little uncertainty about whether they have all sectoral-adjustment loans should include been fulfilled. These conditions should relate policy conditions that contribute directly to to policy changes and institutional changes that medium-term reduction in the macroeconomic are under the direct control of the borrower imbalances would restrict the flexibility with and not to performance targets. Economic which adjustment lending is used and may lead performance is what matters in the long run, to a reduced focus in these operations on but unexpected external factors can affect eco- longer-term sectoral issues. Nevertheless, nomic performance. There are also lags, of given the nature of financing, it is important, in variable length, between the adoption of ad- the context of a sectoral-adjustment loan, that justment measures and their effects on perfor- the Bank be satisfied as to the soundness of the mance. However, in a series of adjustment government's overall structural-adjustment operations, the required policy actions under program, including short-term stabilization, as subsequent operations would inevitably be ad- well as longer-term development objectives. justed in the light of progress of economic The current approach is to be monitored for a performance. period of eighteen months, after which man- On limits of adjustment lending. Whether agement of the Bank will reassess its adequacy IBRD or IDA financing is involved, adjustment with respect to improving macroeconomic with growth clearly requires a mix of balance- management. of-payments support and more traditional sec- Looking to the Future. The Bank's evolving tor and project financing. In view of the Bank's structural-adjustment policy implies a some- primary role as a development institution, the what more selective approach to quick-dis- predominant share of the Bank's lending port- bursing adjustment lending. It should strength- folio should continue to contain sector and en confidence that an adequate macroeconom- project financing. In order to provide assur- ic program is being maintained by the review of ance that the Bank is not pursuing an inappro- recent developments at the time any adjust- priate lending mix, an overall limit on adjust- ment operation is presented to the executive ment lending is desirable. board, and also, when any later tranches are to In the case of IBRD loans, the 25 percent be released. It also calls for a closer application overall limit for adjustment operations recom- of the specific conditions associated with dis- mended for portfolio-management purposes bursement of adjustment financing. should continue. In the case of IDA, the Bank The increase in selectivity should provide and donors, under the eighth replenishment of greater assurance that quick-disbursing lending IDA resources, agreed on an overall level of for balance-of-payments support will comple- lending of between 24 percent and 28 percent ment, rather than substitute for, structural for adjustment operations. The IDA limits will reforms by the borrowing country. But, it be reviewed during negotiations on IDA's might slow down the pace of adjustment lend- ninth replenishment. ing-at least initially. Developing a consensus On dealing with the social costs of adjust- on the appropriate strategy and working out a ment. There is a need for greater emphasis on program that a country genuinely owns may Review of Adjustment Lending 81 Box 5-i. Adjustment and the Poor litile is knosn albouI the o erall etfecit of resIour ..C de"elopIlierit aCt - 'ie' s ssell S io adjustment programs on po%erts. T-o a large oper,ition- and maintenance expenditure .and to emnt. this is because it is difficult to distinnulih incrcasing the etftcienc of existing programi. the effe,ts of e\ternaIl niidu,ed receision fromi Some adju-tmrent programs hav-e addressed the effects of the polies ind progrjms designed these 'sue', and more nous concentrate on more to offsel theni. Ne%eriheless. one clear le.son el'ective largeting ol re;ources t.l the poor The trom experience %ith adjustment programis ha,s ke% Iuestion Ish oss suih t.,rgeted programs Can been ihat failure to adjusit I. ltkle t5 hun the poor be fin.nced dunne a period of %% idespread cuts in and thal an orderls adjustment process ti ndi,- go%ernment espenditures Since; dditional re pensabit to improve Ihe long-term po'it'on of the sourrc' iare unlikels to becomrre .,iil.ble. priorati poor. ,ocial and poserr% ptogrami mu,t be protected at At the anme time. the poor mas he adversels ihe eipense ot- alternatise,. Some emterntl Ii- affected during the adjustment proce,s Broadly. nancing trom multilateral and bilateral donor' Is these adser,e effects may result irom increases in otten available to upport such programs But it unemplo%ment and reductions in "age rate, re- is also es.ential to increase the efficienes of sultng fronm changes in econom%sa%de incentive strsice delder\ and to pursue measures. includ- strucuJres or from reductions in pubhl,-sector Ing cosl reco' er\ from ihose %% ho can atford to emplos menl and from cuts in public expenditures paF. to raie additi,onal domestic resources and consumer sub'idies trhe likelihood of such Siuhbsid reductions hate been controversial I effects must be kepL in mind sehen designing Jnd hia:e sometime' prosoked sirong opposition . adiu'tment progr.ms, and remedial actions must In cabes %- here -ut-idies benefited the poor. the be considered. pkuoi hate 'ui(Lred considerable ha.idship %; l,en Expenditure cuts hate a contraction.al effect sub,idies hase been cut. In 'uch ba5ei, better and man! public-seclor cmplo%ees and un,killed targeting or suhstitution of aternratise more ef- and semiskilled t%orkers insolved in infrastnrc- ficient scheme'. is needtd In Morocco. sub-i- Lure or the prosision of public sersice are likelk dies are being restructilred io J' to be applied to become unemplosed or sutfer cuts in re.l maint. Lo foods eaten hy the poor Thi- could "ages. The tranintion to neu iohs mai he ilo% gise the poor greater nutritional henefit, for one and dit'ficult because ot constraints to labor mo- tifth Lhe foirmer cost Nonetheless. proayres, in hilits or because of mismatching skillS Such cuts implemcraing ihese reform' ha' been slov. In are ltkeh to exacerbate poveri,,. particularlh in Mexico. the go%emnrinent. ith the help of t' urban .reas. Seseral compensatorn programs tire Bank loansi is replacinc Its mirketsside subsidies intended to addres' these issues. t'or e\jmple. by b:. niore tareeted and chiraper altern.tives These prosiding sc erance patmemnt or reir.tning 1o aIterntise ichLmes include food coupons and tho'e ss ho heconme unemplo\ed. mill distribution. tusidies on lo--income foods Besord the direct and indirect elfect on em- in 'elected areas. md s:hool-lunch programs plov,meni and income. cut, in public expenditurc The mo,t Common 5It ot .,ddressin the d- mas slots inestmneni ind have a1 laJsing ad'ei 'e \serse effects of adiu'imenr has been the imple- etfeetott productive and stical infrastruiLure and meniatotin ot complemnentars taigeied programs. ,er ices Such cuts nv:i hurt ihe poor becaa'c of s-hich the best kno-s n esjniple !- Bols a, the'e serNice' cai be An effecntie %.a\ to enh.nce emergenes soial fund Such progranm represent rh..r pruducti--it\ in the lo.ng run, the, can also an aitrpacite ipttiri t,r ameliorating adver,e so. act. as a saflet. liei. panrtUcl1arls in ihe pooresi ci,t effecti because the'. can be elfetli\e in cour.rie-. Rediuced ailoc,i,-on ftor recurrenL es- reaching Ihe grour- the. are intended to rLach penditure; ofien affect the social sector' mo-i "h,le ihe adiusirent pFogrim is beng imple- since recurrent 'utl%ts' a:ccount ftir nmos of the menied. These programs hase compensated spendin in these sector. those .itfecled h: adiuncmeer or haue prosided Stnce expenditure Cuts malt b unasotidable. tempora:r emplosmint or- reliet to the chront- the ke. to redu,ing adserse social ctfeci s; fur c.lls poor But the program' base often factd governments to a' oid acro-the-board ieduc- ,serious .hortiomings such as insufficient political tions. Instead, as.ailable resources- should he al- commitment. insniut,ional %kenkne-es. shOria,es lc.aied Lo priorhit investment and human- of tundiniz. and poorly trained taff. also take time. Mobilizing the needed external of the effects of the external economic envi- financing, which is, in part, outside the control ronment. Overoptimism in either respect is of the country and the Bank, may take more likely to lead to subsequent disillusionment time, as well. with the adjustment process. The joint empha- Other concerns are the need for greater sis upon selectivity and realism should help the realism in the speed with which supply re- Bank grasp new opportunities, reduce its port- sponses can be expected and fuller recognition folio risk, and strengthen its country relations 82 World Bank Policies and Operations by further progress in the effort to support While the Bank avoids financing relief oper- structural adjustment and growth. Most impor- ations, it does not ignore their importance or tant, it should assist countries engaged in the priority in the immediate aftermath of a natural unavoidable task of adjustment for growth. disaster. The Bank tries to work closely with governments even in the early relief phase to Bank Lending for Emergencies ensure that longer-term development consider- While discussing details of proposed emer- ations are kept in view and that important gency lending projects, the Bank's executive development options are not foreclosed when directors have suggested that it would be desir- decisions have to be made hurriedly and with- able to review more broadly the Bank's lending out adequate information. for emergencies. Thus, in fiscal 1989, a policy A review of experience with emergency paper was prepared that reviewed the Bank's lending operations concentrated on the fifty- experience with operations of this type, exam- seven emergency loans and credits in forty ined the factors that seemed to make for suc- countries that were approved between fiscal cess or problems, and presented the policies 1960 and fiscal 1988. The events that led to the and criteria used for selecting and designing emergencies were almost always major natural such operations. disasters (cyclones, drought, earthquakes, and Although the World Bank normally provides floods), but also included war or civil distur- advice and finance associated with the long- bances in ten different countries. The review term development plans of its developing mem- did not lead to proposals for any major depar- ber countries, since its earliest days it has also tures from past practice, but it did provide an provided financial and technical support in re- opportunity to reinforce the lessons of experi- sponse to major emergencies. ence and refine the scope of future activities in This support has characteristically been in this area. the form of reconstruction loans following nat- The Bank, the review shows, has learned ural or man-made disasters. Although the vol- from experience. Thus, earlier emergency op- ume of lending has been modest-$375 million erations often experienced long implementa- on the average over the five-year period, fiscal tion delays as compared with their original 1985-89-emergency lending is more important schedules. These delays are attributed to the to the Bank as an institution than is reflected in fact that the response to natural disasters was the figures alone. First, reconstruction and re- often in the form of a single-sector loan that covery are at the heart of the Bank's original attempted to compress most of the elements of mandate. Second, lending for emergencies usu- a regular operation into the accelerated time ally comes in the wake of immense human frame of an emergency loan. In recent years, tragedy, which calls for an urgent response. however, the design of emergency operations And third, these operations test the Bank's has been simplified and has become geared ability to respond quickly and effectively to the more specifically to the restoration of particu- urgent needs of its members, and they challenge lar facilities or services. In addition, there has the Bank to find new solutions to problems of been an evolution in the direction of multisec- procedure and implementation. tor time-slice reconstruction loans, in which, The Bank's procedures for handling emer- although the Bank agrees with the government gency lending have evolved over the years. But on an overall recovery program and on the they have always been governed by two princi- criteria that subprojects have to meet to be ples: The Bank should finance productive activ- eligible for Bank financing, the funds are not ities and investment rather than relief and con- allocated in advance to specific subprojects. In sumption; and, it should focus on the areas of this way, subprojects meeting previously its own comparative advantage. agreed-to criteria can proceed as they are The first principle flows from the Bank's ready, and disbursement delays can be mini- Articles of Agreement. Avoidance of relief ac- mized. tivities is not merely a product of the Articles, The review also pointed out the advantages however; it is also a reflection of the second of flexibility and a willingness to experiment. principle. The Bank's natural perspective is on Thus, for example, although it was acknowl- medium-term and long-term development, and edged that emergency loans in response to its approaches to information, analysis, and droughts in the mid 1970s were not generally administration of lending operations all reflect successful, the Bank, nevertheless, made two this outlook. A division of labor has developed emergency loans in response to the 1984 between the Bank and official agencies and drought in East Africa. These loans, however, nongovernmental organizations (NGOs) that were designed specifically to deal with the have the specialized skills and experience to short-term restoration of production by financ- deal effectively with relief activities. ing inputs of agricultural chemicals, machin- Bank Lending for Emergencies 83 ery, fertilizer, and transport equipment, and so ment problems. The effects of an emergency did not repeat the earlier mistake of trying to should be significant, and the event triggering solve long-term agricultural development prob- the emergency should be so infrequent that the lems in a short-term framework. consequences, while severe, can be regarded The review also revealed that, generally, as a temporary dislocation. The need for an experience with emergency operations closely urgent response must be evident. Emergency reflected that of regular operations in corre- lending should be limited to cases in which sponding sectors and countries. Thus, the pre- effective action can be felt in the short and viously mentioned drought-emergency opera- medium term (two to three years). And finally, tions in the 1970s, all of which were in there must be some prospect for future reduc- sub-Saharan Africa, were characterized by im- tion of hazard; although an emergency opera- plementational problems (as were normal tion may not be the only or best vehicle for Bank-assisted agricultural projects in the preventing a recurrence of the cause of the region), while emergency operations that dealt emergency, it is usually a good place to start. with a well-defined technical activity in one The design of emergency operations. The sector (such as the project that restored Ecua- criteria determining when emergency opera- dorian oil production and exports that had tions are warranted play an important role in been stopped by the earthquake-caused rup- guiding their design. However, there are four ture of the Ecuadorian oil pipeline in March other important considerations affecting the 1987) enjoyed high rates of success, just as design process: regular operations of a similar nature do. * The possibility of a reallocation of pro- Finally, the review pointed to six features ceeds under existing loans for related purposes that seemed to recur in the more successful is always considered as the Bank's initial ap- examples of emergency operations: proach (as this can be done more expeditiously * Strong government commitment, often at than processing a new operation). the highest levels, helps overcome bureau- * If a new operation must be designed, func- cratic tangles and ensures that decisions are tioning and familiar institutional capacities made promptly. should be made full use of, and the operation * Involvement by Bank staff at the early itself should be made as simple as possible. post-disaster stage is highly desirable. * Flexibility in regard to policy conditional- * The existence of a comprehensive program ity is essential; emergency lending operations that provides a framework for the whole recov- are not intended to address long-term eco- ery effort facilitates planning and the coordina- nomic problems requiring major policy adjust- tion of donor assistance and provides a long- ment, but, if warranted, conditionality should term perspective for decisionmaking. focus primarily on issues directly linked to the * Successful operations have limited objec- cause of the emergency, where a change is tives and realistic time frames for attaining likely to reduce the probability of a recurrence. them. More generally, the Bank takes into account * Problems are solved and decisions made the effect of an emergency on a government's quickly when there is a strong prior relation- macroeconomic program and performance. ship between the Bank and the agencies con- * Although most emergency operations fi- cerned. nance specific capital investments or interme- * Because emergencies cause dislocations, diate imports, such as agricultural inputs or simple implementation and institutional ar- transport equipment, the need for flexibility rangements are important. demands that the Bank occasionally permit the Looking to the future, the policy paper fo- importation of a broad range of urgently cused on three major policy areas: criteria for needed imported supplies in response to an proceeding with emergency loans, aspects of emergency (as, for example, following a war or their design, and questions relating to mitigat- civil disturbance). To maintain the distinction ing the effect of emergencies.4 between lending for structural or sectoral ad- Determining when emergency operations justment and emergency lending, the latter will are warranted. In considering proposals for finance only a "positive list" of imports iden- emergency lending, the Bank now applies five broad criteria: An operation must be directed at restoring assets or productivity in a long- Discussion of a fourth aspect of policy, dealing with term development perspective-not at relief. internal processing and administration of emergency lend- Prospective economic returns should be high; ing operations, has been omitted here. It deals with the if they are not, there is reason to question need for accelerated processing procedures, the provision of finance for the recurrent costs of implementation assis- whether the operation is really focused on the tance, and the extent of flexibility desired in providing emergency rather than on long-term develop- retroactive financing. 84 World Bank Policies and Operations tified as critical to a well-defined recovery ca-while stating that economic growth is es- program. sential, also conclude that long-term aggregate Mitigating the effects offuture emergencies. growth alone is not sufficient (since the poor Experience has demonstrated that disaster-mit- do not possess the physical and human assets igation components of emergency operations needed to take advantage of growth) and that it have not been uniformly successful and that the must be supplemented by additional efforts to best vehicle for these components is often reg- ensure access to food by those at greatest risk ular lending operations, which not only share from food insecurity, through increases in pro- the same long-term horizon but also benefit duction and real household incomes, to facili- from more careful planning and preparation. tate productive employment for the growing This does not mean that emergency-lending numbers of the poor, to endow them with more operations should exclude mitigation compo- physical and human assets, to improve their nents; it means, rather, that these components access to basic social services, and to better should become more prominent in a wide range target funds for those most in need. of Bank operations in countries prone to natu- The reports of the two task forces also ral disasters. underline that these additional efforts need not In these countries, risks are to be assessed involve a trade-off with efficiency because the and analyzed explicitly in the context of na- scope for improving the productivity of the tional planning and investment-program re- poor is very broad. views. In their dialogue with government offi- The Bankwide task force on poverty allevi- cials in disaster-prone countries, Bank staff are ation was formed in fiscal 1988 under the to point out the need to allocate resources in chairmanship of the regional vice president for anticipation of disaster, as well as the cost- Asia. Its mandate was to define a program of effectiveness of appropriate emergency pre- action for the Bank over the next five years paredness and hazard-reduction measures. that could help eliminate the worst forms of In addition, ties are to be built with other poverty in developing member countries by the international organizations involved in emer- year 2000. gency relief and recovery activities, as well as The task force on food security in Africa, with those NGOs that work within the broad chaired by the regional vice president for Af- framework of a borrowing government's poli- rica, and also established in fiscal 1988, had a cies, so that collaboration in the field, where mandate to develop improved approaches to necessary, can be effective; the Bank stands meet the goal of food security by the end of the ready to help governments gain access to new century. developments in hazard-reduction technolo- Although the two task force reports could be gies and standards; in designing regular invest- read and analyzed separately, the recom- ment projects and sector loans in disaster- mended approaches and actions were mutually prone countries, due attention will be given to consistent and complementary: The task force early-warning systems and other elements of on poverty alleviation approached the issue emergency preparedness through financial or globally and comprehensively, while the food technical assistance; and emergency opera- security task force narrowed its attention to a tions will continue to incorporate mitigation critical regional dimension of poverty. components, with the knowledge that they Issues in Poverty Alleviation. In reviewing must be given special attention by Bank staff the relationship between economic growth and during implementation. poverty alleviation, the task force achieved a consensus on several basic premises. * * * * Over the long haul, economic growth is the major factor in the reduction of mass poverty. The report on lending by the Bank for emer- The incidence of poverty goes down, there- gencies was discussed by the executive direc- fore, in those economies experiencing sus- tors, who generally endorsed its findings and tained periods of increased efficiency in re- recommendations. source use and aggregate growth. * Conversely, the incidence of poverty in- Reducing Poverty and Food Insecurity creases in stagnating or declining economies. Studies emanating from two World Bank * Long-term aggregate growth, while neces- task forces have concluded that per capita sary, is not, however, sufficient for the allevi- economic growth is the sine qua non of suc- ation of absolute poverty at the desired speed. cessful efforts to reduce poverty and food Benefits of national growth do not always insecurity. accrue to those who are below the poverty But both studies-one on poverty allevia- line. In many instances, the poor do not pos- tion, the other on food security in Afri- sess the physical and human assets needed to Reducing Poverly and Food Insecurily 85 take advantage of growth, and growth may not gests that the urban poor bear a disproportion- provide adequate expansion of employment for ate share of adjustment costs. the unskilled. The report did not set out detailed country * This helps explain why the number of strategies and medium-term poverty lending people living in absolute poverty has increased strategies, as they would likely emerge coun- in low-income countries even while respect- try-by-country only over time and in the con- able growth rates have been achieved over the text of the Bank's dialogue with governments. past three decades. Similarly, in many middle- In most cases, projects that have as their income countries, sizeable pockets of poverty primary and direct objective the reduction of persist side by side with relative affluence and poverty would be evaluated according either to vigorous growth. cost-effectiveness (least cost) considerations The task force concluded, therefore, that (in education and population and health) or growth policies must be supplemented by economic rates of return calculations (as in clearly defined poverty-alleviation efforts and agriculture). noted that evidence pointed to the economic Issues in Food Security. Food insecurity is a feasibility of such an approach. Because areas problem throughout Africa: About a quarter of of complementarity between the twin objec- the population-more than 100 million peo- tives of efficient economic growth and the ple-do not eat enough for an active working alleviation of poverty exceed those areas in- life (see Figure 5-1). Food insecurity is a prob- volving serious trade-offs, pursuit of both ob- lem in both adjusting, as well as in nonadjust- jectives is essential to lasting and stable devel- ing countries, in low-income food-deficit coun- opment. tries and in the middle-income countries that The task force report noted that an effective are self-sufficient in food, in the drought-prone antipoverty effort also needed to emphasize and the drought-free countries, and in coun- the role of policies and institutions, including tries with generally sound economic growth the reallocation of public resources for social policies. services, to complement the more traditional The problem is serious and deteriorating. In investment-oriented interventions. Such an ap- the 1970s, the proportion of Africans with proach, launched on a sectoral rather than a deficient diets increased by far less than the project-by-project basis and with due regard rate of population increase. In the 1980s, how- for sustainability, should be feasible and effec- ever, both the proportion and the total number tive for poverty alleviation in agriculture, of Africans with deficient diets are believed to health, nutrition, family planning, education, have climbed. and urban development. Part of the report of the task force on food Improving the access of the poor to social security in Africa dealt with the aspect of services is another major area in which an hunger that attracts most media attention effective and focused sector-policy effort can -transitory food insecurity, which occurs be made and antipoverty strategies imple- when households are faced with a temporary mented, the study added. Services, such as inability to acquire food as a result of sporadic health and family planning, have important misfortunes such as drought or civil strife; but short-term and long-term roles to play in pov- the report also addressed the more deep-rooted erty-alleviation efforts. Significant improve- and larger problem of chronic food insecurity, ments can be made in orienting social services which exists when households suffer from a towards poorer households, in making these persistent inability to acquire enough food to services more relevant to the needs of the eat.5 poor, and in raising the efficiency of delivery Assuring African food security, the task systems. force report noted, entails meeting two condi- The task force report also called for an tions: first, food must be available, and sec- increased effort in protecting vulnerable ond, households must have the ability to ac- groups during implementation of adjustment quire it. While much attention has been given policies. During initial efforts to correct inter- to the food-availability dimension, the report nal and external imbalances, output, along concluded that effective action to combat both with employment and consumption, may be chronic and transitory food insecurity must depressed. Reallocation of fiscal resources be- focus also on the root cause of food insecurity: tween sectors and activities may benefit some insufficient real income of households either to groups (such as farmers) while penalizing oth- grow or buy food. ers (such as urban wage earners). In most developing countries, poverty groups tend to be the least protected by the social safety nets, Worid Bank. The Challenge of Hunger in Africa: A Call to and experience obtained so far strongly sug- Action (Washington, D.C., 1989). 86 World Bank Policies and Operations Figure 5-1. Number of Food Insecure in sub-Saharan Africa F.r r, il u30 ,:. if- l :- a-- r It iir 5 r.i~ f.. , :uF ,*' ,irlrIe *'ir-, 11 I rr,iIicr, &r n;,-re lo):-t ir,|r..erurp Ni.ler3 13_ 17 Ki.ir.rr .: ?,'i!r' : rrici,n or nlr.e l.- i Thr,?3ri I- ,i.)-ir,.-1:r I tj 1 ir r 3f~l ri-., F 2 ri!t, lr1- ir 11 JTrIIIr:ri 1:71 riB &,C St,.:S;n | . J ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1.-. ,l,ill ~ ~ ~ ~ ~ ~ ____________________ - lii C2i'-r EL.r I-n3 F-.3 _C -,'1 J -r I1-: |-1 , wvIr',a _4 , T,|r,,ls _.imbu Fj1 2 C Er i,Jrili- 1.1lr, l-!el tt- jri 1 Ir,l,, ,rl t,-.D rl e Eirr cr; ir re A'i-r Tri3ri 1 nih r .t r r ri r _nr r p r 9 3 Lez-cr. *~.s 23 r,;r 3lll:1 .:IrI,. 3r, Fel:l LI,,: 1)'_ i ten in -~ r z r'. i1i L. 311r3lJI, S F Ir,r_ rr, ir-, I _ A 1 ij,rI.3r : g1 9 3 .; -,r i'* .-rl 'r.1 - '1-lire :1 ref ,- 3;t ((.41 (|r-ijrr.Ii.,il * 1'3fl1J -"lrrT;eB .BCij-u(r.B ; E ..3i ri,r3r _:'1 .n-- ..~ - ,r.e-L--,..,, L.-- :.r,.:. :3 i~. T. i.Il- 11-3. F ' -:ie -Be ., r,eii -:. S-;, g.3 ' .1,. _rdY,;3r.1 Reducing Poverty and Food Insecurity 87 The study stated that although ongoing ef- groundwork was laid for coping with emergen- forts to promote per capita income growth cies and preventing famine. In addition, the comprise an essential element of a sound food- report recommended that the Bank make a security strategy, they should be accompanied systematic effort to identify, prepare, and lend by: the introduction of new elements to iden- for growth-oriented projects benefiting under- tify the groups at high risk of food insecurity nourished people, as well as for cost-effective and to develop action plans to deal with food interventions (growth-promoting programs insecurity; provision of more real external re- that especially benefit the undernourished, sources to finance programs for the food inse- subsidy schemes for production or consump- cure; improvements in the capabilities of Afri- tion to improve food security, and policy ac- can governments and donors to respond to tions aimed at relieving key constraints to emergencies; the development of policies and achieving food security, for instance); and as- programs to stabilize national incomes and sist African governments build the institutional prices; and the strengthening of institutional capacity to handle food-security issues. capabilities to deal with food-insecurity prob- 3. The study urged the Bank to take steps to lems. mobilize an effective partnership of all con- The report cautioned, however, that there cerned donors so as to minimize duplication of are no quick fixes, simple short cuts, and easy effort, increase staff expertise, and mobilize answers that can make the problem go away, additional funds. The task force suggested that and added that only large-scale action, pursued the main focus of collaboration should be at the over many years with adequate resources and individual country level and that the Bank skilled personnel, could alleviate the problem. work to enhance its catalytic role in bringing In response to the challenge, the task force together governments and NGOs to work to recommended that the Bank take action in four meet common food-security objectives. areas, the implementation of which could make 4. A final set of actions was identified that a significant contribution toward resolving the involves applied research. These actions problem of food insecurity. would include: the carrying out, in collabora- 1. The Bank should build the foundation for tion with the World Food Programme, an over- long-term food security through a more vigor- all review of African food aid with a view to ous application of ongoing approaches to developing recommendations for enhancing its growth and adjustment. effectiveness and efficiency; exploring ways to Thus, for example, the Bank could increase provide catalytic assistance to the Food and its efforts to enhance agricultural production Agriculture Organization of the UN (FAO). through an operational emphasis on farmers at which is heading up efforts to accelerate the risk of food insecurity-especially low-income pace of enhanced collaboration in early- smallholders and women farmers; examine, in warning systems for droughts; finding ways to the context of its adjustment operations, food- accelerate women farmers' integration into the security implications and take advantage of development process; and encouraging re- ways to protect and help the undernourished; gional integration, with a view to finding prac- give special attention to programs in support of tical ways of enhancing food security. family planning, health, and nutrition; conduct reviews of public investment and expenditure 8 * * programs (to ensure that they fund growth- oriented projects that can help undernourished In summarizing the executive board's dis- people) and of targeted subsidy schemes that cussion of the two task force reports, the support the food insecure; and give increasing chairman noted that its obvious interest reaf- attention to incorporating environmental con- firmed that poverty alleviation was a funda- cerns into development policy and programs. mental objective of the Bank and that a more 2. The Bank should pursue a new set of focused and concerted action appropriately country-specific actions to form a more inten- could be undertaken on a country-by-country sive, organized, and systematic approach to basis to reduce poverty. The directors, he the problem of hunger in Africa. continued, expressed broad support for inten- Thus, for example, the Bank would begin sifying the Bank's role in both poverty allevi- preparation of food-security action programs ation and food security. in at least six countries, with the intention of There was broad agreement that economic covering, in five years' time, one third of growth, while necessary, was not sufficient to African countries and the bulk of Africa's resolve the poverty problem. It was agreed food-insecure population; in countries where that growth must be supplemented by addi- transitory food insecurity was a problem, these tional efforts to ensure that development programs could be designed to ensure that a reaches the poor. Such efforts need not involve 88 World Bank Policies and Operations trade-offs with efficiency standards, and the sis: debt and adjustment, financial intermedia- need for sustainability was stressed. tion, food security and poverty alleviation, There was also general support for the Bank environment, human resources and the role of to draw on its considerable experience to de- women in development, private-sector devel- velop specific antipoverty programs. Directors opment, and public-sector management. Re- stressed the importance of governmental com- search on these areas of special emphasis now mitment; the need for a country-specific ap- accounts for two thirds of total resources de- proach; the need for sectoral approaches, es- voted by PPR to its research program. In pecially in agriculture and social services, to parallel with ongoing work, research initiatives ensure that the poor were being reached; in- or plans are being developed in each of these creased participation of the poorest of the priority areas, concentrating on the most im- poor; use of selected but carefully targeted portant issues that need to be addressed in the subsidies; and the need to review the method- context of the Bank's operational and policy ology used in evaluating the efficiency of work. projects that aimed at reaching the poor. Current work on debt issues is looking at the There was also full agreement that economic interwar record on external debt and default in growth in Africa depended both on a healthy order to assess its relevance to current prob- agriculture sector and continued structural re- lems and policy issues. Work is also ongoing form. There was to be no stepping back from on the debt problems of middle-income sub- the Bank's commitment to increase agricul- Saharan African countries that fall outside the tural production in Africa, nor did the Bank Bank's special program of assistance (SPA). intend to relax its support for structural adjust- Investigation of the external financing needs of ment. low-income African countries in the 1990s after The chairman reported that the Bank would the expiration of the SPA has begun and will proceed with the implementation of the recom- continue in fiscal 1990. So, too, will work on mendations of the food security report and the determinants of foreign direct investment with the intensification of work on poverty, flows designed to assess the possible expanded and that the executive board would be in- use of these forms of finance as alternatives to formed of any progress made in both activities debt finance. Five additional areas of research and consulted on key issues.6 will be emphasized: commercial-bank behavior and constraints in international lending, the The Research Program relationship between debt and growth, the re- During fiscal 1989, the Bank devoted 105 lationship between external-debt difficulties staff years to research and allocated $4.9 mil- and internal financial and banking crisis, fiscal lion to the central research support budget. aspects of the debt crisis, and continued anal- This budget, administered by the Research ysis of market-based strategies for resolving Committee, allows researchers from all parts the crisis. of the Bank to compete for funds to finance Research aimed at developing a better un- consultants, travel, and computing expenses derstanding of the process of adjustment forms related to their research. The process of allo- an important part of the Bank's research cating these funds through a central screening agenda. A major initiative in this area is the of research proposals is the most important development of macroeconomic models that mechanism for ensuring both the institutional incorporate key interactions among macroeco- relevance and technical quality of the Bank's nomic variables that are affected by adjust- research. The centrally funded research port- ment packages. Other related studies deal with folio consisted of 130 projects, including thirty the political economy of adjustment, the role projects completed during the year and sixty and functioning of labor and financial markets new starts. Research is mainly conducted in in the adjustment process, the effects of eco- the policy, planning, and research (PPR) com- nomic policies on domestic savings, and mac- plex, but research is a significant part of the roeconomic adjustment issues of special rele- work program in the operations and finance vance to Africa. Stabilization programs also complexes. figure high in the research agenda. While les- Institutional priorities set the tone and direc- sons are being drawn from Latin America's tion for Bank research, but specific research experience with stopping high inflation, a new agendas or topics are the product of exchange study will examine issues of inflation and sta- among research and operational staff at all bilization in Africa. Another study will trace working levels. Thus, the past year witnessed a the macroeconomic aspects of public-sector substantial redeployment of research re- sources toward the priority areas identified by 6 Details of the Bank's operational focus on poverty reduc- Bank management as requiring special empha- tion during the year are found on page 38. The Research Program 89 deficits. Studies are also under way on various the supply-response effects resulting from re- aspects of adjustment-related reforms (trade, moval of barriers to women's access to factors public-sector finances, the financial sector, of production such as information and credit; and public enterprises, for example). Some will the contribution of education, training, and focus on issues of sustainability and sequenc- health and family-planning services to wom- ing of the reforms. en's productivity; and the influence of eco- Several studies are under way that relate to nomic policy on women's incentive to work. A private-sector development and the role of the new and major research project is specifically private sector in the adjustment process. They focused on women's access to, and use of, deal with issues of macroeconomic adjustment public services. and private investment, financial policy and In the area of environment, topics under private investment, and private provision of study are: deforestation and desertification, public services. Other areas of concentration pesticide management, irrigation and salinity, will include: the pace and sequencing of pri- watershed rehabilitation, and protection of bio- vate-sector development in structural-adjust- diversity. An attempt is also being made to ment programs, issues of regulatory reforms undertake a comparative analysis of air pollu- and the promotion of competitive markets as tion. The groundwork for a policy and research substitutes for more directed economic inter- work program, covering both technical/scien- ventions, entrepreneurial development in tific and economic/behavioral issues has been least-developed countries, and privatization. prepared. Economic issues likely to receive On public-sector management, research is priority in research are the relationship be- aimed at finding ways to improve the efficiency tween environment and economic growth and of resources in public-services sectors and to poverty, the costs of economic degradation, reform the civil service, public employment and integration of environmental concerns in and pay, as well as municipal finances and adjustment lending. taxation. While these studies and themes form the On poverty-related issues, an increasing core of the Bank's research program in the number of studies are examining the social areas of special emphasis, there is much effects of adjustment. In particular, these stud- research in other areas, ranging from the inter- ies are looking for targeted policies that are national economic environment, financial in- both affordable and can mitigate the negative termediation, and public economies, to land- effects on the poor. Poverty reduction is also rights systems, education and vocational directly or indirectly addressed in other sector- training, energy use, and urban and transport specific research, notably research aimed at development. An emerging area of new re- raising agricultural productivity on a sustain- search concerns the implications of an uncer- able basis, facilitating structural change in ru- tain future for the analysis of risk and the ral economies, and designing effective pro- development of risk-management instruments. grams for the alleviation of rural poverty and Another important area of new research is food insecurity. Many poverty-related re- technology change and diffusion, and the rela- search issues cut across several departments' tionship between technology and human re- concerns (for example, user fees are relevant sources as it affects the development process. for health and education and also for water The Bank held the first of what is hoped to supply, electricity, and public transportation; be an annual series of conferences on develop- the effects on the poor of contractions in the ment economics at the end of April 1989 in formal market have implications for schooling Washington, D.C. The aim of the conferences and employment). Raising the welfare and liv- is to bring together Bank staff, development ing conditions of the poor is also the motiva- researchers, practitioners, and policy advisors tion for several studies under way or planned from around the world to focus on important on the effectiveness of family-planning and issues confronting development economics to- nutrition programs, the causes and conse- day. quences of morbidity, and the specific contri- The conferences are also intended to signal bution of women to household welfare and to to the academic and policy communities in the poverty reduction. Bank's member countries that the Bank is Women's economic productivity has willing to listen carefully to them in its attempt emerged as a key area for research. A recent to find innovative solutions to the conceptual review of evidence shows that improving wom- and practical problems that its staff and its en's economic opportunities can achieve gains member countries face in working on develop- not only for women but also for their families ment issues. About fifty outside researchers, and for national and regional economies. Fur- more than three dozen from developing coun- ther research will concentrate on the following: tries, attended the conference. Over 400 Bank 90 World Bank Policies and Operations staff from all the Bank complexes attended at Economic Development Institute some point during the two-day conference. Six major papers were discussed at the con- Fiscal year 1989 marked the final year of the ference. They dealt with the Uruguay Round of five-year plan prepared by the Economic De- multilateral trade negotiations, savings behav- velopment Institute (EDI) in 1984. A review of ior in developing countries, social-sector the experience over the five-year period points (mainly health and education) pricing policy, to satisfactory progress in fulfilling the plan's the role of institutions in development, the objectives: giving emphasis more to develop- policy implications of the new strategic trade ment-policy decisions than to individual in- theories, and agricultural supply response and vestments; concentrating more heavily on the public policy. The conference began with a institutionally weaker countries, especially in keynote address by Manmohan Singh, the sec- sub-Saharan Africa; and increasing support for retary-general of the Geneva-based South developing countries' own training institu- Commission, and ended with a roundtable dis- tions. cussion by development experts on the major Table 5-1 shows the changes in the number issues in development. and pattern of EDI teaching and institutional- The Bank is launching a visiting research assistance activities between fiscal 1984 (the fellow program to draw some of the best de- year before the plan was launched) and fiscal velopment research scholars worldwide into 1989. Apart from the expansion in the number the Bank's research activities. The program, of activities, especially in assistance to partner funded by the Research Committee through training institutions, there was a marked shift the research support budget, is managed in the in favor of policy-related training in the form of research administrator's office. The program senior policy seminars (three- to five-day has two objectives: first, to broaden and events for top-level government officials) and deepen the Bank's existing and future research of macroeconomic and sector-management base; and second, to enhance scholarly under- seminars (one- to four-week events for senior standing of the Bank's research activities, its officials in economic and sector ministries). operational and policy work, and the chal- There was also a shift in favor of training- lenges it faces. Visiting research fellows may of-trainers seminars. In contrast, there was a be based in one or more units in the Bank in sharp decline in the number of training events Washington, D.C. during their fellowship in project analysis and management, a field of term. training increasingly provided by other institu- The Bank disseminates its research results tions, some assisted by EDI. widely, within, as well as outside, the Bank. The table also compares, on an annual aver- University press books remain a major dissem- age basis, the programs planned and the actual ination avenue for the Bank's research ouput. outcome. In every category of activity, the The Bank's journals. The World Bank Eco- planned program was either met or exceeded. nomic Review and The World Bank Research A separate calculation shows that the plan Observer, as well as the widely circulated objective of concentrating more heavily on Finance and Development, published jointly sub-Saharan Africa and other institutionally by the Bank and the International Monetary weaker countries was also attained. The EDI Fund, spread the results of Bank research focused 30 percent of its training and assis- throughout the world, as does the quarterly tance activities on sub-Saharan Africa in fiscal newsletter, Research News. Free distribution 1984 compared with 44 percent in fiscal 1989. of journals in developing countries aims at The EDI's work program in fiscal 1989 was getting research results-and, in particular, strongly oriented towards structural-adjust- results of work funded by the Bank-to librar- ment policy and implementation issues at the ies, researchers, students, and policymakers macroeconomic and sectoral levels. with limited access to professional journals. At the macroeconomic level, particular at- This past year, PPR launched two new publi- tention was given to the persisting external- cations series aimed primarily at disseminating debt problem and on the social costs of adjust- results of its research to operations staff of the ment. Also, a pilot seminar to train trainers Bank. The PPR Working Paper Series dissem- from EDI's partner institutions throughout the inates the findings of work under way; one of world in the design and delivery of national its objectives is to get these findings published economic-management courses and seminars quickly, even if presentations are less than was held in Washington, D.C., in March 1989. fully polished. The PPR Policy and Research At the sectoral level, increased attention was Series highlights the findings and implications given to issues in the financial sector, health, of broad programs of research in a form that is natural-resource management, and public-ex- accessible and useful to operations staff. penditure planning. In recognition of the in- Economic Development Institute 91 Table 5-1. EDl Teaching and Inslitutional .%ssislance. Fiscal Nears 19841 and 1989: Annual Azerages. Fiscal Years 1985-89 I,..~~~~~~~~~~~~~~~~~ ,.i. IfU pl ,i,1 Senior plh'k It 1-" Exonomnm ;and e i,-,r ni.tri:eenri 1 - 3t 31 Pyoiien .nal .i and ni.ina rmenl .'I Is 7t Tr;,ining rA tr.ainer, I 1 2i1 Salhiordl 72 SI4 qh ,tillr,.,,d,l! d.1i, ,1. Pvdapopical 1 4 3A 44 'Rther' n :_ 4", ; Suho. jl I 3 .I TOi.I Sh 142 I n.a. tNoil.| ible .1 lndis lte, Ihu n11Mh,r of inl' uiUI% 1 Ic,IL oI.u . v.n< n n,,ot lm dn,i ,1 1r p,i rl,l , ,r, o-ek-pr,.:mirt pr.o id.I creased importance attached to financial- level. Community participation, project man- sector reforms as part of the adjustment agement, and sustainability were the foci of a process, EDI focused its work on financial- seminar held in Kuala Lumpur. Malaysia, in systems evaluation, innovative instruments in July 1988. Private and public officials from five foreign financing, and the prospects of capital- Asian countries gathered to assess the poten- market development in developing countries. tial contribution of community participation in These efforts yielded highly valuable written implementing and sustaining development materials for training purposes. as well as for projects, as well as to learn about the compar- wide public distribution. ative advantage provided by nongovernmental A number of training and institutional-devel- organizations (NGOs) in fostering community opment activities undertaken by EDI in fiscal participation. 1989 are worthy of note. As part of EDI's work program in China, a Decentralization of public-sector authority is two-phased case-development workshop was increasingly being accepted as an instrument held, in partnership with Tsinghua University for improving public-administration efficiency. (Beijing). In September 1988, a week was spent To explore the relevant issues and policy op- discussing and demonstrating the use of case tions surrounding decentralization, three train- materials of different types and providing train- ing events were organized. Two workshops on ing in their preparation and writing. Thereaf- strengthening local government in sub-Saharan ter, the participants returned to their institu- Africa were held near Bologna, Italy, in March tions to prepare their case studies on the 1989. The World Bank's Africa technical de- implementation of China's economic reform. partment, the Italian government, the Emilia In March 1989. a week was devoted to prac- Romagna region, and the Italo-Africano Insti- ticing the teaching of these cases; the practice tute collaborated in carrying out the work- was interspersed with lectures on case use and shops, which were attended by senior govern- development. The EDI expects to publish six- ment officials, mayors, and local-authority teen of the case studies in Chinese and about managers from Africa. The third event, a half that number in English. roundtable on decentralization policies and so- As part of its program emphasis on environ- cioeconomic development in sub-Saharan Af- mental issues, EDI organized seminars on so- rica, was held in Douala, Cameroon, in June cial forestry, land access, and water resources. 1989. The objective was to examine actual and At a senior policy seminar in Zimbabwe in potential contributions of decentralization pol- March 1989. senior foresters and NGO repre- icies to economic development. sentatives looked at ways to manage forest Closely related to questions of decentraliza- resources at the local level. At another senior tion is the role of the private sector at the local policy seminar in Bali in October 1988, held in 92 World Bank Policies and Operations collaboration with the Royal Tropical Institute on women in development were included in the of the Netherlands and the Centre on Integrated curricula of several courses, notably one on Rural Development for Asia and the Pacific, macroeconomic analysis for structural adjust- participants discussed several major issues, in- ment, held in Harare, Zimbabwe, in May 1989. cluding database surveys and management, The EDI is also managing a pilot project to land-tenure systems and their effect on rural strengthen the capacity of selected African poverty, and encouragement of land-use plan- institutions to train trainers and extension ning to avoid environmental degradation. agents, who, in turn, will help African women A third seminar, on water resources and establish and manage small-scale enterprises. water-quality management, was held in Am- An important vehicle for delivering EDI man, Jordan, for countries of the Middle East activities is the partnership it has established and Africa. Cosponsored by the World Health with many regional and national management- Organization (WHO), it addressed the environ- training institutions in developing countries. mental and health issues involved in the plan- The EDI cooperates regularly with forty-five ning and management of water resources. partners, of which twenty-eight are regional A major seminar on ecosystem management institutions or associations (the remainder are was held in Turrialba, Costa Rica, with the national). The EDI helps partner institutions Tropical Agricultural Research and Training with pedagogical assistance, including advice Center and with financial support from Japan. on the design and delivery of seminars; staff The seminar evaluated policies and practices development; training materials; advice on ef- related to the management and conservation of ficient management; enhancement of their con- natural resources consistent with long-term sulting capacity; and mobilization of external sustainable economic development. resources. Since health-sector financing has been rec- The EDI is also supporting the formation of ognized as an important bottleneck to improv- networks among management-training and re- ing health services, EDI expanded its activities search institutions to stimulate cooperative in this field in fiscal 1989 to reach both senior self-help in improving their programs. This policymakers and technical-level managers in entails such measures as exchanges of infor- all regions of the world. The following activi- mation and staff, collaboration to fill gaps in ties were undertaken: EDI, in collaboration training materials, joint discussion of manage- with the Pan American Health Organization, ment problems, and organization of common held a seminar on health financing in Barbados courses for faculty development of member for the Eastern Caribbean countries; provided institutes. In Latin America and francophone pedagogical assistance to an Eastern and West Africa, for example, multicountry net- Southern Africa Management Institute-spon- works have been established in the urban- sored seminar on health financing in February management field; the focus is on joint devel- 1989; cosponsored an Asian seminar on social opment, on a regional basis, of new curricula, security health insurance in Seoul with the related course materials, and the training-of- International Labour Organisation (ILO), trainers programs. WHO, and the Asian Development Bank; or- Fiscal 1989 saw important new develop- ganized a meeting on health financing with ments in a major institutional-strengthening senior officials from five Portuguese-speaking project in sub-Saharan Africa financed by the countries in Geneva during an annual World United Nations Development Programme Health Assembly; and sponsored a consulta- (UNDP), for which EDI, in collaboration with tion with senior African policymakers in June the ILO, is the executing agency. The project 1989 to review a draft World Bank health- involves direct assistance to sixteen manage- policy brief as it pertains to health financing in ment-training institutions, as well as three as- Africa. The EDI is also increasingly involved sociations. To assist in the coordination of in developing training in the related fields of activities and to extend the project's outreach population programs and the relationship be- to other institutions, two field offices have tween nutrition and health. In fiscal 1989, it been established-one in Douala, Cameroon cosponsored a population program with the (for the francophone countries), and the other United Nations Fund for Population Activities in Gaborone, Botswana (for the anglophone (UNFPA) in Zimbabwe for various anglophone community). countries. The project is now entering its full-imple- In line with the increased attention to mentation phase. A number of workshops and women in development in World Bank opera- seminars, focusing on the practical develop- tions, EDI intensified its efforts to include ment problems of the partner institutions and gender issues in its training programs and in associations (faculty and consultancy skills, the preparation of training materials. Modules marketing, and financial management), were Economic Development Institute 93 held during the year, and the main areas and In addition to its regular end-of-seminar eval- lines of interinstitutional collaboration under uations, EDI carried out a number of in-depth the project were agreed at a general meeting of studies in fiscal 1989. The effect of EDI training institute directors. Special efforts have been in Senegal and Tanzania was evaluated, and made to integrate gender issues into the pro- suggestions made for increasing the contribu- gram. The project has attracted collaboration tion to development of future EDI types of of other donors, including the Commonwealth training efforts. A survey conducted in five Secretariat and the Canadian International De- Asian countries reviewed the effectiveness of velopment Agency. "two-tier" seminars, in which one seminar for Another capacity-building program for sub- top-level public officials overlaps partially with Saharan Africa in which EDI is engaged in another on the same topic held for middle-level providing pedagogical assistance is the agricul- officials. The survey concluded that the ap- ture management training-in-Africa program. proach significantly improves in-country under- The program, cofinanced by the International standing and cooperation between ministries Fund for Agricultural Development and the and hierarchical levels. Finally, studies by par- African Development Bank and aimed at up- ticipant-observers at two training events in fis- grading project-management and implementa- cal 1989 provided valuable insights into the tion skills, focuses in its current phase on dynamics of training and ways to improve their twenty projects in six countries of sub-Saharan quality. Africa. External sources of support for EDI's pro- The World Bank graduate scholarship pro- grams in developing countries expanded fur- gram, financed by the government of Japan, is ther in fiscal 1989. While the UNDP continued providing financial assistance to seventy-eight to be the largest contributor to EDI's regular scholars (nineteen of whom are women) in the programs of seminars and institutional assis- 1988-89 academic year. Thirty-eight countries tance, the increase in total cofinancing came are represented, most of which are developing largely, as it has in the past few years, from member countries of the Bank. The scholars bilateral aid agencies, whose contributions are attending forty-four universities in Asia, now represent well over half the total external Australia, Europe, and North America. Thirty- resources mobilized by EDI. This increase was three scholars are pursuing master's level de- due, in part, to the full-year effect of arrange- grees, and forty-five are engaged in doctoral ments that had been negotiated or renewed in studies. For the 1989-90 academic year, 1,325 the previous year with Australia, Canada, Ja- applications were received, and forty-three pan, Italy, and Spain. Additional contributions scholarships for graduate study were awarded. from France, the Netherlands, Switzerland, For the 1989 cycle of McNamara fellow- the United Kingdom, and the United States ships, eleven outstanding scholars from seven also contributed significantly to the increase in member countries of the Bank were awarded cofinancing. Among multilateral organizations fellowships aggregating $330,000 in support of other than the UNDP, WHO and the United innovative research topics in development eco- Nations Commission on Human Settlements nomics. Most of the year's recipients, who (Habitat) remained EDI's most important col- come from both developed and developing laborators. The EDI continued throughout the countries, will conduct research on either tech- year to lay the groundwork for enlarging its nology transfer to developing countries or ex- cofinancing base, and discussions with inter- change-rate issues. More than 300 applications ested governments suggest that additional col- were received from scholars in seventy-one laborative arrangements, in one form or an- countries for the year's round of fellowships. other, are likely to be concluded in fiscal 1990. The McNamara fellowships will support the The EDI's collaboration with regional financial researchers' work for one year beginning institutions, such as the Asian Development July 1, 1989. Bank and the Inter-American Development A substantial volume of training materials Bank, was strengthened during fiscal 1989 and was published during the year. Fifty-seven is likely to widen in fiscal 1990. titles were added to the EDI catalog. Seven- In May 1989, the executive board of the teen are formal publications that appear in one World Bank approved the EDI strategic plan or another of the EDI series and are now for the five-year period, 1990-94. The main included in the list of World Bank publications. thrust of the plan, prepared with considerable Forty are informal publications, distributed in help from EDI's new advisory board, will response to requests. They include twenty- continue to be towards policy issues and the seven working papers and thirteen miscella- strengthening of local training capacity. The neous documents such as course notes, case intended expansion of EDI's work program is studies, and collected course papers. likely to entail increased reliance on cofinanc- 94 World Bank Policies and Operations ing. Based on the lessons of experience, a sion program provides technical and policy ad- number of refinements in program emphases vice to countries intending to reform their trade will be instituted: a sharper focus on selected regimes. The social dimension of adjustment priorities in each region and subject area; a program, presently being executed by the Bank slight shift from macroeconomic to sector-re- in collaboration with the UNDP, the African lated adjustment concerns; additional publica- Development Bank, and bilateral donors, helps tion and dissemination of training materials; a ensure that the human dimensions of economic- progressive move from ad hoc cofinancing of adjustment programs are systematically taken individual activities towards multiyear pro- into account in countries undergoing adjust- grams; more systematic and in-depth evaluation ment. The safe motherhood operational re- of EDI's activities; and the introduction of search program, created at the initiative of the annual activity reports to provide better feed- Bank and executed by the World Health Orga- back on the substance and lessons of EDI nization, provides grants for studies on how to activities for the rest of the Bank. deliver maternal health care with greater effi- ciency and on the effect of such health care on Interagency Cooperation the health and lives of women and their young The Bank and agencies of the United Na- children. The Bank and the United Nations tions continue to cooperate on a number of Children's Fund (UNICEF) are actively work- innovative global and interregional programs ing together through the interagency task force of special interest to developing countries. for child survival, established to promote initi- Significant among these ongoing programs are atives aimed at protecting the world's children. the Consultative Group on International Agri- Combined efforts with other agencies have re- cultural Research (CGIAR); the Energy Sector sulted in an expanded immunization program Management Assistance Program, implement- for children worldwide. It is expected that many ing priority energy investments and providing developing countries will reach full immuniza- related technical assistance; the Onchocercia- tion by the end of 1990. sis-riverblindness-Control Programme and The past year witnessed a resurgence of the Special Programme for Research and international concern and collaboration for Training in Tropical Diseases, which under- educational priorities. With a renewed focus take research into the development of better on basic education, Unesco, the UNDP, tools to control tropical diseases and provide UNICEF, and the Bank have agreed to spon- training and strengthening of institutions to sor a "world conference on education for all." increase research capability in tropical coun- The conference, to be held early in 1990, is tries; and the International Drinking Water intended to serve as a catalyst for securing Supply and Sanitation Decade, which identi- basic education for all by the year 2000. fies and implements sanitation-investment Nongovernmental Organizations. The Bank projects and seeks to increase substantially continues to accumulate considerable experi- safe drinking water and sanitation by 1990. ence in involving nongovernmental organiza- Other recent cooperative endeavors toward tions (NGOs) in Bank-assisted projects. Be- improving economic and social conditions in tween 1973 and 1988, NGOs were involved in developing countries, particularly in Africa, are some 200 projects supported by the Bank. Most noteworthy. The United Nations Development have been in Africa, and almost half in agricul- Programme (UNDP)/World Bank trade expan- ture and rural development (see Table 5-2). Table 5-2. Projects Inioling NGOs. by Sector and Region. Fiscal Years 197-88 Region Eu,,.Pe. Ljtin rotal KIddle E:Lq. %mc ri nulmhe .and N,.rth and ihe .1 c1-10i Mr..A. Afric, Carittcan prrieci P.-rcenilge Agriculitire 5 i h ( 45 EJhjiciaon ir rin 1 I J 2tl 1(1 Population he:dlth i1 2 1 2 lndusr2 enerce 4 Ut1 4 2)1 Ii 1nfr:ituciuru urb:iii developnient 6 2X 2 6 42 21 ReconirtntnC'n - _ = l _ Tot.al num,ber ot prolc,I- -1 11; 15 17'2 Pcrcent.lee 2 5 3 1t) Interagency Cooperation 95 Cooperation with NGOs continued to in- million to community-based development pro- crease in fiscal 1989. In his annual meetings jects designed and implemented by NGOs and speech to the board of governors of the Bank in their beneficiaries. September 1988, the president of the Bank In some countries, the Bank is working with encouraged Bank staff to "initiate a broadened government officials to help establish public dialogue with NGOs" and stated that he fully policies and institutions that are conducive to expected collaboration to "flourish." The effective NGO contribution to national devel- Bank is working with developing-country opment. The Bank's most recent economic member governments to expand, within the report on Nepal, for example, documented framework of their policies toward NGOs, the NGO contributions to development among involvement of NGOs in Bank-supported ac- low-income groups and suggested steps that tivities-especially in the early stages of proj- the government, official donors, and NGOs ect planning and design-as one way to might take to strengthen the NGO sector. The achieve greater effectiveness. Philippines Department of Health is using the Several reviews of Bank-assisted projects health-development project, approved in fiscal have confirmed the importance of beneficiary 1989 in the amount of $70.1 million, to learn organizations to the success and sustainability from and strengthen NGO community-health of many development activities. NGOs, such programs in the country. as local women's groups, independent cooper- The Bank has taken a number of steps to atives, and private voluntary organizations, foster increased NGO involvement in Bank- can often bring insights about the needs and supported activities, with the agreement of the perspectives of low-income people into the government and within the framework of the planning and implementation of official devel- relevant policies of the governments concerned. opment projects. NGOs are increasingly in- Resident missions are playing a lead role, since volved with government officials at the design they are well positioned to learn about NGOs stage of Bank-supported projects. For exam- that are active at the country level. Regional ple, in the second Upper Krishna irrigation staff have identified potential, subject to gov- project, approved during the past fiscal year, ernment agreement, for NGO involvement in MYRADA (an Indian NGO) assisted in plan- some 200 upcoming Bank-supported opera- ning resettlement of up to 12,000 affected fam- tions, and this list of projects is being distrib- ilies. In Madagascar, NGOs contributed to the uted to help NGOs involve themselves early in formulation of a national environmental action the project cycle. The Bank's Monthly Opera- plan and of the social action plan that IDA is tional Summary is also being sent to some 200 supporting through the economic management NGOs around the world to help them learn and social action project, approved in fiscal about projects of interest to them and signal 1989. potential social or environmental problems. NGOs can be cost-effective in the delivery An operational manual statement on collab- of social services. A mid term review of the oration with NGOs, issued in August 1988, Bolivia second emergency social fund project encourages staff to explore possibilities for found that the project has been remarkably operational collaboration, particularly with lo- effective, partly because many NGOs-in- cal NGOs, while bearing in mind the Bank's cluding religious organizations and community primary relationship with governments. The groups-have been involved. The Imo state Bank organized its first staff training course on health and population project in Nigeria, also NGO collaboration in March 1989. The Bank approved in fiscal 1989, builds on a strong has also established an NGO database to help tradition of community self-reliance; commu- staff learn about NGOs and to strengthen its nity health committees, made up of represen- institutional memory regarding NGOs. tatives of traditional groups, women's organi- NGOs in both developed and developing zations, schools, and local government countries contribute to the Bank's thinking on agencies, are responsible for developing and important development issues in various ways. implementing community health care and fam- Unofficial conferences and NGO events are ily-planning programs. Most Bank-supported increasingly prominent during the annual meet- population and health projects include a major ings of the Bank and the IMF, for example. The role for the local family-planning association or Bank-NGO Committee continues to provide a community-based health groups. formal forum and focal point for policy discus- The first freestanding NGO project financed sion between Bank staff and NGOs. Well over by the Bank-the grassroots-development ini- half of the twenty-six NGO members on the tiatives project in Togo-was approved in fis- committee are from developing countries. cal 1989. The government of Togo, supported Organisation for Economic Co-operation and by IDA, will provide grant financing of $3 Development (OECD). As the decade of the 96 World Bank Policies and Operations 1980s draws to an end, aid donors are assessing member countries. This has resulted in an the lessons of experience and are planning increasing emphasis on the need to strengthen strategies for the 1990s. In the Development collaboration between the Bank and the IMF. Assistance Committee (DAC) of the OECD, Over the past several years, many steps which is the primary policy-coordination fo- have been taken to strengthen collaboration rum for bilateral donors, aid in the 1990s was a -including the increased sharing of informa- key theme during the past year. tion, cross-attendance by staff at selected The OECD Development Center's twenty- meetings of the executive boards of the two fifth anniversary symposium provided an op- institutions, and temporary exchange of staff. portunity for the international community to Greater coordination in financial assistance deliberate on a sustainable development strat- has increasingly been achieved while continu- egy for the new decade in the face of continu- ing to avoid cross-conditionality. ing uncertainties in the world economy. The Given the central role of the Bank and the Bank's observer status in DAC and its continu- IMF in helping countries design and implement ing strong working relationship with the OECD adjustment programs, the two institutions rec- secretariat have enabled Bank staff to partici- ognize the need to work even more effectively pate in these and related debates on poverty together in areas of common concern and alleviation and equitable growth, the environ- complement one another using their compara- ment, health care, and private-sector develop- tive advantages. The central task for both ment. There have also been opportunities to institutions is to continue to move towards share experience with the broader aid commu- better and more effective understandings over nity on NGOs (especially those from develop- the whole range of policies required for each ing countries), women in development, techni- country, the mobilization of adequate financial cal assistance, and progress under the special support for economic-reform programs, and program of assistance for Africa. the monitoring of these programs in time, as A first DAC meeting using a regional ap- well as range. proach enabled bilateral and multilateral agen- Given the complexity of the problems faced cies active in South Asia to focus on problems by the developing member countries of the that countries in that area have in common. Bank and the IMF, the different perspectives of The Bank helped to develop the "principles of the two institutions, and the increased overlap- project appraisal," which represent the com- ping of their activities, it is not unusual that mitment of donors to harmonize their proce- differences of view may sometimes arise. How- dures in the interest of developing countries ever, the two institutions recognize that it is and to adhere to sound economic, financial, essential that the advice they offer be consis- technical, environmental, and social principles tent. The president of the Bank and the manag- in project lending. ing director of the IMF acted in concert during Participation in other OECD fora permits the the past year to strengthen collaboration, to Bank to bring its development perspective to more clearly define institutional responsibili- bear and to integrate industrial-country issues ties, to ensure that conflicts of views were into its own analytical and advisory work. resolved at an early stage, and that these neither Bank staff have recently participated in meet- surfaced in contacts with country authorities ings of bankers, debt analysts, forecasters, nor resulted in differing policy advice to mem- environmentalists, and trade specialists. Meet- ber countries. New guidelines were issued to ings of the Economic Policy Committee have the staffs of the two institutions reflecting these focused on agriculture, savings, and invest- basic positions. The guidelines, which were ment. The Bank attends the annual ministerial- discussed by the executive directors, are de- level meeting, which, during the past year, signed to ensure the closest possible collabora- concentrated on growth and global interdepen- tion and working relations between the two dence, including the Uruguay Round, the envi- institutions, while recognizing that each institu- ronment, and debt. Since October 1988, coop- tion must make its financial assistance available eration has been facilitated by on-line and to its members in accordance with the standards direct electronic communications between the laid down in their respective Articles of Agree- Bank and the OECD, making consultation and ment and the policies adopted by their respec- the exchange of data much more efficient. tive executive boards. Collaboration between the Bank and the In- The guidelines include, among others, the ternational Monetary Fund. During the following points: 1980s, the work of the Bank and the Interna- * The daily interactions and ad hoc contacts tional Monetary Fund (IMF) has increasingly involving management and staffs (as well as moved into areas of common concern in re- monthly and ad hoc meetings between the sponse to the evolving adjustment needs of president and the managing director) will be Interagency Cooperation 97 supplemented with regular meetings of the that funds research programs and related activ- senior staff of each institution. These meetings ities, including training, carried out by a net- will anticipate and thus reduce the differences work of thirteen international agricultural-re- of view between the two staffs. search centers. The Bank is a cosponsor of the * Whenever conditionality or advice to CGIAR, together with the Food and Agriculture countries on major issues is involved, agree- Organization of the UN (FAO) and the UNDP. ment will be sought early and promptly among CGIAR-funded programs cover most of the working-level staffs. Detailed procedures were world's major food crops, and include research put in place to resolve issues that are not on animal-production systems, as well as food resolved at the staff level. policy. One of the CGIAR centers encourages * In the low-income countries, discussions the collection and preservation of the germ- concerning policy framework papers will con- plasm of food crops. Another devotes itself to tinue to be handled jointly on the basis of supporting developing-country research sys- preagreed terms of reference and, whenever tems. possible, with a single mission chief at High-yielding cultivars of wheat and rice, an appropriate rank. When parallel missions based on research at CGIAR centers, are now are in the field, they will be expected to coop- grown on half of the wheat land in developing erate fully and meet jointly with country au- countries and on more than half of the rice thorities, following positions clearly agreed on land. Research into both commodities contin- in advance. ues, with the goal of producing new varieties * In order to better coordinate assistance to that increase yields without depleting natural debtor countries faced with the need to develop resources. Research on cassava, millet, sor- other innovative forms of financing, including ghum, and other food crops, as well as re- those aimed at debt reduction, a task force to search on farming systems and post-harvest promote cooperation, analysis, and the ex- technologies, also continue to have a broad change of information on the financing tech- impact. The need to apply dangerous pesti- niques of the two institutions was established. cides has been reduced as a result of integrated * In dealing with other institutions that have pest-management programs and biological- an interest in matters of debt and growth (the control programs devised by CGIAR centers. United Nations and the OECD and its DAC, for In calendar year 1988, contributions to the example), draft reports prepared by one of the centers totaled $212 million, up $10.4 million two institutions, to the maximum extent possi- from 1987. The Bank contributed $30 million. ble, will be sent to the other well in advance of The strength of the United States dollar re- the circulation date for review and comment so sulted in lower dollar revenues from donations as to provide an additional opportunity to iden- in nondollar currencies, but center programs tify and resolve possible problems. were generally unaffected because of the exist- * Finally, to better acquaint staff of one ence of a special "stabilization" fund that institution with the corporate culture and con- compensated for exchange-rate losses. The straints within which the other operates, an stabilization mechanism, established in 1984 exchange of staff will be initiated at the senior with Bank funds, buffers the budgets of the professional level. During a two-year or three- thirteen international agricultural-research year period of secondment, staff members will centers against short-term exchange-rate and be wholly integrated into the regular staff inflation-rate fluctuations. Exchange rates fa- of the institution to which they have been vorable to the system in previous years helped seconded. to create the reserves that were used in 1988. Taking note of the agreement between the Focus on sustainability. The development of heads of the two organizations, members of the sustainable agriculture was reemphasized as a Development Committee, meeting in Washing- major responsibility of the CGIAR when the ton, D.C., in April 1989, welcomed the efforts group held its mid term meeting in Berlin of the Bank and the IMF to develop further (West) in May 1988. A report from the group's their collaboration, while avoiding cross-con- Technical Advisory Committee (TAC), as well ditionality, and to make full use of their com- as Our Common Future, the report of the parative advantage in respect of the advice World Commission on Environment and De- they offer borrowing countries on the design, velopment, served as the basis for discussion financing, and monitoring of structural-adjust- among donors. Defining sustainability, the ment programs. TAC report said that "sustainable agriculture Cooperation on Agricultural Research. The should involve the successful management of Consultative Group on International Agricul- resources for agriculture to satisfy changing tural Research (CGIAR) is an informal associa- human needs, while maintaining or enhancing tion of forty public and private-sector donors the quality of the environment and enhancing 98 World Bank Policies and Operations natural resources." Several concerns emerged some instances, many national systems have from the discussion: for instance, how to de- reached high levels of competence. Con- velop technologies that encourage sustainable versely, however, many national systems are development; how best to evaluate the new inadequately supported, both domestically and technologies; and how to support national re- by the international donor community. Against search systems as they carry out new respon- this background, the CGIAR found it appropri- sibilities arising from an overall emphasis on ate to reexamine and, where necessary, reor- sustainable development. der its relations with national research sys- The CGIAR system has always been commit- tems. ted to the sustainability of agriculture, but the Direct links between international centers group saw that a renewed effort was required. and national systems underwent a qualitative In response to the views expressed, the chair- change, in some instances, with representa- man of the CGIAR, World Bank senior vice tives of national systems drawn into the re- president for policy, planning, and research, W. search process from the first stages of plan- David Hopper, appointed a technical group, ning. Scientists from international centers including the scientific leadership at the centers, continued to help strengthen national systems. to help determine what specific form that effort At the same time, the CGIAR began to exam- should take. In one of its first actions, the ine the issue of how specific responsibilities technical group designed a matrix by which the should be shared between international centers sustainability orientation of each of the thirteen and national systems. CGIAR centers' research programs could be Strengthening research in Africa. Many of defined and assessed as a prelude to detailed the programs that centers will initiate will be recommendations for future programs. supported by the infrastructure and systems Expansion of the system. A second major developed over the past several years. In Af- theme that occupied the group was the rela- rica, two new research facilities-both di- tionship of the CGIAR system to international rected at increasing food supplies and pro- agricultural-research centers not directly asso- tecting fragile African ecosystems-were ciated with the group at present. A substantial established in 1988. number of these "nonassociated centers" fo- In Niger, just outside the capital city of cus on resources such as soil, water, and Niamey, a 1,200-acre research center for the forests, whose future contribution to food and Sahelian zone was put into operation as a base agricultural production is central to sustain- for pearl millet, groundnuts, and dryland crop- ability. For this reason, among others, the ping-systems research. The center is part of group decided to embark on a review of the ten the International Crops Research Institute for nonassociated centers in order to decide the Semi-arid Tropics (ICRISAT), based in whether some or all of them should be brought Hyderabad, India. The Niamey center will into the CGIAR system. strengthen cooperative research between At the group's annual meeting, held in Oc- ICRISAT and national research systems seek- tober 1988 in Washington, D.C., the group ing to increase food production in areas of approved a proposal by the TAC chairman that scarce rainfall and poor soil fertility. It also called for the programs and management of the provides a base for several other international ten nonassociated centers to be reviewed in agencies doing agricultural research in the relation to CGIAR programs. The group also Sahel. agreed that such a review should consider the To the southwest, in Benin, work was com- possibilities of cutting back on lower-priority pleted in 1988 on the CGIAR's first facility activities currently financed by the CGIAR. devoted to biocontrol. The International Insti- Specific proposals will be formulated and de- tute of Tropical Agriculture's Biological Con- cided on at the completion of the reviews. In a trol Center in Cotonou was inaugurated in connected development, several donors, October. The center is an extension of a pro- which have been collaborating under the spon- gram that has reversed the spread of the cas- sorship of the Bank, the FAO, and the UNDP sava mealybug, an insect pest responsible for in looking at worldwide needs for forestry $5.5 billion in damages to Africa's cassava research, urged the CGIAR to consider adding crop. Recent studies indicate that the cost- forestry to its areas of concerns. benefit ratio of the mealybug-control program Support to national systems. Collaboration is well in excess of $100 for each dollar in- between international centers and national re- vested. Research at the Cotonou facility will search systems is a continuing process on also cover other pests, including large grain which the implementation of research de- borers-a recent invader from Latin America pends. Partly as a result of this association, -several other cereal borers, locusts and and also because of strong domestic support in grasshoppers, water hyacinth, which clogs in- Technical Assistance 99 Table 5-3. Aid Coordinalion Group SMeetings Held in Fiscal Year 1989 icr) n ,'n,ul i.,i; .Ind .1J er.Oir, I Ch,. v~,-rnlravL .in.fl CIl,i, 1U, I d/hit. 'rid BRank Julk f`-7. 19S H.'ii B .i onr.ult.we gioup P,r'-. Frjnc- JUNs H. 19&9!6 Taini.inia co,LmutJi%e czroup P-JII. F rI ric1e Septerrher 15. 19.ssitiadn confLuI[Alle gr(tLp P:1ri- France Seplefrnhei 19. 19:ss Nl(liaMh1+JL con,nijiltave L:i4)F P;.r, . Fr;.-nce October '4. 19SK ken%. CCnUlLd[,U,e ,'ro&jr PAr, Fra r e OCI%lt'Lr -'-. MS^ Llg.inda cowlluliamle group P.iril. Fr.,n,ne No%.eniber 3. 19S8 Nloz.nimbique conuul!.flil L:rup r.,IIP . l-r.nce No.remrber IS 19S Nepp.d :ud proIJp Pr.u,, r.tnKe Decemher 1'. 14SS Mauritninj con'ltlmil\c group Paris Fr:nce Fehru.,ry, N IN Gih.ln- on-uIltri%e gi.ur Pris. i r:.,icc April lS-1p 194S9 BanrldeNh :.lid group lPart,. France April 20. 19X9 P:aki iun conr.or-.un' Kjri,. F r.nec Ma% 25-26f. MY) P.pua Nc%% (Ouine.~ cunsuIdiivltl e croupr Tok%c Jp.mn June 19-2i'n 14844 Irndi. consolti,um Pa r i Fran.c Jujne 21-22. Vmcp Sri L.nkiid ad erour PRa,i France Cha Zirit t' m / iii N !t th r It in 11 J lune 11-14. 19b Inter-,ovein!icnni,d t ;|i,i|jp on ind,rne.ia 1rhe H.,cu.. Ne[herLnd1 land waterways, and a parasitic weed known among borrowers to undertake assistance on as 'striga," which is a major impediment to their own. Second, the share of adjustment increases in African maize production. operations in all regions has increased from 8.4 The past year also saw the relocation of the percent in calendar 1984 to 24.5 percent in West Africa Rice Development Association calendar 1988. This type of lending normally (WARDA) to C6te d'Ivoire. The move was requires a proportionately smaller amount of part of the revitalization of the once-ailing technical assistance than regular investment regional rice-research program. WARDA now operations; much of the technical assistance operates from temporary headquarters near that is associated with adjustment lending is Bouake and conducts research on land pro- provided through separate, freestanding tech- vided by the Ivorian national research pro- nical-assistance projects. Third, there is a re- gram. Planning for a permanent 3,200-acre luctance by countries to borrow for technical headquarters site in the Mbe valley is under assistance if prospects are favorable for secur- way. ing technical assistance on grant terms. Freestanding technical-assistance loans fi- Technical Assistance nance projects devoted entirely to technical The major source of technical assistance in assistance. Sixty-one freestanding technical- Bank lending comes from technical-assistance assistance projects were approved during the components in loans and credits. In calendar five-year period, calendar 1984-88, for an an- year 1988, technical-assistance components in- nual average amount of $129.3 million. In 1988, creased slightly in amount, from $1,022.3 mil- twelve projects were approved. Of these, ten lion in 1987 to $1,095.1 million. The major were in the Africa region; the other two were in change occurred in the Africa region, where the Latin America and the Caribbean region. technical-assistance components increased by Although small in size compared with other 50 percent in amount. In contrast, the shares in Bank operations, freestanding technical-assis- other regions declined. As a percentage of total tance loans and credits may target specific lending, the share of technical-assistance com- technical-assistance activities in support of ad- ponents in all regions fell from 6.5 percent in justment programs, both at the macro and the five-year period, 1984-88, to 5.7 percent in micro levels. At the macro level, support is 1988. commonly geared to strengthening governmen- The decrease in the weight of technical- tal capacity to formulate and/or implement assistance components is the result of at least economic policies and reform measures. At the three factors. First, there is a growing capacity micro level, assistance is largely focused on 100 World Bank Policies and Operations specific sectors and is aimed at improving OED staff. The cumulative total of Bank oper- efficiency and expanding output. ations subjected to ex-post evaluation reached In 1988, ninety-two project-preparation fa- 2,152 by the end of the fiscal year. cility (PPF) advances were approved, for a A Bankwide working group reviewed the total of $66.6 million. The use of the facility is preparation of project-completion reports. concentrated in the Africa region, averaging, This working group formulated a number of by value, 79.5 percent of all advances in the specific recommendations to help ensure the five-year period, 1984-88, followed by Latin timely production of PCRs, to improve the America and the Caribbean (10.4 percent), quality of the PCRs through increased empha- Europe, Middle East, and North Africa (7.3 sis on the analysis of main issues and lesson- percent), and Asia (2.8 percent). The use of the learning rather than description, to encourage facility has increased sharply since 1986. In substantive borrower participation in the prep- part, this can be attributed to the increase in aration of PCRs, and to make the whole PCR the number of IDA credits approved. By sec- process as cost-effective as possible. With this tor, the use of the facility is most heavily found in mind, it was agreed that PCR preparation in the agriculture sector (29 percent), followed should start during the last supervision mission by technical assistance and transportation (10 of each project. In addition, a new, three-part percent each). format of the PCR was designed: Parts I and Special project-preparation facility (SPPF) III, to be completed by the Bank, analyze the advances increased in 1988 compared with the project experience and include the relevant previous year, but approvals of $3.4 million data, while Part II, to be completed by the were below the $5 million peak set in 1986. borrower, presents the borrower's views on The Bank's portfolio of United Nations De- the project and the issues. velopment Programme projects under Bank Equally important are the recommendations execution consists of 154 projects in progress, of a task force that analyzed the dissemination for a total of $234.5 million. Disbursements on and utilization of OED findings in the context these projects have been increasing in recent of the reorganized Bank and made a number of years at an annual rate of 14 percent. suggestions designed to enhance the effective- ness of the process, including: that OED Operations Evaluation sharpen its message, that formal management Operations evaluation provides systematic responses to major OED studies be reinsti- and independent assessment of Bank opera- tuted, and that earlier evaluation findings be tions and activities. its principal objectives are cited more systematically in decision memo- to account to the Bank's shareholders for the randa and board documents. The recommen- outcome of Bank-supported projects and pro- dations of both the working group and the task grams and to feed back that experience into the force were endorsed by the Bank's manage- design and conduct of future operations. ment, the DGO, and the JAC, and are now The director-general, operations evaluation being incorporated into operational guidelines. (DGO), has overall responsibility for the eval- The Annual Review of Project Performance uation function. He reports directly to the Results, covering calendar year 1987, was is- executive board and is supported by the oper- sued in October 1988 and was subsequently ations evaluation department (OED). The Joint published. The review constitutes an important Audit Committee (JAC) of the board oversees mechanism for synthesizing the results of op- the work of the OED. As in the past, the erations evaluation, thus contributing to the committee's findings and recommendations cumulative assessment of the Bank's opera- were reviewed during the year by the full tional effectiveness. A new, more analytical board, as was the fiscal 1988 annual report of and thematic design was approved by the JAC the director-general and the department's An- for future Annual Reviews and will begin to be nual Review of Project Performance Results reflected in the next review, covering calendar for 1987. year 1988, which is currently being completed. Most OED evaluations fall into two catego- Of the 187 projects covered by the 1987 ries: audits of completed projects and pro- review, 72 percent were considered to have grams and special studies that address broader achieved satisfactory results. This compares development issues at the country and sectoral with 82 percent the year before. The signifi- level. During fiscal 1989, performance audits of cantly higher rating in the year before was the ninety-two operations were issued to the exec- result partly of that year's different sectoral utive board. In addition, project-completion and regional composition. The satisfactory rate reports (PRCs), prepared by operational staff was 70 percent two years ago. Satisfactory and covering 136 projects, were passed on to performance achievements in 1987 continued the executive directors without full audit by to be concentrated in the Asia (84 percent) and Internal Auditing 101 the Europe, Middle East, and North Africa (83 reorganized Bank. In this context, the OED is percent) regions. The percentage of satisfac- stepping up its interaction with other units tory outcomes for the Latin America and the Bankwide to ensure the continued relevance of Caribbean region was 68; for the Africa region, its products, to support their dissemination, it was 53. Among the sectors, the seven struc- and to report on their impact. tural-adjustment projects had the highest satis- factory assessment rating in 1987-86 percent. Internal Auditing Agricultural and rural-development projects The internal auditing department (IAD), had the lowest-61 percent. headed by an auditor-general (a newly formed OED's fiscal 1989 work program was dis- position within the reorganized Bank), reports cussed and agreed in April 1988. In addition to functionally to the president of the Bank and OED's activities related to PCRs and audits, administratively to the senior vice president, this program includes a broad array of studies. external affairs and administration. Studies are the most effective instrument avail- Internal auditing is an independent appraisal able to OED for documenting and distilling function within the Bank that reviews and recommendations-not only because they are evaluates Bank operations and activities as a topical but also because groups of operations service to the Bank. This appraisal function is offer considerably more scope for drawing accomplished through operational audits of the lessons than do single audits. A prime consid- financial and operating systems and proce- eration in identifying and selecting studies is dures used in the conduct and management of their relevance to current and prospective is- the Bank's operations. The overall objective of sues as identified by executive directors, mem- the IAD is to assist vice presidents, depart- ber countries, and Bank management and staff. ment directors, and other managers in the The study program covers studies in various effective discharge of their responsibilities by stages of progress. The topics range from providing them with periodic reports and ap- country studies, macroeconomic and policy praisals carried out on activities within their reviews (structural-adjustment loans and sec- respective areas of responsibility. tor-adjustment loans), and sectoral studies (im- IAD's examination and evaluation of the pact studies of irrigation and of agricultural adequacy and effectiveness of policies, sys- credit in different countries, a review of rural- tems, and internal controls used in the manage- roads maintenance, education-impact studies, ment and conduct of activities include, as a power-sector review, and a review of sustain- appropriate, an assessment of the reliability ability of development finance companies) to and integrity of financial and operating infor- operational issues, such as technical assistance mation. The department reviews systems al- in sub-Saharan Africa and procurement and ready established to ensure adherence to those construction modes in highway projects. These governing agreements, instruments, and re- examples of topics covered provide a flavor of lated decisions, as well as to regulations, poli- the diversity and complexity of OED's study cies. plans, and procedures that could have a program, as well as an indication of the future material effect on operations; it also reports focus of OED's dissemination activities. Eight and determines the extent of such compliance. studies were sent to the executive board during In addition, where appropriate, each audit in- the fiscal year, and another four were substan- cludes an evaluation of the means used to tially completed. safeguard the World Bank's assets from vari- Two other studies were published during the ous types of losses, an appraisal of the effi- year: a study on educational development in ciency and economy with which resources are Thailand and the role of Bank lending to that used, and the accomplishment of established sector and a review of agricultural-pricing pol- goals and objectives of specific programs or icies as conditionality in Bank lending. Two operations. further studies dealing with renewable- In order to achieve its objectives, the depart- resource management and agricultural market- ment prepares an annual work program, which ing are being prepared for publication in early is considered by the Joint Audit Committee of fiscal 1990. the executive board. This annual program is In his annual report to the executive direc- derived from a master work program, an overall tors, the director-general provided a detailed assessment of total audit coverage for which the account of all evaluation activities in the Bank, department is responsible. During fiscal 1989, a including those conducted by the IFC and the comprehensive review of this master work pro- Economic Development Institute. The direc- gram was initiated to ensure that it remain tor-general emphasized the need for a strong appropriate to the current Bank environment. evaluation function as a necessary complement In parallel with this review, a fundamental re- to the increased delegation of authority in the assessment of the methodology used within the 102 World Bank Policies and Operations department to assess the degree of risk associ- made the corporation a stronger institution, ated with specific parts of the Bank's operations able to offer its member countries a greater was undertaken. The result of this exercise variety of services. should be a methodology that enables the allo- Fiscal year 1989 was a record year in terms cation of scarce audit resources to be priori- of the volume of new projects and the IFC's tized. Within the annual work program, specific own financial performance. The IFC approved provision is made to allocate a proportion of investments of all types of $1,709 million for IAD resources to meet requests by operational ninety projects, with total costs of $9,694 mil- managers for ad hoc assignments. lion. Disbursements reached $870 million. The During the past year, a significant proportion IFC's net income increased for the third suc- of IAD resources was allocated to a special cessive year to a record $197 million. review, which had been requested by the sen- Fiscal 1989 marked a major milestone for the ior vice president, operations, of loan-pro- IFC, with the decision to apply for a rating for cessing arrangements. Other major assign- a public issue of the corporation's debt securi- ments undertaken during the year included a ties. The conferral of a AAA rating by Stan- special review of the reorganization budget, dard & Poor and a Aaa rating by Moody was procurement in investment lending, technical recognition of the IFC's superior financial sta- assistance, trust funds, security of informa- tus. Access to the top-rated public securities' tion-resource management, data sharing, and markets will help minimize the IFC's funding the project-preparation facility. costs, while broadening significantly its inves- A number of activities were initiated by the tor base-advantages that can also benefit the auditor-general to enhance the quality of the IFC's clients. Moreover, the ratings will help department's work. A strategic review, identi- the IFC's efforts to mobilize funds by confirm- fying the major issues facing the department ing to the commercial-banking community that into the mid 1990s, was completed. A compre- it successfully combines profitability with its hensive study of departmental standards, pol- broader developmental role. icies, and procedures was undertaken, new As part of a continuing effort to mobilize approaches to staff recruitment and training equity in its developing member countries, the were introduced, communications with client IFC established a new international securities departments were enhanced, and the possibil- group within its capital markets department. ity of arranging the interchange of staff with The group will be responsible for structuring other departments was also examined. securities transactions and executing sales of Finally, means by which members of the shares in enterprises in the IFC's developing senior management council can be kept aware member countries to dealers, brokers, and of significant findings arising from IAD work in investors. The IFC has already reached agree- their respective units and of the status of ments with the authorities in Japan and in the implementation of recommendations made in United Kingdom, permitting it to place securi- internal audit reports came into operation with ties in those financial markets. the introduction of formal meetings held by the The capital markets department continued to auditor-general at six-month intervals at which provide technical assistance to member gov- these matters are discussed. ernments in capital-markets development. Through the foreign investment advisory ser- International Finance Corporation vice (FIAS), ajoint service of the IFC and the The mandate of the International Finance Multilateral Investment Guarantee Agency, Corporation (IFC) is to promote private-sector the IFC also provided advice to governments development in its developing member coun- on mechanisms for encouraging foreign direct tries. It does this by financing private-sector investment. projects, mobilizing funds from other investors With the creation of a new corporate finance and lenders for projects, and providing techni- services group, the IFC has expanded its abil- cal assistance and advisory services to both ity to provide advisory services in two impor- governments and private enterprises. tant areas: corporate restructurings and priva- Fiscal year 1989 marked the ctose of the tization. IFC's five-year program. Despite difficult eco- In collaboration with five bilateral donor nomic conditions in the developing world, par- agencies from its developed member countries, ticularly during fiscal years 1985 and 1986, the IFC set up trust funds totaling $4 million to most of the program's objectives were finance technical-assistance projects. A new achieved, and some were surpassed. The technology service unit was established to help IFC's growth over the period, supported by companies identify and acquire appropriate the doubling of its authorized capital from $650 technologies, from developed, as well as from million to $1,300 million in December 1985, has other developing, countries. Multilateral Investment Guarantee Agency 103 Sub-Saharan Africa continued to be one of ing, agriculture and agribusiness, aquaculture, the corporation's priorities: the African man- manufacturing, services, energy, and forestry. agement services company (AMSCo) and the Guarantees are available for eligible invest- Africa enterprise fund (AEF) were both ments that had not been made or irrevocably launched during the year. The former will committed at the point of filing a preliminary address the need of African enterprises for application for guarantee. After submission of better management, while the latter will allow a preliminary application, the second step the corporation to increase its assistance to toward obtaining the guaranty is to complete a small and medium-sized African enterprises. more detailed, definitive application for guar- Moreover, in light of the success of the African antee. By the end of the fiscal year, fifteen project-development facility, which began op- definitive applications had been filed, covering erations in 1986, an extension of that service in investments in eleven countries. a second phase is now being considered. Policy and advisory services. The principal While the IFC's traditional investment activ- task of MIGA's policy and advisory services ities will continue to grow in the coming years, (PAS) is to help promote the flow of foreign the IFC plans to make special efforts to expand investments to and among developing coun- its advisory services and fund mobilization tries and to assist these countries in creating an activities. It will also devote more attention to attractive and hospitable investment climate. small and medium-sized enterprises, which are A major component of the PAS is the foreign often dynamic and innovative and make up a investment advisory services (FIAS). Estab- significant portion of the productive economy lished in 1986 in the International Finance in many developing countries. Corporation, it became, in late 1988, a joint Full details of the IFC's fiscal year can be venture between MIGA and the IFC. FIAS is found in its annual report, which is published charged with providing advice and technical separately. assistance to developing countries on their investment laws, policies, programs, and insti- Multilateral Investment Guarantee tutions. The advice and technical assistance Agency are designed to promote, regulate, and other- The Multilateral Investment Guarantee wise influence the amount and character of Agency (MIGA), the newest member of the foreign direct investment that member coun- "World Bank Group," has a specialized man- tries receive. date: to encourage equity investment and other In fiscal 1989, FIAS staff worked on four- direct investment flows to developing coun- teen advisory projects, four conferences, and tries through the mitigation of noncommercial four research projects. Of the advisory proj- investment barriers, especially political risk. ects, ten were completed, including five in To carry out this mandate, MIGA offers inves- MIGA member countries. These five projects tors guarantees against noncommercial risks; involved making recommendations on new ap- advises developing member governments on proaches to the problem of foreign-exchange the design and implementation of policies, pro- allocation to joint ventures in China; assistance grams, and procedures related to foreign in- in formulating a new foreign-investment code vestments; and sponsors a dialogue between in Togo; identifying policy impediments to the international business community and host foreign investment in the agricultural sector in governments on investment issues. Indonesia and Senegal; and a general diagnosis The guarantee program. Through media ex- of policy issues for foreign investment in Mad- posure, referrals by national investment credit agascar. insurers, direct mailings, participation in busi- In addition to the advisory functions that ness and trade fora, and seminars, MIGA's FIAS undertakes, PAS also provides consulta- guarantee program was successfully launched tive services to developing member countries in fiscal 1989. By June 30, 1989, MIGA had that include the design and organization of received sixty-nine preliminary applications investment promotion fora, specialized re- for guarantee, covering potential investments search and other related activities aimed at in twenty-four member countries. During enhancing the level of investments and pro- the year, twenty-one additional preliminary moting opportunities for joint ventures in de- applications were received for projects in fif- veloping countries. teen countries that have not yet become MIGA As of June 30, 1989, the convention establish- signatories. ing MIGA had been signed by fifteen category The variety of host countries in which the one (capital-exporting) countries and fifty- proposed investments are to be made is en- eight category two (capital-importing) coun- couraging. A diversity of sectors is also repre- tries, whose subscriptions totaled 74.43 per- sented in these applications and includes min- cent of the agency's authorized capital. Fifty- 104 World Bank Policies and Operations two signatory states had also ratified the con- As of June 30, 1989, ICSID membership com- vention; their subscriptions totaled 65.21 prised ninety-one member countries of the percent of the capital. Membership in MIGA is World Bank, plus Switzerland. In addition, open to all members of the Bank and to Swit- seven countries have signed but not yet ratified zerland. the Convention. Details of MIGA's activities in fiscal year There are currently nine disputes pending 1989 appear in its annual report, which is before the centre. These include two proceed- published separately. ings for the annulment of an award and seven arbitration cases. During the fiscal year, the International Centre for Settlement of disputes in two other cases submitted to the Investment Disputes centre were amicably settled. This brought to The International Centre for Settlement of eleven the number of ICSID cases that have Investment Disputes (ICSID) is a separate been settled or discontinued, as compared with international organization established under nine that have given rise to binding awards. the Convention on the Settlement of Invest- The high proportion of settlements is encour- ment Disputes between States and Nationals of aging evidence of ICSID's ability to facilitate Other States (the Convention), which was the resolution of disputes on terms agreed by opened for signature in 1965 and entered into the parties. force on October 14, 1966. Pursuant to the In addition to administering conciliation and provisions of the Convention, ICSID provides arbitration cases, ICSID carries out a variety facilities for the conciliation and arbitration of of promotional and publications activities. The investment disputes between an ICSID mem- centre's publications include a semiannual law ber state and a national or nationals of other journal, ICSID Review-Foreign Investment member states. The World Bank sponsored the Law Journal, and multivolume collections of Convention in the belief that the availability of Investment Laws of the World and of Invest- such facilities could contribute to creating an ment Treaties. Two issues of the law journal atmosphere of mutual confidence conducive to and four releases of the investment laws and increasing the flow of private foreign invest- treaties collections were published in fiscal ment into countries seeking it. 1989. Membership in ICSID continued to grow Details of ICSID's activities in fiscal year with the ratification of the Convention by 1989 appear in the annual report of the centre, Honduras and Turkey during the fiscal year. which is published separately. 105 Section Six 1989 Regional Perspectives Africa Reflecting normal weather conditions, a GDP has grown at 2.6 percent a year during terms-of-trade improvement (except for the 1985-88, counteracting the general perception petroleum exporters), and continued structural that Africa is a continent still in unrelenting adjustment, sub-Saharan Africa's gross do- decline. On average, oil exporters, which ac- mestic product (GDP) is estimated to have count for a quarter of the region's population, grown modestly in 1988, reversing the decline grew at a lower rate (2.3 percent a year) and in the previous year. The recovery was shared experienced larger fluctuations in GDP. In by most countries in the region. contrast, the low-income countries in the re- Although the varied performance of African gion have had more steady growth, averaging countries makes it hard to isolate general 2.6 percent annually. Growth, however, has trends, in aggregate, sub-Saharan Africa's been inadequate to permit increases in per Table 6-1. Africa: 1987 Population and Per Capila GNP of Country Borrowers. Fiscal 1'ears 1987-89 Co-In.z ntr;Per :,iPIT, CounLrr 1Kr ciCp!ta horrttvr, P IUpulJioT C 1JNP IS- t,r.. c i Ppul.'io'rl 6N P I4-' fi 4' 1'.0 2.S78.1 Net Lr3n,er I 34.9i 35' 11 ;4 4 '11.3 Is t 339 Q b'tn' 4.455.6 \ *-TF LDis-ur,.,rm-ni' lr,. n he ID) A SpoalI Fund rc ininided The counine, ,hoi n in ihe tnhle ,re ihoe ith ihc Ijreef i r.p!ijiirn T he tecion.,I 1.iA- . .n ,ude urnerl bO,-iO - erl rll; . Dk'..II. n- A,dd 1... N.'TAI hC.'C.,u,e .1 rodrnding focus on issues of long-term development. In late the consensus into effective action pro- addition to strengthening its investment- grams. As part of this effort, the Bank and lending program, the Bank is giving special other multilateral donors (the United Nations emphasis to several areas that need urgent Fund for Population Activities, the Interna- attention: population, environment, agricul- tional Planned Parenthood Federation, and the tural research and extension, food security. World Health Organization) have launched an education, and institution building. initiative to support African institutions to de- A task force was set up in fiscal 1988 to velop an agenda for action for the 1990s. For examine ways to deal directly with malnutri- this purpose, an African Population Advisory tion, both chronic and transitory, in the coun- Committee has been formed. In addition, to tries of Africa. Its report, completed in fiscal enhance the internal capacity of the Bank, a 1989 and discussed with concerned donors, has task force has been constituted to recommend resulted in considerable staff resources being actions to expand population activities, includ- devoted to the development of action programs ing analytical work and lending to the sector. A in eight priority countries (Benin, Burkina second regional conference on "safe mother- Faso, Kenya, Madagascar, Malawi, Mozam- hood" (the first was held in Nairobi in 1987) bique, Nigeria, and Sudan). Although the com- was sponsored by the Bank in Niger early in position of these action plans is likely to vary 1989, and the participants, who included polit- depending on country needs, a number of ical leaders, nongovernmental organizations, areas, such as marketing and storage, income and donors, reiterated the urgent need for generation for the poor, nutritional education, accelerated action in the related areas of reduc- early-warning facilities, pricing and planning of tion in maternal mortality and morbidity. food aid, and pilot interventions to reach the Many African countries are experiencing an poor, would be covered. In addition, a study of alarming rate of desertification. deforestation, food aid is being made, jointly with the World groundwater loss, and air and water pollution. Food Programme, to find ways of improving The Bank is trying to build a multisectoral the effectiveness of food aid. environmental focus in its operational work. Africa's population is growing at more than 3 One aim is to obtain accurate data on the percent a year, and unless fertility rates are changing status of natural resources; a second brought down, many countries will approach a is to understand better the behavioral and rate of 4 percent a year. While the difficulty of technical factors that influence the use of nat- accommodating rapid population growth is ob- ural resources; and a third is to develop and vious at the national level, households often promote more efficient technologies for such perceive large families to be economically ben- use. Seven country environmental action plans eficial. A major objective of the Bank's efforts (EAPs) were launched in fiscal 1988 and 1989 in the area of family planning is to generate a (Burkina Faso, Ghana, Guinea, Lesotho, Mad- consensus among opinion leaders, the public, agascar, Mauritius, and Rwanda), of which and in governments on the need for a vigorous three (Lesotho, Madagascar, and Mauritius) family-planning program that includes de- were completed during the past year. The EAP mand-generation activities and to help trans- in Madagascar has paved the way for a major Africa 113 investment-the Environment I project.4 Sim- and examination systems. Parallel to this effort, ilarly, in Mauritius, the EAP has generated the World Bank is in the early stages of launch- strong donor support. In addition, several re- ing an initiative to strengthen African capacity gional studies have also been started in areas for economic policy analysis and management. such as remote sensing, management and mon- It cohosted, with the Rockefeller Foundation. a itoring of changes in environmental resources, meeting of African leaders and donors to dis- agroforestry, and other related areas. cuss the best approach, and is participating in In the area of education, over a dozen coun- consortia that provide support to Africans un- tries are either implementing education-sector dertaking research on economic issues. An- programs or are planning for programs in the other important effort involves strengthening near future. Following up on the publication of local consulting capacity in Africa. With sup- the Bank's education policy paper in 1988,5 port from other UN agencies and the Nether- twenty-five donors to African education have lands, the Bank is assisting in the preparation of agreed to improve coordination of their finan- action plans for C6te d'Ivoire, the People's cial assistance to educational programs. In ad- Republic of the Congo, Ghana, Madagascar, dition to establishing an information system on Mauritius, Senegal, and Tanzania. donor assistance, working groups have been formed to assist governments to develop na- tional education strategies, improve educational 4 For details, see page 51. statistics, increase the quality and availability of 5World Bank, Edutcation in Sub-Saharan Africa (Washing- textbooks, and upgrade the quality of teaching ton, D.C.. 1988). 114 1989 Regional Perspectives Asia The economic expansion that marked the central role, with export volume expanding by performance of many Asian countries in both over 9 percent in 1988. High rates of investment 1987 and 1988 continued into 1989. Growth in have also contributed to vigorous growth, espe- gross domestic product (GDP) for Asian devel- cially in East Asia, where fixed investment oping countries was 9.3 percent in 1988 and is grew by over 12 percent in 1988. projected at 7.6 percent for 1989. Many coun- The dynamism of these Asian economies tries, propelled by a consistent record of mac- co-exists with severe economic, social, and roeconomic stability and an enduring commit- environmental problems, which deserve, and ment to undertake structural economic reforms, are receiving, more concerted attention from have shared in this growth. Trade has played a governments. In what might be termed a "second Asia," over half of the developing world's poor, some 500 million people, strug- gle to survive on incomes below the poverty Table 6-5. Asia: 1987 Population and line. Although economic growth has been the Per Capita GNP or Counlry Borrowers. primary factor in the reduced incidence of Fiscal t'ears 1987-89 poverty in Asian countries, the continuing high rates of population increase have applied re- borroir ~ P'1rlition G 1apr1'7' lentless pressure on natural resources and have flcai A lioun,und;li iL'SSi helped block any significant reduction in the Bangladesh Iuh.)% I numbers of the poor. Bhuitan 1.343 1511 China I 68.543 U29n1 Structural Reform and Economic Growth Fiji 71' 1.5 70 In many countries of Asia, economic man- India '97 5'6 31)t agement is distinguished by two important Indonesiu 171.443 450 characteristics: prudent macroeconomic man- Korea. RepuLblic ol 42.0182 2.69(1 agement and an ongoing process of structural Lao People ; Democr.ltic reform. The former can be seen in the success- Republic x.78 I ful avoidance of macroeconomic imbalances in Nfala% ii I6.52i^ 1.81(1 most Asian countries, where low rates of infla- INIaldi% es 19'i 3O0) tion, modest fiscal deficits, and manageable W,.anrnar- 9.27' n.a.: levels of external debt generally apply. Under- Nepal 17.i91 1609 lying and complementing this macro stability Paptia Ne%% Guinea 1.7%14 701J of Asian countries is the attention paid by Philippine,, 'p1.419 590 many governments to emerging structural Sn Lanka 16.3h61 40' problems in their economies and the continu- Thailand 53.F.l S5IJ ing efforts to correct them through economic 1 ongf I(910 i20 policy reform. In other countries that are con- s inuaiu 1511 nflj.d tending with financial crisis and severe macro We,tern Samoa 1A6 55o imbalances, these structural changes are nec- Noii, The 14\7 e,limalev oi GNP per capaa r.rc5entei essarily compressed into shorter time frames abo%e :ire from ihe World Detelopmeni Indicaiors in and supported by programs of structural ad- the Ll',DJ P.o , pm.wfll Rtpe.,i /'.Y4 justment. Over the past year, the reform pro- na Nm dtailhic cess and expanding international and regional a, E I.r frofr mid 114:' trade have helped a number of Asian countries b It,Sr/ Bir .J1 -I.. mr[.thodokql I'5i47 hje period. either to meet or exceed expectations in terms v F.rnierI BTjrm. of their growth performance. J. t.NF' pet cxPiia -imdietd to o.e in the lo.-,ncoine Since 1986, the economies of both Thailand rans-e. and the Republic of Korea have experienced Asia 115 boom conditions due, in large part, to their currency fluctuations and the composition of timely adjustments to external conditions over the external debt). In response, the govern- a substantial period of time. For Thailand, the ment has taken decisive actions to restrain initial stimulus came from surging exports of domestic demand. mobilize additional re- manufactures (34 percent growth in 1987), sources, and set in train the structural changes which has since led to a major increase in needed to develop the nonoil economy. investment. Private fixed investment rose 23 The economy has responded strongly to percent in 1988, and GDP growth accelerated these reforms. Gross domestic product in- by a record 11 percent. In Korea, GDP growth creased by 4.7 percent in 1988, with the nonoil for 1988 was at 11.3 percent, with exports economy increasing by 5.6 percent. Nonoil expanding at a 13.1 percent rate. Both coun- exports have underpinned the economy's tries are encountering some constraints to fur- growth performance, totaling around $12.1 bil- ther double-digit growth, such as transporta- lion in Indonesia's 1989 fiscal year (ending tion and other infrastructural bottlenecks in March 31, 1989), compared with $6.7 billion in Thailand, and growing labor problems, trade fiscal 1987-a real growth rate of 20 percent difficulties, and some inflationary pressures in annually over the past two years. While com- Korea. modity exports, such as palm oil and shrimp, In Malaysia, growth has also been strong. have performed strongly, two thirds of the Real GDP growth was close to 9 percent in increase was due to manufactured exports, 1988, and only a slight moderation of this rate reflecting substantial gains across a broad is expected in 1989. Growth in manufacturing range of manufactured goods. Because of this has been particularly robust (18 percent growth strong nonoil export performance, the govern- in 1988, 14 percent forecast for 1989). Evi- ment succeeded in further reducing the cur- dence of the important structural changes that rent-account deficit from about 5.9 percent of have been taking place in the economy is gross national product (GNP) in fiscal 1987 to provided by the fact that manufactures now 2.5 percent in fiscal 1989. represent over 50 percent of Malaysia's export The government also undertook measures to trade. Recent growth has also become more deregulate further the economy in three key broad-based, with domestic demand becoming areas. Two major packages of reforms in the significant. As in previous decades, the impor- financial sector were announced at the end of tant challenge for Malaysia is to sustain re- 1988 that provide for greater competition in the spectable rates of economic growth that also banking system and promote the development takes into account the need for equitable dis- of capital markets. Another major set of re- tribution. forms was announced in trade policy and in- The Philippines, which has begun implemen- cluded the removal of import-licensing restric- tation of a serious program of structural re- tions in areas such as plastics, fertilizers, and form, has staged a remarkable and unexpect- agricultural products. Regulatory impediments edly vigorous economic recovery. Following have been reduced, thus easing the bias against the severe recession of 1983-85, GDP regis- foreign investment and making the local-con- tered a positive growth of 4.7 percent in 1987 tent programs more flexible. In May 1989, the and further accelerated in 1988 to almost 7 government converted the "investment prior- percent despite poor performance in agricul- ity list" to a short negative list, thereby in- ture and a large external debt burden of about creasing the transparency of the system and $29 billion. Public-sector deficits were held to opening up new sectors to domestic and for- 3.4 percent of GDP in 1988, and inflation is eign investment. Finally, wide-ranging reforms running below 9 percent a year. Despite this in the maritime sector removed virtually all recent macroeconomic progress, the Philip- restrictions on entry by domestic and foreign pines continues to face structural difficulties in shipping lines. These reforms result from the such areas as the low level of savings and tax government's conscious strategy to expand the collection, a rapidly growing population, and role of the private sector and remove con- severe problems of poverty and unemploy- straints on private-sector development. ment. The government is well aware of these Although still a very poor country and the issues and their potential effect on the sustain- victim of a major earthquake in August 1988, ability of the recovery. Nepal's economic performance has improved, Since the early 1980s, the Indonesian econ- and the country's structural-adjustment and omy has been buffeted by a severe deteriora- development programs have remained on tion in the external terms of trade (primarily track. Led by a strong recovery in agriculture, caused by the collapse of oil prices) and a GDP grew by 7 percent during Nepal's 1988 rising debt-service burden (resulting in large fiscal year, and exports rose by more than 20 part from the adverse effects of international percent in volume terms. Public-revenue re- 116 1989 Regional Perspectives forms and increased aid disbursements in sup- sectoral and macroeconomic issues. In the port of the country's adjustment program re- Philippines, the Bank financed a financial- sulted in a much stronger fiscal position and sector adjustment program with a loan of $300 contributed to a continued build-up of re- million and completed important studies in serves. However, with the expiration of the education, energy, and municipal management bilateral trade and transit treaties with India in and finance. Similarly, in Indonesia, a private- March 1989, Nepal's external trade was se- sector development loan was designed to sup- verely constrained, posing potential problems port key structural reforms, and operations in for economic growth and the pace of reform. industry, energy, agriculture, and health will In another poor Himalayan country, Bhutan, finance improvements in efficiency and needed the economy continued to grow rapidly during expansion in infrastructure. In Nepal, IDA ap- 1988 following completion of a large hy- proved a second structural-adjustment credit dropower plant. Gross domestic product is last year to support continuing improvements in estimated to have increased by 25 percent over macroeconomic management. the past two years. The government recently published its sixth five-year plan, which re- Reform Challenges in India and China ceived strong support from donors. The two largest economies in Asia, China The World Bank's lending and analytical and India, are undertaking distinctive pro- work has contributed significantly to structural grams of structural reform, and both have reform programs in Asia, while also addressing enjoyed positive growth outcomes. But over investment needs. In Thailand, for example, the past year, these two countries have also the Bank last year supported operations in the experienced significant macroeconomic imbal- highway sector and in power-system develop- ances. ment. Malaysia and Korea also received Bank The impact of the almost total failure of the support for investments in key sectors such as 1987 monsoon on India's economy has turned agriculture, transportation, industry, and edu- out to have been much less severe than had cation. For countries following more concen- been feared. Overall GDP growth in India's trated programs of reform under difficult exter- 1988 fiscal year (ending March 31, 1988) is now nal conditions, the Bank directed support to estimated to have been about 3.6 percent, Table 6-6. Lending to Borrowers in Asia, by Seclor, Fiscal Y'ears 198089 , milliorn *.- Lf US dolix M xnnual .1' er:.ye Seitur 19YtSb4 lSb's 19Sh~~~~~~~~~~~~~C4gf 19>, Nv 1'lb 'IW. Apriculture and Rurdl Developmen. 1.4I5.4 1.943 0 1,h621.5 81-.' 1.4%6.3 1.162 0 De%elopment Finance Companies 312 2 '24.U 376h 3o12.0 - 1102.8 Education 299.2 45h 4 491.4 - 35i.7 484 5 Energp Oil. pa!. and coal 504.4 S94 0 9' 0 52(.Il iIi 340.0 Ptw er 1.10,.1 89.93.0 1.155.5 1,92b.8 1019S.9 1,993.5 lndustr, 214.b 456.0) 502.2 19.4 h32 I n5h 56 Noinpro,iect 378.2 3(1.0 200.0 8W. 500 iJ 452.5 Populanton. HealLh. and NuLrition bi.(1. A5.0 242.4 - 74 5 9(0.2 Small-scale Enterprie 12 8 I 7(1.r 74.5 166.5 ISi 0 16U.0 Technical Akiidnce 1 2.6 - '(1.11 J(I.7 - - TelecommnLniwdtion, I12.9 h6.0 3.9 359.5 - 12.' Iransporiation 644.5 7.I9.9 97i.' 44U'.1 1.486 3 1.1 3h.8 Lirman De'.elopmenL I(3.6 218.5 SiJly. 317 (1 1.1i5 8 41 5 Water Supplk and Seuerage 132.4 17..0 29U.3 N.ti4. iwi 5.5.s9.2 5.981 1 J 6.i46.u 6.7'3-' .669 h '. 32.5 C1 xhl,-h 1BRD i,627 1 4,39u.3 4.845.0 4,29'J.4 j.7 1 . 5i.57.1 ID\ 1.9h2 1 1,591.1 1,'(11 1.4-.3 1.918.) 2.175.4 Number of Operation ~ 7If 68 69 57 65 62 Nr.rE Der.k m-. noi .ldd to iial, br.:ute of roand;ng Asia 117 - S| __ g _ |hP I.~~~~~~~~~~~~~~~~~~M At a rubber-processing laboratory in Thailand, where GDP growth in 1988 registered a robust 11 percent. highlighting the resilience of the economy, and low-growth syndrome that had characterized of the agricultural sector in particular, and the much of its post-independence period. success of government programs to protect The major challenges to economic manage- incomes and cushion the effects of drought. ment come from a difficult balance-of-pay- In India's 1989 fiscal year, an excellent mon- ments situation and continuing strain on public soon led to an extremely strong economic finances. On the fiscal side, the government recovery. Agricultural production is expected recognizes that the current level of the deficit is to have grown by between 17 percent and 20 unsustainably large and that progress must be percent and industrial production by about 9 achieved in arresting the trend toward rising percent. As a result, GDP is likely to rise by budget deficits, which have climbed from an about 9 percent. The upsurge in economic average of 6.1 percent of GDP in the early 1980s activity means that India, in all probability, to nearly 9 percent in the first three years of the will surpass the 5 percent growth target of the seventh-plan period. In this respect, the fiscal seventh plan (1986-90), thus confirming that 1990 budget, which programs a substantial re- the country has indeed broken free of the duction in the deficit, is particularly welcome. 118 1989 Regional Perspectives As to the balance of payments, India's fiscal served to keep alive grassroots support for 1989 import needs, fueled by the drought and China's reform program, such high rates of surging industrial growth, have resulted in a growth have clearly pushed the economy to the rise in the current-account deficit from about limits of its productive capacity. With invest- $4.7 billion (2 percent of GDP) to $5.6 billion ment as a percentage of GDP approaching 40 (2.2 percent of GDP). This rise was a major percent in 1988 and consumption demand ris- factor behind increased recourse to noncon- ing by over 10 percent in real terms, shortages cessional sources of finance in fiscal 1988, a of energy, building materials, basic metals, and shift accentuated by the severe constraints in certain foodstuffs have become steadily more the availability of concessional aid during the acute and resulted in spiraling prices. The 1980s. India's nonconcessional external debt annual increase in the retail price index tripled outstanding increased from about 19 percent of between 1986 and 1988, from 6.0 percent to total medium- and long-term debt in 1985-86 to 18.5 percent. about 23 percent in 1987-88. Although the economy departed substan- While India's macroeconomic balances tially from the more stable price regime of show some signs of strain, the situation is not earlier years, those macroeconomic imbal- unmanageable. Inflation remains in the single- ances that had become very marked in 1985 digit range, foreign-exchange reserves are were rectified. A balance-of-payments deficit equivalent to 2.6 months of imports, and the on current account, equivalent to 4.6 percent debt-service ratio, at 25 percent, is not high by of GDP, had been completely erased by 1987 international standards. Interest payments are through an increase in domestic savings. Rap- equivalent to only 0.5 percent of GDP. idly growing exports of textiles, machinery, Given the acceleration of economic growth, foodstuffs, and metal products, together with it will be possible for the government to aim at curbs on imports, were instrumental in narrow- a 6 percent growth target for the eighth-plan ing the trade deficit to $3.8 billion from nearly period (1991-95). However, tighter control of $15 billion in 1985. Net medium- and long-term domestic demand, especially more stringent external borrowing, which climbed to $4 billion fiscal management, will be necessary to avert in 1985, also slowed, to $2.77 billion in 1987, inflationary pressures that can jeopardize thus stabilizing the debt-service ratio at 10.4 achievement of growth targets. Also crucial percent. The estimated current-account deficit will be the continuation of the steady progress for 1988 was a modest 0.4 percent of GDP, in industrial and trade reforms. The govern- despite sharply rising demand for imports. ment, for example, has streamlined procedures While robust economic performance is a for approving industrial investments, eased source of satisfaction for Chinese policymak- licensing and entry requirements for large ers, widespread public concern over inflation firms, and reduced the number of products has induced the government to launch a stabi- reserved for manufacture by small firms. Of lization drive and to moderate certain aspects particular importance for the future will be a of the reform program. To regain price stability more concerted assault on protectionist barri- over the medium term, a series of administra- ers in the trade regime. tive, monetary, and fiscal measures has been In China, structural reforms have accom- introduced. Administrative reduction of in- plished a great deal in moving the economy vestment spending by state entities attempts to towards market responsiveness, but the most reach the root of the demand pressures. Con- difficult part of the reform process lies ahead. trol over monetary expansion and higher inter- The stunning economic results of promoting est rates reinforce the curbs on spending private enterprise in agriculture and decentral- throughout the economy. Finally, efforts are izing decisionmaking to urban enterprises have being made to augment tax revenues and com- brought with them more fundamental problems press the budget deficit, which, at about 2 relating to the management of investment in an percent of GDP in 1988, also fuels demand in economy based on public ownership of capital. the economy. Nonetheless, China's economy has advanced These actions should push growth closer to with remarkable speed in recent years. sustainable levels and gradually moderate in- China's GDP growth rates have accelerated flationary pressures. By deferring certain from 7.9 percent in 1986 to 11.2 percent in planned price reforms, the government expects 1988. Industry, which expanded by 18 percent to reinforce its macroeconomic policies and in 1988, has provided much of the impetus. dampen expectations regarding future price Agricultural output, by comparison, grew only trends. A continuation of enterprise and finan- by 3.5 percent. While the rising tempo of cial reforms should also improve the efficiency economic activity has raised the living stan- and the prospects of rapid growth with price dards of the broad mass of the population and stability. Asia 119 The Bank's operational activity in China and stabilize food prices, increase the fall and winter India continued to be substantial in fiscal 1989: crop production, and repair and rehabilitate India received IBRD and IDA support for infrastructure. The government's agricultural- eleven projects, with an emphasis on hydro- rehabilitation program helped the exceptionally power, agriculture, and transport. The Nathpa resilient Bangladeshi people produce a good Jhakri hydroelectric project merits special at- winter rice crop-overall, foodgrain production tention as a high-return, environmentally will not be far short of normal levels. However, sound power project with an innovative ap- if following last year's unprecedented flood the proach to utility pricing. An export-develop- country had not suffered from, successively, a ment credit is addressing outstanding policy cyclone, drought, and tornados, foodgrain pro- issues, while operations in health and family duction would have been much higher. Other planning and education are aimed at social crops also suffered setbacks due to natural problems. calamities. For China during the past year, the Bank While foodgrain production held up remark- completed work on two major economic re- ably well, there were disruptions to production ports. A country economic memorandum ana- in other sectors. Economic growth is estimated lyzed the sources of the current inflation prob- to have been around only 2 percent. Although lems and their implications for the reform imports of foodgrain and materials for recon- process, and a tax report examined options for struction increased, the depressed economic fiscal reform and the greater use of taxes as situation kept import demand down, and re- incentives for production and growth. serves rose substantially. Partly due to these The Bank's lending program to China con- disruptions, the gains made in the early 1980s tinued to address both growth and social sec- in the fight against poverty appear to have been tors. Two more provincial agriculture projects reversed in the past two years. The central aim at improving rural productivity and ex- challenge now facing the government is to panding food production. An industry project revive the economy and accelerate growth and in Tianjin is supporting efforts to restructure development, including the key agricultural key industries, while an operation with the sector, which accounts for half of GDP. A China Investment Bank supports further ef- comprehensive report prepared by the United forts to modernize medium-sized state enter- Nations Development Programme on how ag- prises. Two ports projects, two provincial ricultural growth could be rejuvenated was highways projects, and a railway project in discussed in a special aid-group meeting Inner Mongolia will help address important chaired by the Bank. transport bottlenecks. A textbook-develop- Uncertainties continue to affect Sri Lanka's ment project will increase the volume and economic performance. As a result, recon- improve the quality of textbooks at all levels of struction activity was modest, GDP growth in education, and a health project in three regions 1988 was 2.7 percent in real terms, the fiscal will help find new, more cost-effective ap- deficit, inflation, and unemployment began to proaches to medical care and give increased worsen, and foreign-exchange reserves to emphasis to preventive medicine. show an adverse trend. The government has indicated that it remains committed to eco- Modest Growth in Several Low-income nomic reforms, and the Bank and other donors Countries are working actively with it to improve policies Natural disasters and political disturbances in trade, public enterprises, and public-sector have impeded development efforts in several management. low-income countries in South and Southeast The economic performance of Laos, the Asia during the past year. Severe floods dev- poorest country in Southeast Asia, has been astated the economy of Bangladesh; civil strife mixed because of droughts during the past two disrupted the economies of Sri Lanka and years. Real GDP fell by an estimated 2.5 per- Myanmar (formerly Burma); and the Lao Peo- cent in 1987, and is estimated to have recov- ple's Democratic Republic endured a second ered by only 2 percent in 1988. Over the past year of drought. few years, the government has undertaken a Bangladesh, for the second consecutive year, program of wide-ranging economic reforms to suffered severe flooding. Nearly 85 percent of liberalize and restructure the economy for the land area was inundated during the floods of more rapid growth. Early results are positive: August and September 1988. Forty-five million Inflation slowed down considerably, from 115 people were affected, and crops and infrastruc- percent in 1985 to 7 percent in 1988, and there ture were extensively damaged. The govern- has been a shift in relative prices in favor of ment responded to this crisis by initiating pro- agriculture, thus improving the condition of the grams to ensure food security through imports, poorer, rural population. Exports of log and 120 1989 Regional Perspectives Table 6-7. Nel Transrers to Asia ,mnI Iion - of LIS dotl a, I1>! -r C~h,na lnd,.i Indone qj Toial reg.in tsir! ~ ~~~~~~~ JQ iM 1>_x9 4S' P) 1siO Nl) 1 9S i - -9 19S9 f 19.MO_9C IBRD and IDA commitfrrenov 1.3348 6. 704.5 1.1166 13.i421 1.640.4 6.17S.' 7.,Y32 5 147&)- . Gros disbursement, I '1_ .9 3.611 0.4 2.3x9 I i 5IF) 1 1 .476.' 56.5 ' 14 .172 ' 6 Rtpa% rmenzm 41 AI> it 179 6 1.4 1'.(A 450.9 I 4il.l' 2.9R8.4 8.979.5 N et disbur-enieni, 1. 19'2.' .444.l 1.9'f 7 w' .' 1 .025.4 4.114 5 3.5iE.6 16393.1 lntere,t and .haryee I i1.j 4;6 58(I) 1 .99. -' f 645 h ''s ' 2.3o58 9,373.9 Net trjnoter 11 1.eX* 2.'W 6 I . QY 11 i.161 i 1_4 S I S14 ' I .I t6h -.i19.3 N E, I F Dth.hi ' ra frorn ih- it) ; Spee-I Fund rc mnclud,l. The c.,,iniris ;ho% .n in ihe v,ble are tho,e 'Aah the large4t tN:,nil dion Tre rsq,.riai i.u%,i) incl,ud ~urreoit hIorToer; olI1 Regional reptsfment .I,T..iuln ir 1?i;.1 1S9 inslude, rr,p 1. menn * . ' h-lhoIn h. Inr Repum- .f Ki-or-, tnd i A tilIbon 1i' Thal,Ind Det.,L, roa. not add to totals lIcuse ot r.Jndinh wood products continue to contribute a sub- Papua New Guinea and the Island stantial share to export earnings, while manu- Economies factured exports are growing rapidly, although from a small base. The Laotian economy, Among the smaller Pacific island countries, however, shows severe structural weaknesses, internal developments, rather than external which are being addressed by an IDA-sup- factors, governed economic performance in ported structural-reform program. 1988. In Fiji, emergency stabilization and ad- Myanmar, another low-income Southeast justment measures, following the political de- Asian country with considerable potential, is velopments of 1987, restored economic stabil- still trying to overcome the economic down- ity, but GDP declined by about 2 percent. turn in the aftermath of political disturbances. Among the other Pacific economies. Solomon The Bank hopes to play an active role with Islands registered strong growth in production, other donors in assisting its efforts at opening as well as exports, following a weather-related up the economy. decline of GDP in 1987. Real GDP growth in The unexpected disasters and civil disrup- 1988 is estimated at 8 percent. Vanuatu's re- tions in these countries has affected the imple- covery from cyclone damage was undermined mentation capacity of some governments and by political difficulties encountered in 1988. In hampered the flow of development assistance. Tonga and Western Samoa, the effects of Nonetheless, the Bank has maintained an ac- drought were evident in lower production, tive policy dialogue and significant operational higher prices, and some deterioration in the activity. current accounts. A decline in GDP of about 2 In Bangladesh, for example, IDA is support- percent is estimated for each country, but ing the government's flood-reconstruction ef- growth should return in 1989. In Kiribati, GDP forts through a third flood-rehabilitation proj- growth is provisionally estimated at 4 percent ect, and economic reforms are being assisted in 1988, primarily because of record copra by IDA credits in the energy sector. In Sri production. In the Maldives, a small island Lanka, the Bank is assisting the government in economy outside the Pacific region, growth analyzing poverty and employment issues. A was sustained at a high rate of 8 percent, led by third industrial-development project and a for- tourism and fisheries exports. est-sector development project to address en- Recent years have witnessed a revival of vironmental and forest-management problems growth in Papua New Guinea. Growth in GDP is also being supported. In addition to its first has averaged about 4.5 percent from 1985 to structural-adjustment credit for Laos, the Bank 1988, compared with only 1.3 percent a year also approved an industrial-sector credit and earlier in the decade. Most of this improve- an education credit for a total of three opera- ment. however, has been due to increases in tions, an increase over past levels of activity. output of the enclave mineral sector. The main Asia 121 challenge facing the government is to promote 1989, contains a substantial technical-assistance stronger and broad-based growth in the non- component for environmental-management im- mining economy, on which the vast majority of provement in the Steel Authority of India. the population depends for income and em- An estimated 70 million people live in con- ployment. The Bank's operational strategy in ditions of absolute poverty in China, where Papua New Guinea places particular emphasis regional disparities in natural-resource endow- on supporting the development of agriculture, ment and remoteness from dynamic centers of infrastructure, and human resources. industrial and agricultural development add a distinct geographical dimension to the inci- Reducing Poverty and Protecting the dence of poverty. The Bank is helping the Environment government in alleviating poverty in remote Despite the impressive performance of most areas through rural-development projects in Asian countries during the past year, the region Nei Monggol and Ningxia (where 123,000 fam- still faces massive social and economic prob- ilies are expected to increase their living stan- lems. The core issue is poverty, made worse by dards), Shaanxi (where 180,000 families are to high rates of population growth, both of which benefit), and in Shandong (where, through are closely linked to most forms of environmen- development of coastal lowlands, as many as tal degradation. Although impressive progress 1.5 million families stand to benefit directly). has been achieved in such areas as food self- Nepal is another country with daunting prob- sufficiency, indicators of health, and good insti- lems of poverty and degradation of the natural- tutional capacity for managing relief in times of resource base. The government has launched a major droughts or floods, the overall picture is basic-needs program with the ambitious goal of not encouraging. The world's poor are over- eradicating absolute poverty by the year 2000. whelmingly concentrated in Asia, and the num- Much of the Bank's analytical work is focused ber of people with incomes below their national on Nepal's basic-needs strategy and the priority poverty lines may well be increasing. Popula- for developing human capital. There is also a tion growth is highest in the poorest areas, growing appreciation among aid donors and where population densities often exceed envi- government officials of the fragility of Nepal's ronmental carrying capacities. Severe soil deg- natural-resource base and the costs of further radation, widespread deforestation, and grow- degradation. The Bank is working with the ing water and air pollution-stemming mostly government and other donors on a series of from the region's rapid industrial growth-have studies to analyze longer-term environmental raised the environmental awareness of Asian issues. Meanwhile, building upon past involve- governments and their citizens alike. Over the ment, an IDA credit for a hill-community for- past year, the Bank and many of its Asian estry project was approved. borrowers have sharpened their operational fo- In the Philippines, poverty remains an exten- cus on the long-term issues of poverty reduction sive and serious problem, with the incomes of and environmental protection. over half the households falling below the pov- Bangladesh and Sri Lanka are both engaged erty line. The current recovery, while vigorous, in efforts to improve the antipoverty impact of has not yet exerted a telling impact on the their development programs with the active poverty situation, and there is a great need for collaboration of IDA. However, the unprece- expanded public services, as well as efficient dented floods of 1987 and 1988 resulted in a implementation of the comprehensive agrarian decline in real wages and an increase in unem- reform bill, to meet the needs of the poor. As to ployment, causing some deterioration in the poverty-related environmental trends, the rap- poverty situation in Bangladesh. India has per- idly expanding poor population in rural areas haps the region's most extensive programs to has moved into fragile upland ecosystems not address the needs of the poor, who now num- suited for farming and has caused widespread ber over 300 million people out of a total damage to forests, soils, and watersheds. The population of some 800 million. Bank has completed major operational reports In fiscal 1989, the Bank's analytical work on on poverty and the environment for the govern- India was heavily concentrated on production ment's consideration. of a major report on poverty, employment, and In the past year, the government of Indone- social services. Bank initiatives during the year sia has made a renewed commitment to reduce to address environmental problems and issues the incidence of poverty and to improve envi- included a first environmental reconnaissance ronmental management in order to ensure the mission to help formulate future operational sustainability of development. The share of priorities for dealing with India's most critical public expenditure allocated to poverty-related natural-resource problems. An industrial- sectors, such as social services and small- finance project, which was approved in fiscal holder agriculture, has been increased. 122 1989 Regional Perspectives Europe, Middle East, and North Africa The Europe, Middle East, and North Africa All borrowing member countries of the region is characterized by great diversity: di- World Bank share a common goal: that of versity in economic management, from the developing their human, physical, and institu- socialist economies of Eastern Europe to the tional infrastructure to provide for long-term relatively free-market economies of Pakistan sustainable growth so as to raise living stan- and Turkey; and diversity in stage of develop- dards. The attainment of these common goals ment, from relatively high-income countries, has been made particularly difficult for all such as Portugal and Hungary, to poor, such as these countries by the need to deal with heavy the two Yemens. The region includes oil im- debt burdens and introduce reforms that porters (Morocco, Pakistan, Portugal, Turkey) increase reliance on both efficiency and an and oil exporters (Algeria, the Arab Republic appropriate balance between the private and of Egypt, Tunisia, and the six member states of public sectors in order to raise long-term pro- the Gulf Cooperation Council-Bahrain, Ku- ductivity and growth. wait, Oman, Qatar, Saudi Arabia, and the The growth experienced in 1988 in the coun- United Arab Emirates).6 tries of the region was also diverse. Algeria, Hungary, Tunisia, and Turkey had declines in GDP growth, while Morocco, Poland, Portu- gal, and the Yemen Arab Republic had rates above those for 1987. In Portugal, sound do- mestic economic policies, together with a Table 6-8. Europe, NMiddle East. and strong export performance, allowed that coun- North Africa: 1987 Population and Per try to continue an impressive growth rate of Capita GNP ol Countr3 Borrowers. over 4 percent and continue its sustained re- Fiscal Y'ears 1987-89 covery from the macroeconomic difficulties of ( o-ulrur Pe:r CPppa the early 1980s. The divergence in economic ne-rro..er>. Populijtln GNP 19.%-' growth is country specific, and can be ex- Oscal lr-5) 29ihodsandi i!USti plained by differing exposures to externally AILeria 23.(97 'I.,h; induced shocks, continued low oil prices, C,pru, NM^O i.21)11 growth in oil exports (the Yemen Arab Repub- Egypt. Arab Republic ,of it) 1411 681) lic is the prime example), drought (particularly Huungar, 10,h1'1 ,241 in Algeria), and differing economic policies. Jordan 3.79t 1.561l1 The excellent export performance of the region Mo'roco ' h in 1987 continued, and exports in 1988 grew by Oman 1.347 ij810 about 10 percent; performance in a few coun- Paki,ttan II)2.4, 2 3' tries (Egypt, Jordan, Tunisia, and Turkey) fell Portural In. 161 2.:NIl off from the record levels recorded in 1987, Tunisia '.h1 1. 181) however. Turker 1.21' l) Y emen Arab Republic 6.4-'4 '9 N'emen. People 6 The Gulf Cooperation Council, established in 1981, pro- Denic.eratic Republic of 2.269 4'20 vides a political, economic, and social framework for Y ugoslavia 123411 2A4X0 cooperation among the six countries. In February 1989, leaders of Algeria. Libya, Mauritania, Morocco. and Tu- NUI1E The I5' ofuue .-n GNP per .apir, pre,enrdJ nisia formally agreed to the establishment of the Arab b-uoe Ire trorn ihe \%orld De;rl.ipmnmni ndkicors" rn Maghreb Union. which is expected to increase regional the Itor!d D-.- pn-r R.rp,rr l JA9i cooperation among these countries, as well. The Arab *. E,umarie. trom rnmid l'JY-. Cooperation Council. composed of Egypt, Iraq. Jordan, h. W.9r1J Bank 4flar merh.dololos. 19i.t- hdse period and the Yemen Arab Republic, was also formed in Febru- c Eus B.nk ortx. ary 1989 for the purpose of aehieving economic coordina- tion and integration. Europe, Middle East, and North Africa 123 Continued Variation in Economic about 50 percent in 1987 to about 70 percent in Performance 1988 despite the concerted efforts of the gov- ernment to tighten fiscal and monetary poli- Real gross domestic product increased the cies. Key objectives for the government for fastest (19.2 percent) in the Yemen Arab Re- 1988 included a reduction in the public-sector public, which benefited from a massive in- borrowing requirement to 6 percent of GDP crease in oil production and exports; Morocco (from over 8 percent in 1987) and a reduction in (10.3 percent); and in Pakistan (6.5 percent, a the growth rate to 5 percent (from an average rate, however, that was slightly lower than in of about 8 percent over the previous two 1987). No country experienced negative years). These goals were broadly met, and real growth, although GDP growth in Algeria, Tu- growth declined to 3.4 percent in 1988. More- nisia, the United Arab Emirates, and Yugosla- over, aided by a boom in tourism, the balance- via was around I percent. of-payments improvement was greater than the In Pakistan, the most populous country in targeted goal, with the current account shifting the region, the steady economic expansion, from a deficit of 1.4 percent of gross national which has lasted throughout much of the dec- product (GNP) to a surplus of over 2 percent in ade, was accompanied by growing macroeco- 1988. The improved current-account perfor- nomic imbalances. In 1988, for example, the mance, together with a significant increase in fiscal deficit, at 8.6 percent of GDP, reached its direct foreign investment, permitted a reduc- highest level in the past ten years. Despite tion in external-debt ratios. These macroeco- strong export growth (24 percent in current nomic policies were not successful in contain- dollars), the country's current-account deficit ing inflation, however. stood at 4.1 percent of GDP, well above the The initial impetus for the increase in the annual average of 3.3 percent experienced dur- inflation rate appears to have been the adjust- ing the earlier years of the 1980s. A deficit of ments made, in late 1987, in public-sector this magnitude is unsustainable, given Paki- prices and tax rates. As rising inflationary stan's low gross official foreign-exchange re- expectations rendered real deposit interest serves and its relatively high debt-service ra- rates negative, demand for domestic money tio. By mid 1988, gross reserves covered but declined in real terms, and the Turkish lira was three weeks of imports, and the debt-service subjected to periodic bouts of speculation. In ratio stood at 28 percent. In response to the response, the government permitted interest growing crisis, the government introduced sig- rates to rise significantly in October 1988 when nificant fiscal and trade-policy reforms, and, in it liberalized the banking sector's ability to set December 1988, reached agreement with the interest rates. This action, combined with a International Monetary Fund (IMF) and the partial freeing of the exchange rate earlier in World Bank on a policy framework paper the year, did ease pressure on the exchange (PFP) that outlines government-reform propos- rate, but it also led to a rise, to very high levels, als for the period 1989 through 1991. The in real lending rates. In turn, demand was program of reform, reflecting strong govern- dampened, particularly in the manufacturing ment commitment to adjustment and structural sector, at a time when economic growth was reform, seeks to redress the growing macroeco- already slowing. The government is currently nomic imbalances of recent years and increase faced, simultaneously, with weakening real economic productivity in the economy, as well economic activity and an inflationary situation as in the financial sector. Key targets, covering that shows no signs of subsiding. Recognizing a reduction in the budgetary deficit, inflation, the difficulty in addressing the twin goals of the external current-account deficit, and the bolstering growth and controlling inflation at external debt-service ratio, have been agreed the same time, the government has chosen to upon. Once implemented, these reforms could give the priority to the goal of achieving a result in a sustained real growth in GDP of sharp drop in inflation in 1989 and, accord- about 5.2 percent in 1989 and of 5.5 percent a ingly, has revised its 1989 growth target down- year in 1990 and 1991. The government has ward, from 5 percent to 3.7 percent. Moreover, also stated that it intends to give greater prior- the government has placed even greater em- ity to the social sectors, and the Bank has phasis on tighter fiscal and monetary policies, indicated its willingness to support these ef- accompanied by a longer-term adjustment forts. During the past year, the Bank gave agenda that gives priority to reforms in the considerable attention in its economic and sec- financial and industrial sectors. tor work program to social-sector issues and to In Cyprus, all sectors of the economy have ways to alleviate poverty. shown positive and satisfactorily high rates of Inflation continues to be the prime concern growth, with particular accelerations in the in Turkey, where it increased from a rate of rates of expansion of manufacturing and agri- 124 1989 Regional Perspectives culture (8 percent and 6 percent, respectively, of economic and sector work, the Bank has in 1988). Within the services sector, above been assisting the Polish authorities to develop average performance was exhibited by the reform and adjustment proposals to establish subsectors that are directly related with tour- the basis for sustainable growth and improved ism, offshore activities, and the provision of creditworthiness. Important systemic and pol- services abroad. icy improvements are already being imple- Yugoslavia experienced several economic mented, and further work is under way to developments similar to those in other highly prepare a revised medium-term plan. indebted, middle-income countries. These in- However, the macroeconomic context for cluded increasingly severe inflation (at over implementing the reforms has deteriorated, 250 percent a year) and a continued decline in and the country faces severe difficulties in GDP growth and consumption. The govern- restoring domestic and external balances. ment has embarked on a major program of While Poland's output and exports continued structural reform that stresses a more compet- their upward trends, 1988 was a difficult year, itive and market-oriented economy. The Bank and the beginnings of 1989 show signs of has provided extensive technical assistance in further imbalances. this effort. The constitution has been amended, Reform is also critical to Hungary's medium- and new laws are on the books that could term and long-term prospects. In 1988, the fundamentally affect enterprise operations, government introduced a stabilization and foreign investment, and banking and financial structural-reform program that aimed at reduc- operations. In addition, the government has ing the growth in foreign debt (presently at 64 been actively working with the Bank to iden- percent of GDP) and accelerating the pace of tify policies to increase greatly both trade and structural reforms through improvements in domestic competition. fiscal balances, limitations on nominal wage Reforms being developed in Poland are of increases, price and tax reform, and an active unprecedented political and economic scope exchange-rate policy. This program was sup- and represent a daunting task of institutional ported during the past year by the IMF, as well and policy change. Through an active program as by the Bank, which approved an industrial- Table 6-9. Lending to Borrowers in Europe. Middle East, and North Africa. by Sector, Fiscal I-ears 1980}89 millin - .ff S U .Jil3rsi Annuil a %er.ge Seimr~~~~~~~~~~~~~~~ 148t ., 195 1996 1 ox'5 Iso Y 1- 9ilzJ Agriculture and Rural De%eloprnenl 676.0 1.013.8 712 39. 4 ih6 05 1,411.4 De%eliopmenr Finance Conipuniei 363 9 S1. I '135.t 3h'.9 11. 31) Education 1 16.4 156l . 213.1 2'ii.;l i '41.:5 178.0 E nerE (Oil. rd, and coal 169 ' ,94U - 'I.IJ 30 1 115 5 Po% er 'l6 3 46' 0 595 89- 1X 4u0.0( 415.1 lndusti 2"1 7 1 7.6 1 2.1 1hNt.l 377.( 31si. I Nonproicct 404.1 - - ti1iJ I'U.1I 200.0 Population Health. dnd Nutrnilion 9 7 41 9 - 133 - 5'. Sman.1-c_de Enterprive 41.1 tJ 51.11 It1t) (I 54 0 32N.0 1 Technical AssisLance 5 I 4.7 1.(J ' -U lelecorn!munication 5(b.8 3.(J - 245 i0 36 0 Tranport1aion 306.1 356 Li 193.5 54i 8 3i7.0 29h 0 Llrbjn De%elk.pmerit 61 4 3 . ' 9Yii 17ft... 90 1) 58.t Water Supph lnd Streerape IS 1O 192.11 12l I'l 559 233 h' Tot3l 5S;2.841 ' .0 i 1.95s.() 3.6s. 6 3.u135>t 32767.5 Of %%hich: IBRD '.511i 4 2.820. 1 2. 31 4 3437.4 4.1 3 I 3.511 . IDA 336.3 2l Y 4 223.6 249. 22. l 255.7 Numbrr ,t Operation- 5i 47 37 4' 35 34 N i F Del .iI. m.. r..u *JJ 10 11..l be aute of oundini Europe, Middle East, and North Africa 125 I~~~~~~~~~~~~ -r!y -- - ~ ~ ~ ~~~~~~a Irrigation provides water for a date-palmn plantation in Tunisia, whiere drougflt induced a 24 percent decline in agricultural production in 1988. sector adjustment loan. Initial results, by and debt rescheduled, the current-account deficit large, have been mixed. Gross domestic prod- was reduced to about 6.5 percent of GDP (com- uct remained constant (against a planned mod- pared with 12 percent had not interest payments est increase), exports to convertible-currency been rescheduled). The budget deficit conitin- areas grew 9 percent in volume terms, and ued to decline considerably-from 20 percent of there was an improvement in the convertible- GDP in 1987 to about 16 percent in 1988-but currency trade balance to an overall surplus of still remains unsustainably high and continues about $615 million. This improvement, how- to represent a potential source of high inflation. ever, was offset by a larger-than-expected def- The government has initiated a series of icit in the services account, with the result that changes in pricing policy, as well as other the convertible-currency current-account defi- actions, designed to cut further the budget def- cit was about $100 million greater than ex- icit. However,.amore rapid and thorough struc- pected. The government budget was also tural reform will be needed if Egypt is to restore higher than planned, due largely to a failure to its economy to a balanced growth path. reduce sufficiently subsidies to enterprises. Egypt continued to experience economic Adjustment in the Maghreb Countries difficulties, which were exacerbated by the Over the past five vears, Morocco has un- oil-price decline and by an extremely heavy dertaken important structural reforms, which, external debt. After a significant slowdown in despite difficult circumstances, have led to growth over the previous two years, the econ- considerable progress towards achieving inter- omy expanded slightly in 1988 (by about 3 nal and external equilibria. At the same time, percent), facilitated, in part, by a substantial the country has succeeded in achieving a mod- increase in imports. The balance-of-payments est growth rate with low inflation and avoiding situation, however, remained precarious, al- the drastic decline in per capita consumption though some modicum of relief was provided experienced by other highly indebted countries through a sharp decline in interest payments as facing a similar deterioration in terms of trade. a result of the Paris Club debt rescheduling that Morocco's reform program can be traced back covered the period through June 1988. With to the balance-of-payments crisis of 1983 that 126 1989 Regional Perspectives caused the government to embark on a coura- the conduct of macro policies, stressing the geous stabilization and adjustment program active role of the central bank in controlling supported by the Bank and the IMF. Since credit and money supply and the disengage- then, an active exchange-rate policy has re- ment of the treasury from direct financing of sulted in a decline in the real exchange rate of public enterprises. Further deep transforma- 23 percent, which has helped proceeds from tions are under way toward establishing fully tourism and workers' remittances to be main- autonomous public enterprises and banks, as tained at high levels and import demand to be well as reforming the incentive framework, contained following a reduction in trade barri- including adjustment of the exchange rate, ers. Budgetary subsidies have been reduced by interest rate, and commodity prices. about 3 percent of GDP, and public investment Far-reaching adjustment has been a feature has been rationalized. The government has of the Tunisian economy for a number of also implemented comprehensive tax-reform years. Stabilization measures, begun in 1985, measures that should improve allocative effi- reduced the imbalances in the budget and ciency and ensure that the tax burden is shared external current account and established the more equitably. In parallel to the macroeco- conditions for the country's deep liberalization nomic reform program, the government has program, which was begun in 1986. Despite implemented reforms at the sectoral level. Pol- the government's commitment to adjustment icy reforms at the macro level and in the (which has led to substantial donor support), industrial, agriculture, education, and public- recent economic events have been adverse. enterprise sectors have been pursued. These In 1988. for example, the economy was sectoral reforms, supported by Bank lending affected by a severe drought and a locust and advisory assistance, have made the econ- infestation that, together, induced a 24 percent omy reflect more realistically, through a set of decline in agricultural production, bringing incentives, economic costs and benefits to GDP growth down to 1.5 percent, as opposed producers and consumers. They have also to 5.8 percent in 1987. Nevertheless, exports made the budget cost of state intervention performed strongly, and imports grew only more transparent and have led to an improve- modestly; as a consequence, the current ac- ment in the climate for private investors. count was slightly in surplus. The economy has responded positively. To- tal exports have increased by almost 5 percent Adjustment Issues in Jordan a year since 1984, led by a dramatic rise in the During the past year, Jordan's economic share of manufactured exports, which now performance was adversely affected by a de- represent almost 30 percent of the total. The cline in export receipts and by a slowdown in current-account deficit (after rescheduling), remittances from workers in neighboring oil- which was 8 percent of GDP in 1980, improved exporting countries. Consequently, strains to a 1 percent surplus in 1988, and the fiscal have been placed on the government's budget- deficit declined from almost 12 percent of GDP ary operations, as well as on the balance of in 1983 to about 4 percent in 1988. payments. Calendar year 1988 was difficult: Morocco's success in adjusting has not been GDP declined to 1.7 percent in real terms. The without costs, however. Since the inception of only sectors registering growth were agricul- policy reforms, economic growth has not been ture and public administration, while manufac- strong enough to ensure significant increases in turing, mining, and construction showed sharp per capita income and adequate employment declines. The reduction in output was accom- levels. The Bank has emphasized in its eco- panied by a further deterioration in the fiscal nomic and sector work better understanding of situation, as the budget deficit rose from 11.8 the effect of economic adjustment on employ- percent of GDP in 1987 to almost 15 percent in ment opportunities, on the compression of 1988. This increase was caused by the slow living standards, and poverty with a view to growth in domestic revenue, together with a identifying operations that can substantially rapid growth in current expenditures that re- alleviate the social costs of adjustment. sulted from a rapidly rising public-sector wage In the case of Algeria, movement from a bill and a steep increase in external and inter- centrally planned economy to a more market- nal debt payments. At the same time, the oriented system has been striking. The first balance of payments has come under increased step in this direction was the effective privati- pressure, and large deficits have led to a run- zation of state farms, a structure that had down in official reserves. The weakness in resulted in low and stagnant productivity for Jordan's balance-of-payments situation in 1988 the past twenty-five years. was largely the result of the significant decline This measure was followed by a complete in remittances and grants (by 6 percent in revamping of the institutional framework for nominal terms) and the increase (by nearly 40 Europe, Middle East, and North Africa 127 Table 6-10. Nel Transrers to Europe. Nliddle East, and North Africa imilli.ri. c L- *s di,Ii,.r' i*..Q;d1: . l1 rks E%w. pi T.ic ci rtg-.n IBRD and IDA commilm-nt' 949.4 l. 3x 9 7(j9 4AI 24 1.11 5 N4 3 . 5 16711 .1 Grows djsbursements 47ii - l.;44.2 S2 ' xf 116 fS 944 7 '.h54 L 1'1hi.S Repayments II 4 ',I16. 4X9 3 1. 524 12 l' v i 4 1.7 5.> .979.9 Net disbUrsemenrs 8Sc 0I L.'42.7 q i) 2.'l'' M I 'h 'I 415.11 SS' 4 h'X 6 Interest and char-c, 11)4.5 365 5 52 S 2 I 2 I ;91 i I il. S ')i13 S Nei tranifer ' :S4.5 x'17. 1443.Si SI h Ili's 3l II-h'I it," ii I No)i Di r,eme.j I* irorm I tc ID-% Sr.cci. F,.nl .r In,lwjcd IhL '. c.1n1r- h,. . n Lr. Ithe I,hl'e rc iho,v. n.i rluduinr Polknd. '-hich ha; . ci i,o ho,rw. Ir,om ih, Bn,4 I -%,th the I,rceet r-pul i.!r' lhc1 rccciriIi, T,l. indljec urr.,ni bomir-'e i olr, D)-Ukii Trix., not Add i,' 1.-.. hec.d.e *:I I,'din, percent) in debt-service payments. In response nomic activity and the emergence of a degree to the deteriorating economic situation, the of independence from oil-price fluctuations. government has implemented a series of re- Preliminary estimates indicate that Kuwait, form measures, the most important of which Oman, and the United Arab Emirates have had are a 30 percent depreciation of the dinar, the the highest nonoil GDP growth rates, in the 4 deregulation of interest rates, the liberalization percent-to-6 percent range. The case of Oman of financial markets, and a budget for 1989 that is particularly noteworthy, as it had suffered emphasizes economic austerity. The govern- significant negative growth rates in overall ment recently signed a letter of intent with the GDP in both 1986 and 1987. Nonoil GDP IMF on a standby arrangement. Discussions growth rates have been somewhat lower for on a Bank-supported structural-adjustment Saudi Arabia (about 2 percent), Bahrain (about loan have progressed satisfactorily, and its 3 percent), and Qatar (less than I percent). presentation to the executive board is expected A deterioration in the external balances of to take place early in fiscal 1990. most of these countries took place in 1988. with the current-account deficit increasing Adjustment among the High-income Oil from $1.5 billion to $3.8 billion. Kuwait and the Exporters United Arab Emirates were the only countries The further decline in international oil prices with current-account surpluses, of $3.6 billion during 1988 did not have a uniform effect upon and $3.4 billion, respectively. Saudi Arabia the high-income, oil-exporting countries. Saudi showed a current-account deficit of about $7.4 Arabia was able to compensate for the oil-price billion, a 22 percent improvement over the decrease through an increase in output, while previous year, reflecting increases in nonoil Bahrain, Oman, Qatar, and the United Arab exports. Emirates experienced precipitous drops in oil revenues. As a result, growth rates in 1988 The Challenge of Systemic Reform varied, with Saudi Arabia growing at 4 percent, While there are opportunities for increased the United Arab Emirates at less than I per- domestic savings in several countries of the cent, and the other member countries of the region, a consensus exists throughout the re- Gulf Cooperation Council (Bahrain, Oman, gion that revival of growth must rely on greater Qatar) at about 2 percent. Aided by a growth in economic efficiency. The search for economic exports of 3.2 percent, Libya's GDP increased efficiency encompasses a wide agenda-sys- by 2.6 percent during the year. In Kuwait, temwide reforms, corrections of economic dis- where oil production was virtually the same in tortions through greater reliance on market 1988 as in the year before, GDP growth was prices, better balance between the public and estimated at 2 percent. private sectors, and greater outward orienta- The growth of nonoil GDP in many of these tion of economies through trade reform. countries has been positive, thus demonstrat- Perhaps the greatest challenge will be for ing a resumption of a balanced level of eco- countries to raise economic efficiency by per- 128 1989 Regional Perspectives mitting a greater role for markets and the results of this program are already visible, both private sector. In the socialist countries of the in the banking sector and in the process of region, this means a fundamental reorientation establishing capital markets. Recently, Poland of the economic system to one that would has undertaken major reforms in this area with permit a greater role for markets and decision- Bank support to separate the functions of making and introduce private-sector activity in savings banks and commercial banks from the large segments of economies that had previ- central bank. In Yugoslavia, where banks have ously been in the public sector. In many cases, been owned by the enterprises they lend to, efficiency will not need to be achieved by banks are now required to convert into profit- privatization per se, but through competition making entities with a minimum of paid-in where none existed before. Trade reform and capital and their management independent of an opening of the economy to foreign compe- sociopolitical communities. During the past tition is often an important element in this year, the Bank has been actively involved with process. In mixed economies, efficiency in- financial-sector reform. both through lending volves restructuring of public enterprises, and advisory work, in Algeria, Morocco, Tu- helping them become more autonomous, ex- nisia, Turkey, and Yugoslavia, as well as in posing them to more competition, and, where Pakistan, where a first financial-sector loan appropriate, assisting in their privatization. was approved. Several countries of the region are contem- Systemic reform in the socialist economies plating, or have started, systemwide reforms of the region perhaps offers the greatest of that involve greater competition through challenges, given the major structural changes greater freedom of entry for firms and a more required within their economies. In order to liberal trade regime; greater financial discipline gain a better understanding of the complexities through limiting access to the budget and the and linkages of introducing market reforms banking system; and a general easing of con- while simultaneously pursuing stabilization straints on labor and capital mobility through and adjustment goals in these countries, the bankruptcy laws or other measures. Such re- Bank has embarked on a major work program form measures, for example. have been a ma- of analysis and research. The program is ex- jor focus of Bank assistance to Hungary pected to be completed within two years. through industrial-restructuring loans. Fur- thermore, in Hungary, Poland, and Yugosla- Bank Operations, Fiscal 1989 via, the Bank is assisting governments design In a global environment characterized by new frameworks to facilitate foreign ventures continuing difficult external and domestic eco- and direct foreign private investment. New nomic conditions, the World Bank continued laws for this purpose were passed by all three to provide assistance for adjustment efforts countries in fiscal 1989. -both at the macroeconomic and sectoral In the more market-oriented economies of levels-aimed at strengthening the capabilities Morocco, Pakistan, Tunisia, and Turkey, im- of the countries to implement key reforms. proving economic efficiency depends less on Policy-based lending, which included a first systemic reform than on realistic pricing of structural-adjustment loan to Morocco, three foreign exchange and credit and liberalization sector-adjustment loans in Pakistan, and one of the price, foreign trade, and investment sector-adjustment loan to Tunisia, totaled $884 regimes. Even in these countries, a serious million during the year, or about 23 percent of reappraisal and redefinition of the role of the total lending. Pakistan was the region's largest state and the rules of the game for public- borrower, with $949 million in loan commit- sector enterprises are under way. ments from the IBRD and IDA. Reforming the financial sector remains a Project lending was extremely varied, with critical aspect of any reform program. Finan- almost all sectors represented, including re- cial-sector reforms are often essential to pro- gional development (Portugal and the Yemen viding greater opportunities for private-sector Arab Republic), human-resource development development and to providing an important (Jordan, Morocco, and Tunisia), and water and underpinning to expanding output in all sec- sanitation (Egypt, Pakistan, and the People's tors. Reform normally requires limitations to Democratic Republic of Yemen). Special em- be placed upon subsidies, reductions of pre- phasis in the lower-income countries (the two ferred-creditor practices, improved financial Yemens and Pakistan) was placed on projects transparency, establishment of a sound bank- designed to assist the poor. Finally, an unusual ing regulatory framework, and the develop- project was approved-a locust-control proj- ment of efficient central banks. Hungary, with ect, designed, on an emergency basis, to miti- the Bank's support, has introduced a compre- gate the effects of the devastation to Algeria hensive financial-sector reform program. Early caused by locusts during 1988. Latin America and the Caribbean 129 Latin America and the Caribbean Over the past eighteen months, economic erating. The improvement in the region's terms growth in the Latin America and the Caribbean of trade over the same eighteen-month period region has slowed, further delaying the process has partly offset, however, the effect of declin- of restoring per capita output, income, and ing output per capita on income and consump- consumption to average levels that had pre- tion-except in the oil-exporting countries, vailed during the three-year period, 1979-81. which were hit by an additional decline in oil Gross domestic product (GDP) per capita de- prices in 1988. clined at an annual rate of -0.6 percent in 1988 Regional economic growth has been quite and early 1989. Further, in the first half of uneven. The record of regional performance 1989, the decline in per capita GDP was accel- has been much influenced by the deceleration of GDP growth in Argentina, Brazil, and Ven- ezuela, which, together, account for around Table 6-11. Latin America and the two thirds of the region's GDP. In these three Caribbean: 1987 Population and Per countries, total GDP increased by only 0.8 Capita GNP of Couniry Borrow-ers. percent in 1988 and declined in the first half of Fiscal Vears 1987-89 1989. Deceleration of growth in Argentina and Brazil halted the economic recovery of Uru- Cournri hep-Iluna GNpi . guay. The severe drought that has been affect- fi;.Il IW.4s9 ith.,u.and&i US4 ing Argentina and Uruguay since mid 1988 Argentina 31.121 2.39tl reinforced the contractionary pressures on Bahama.. The 24t.1 lt.u economic activity by early 1989. The experi- Barbsados "4 > o ence of these three countries stands in contrast Belize l'h .'4 with the strong recovery that took place most Belize Ia h.-'9 1b.411 noticeably in Chile, where growth of GDP Bolrail 14.4 continued at the high annual rate of 7 percent Chile 1'.541 in the first half of 1989, but also in Colombia, Colomtna 29. 4". 1. 41( Costa Rica, Guatemala, and Jamaica. The be- Colta Rica 2.4-ki 1.24lt ginning of recovery in Bolivia and Paraguay ComtarRca 2t48 L10 contrasts with stagnation in the Dominican Dominican Republic 6-1' Republic and Mexico, and with large GDP E;unador p89b I6.tJ0 losses in Haiti, Nicaragua, Panama, Peru, and El Scluador J989 1t040 Trinidad and Tobago. Ecuador recovered in GuEemalad 8,43s 6i 1988 the output level reached in 1986 after the Gu'ana '9' 390 loss brought about by the 1987 earthquake. Ham h.l4' in1! In most countries of the region, the decline Honduraiti 4.6.1 3 m output per capita has been accompanied by Jamaica 4.468 91u increases in export earnings and acceleration Jeaico 81.460 1 941 of inflation. By early 1989, export earnings Panama 2' I-0 2.'4t increased enough to ease significantly the for- St. Vincent and] eign-exchange constraint in all countries ex- the Grenadind s I 'RM cept for the oil exporters. But increased export LJruguay .9sl '-19{ earnings failed to fuel a recovery in those 3 2.1911 --countries where governments have not been NcirE The 19S' ..rnmale, of GNP per JPi.La prevented successful in implementing credible fiscal ad- abGze are fr..m ihs "World Development Inuic.iiorz n justment programs. ihe t1opiJ D'elop'Ie.I Rep'ori 199. The increased surplus in the region's trade a Ei,imaic, from rrad 19.S- balance with the rest of the world reflected b. Itorid Ba,k Ail , mnexhodoiog*.. 1I4-N' i.e ver-.-d both external and domestic factors. The sur- 130 1989 Regional Perspectives plus was used to pay interest on external debt, early 1989 as a result of the implementation of although some countries managed to accumu- new policies to correct the country's macroeco- late international reserves. For the region as a nomic imbalances and realign relative prices. whole, the net transfer to foreign creditors was Only in Panama and in the Caribbean countries still larger than the trade surplus, however. For was inflation kept at rates comparable with the first time since the beginning of the debt those of developed countries. crisis in 1982, the nominal value of the region's The acceleration of inflation over the past total external debt declined, from $443 billion eighteen months was one consequence of the at the end of 1987 to $428 billion at the end of increasing difficulty that governments faced in 1988. The reduction of long-term debt with implementing policies to correct macro imbal- creditor banks through buybacks and swaps ances, including controlling public finances programs amounted to about $17 billion in and changing relative prices and real wages. 1988, but, in early 1989, it declined in anticipa- Political pressures mounted to prevent further tion of major actions by creditor countries. reductions in public-sector deficits. The fi- Inflation, which accelerated to very high nancing of these deficits continued to rely on levels in Argentina, Brazil, Nicaragua, and monetary expansion, but the demand for Peru, stands in sharp contrast with Mexico, money balances declined due to the acceler- where inflation has been reduced from a rate of ated inflation brought about by the expansion. 144 percent in the twelve months up to Decem- Thus, the real revenue from a given rate of ber 1987 to one of 18 percent in the twelve monetary expansion also declined. The correc- months up to April 1989. In Bolivia, Costa tion of external and internal imbalances called Rica, the Dominican Republic, and Ecuador, for changes in relative prices and real wages, the acceleration of inflation is noteworthy for which, in turn, called for adjustments in the its reemergence after a period of modest in- exchange rate and government-controlled crease. Despite the acceleration of GDP prices. But these adjustments were often ac- growth, inflation declined in Chile and Para- companied by offsetting adjustments in nomi- guay. Although inflation also declined in Ven- nal wages, government-determined incomes, ezuela during 1988, it sharply increased in and subsidies. Even in countries with a long Table 6-12. Lending to Borrowers in Latin America and the Caribbean. b) Sector. Fiscal 1'ears 1981}89 inillon I LI S dollirsi A^nnu;d a, erJge Sei,or 19s1 -S4 I 4 55 1q9I7 ININX 19i.9 Agriculture and Rural Development '92.4 44'2. 1 .9s t l 1.195.0 I.404.8 161.S Developnent Finance Companies >h3.2 95 (. 252 4 1.11 S I 97(.fi 564.3 Educd1ion 9 95. S III Q - S4 9 8S 3 14o 0 Ener,z Oil, g.l. :nd .oal 98 N 301 (! 131 tl 11.14.4 - 94.o1 Posser 54h 2 313 7 819 2 423 8 423 0 736.t Indutarr 131 4.1.1 - i5st" It.3ht.0 860.0 Nonproject 6h 4 13.11 7'r5 t) I0.u . 2'7.t' 1.492.0 Po.pulaLon. Healih. and Nuintion 20.8 _ sh I) 11 l} 109 . 99.t1 Small-c aile Enierprise 2i 1 2 34U11.0 7' U I. u - 1I5.0 Techni,al Asi-it.nce f '.0 9.5 4 5 15.5 _ Telecommunications " . - - - - 45.0 Transporttttcn 465.2 662.11 140)6 524. 2'1U1.6 149 3 Lirban De%elopment 15- ' r'.9 3t9 5 325 II 464.U 675.0 Wdier SuppI: and Se-erige 2-,1 2 163.8 15 Ui 64 tl 252 3 120.4) Total 3 061.y) 3h.6Y) 2 4.1.2 i.1 i2 11 5.264 u i.S42 I Ofr hich IBRD '.1I15) 0 .h;62.3 4.71)1.' 4.994 . 5 12l 0 5.7(13.7 IO)A 47.1 4- 9 7(.(1 17 4 11 U 138 4 Number or (O)peration 46 -41 43 ; 17 43 N01 E Detilj, mj nil .i.d 1.. ioia heraue *o.1roundne Latin America and the Caribbean 131 A- -- t)- tt>v- s; - w<(; A textile factory in Fortaleza, Brazil. Lending for induistry in Latin America has totaled over $3 billion. history of low inflation, governments were not els so high that there was little likelihood that able to change relative prices and real wages they could be sustained over the next few without creating large inflationary pressures. years. Fuel prices began to recover somewhat in 1989 from their low 1988 levels. It is likely, Export Earnings, Resource Transfers, therefore, that the key to growing export earn- and Debt Service ings in the future will be the expansion of The strong recovery of nonfuel commodity export volumes, which has already been signif- prices and the continued expansion of export icant in Brazil, Chile, Colombia, Ecuador, volumes have been driving the region's export Mexico. Paraguay, and, to a lesser extent, in earnings to record levels (merchandise exports Argentina, Costa Rica, and Uruguay. Further amounted to $104.3 billion in 1988, 11.7 per- expansion of export volumes in these countries cent higher than the average nominal value of is likely to require corresponding increases in 1980-87). By early 1989, nonfuel commodity investment. In the Dominican Republic, Peru, prices, particularly metal prices, reached 1ev- and Venezuela, exports either increased very 132 1989 Regional Perspectives Box 6-1. lb-e Amount and UIe. of Debtor Countries Trade Surpluses There are arii'u meansiure- ol a countir-C re that had a posiri'e total ,turplu, are included in source ir,,n ter. but ihe a -lahilitm of daiA. the [ible ere3dtl determin&- the cholice. The mrni relialhe The Total urplu-s can h; tran4erred to fo-Ircien data reter to the re4ource. -r trade bhlance. ihat creditore and rin.est.r' First. it cin he uc ed to I . thc dtll renLe belt"een e\pUrts ind irnpori' ot ser' ice the long-term external debt (column 41. mercha.ndie ind nontlactor fruicc%. The -a,rce includingde-bihububa:K' Second. tcan he uscd to of the trade hblance of eight highl indebted Latin serx ice the short-term external debi. A grons e.ti- American countrie, for 19s(-X" is presenled in maite of this tianzfer is pic'tritd 'column 5'. but 13ox Table 6-i. In term; ot re'uurce a%ailabilt\ . th, quahltt of the dlt.a is not comparable to that of th ttade surplusu t,olumn II can he comple- the long-term dett. 1 hird. the trade surplus can be mented tentporarl\x h u%ing international r. - transferred to forcign in' en!ior in repa\ment of ser'~ cicolumn i. In the table. the diu-.dov.n of their pre' iotsI in;e tmenti The effetise transfer intern:aional re-er%e . net of International Non should take intoaccount ne-i' inxstment flb\%. In et.ir Fund lredi. I, added to the trade urpIue io *ome cotiniries th. iinplcmenta,tion of debt-equt\ ci%e a totli * urpltiu icolumn 'i (inh counie e x aps ha- led 1o a cignific.ant inc reawe in foreign Bo.n Table h-. Etlimate- of the Re%ourre iYradei Surplus and Its Uses ,. er ge- .fr I'-. i pi rcn *i n' of [)P.a c urrr,t rpr;ie Re our,e bilance Net Trarier to 1 ;re,gn Crcd.ior, Re-c'urce rr.,dc U- ,4 T.atil Ci- -urplu' re-rn e -dnirkln L.;nE-g Ihorn Ir- etior- 'ijritrIr. I I2' 1iJ i4i I t1Ip -:-4 - r. \r,:en al I J 0.n 1 2.b '1 _ -1i.4 -11 3 Br.711 - . "; 3 ' ' _, I i. tThi Žll.'3 -11 S JI J l3a -'' - 4- C olobiaEl ' 3 -t ! 'S 2.' 11 ' -t1.4 -11.2 Ecuador . -i i :. -1i 5 N .t1c. 4o J 1 at I J f, h,ii -11 I - I. - UrXnzua'.- - t. I tI t ' '1 b I li i i-. C. PP .t e hed ..~~~~~ i' 5.ce. 1 1O i !J4 1-1 1 iii1 T Lrde -lip Id . equal to. e e ot e p.rtr o er irnport .It * oi 1 nd nonfacior ,er ke 12i Re-ir-c' ire defined as ioia re'er's c .iluding jOldl net ol- u'e o IkMF credit Intere't paid to nte IMP h,4 not tben sLubtracted. 13' The SLi.T, ot I I rI,d I I 14' The totat rDet iransfer to forei,r cr,diror' related to the tong - term debt It alo Includes an e,timtic 01 the iranster In .ol' ed ir dc-unted b.rac , rd , atii,Lzt,i,n 1f delt Inter~,t p,o ments are c ratiraer in,n accrued See Bo' T,hle h for det,lF . I Fi ETti,ie oi ihhe nct tr:instcr reltaed Ji .hon term Jebt' -i E 'tirm,ie ot 'he -m-i rlo ;1 t.oregn -ri e,tmrnt The repatriaon of pr -fits h,, nor been subtracted frmrni the net 01ut`10 .' S:1 te L n\The ce;tId Bank little or declined during the 1980s, and, in these tainly has happened in Chile and Colombia. countries, the potential exists for expanding But in Argentina, Brazil, and Mexico, export exports without the corresponding need to earnings increased to record levels in 1988 increase investment. In Bolivia and Central without bringing about an accelerated recovery America, any recovery in export volumes fol- of output. In Mexico, imports increased in lowing the long decline of the early 1980s is response to the liberalization of its trade sys- constrained both by the need to develop new tem and the consequent transformation to an production and export activities and to resume open economy. So far, Mexico's new level of investment in traditional exports. imports reflects a change in the composition of Increased export earnings should have facil- output rather than a recovery of GDP per itated the transition from a foreign-exchange capita. In Argentina and Brazil, despite the constrained situation to one in which condi- increased availability of foreign exchange, the tions for sustained growth are ripe. This cer- dollar value of imports did not increase be- Latin America and the Caribbean 133 invesmInent That nmj\ not hake teen pioperl .- t[Fe trade *.urplus a, a pcrtenta&e o1t tJDP at counted The etimiiem, rresented in columnn t .,re crn'tant price- c.an he obhtaind from cch cOfln erv rentiat'e Ir; nairlpal avdntIf. t-Lil the esiimatles depend Bl[o l1ble n-2 hc.%-: the net tran4fer to lone on the price; ol the h1s, .ear .%hbch i! not the term creditors. The net tran,fer include, an, *;nrc f;.r all countrie' Gi ellt he larg_e chan_es in reiource trans;ferred to creditor' Ji a re-uli .or relati. e price; and. in pa,ricalir. th,: deteriora- debthbut bok, and capitalizatiurn icolumn "i The I[rn in the termn ot iradc kith re'pecl to 1.i9--h. table pro' ides information *-n the net iranstcr the r.io, aL con'an fli Pie- shti a different frLm dehbir counrric- publik ectcor' a' kell o. rid uli e'peciall% irn cotinirle' that u-e I9Sti a! on the total net transiei to tinanci,l mnjrk,:t' the ba.se ;e.r for thc national accotjnt, at con- bhichi include; mr:inl comnmercial b.nks. The sLant prices The dollar -aluaiuvn of Gl)P atso basic 'nto'rmrironforr hl itable i,trotnihe Brnk'' pc-e' priblem; because of the large di,crepan- debtor report!nn ss,rem. but orme adiutmirenr, cie, betneen otYicial and parallel e;chnrie ale-s hake been m ade to iho'- icual. rather thin in ',me countries. I he 1iui e, for Argentina and accrued. paymenti. Bra.;il in l4se hid to he jdiusied [to reflect the The dtr.i used tn the table are ;t currerl prices. o, ern alu-arin tor Ihe nationnal currenm ja the and oLficial echange rjle, hase been Lused to otffiilcal rate estimate the dollar %jlue of GDP. Est,mates or Box rab/t 6-2. Net Tran.rer io Foreign Creditors. Long-term De.h ia.er.gc for ! rrerceri ofi tDP a c'rreni rilcc- t- oi-l From purikF P UN fin-ncial mo l,ei, Ii 2 3 !_I4,f, Ii1i ; 4 2 1 it ,,i ,2 3 ,4 .Areenina 2 S i - 3 2 I - -O.4 1 . ii - i! 3 4 ErazrI 3' i i'~, 22 2 .4 r2' 1 4 I1 i 1 ) . Cr le 1 i3i -2 ' |4 >' - -23 45 i ; n -1 ot: 2o h _ol.ornbi 22' -M!il 32 i - -ii 2| ii ' -ii~ 4 Ecu Ador -sli- - -4 *; na n . na ia n IJ - - _1 lMe-cxc...... , ' i, 1 ' _, . I 3 I .3 - 4 3 '. I h -.i,) J 4 Llrucuai . i - -2'" 4 ! - -2 I 3 ' _ - I 'cne:uli i _ . - 4 4 4 - _ 2 - 24 42 C. DP. , c. hle.i :,% eri L!, 4 4 in9 - 4 i 2 ' 11 2 _i1 2 ' 4 t In 12 I S N.:iTL- Th- pubHic 'cior reter, t.- publ, and rihi,J-. U.r.nid eN i a'r. ithe .,ni * it.,, - Li. 1r fl iriilreri rid b% Chil,r * ri. iie r.s * .-on rheii r,,hl r. u irnrtcrd d.tr. hr h, hber. c ..iil.dd inr.n, he rubii . li*lTre; parmenri Finjnc,iln rr. ,r ad ,r d rld n ir. lh a ,nk i I. I i T., ,-, L n a Nit .a.dA Hr. , Nei ir,n.tnr il='*- 4 21, C. a1 ' r. ,n - I.rua l . ti d -in ict.i.n Irroi-h h.-h.i. *c r , -Wau ie m.nI *h: rin , i,nIir. ,Nir N ..LrAll'0 . icqu l r. pr(nlr.0ir..iari- ic- 4. T.tmeni 4S C-h Inlki Vi r,i-Iiani- cause domestic demand slowed, and, more amounted to 3.1 percent of GDP. The trade recently, declined. Consequently, the resource balance of the eight countries ranged from a balances of Argentina and, especially, Brazil trade deficit of 1.4 percent of GDP in Venezu- with the rest of the world showed a large ela to a surplus of 5.3 percent in Chile. A trade surplus over the past eighteen months. surplus, by definition, means that part of out- The aggregate resource, or trade, balance of put is not used for domestic consumption and the region in 1988 showed a surplus of $25.6 investment, and that it is used either by the billion, an increase of $7.1 billion over the public or the private sector to accumulate average of 1986-87. Box 6-1 reports on esti- foreign assets (international reserves in the mates of the resource balance for 1986-88 and case of central banks), or to transfer resources its uses. For the eight highly indebted coun- to foreign creditors and investors. While Chile, tries reported on in the box, the GDP-weighted Colombia, and Uruguay were able to accumu- trade surplus over that three-year period late reserves, other countries used reserves, 134 1989 Regional Perspectives especially Venezuela, where both the trade that are not accounted for in the balance of deficit and part of the net transfer to creditors payments. were financed by depleting reserves. The use The region's net transfer to foreign creditors of international reserves and the trade surplus has been significant in the past three years, and for the eight countries amounted to 3.6 percent most highly indebted countries have had to of GDP over 1986-88. generate a large trade surplus to finance this The net transfer to long-term creditors from transfer. Measures of the trade surplus at cur- the eight countries considered in Box 6-1 rent prices do not take account of the deterio- amounted to 4.4 percent of GDP over the ration in the terms of trade in relation to 1986-88 period. This transfer was exception- 1979-81, which is still significant for oil-ex- ally high in the case of Chile (13.3 percent of porting countries. But no clear relationship is GDP) because of a significant reduction of debt evident between the trade surplus and eco- with commercial banks through buybacks and nomic performance in 1986-88. In particular, capitalizations (around 7.5 percent of GDP). there is no indication that the trade surplus was The transfers from Mexico and Venezuela an obstacle to the sustained recovery of output. were also well above the average for the eight On the one hand, Chile, which has a trade countries. There was a net transfer from long- surplus well above that of the other highly term creditors only to Ecuador (estimated at indebted countries, has been recovering; Co- 0.9 percent of GDP), mainly because of arrears lombia has also continued to grow while gen- in capital and interest payments (around 3.6 erating a trade surplus larger, relative to GDP, percent of GDP over 1986-88) and emergency than some highly indebted countries. On the loans granted after the 1987 earthquake. It is other hand, the deceleration of growth in Ar- estimated that the public sector of debtor coun- gentina and Brazil since 1987 has taken place at tries transferred 2.7 percent of GDP to long- a time when export earnings have reached term creditors, while the private sector trans- record levels; further, Argentina's net transfer ferred 1.7 percent of GDP. The private sector's to creditors since early 1988 has been lower transfer through debt buybacks and capitaliza- than at any time during the past six years. Over tions was important in Brazil, Chile, and Mex- the past three years, the major oil-exporting ico. From the viewpoint of creditors, an esti- countries of the region have pursued different mated 4 percent of debtor countries' GDP was strategies for adjusting to the fall in oil prices, transferred to commercial banks, of which 2.8 but the need for servicing their external debt percent was in the form of interest payments. has not been the decisive factor in defining the For the eight countries, the net transfer to strategies. Venezuela was able to support eco- long-term creditors was 0.8 percentage points nomic growth until late 1988 by depleting in- of GDP larger than the total surplus generated ternational reserves. Mexico made a quick over the 1986-88 period. Foreign investors adjustment to the fall in the price of oil; al- provided the additional resources (an esti- though adjustment has not yet resulted in a mated 0.7 percent of GDP). Only three coun- sustained recovery, it has generated a signifi- tries clearly deviated from that pattern. cant trade surplus to service its debt. Ecuador, In Chile, the net transfer to creditors was where troubles were aggravated by the 1987 much larger than the total surplus (around 9 earthquake, is still attempting to put together a percent of GDP), and financing involved the strategy and has not been able to service its attraction of significant capital inflows from debt. foreign investors and other private sources. The analysis of export earnings and resource The growing inflow of capital allowed Chile to transfers in the period 1986-88 highlights three reduce its external debt without pressing do- issues. First, export earnings have increased mestic interest rates upwards. In Venezuela, enough to ease significantly the foreign-ex- the net transfer to creditors was also larger change constraint. Except in the oil-exporting than the total surplus (above 4 percent of countries, the process of restoring per capita GDP), but there was little net inflow of foreign output, income, and consumption to levels that capital. Venezuela's private sector was able to had prevailed during the 1979-81 period is no service external debt with earnings from hold- longer constrained by the availability of foreign ings of foreign assets, which are not accounted exchange. Second, the trade surplus has been for in the balance of payments. Finally, the net increasingly responding to domestic policies financial transfer from creditors to Ecuador rather than to the availability of foreign capital implied a resource transfer only in 1987, when and to debt-service strategies. The capital con- the trade balance showed a deficit. Over the straint has been eased in countries whose 1986-88 period, Ecuador had a trade surplus sound fiscal policies are attracting both na- and a net transfer from creditors, and, there- tional and foreign capital, the latter from vari- fore, there should have been capital outflows ous sources other than commercial banks, Latin America and the Caribbean 135 including neighboring countries. Third, not- tion of real revenue from a given rate of withstanding the significance of the net trans- monetary growth. To a lesser extent, Ecuador fer to long-term creditors, its actual amount is has also experienced the same problems, since increasingly becoming a residual variable de- the government has relied on both monetary termined-through negotiations or unilateral expansion and domestic borrowing to finance actions-by the resources available to the pub- the primary deficit, although real interest rates lic sector. In particular, debt-reduction have remained negative as a result of controls schemes have taken care of most of the private on nominal rates and a lagged adjustment to sector's long-term external debt and contrib- the unexpected acceleration of inflation. uted to focus the debt problem on the capacity In contrast with the experience of Argentina of the public sector to generate a surplus to and Brazil, Mexico has largely overcome the service its debts. high costs of relying on monetary expansion and transfers from domestic creditors by deep- Public Finances, Internal Transfers, ening, since late 1987, the adjustment of the and Debt Service public sector. The public sector's primary sur- While the public sector has effectively trans- plus is large enough today for the government ferred resources to foreign creditors in an to transfer resources to both domestic and amount equivalent to 3 percent of GDP over foreign creditors (interest payments are larger 1986-88, in most countries it has not been able than net borrowings from each set of credi- to generate a primary surplus larger than that tors). But because the primary surplus is not fraction of GDP.7 In none of the highly in- large enough to finance the interest bill, the debted countries is the public sector's primary total debt of the public sector has kept grow- surplus large enough to finance all interest ing. Given the already extensive adjustment, payments on domestic and external debt; thus, including large reductions in real wages and total public debt has continued to increase at investment, of Mexico's public sector, the least in nominal value, and, in some countries, potential for further adjustment is limited. It is in real value, as well. In 1988, as a result of the in this context that new options for managing large unexpected increase in the price of cop- Mexico's external debt will have to be identi- per, Chile's public sector could have generated fied and assessed. a primary surplus larger than interest pay- The experience of Chile and Colombia, ments, but the government opted to reduce where recovery has been sustained over the taxes. In Colombia and Mexico, the public past three years, has been quite different. The sector has also been generating a primary public sector's primary surplus may have been surplus, albeit one that is smaller than total lower than the resource transfer to foreign interest payments. In other highly indebted creditors in these two countries, but it was countries, the public sector has not yet gener- large enough to enable domestic resources to ated a primary surplus. be mobilized to finance the gap without press- The difficulty the public sector has had in ing interest rates upwards. Revenue from mon- generating a surplus to finance the transfer of etary expansion is not insignificant, but the resources to foreign creditors means that its two governments have avoided its use as the own financing has had to come from three residual source of financing. Furthermore, do- sources: international reserves, a net transfer mestic financial markets have satisfied the from domestic creditors (net borrowings larger limited borrowing demands of the public sector than interest payments on the public sector's without pressing interest rates to rise. Both domestic debt), and monetary expansion. Each of these sources is essentially temporary. The limits of using reserves was shown by The public sector is defined inclusive of central banks and the experience of Venezuela, which depleted all state-owned enterprises. The primary, or noninterest, them in 1988. In Argentina and Brazil, trans- balance is equal to the difference between total public fers from domestic creditors resulted in larger revenues and total public expenditures net of interest increases in outstanding domestic d , wpayments. A primary surplus then means that revenues are increases in outstanding domestic debt, with larger than expenditures net of total interest payments. It attendant increasing pressures on real interest can be calculated by subtracting total interest payments rates. This situation became unsustainable be- from the public-sector borrowing requirement. Financial cause both governments borrowed to pay a information about the consolidated public sector (inclusive of central banks and public enterprises) is not good enough growing interest bill on domestic debt and to allow comparison with the statistics used in Box 6-1. created further financial distress in the private Because of the lack of appropriate data in the text, the sector. In both countries, monetary expansion primary surplus is defined as an excess of (a) the sum of led to accelerated inflation, to the point of interest payments on government's domestic debt and interest payments on the public-sector's long-term exter- triggering hyperinflation, which eventually re- nal debt over (b) the sum of the public-sector's borrowing duced the demand for money and the collec- requirement and the central bank's losses. 136 1989 Regional Perspectives Chile and Colombia have been able to accumu- Venezuela, the second largest recipient of ad- late some reserves over the past three years. justment lending, received assistance to help In sum, the recent experience of the region's restore the competitiveness of national produc- highly indebted countries highlights the critical tion, improve public-sector management, and importance of the internal transfer of re- target social programs. sources. The primary surplus of the public The Bank continued to provide substantial sector in Argentina, Brazil, Ecuador, and Ven- traditional investment loans, as well. Brazil ezuela will have to increase-as has happened and Argentina received the most commitments in Chile, Colombia, Mexico, and Uruguay-if of IBRD funds. In Brazil, project lending in- governments no longer are to rely on unsus- cluded support for malaria control, decentral- tainable domestic sources to finance the trans- ized urban development, and irrigation. In fer to foreign creditors. An increase in the Argentina, Bank projects supported the hous- primary surplus will require further adjust- ing and electric-power sectors, as well as the ments in public-sector revenues and expendi- strengthening of tax administration. In other tures, compatible with efficiency in resource countries, project lending supported the ex- allocation and tax collection. Additional taxa- pansion of infrastructure and housing, as well tion should not introduce new distortions, and improvements in urban services and in the public expenditures that complement private social sectors. investment and that protect the poorest groups The Bank further strengthened the economic in the population should be maintained. This policy dialogue with its Latin American and limits the speed at which the primary surplus Caribbean borrowers by expanding its eco- can be efficiently increased. Thus, at least nomic and sector work. This work focused on during the transition to a sustainable level of four fundamental themes: macroeconomic is- primary surplus, the amount of the external sues of stabilization and growth, sectoral and transfer will have to be limited. In countries institutional reform, external finance, and is- where the public sector is overindebted- sues of transition to sustained growth that cut where even substantial efforts to undertake across all of the economic and sector work. adjustments will not be enough to generate the Bank lending and policy advice has paid primary surplus needed to pay fully the interest special attention to the need to retarget subsi- bill on outstanding debt-creditors will have to dies and provide social services to the poorest share the burden of fiscal adjustment through groups in the areas of food programs, health, debt-service relief. and primary education. This need has become particularly important in Bolivia, Colombia, Activities of the Bank, Fiscal 1989 Guatemala, Jamaica, and Venezuela. The Bank increased its lending program to the region in fiscal 1989 by 11 percent over Cooperation and Cofinancing fiscal 1988 amounts. Total lending commit- The Caribbean Group for Cooperation in ments for forty-three operations were $5.8 Economic Development (CGCED) had an- billion, an amount $578 million above fiscal other successful year in providing a productive 1988 totals. Gross disbursements to countries forum for economic policy dialogue and for in the region were $3.4 billion, a decrease of coordinating external financing assistance to $817 million over fiscal 1988. Gross disburse- its developing member countries. It has also ments for the four-year period, fiscal 1985-89 facilitated regional efforts of the Caribbean totaled more than $18 billion, for an annual countries to promote private investment, tour- average of $4,517 million. Since interest paid to ism, trade, agricultural diversification and de- the Bank has increased along with the region's velopment, health, and a variety of other ac- outstanding debt, net transfers from the region tivities; and it has heightened awareness of the to the Bank further increased. Table 6-13 environment as a necessary element of sustain- shows the net transfers to the region as a whole able development. and to its three most populous countries. Following the hurricane that struck Jamaica More than half, some 53 percent, of Bank on September 12, 1988, the Bank organized, commitments were in the form of adjustment under the auspices of the CGCED, a special lending to support economic policy reforms donors' meeting in Berlin (West) during the aimed at consolidating macroeconomic stabil- Bank's annual meetings to help the govern- ity and enhancing allocative efficiency. Adjust- ment mobilize the financial support needed for ment lending in Mexico, the largest recipient of its reconstruction effort. The CGCED forum this type of lending, supported policy reforms was also instrumental in helping the govern- in the financial system, the area of industrial ment of Guyana mobilize the needed financial regulation. and the restructuring of public en- assistance in support of its economic-reform terprises and some manufacturing sectors. program. Latin America and the Caribbean 137 Table 6-1,. Net Transfers to Latin America and the Caribbean n.ilIons ci L i -ollaru t-- I,.,l * I[Cn; 1~~~~~~~~~~ "N r4>;v 1|1 I JA P4 ,% !e u 1u 4- IhRD iand IDA comm nii eni 7(l1 l] 6.4 -11 i '.211 11 -F 1 ii ;.11 F.'.- I 24.35 5 t,iros~ di,bur,emenis X! 2 'Sip S I .YI V 9 . 4 4 I .13 I 3 4 I A. IIr. Rep%nleienI' 93h, 3.i15 - h_t- 2 .4f 11 I 4 h'.'l 4 it i 4'-in Nei disburs,tmenls I 1114 hl 1.'34 6 ' ,I 4i 1 34 274 1 1.4? ,- l3 11 R.r,44 h InLete'st Jnd chur-e; (,76 3 1 2s.-5. S in.3 2 I .3 I '2.4 4'P' 5 2.14h h f 2 . ! Nei Etranter 7'dt91 I 1 49.i1 7. I ' h .1 1 i t, .., *iITF Di,hulrcmeni, from the ID x Sree d Furl, .re cc I.rdd. The corinir lI-. ho n ir. Ih h hl': Arc ihn e 1h I hle iorecl vmpul.-oon rhe retzonrl r,rin!. !ndu. urr,nt r.,, e,n .',.i, Det rlk rTAr n-:.r Add 1. "Alh " vlLl; .M r.Ar,.i At the ninth meeting of the Ad Hoc Advisory fiscal 1989 catalyzed about $0.35 as opposed to Committee of the CGCED, held on May 12, $0.24 in fiscal 1988. 1989, at Port-of-Spain, Trinidad and Tobago, Japan remained the most important source representatives of Jamaica, Guyana. and Trin- of cofinancing in the region, participating in the idad and Tobago presented their governments' largest number of projects and contributing the economic programs. These presentations af- largest individual share of total cofinancing forded the donor community an advance notice funds. The Export-Import Bank of Japan and of those programs and of the level of external Japan's Overseas Economic Cooperation Fund financing needed. remained by far the most important sources of The volume of cofinancing associated with untied cofinancing for adjustment lending. Bank operations to countries in the region in While official sources of cofinancing re- fiscal 1989 amounted to $2,141 million for mained dominant in the region during fiscal nineteen operations, a substantial increase 1989. it should be noted that cofinancing by over fiscal 1988. The catalytic effect of the export-credit agencies almost doubled. How- Bank's lending improved, also, in relative ever, no cofinancings with private-sector terms: Every U.S. dollar lent to the region in sources were realized during the year. 00 I ¾ 4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~4 'CC)S: -Kz N1. r s =r'sa Q C-O F -" 139 Section Seven Summaries of Projects Approved for IBRD, IDA, and African Facility Assistance in Fiscal Year 1989 Acronyms and Abbreviations Used in This Section ADF-African Development Fund FINNIDA-Finnish Intemational Development AfDB-African Development Bank Agency AFESD-Arab Fund for Economic and Social GTZ-German Technical Assistance Corporntion Development IDB-Inter-American Development Bank AIDAB-Australian International Development IFAD-Intemational Fund for Agricultural Assistance Bureau Development AsDB-Asian Development Bank IsDB-Islamic Development Bank ASEAN-Association of Southeast Asian ITU-Intemational Telecommunications Union Nations KFAED-Kuwait Fund for Arab Economic BADEA-Arab Bank for Economic Development Development in Africa KfW-Kreditanstalt fir Wiederaufbau BDEAC-Banque de Developpement des Etats NORAD-Norwegian Agency for Intemational de l'Afrique Centrale Development BITS-Swedish Agency for Intemational ODA-Overseas Development Administration Technical and Economic Cooperation OECF-Overseas Economic Cooperation Fund CCCE-Caisse Centrale de Cooperation OPEC-Organization of Petroleum Exporting Economique Countries CDC-Commonwealth Development SDC-Swiss Development Corporation Corporation SIDA-Swedish Intemational Development CIDA-Canadian Intemational Development Authority Agency UNCDF-United Nations Capital Development COFACE-Compagnie fran,caise d'Assurance Fund pour le Commerce UNDP-United Nations Development DANIDA-Danish Intemational Development Programme Agency UNFPA-United Nations Fund for Population EDF-European Development Fund Activities EEC-European Economic Community UNHCR-Office of the United Nations High EIB-European Investment Bank Commissioner for Refugees Eurofima-European Company for the UNICEF-United Nations Children's Fund Financing of Railway Rolling Stock USAID-United States Agency for FAC-Fonds d'Aide et de Cooperation Intemational Development FAO-Food and Agriculture Organization of WFP-World Food Programme the United Nations WHO-World Health Organization Agriculture and Rural Development from the Export-Import Bank of Japan. Total ALGERIA: IBRD-$110 million. About 38,000 cost: $569 million. people are to benefit directly from increased farm ALGERIA: IBRD-$58 million. In support of a incomes. and about 340.000 mandays of hired desert locust-control project, which seeks to employment could be generated through a project minimize, if not avert, economic disruption to that will complete an existing irrigation scheme some 39.7 million hectares of the country's in the north of the country and support newly productive lands and to protect the livelihood of created groups of private farmers with onfarm almost 12 million people, funds will be provided irrigation development and services. Total cost: for equipment, vehicles, leasing of aircraft. $425.9 million. strengthening of national locust-control ALGERIA: IBRD-$ 110 million. Finance will be capabilities, FAO-approved pesticides, technical provided to the Banque de l'Agriculture et du assistance, and training. Total cost: $112 million. D6veloppement Rural (BADR) for onlending for onfarm and agroindustrial investments. Institution-building assistance to the BADR is Data used in this section have been compiled from documentation included. Cofinancing ($110 million) is expected provided at the time of project approval. 140 Summaries of Projects Approved BRAZIL: IBRD-$71 million. The development of CHINA: IDA-$ 106 million. Farm production and irrigated agriculture on some 23,600 hectares is incomes will be increased in Shaanxi province, expected to increase agricultural production, one of the country's poorest, through a program improve small- and medium-sized farmers' of investments in irrigation, other rural incomes, and create employment opportunities in infrastructure, and in agricultural services. In the northeastern portion of Minas Gerais state, addition, some 130.000 people will be provided Total cost: $158 million. safe and secure drinking water. Total cost: BRAZIL: IBRD-$63 million. Productivity should $237.5 million. increase, the net incomes of as many as 165,500 EGYPT. ARAB REPUBLIC OF: IBRD-$40 farmers in Parana state improve, and state natural million. The country will be assisted in resources be safeguarded through the increased modernizing and expanding the agricultural- adoption of sustainable modern forms of land storage infrastructure, as well as in improving the management and soil and water conservation. handling of agricultural inputs, grains, and Total cost: $138.3 million. animal feed through appropriate mechanization BURKINA FASO: IDA-$42 million. An and the training of storage personnel. Total cost: agricultural services project seeks to improve the $103.1 million. effectiveness and impact of agricultural and ETHIOPIA: IDA-$85 million. Support for the livestock extension services in transferring government's reform-minded peasant technology to farmers, to strengthen animal- agricultural-development program, which has health services and adaptive-research programs, considerably liberalized grain marketing, will and provide functional literacy training to help sustain the movement toward improving the farmers. Total cost: $44.9 million. sector's incentive framework, facilitate the BURUNDI: IDA-$33. 1 million. A hybrid productive response among peasants, and operation will both deepen the adjustment mobilize support from other donors. Total cost: process in the agricultural sector (through $118.6 million. promoting the involvement of the private sector GHANA: IDA-$39.4 million. A forest-resource and cooperatives in sustainable agricultural input management project aims at stabilizing forestry delivery) and provide investment finance to production and export earnings, promoting strengthen agricultural research and the country's conservation and tree planting so as to counteract agricultural-extension services (through design fuelwood shortages and ecological deterioration, and establishment of a system based on and strengthen sector institutions. Cofinancing is training-and-visit principles). Cofinancing is expected from DANIDA ($8.3 million) and the expected from Belgium ($800,000) and ODA ($7.1 million). Total cost: $64.6 million. France/the EDF ($400,000). Total cost: $40 GHANA: IDA-$20 million. Privately owned rural million. banks, credit unions, and informal savings and CAMEROON: IBRD-$34.6 million. A livestock- loan associations will be supported through a line sector development project aims at increasing of credit to enable them to mobilize more meat and milk production, raising producer deposits and increase the flow of credit to the incomes, and at reducing the government's economy's largest and most important sector- financial burden resulting from its services to the agriculture. Technical assistance is included. livestock sector through a combination of policy Cofinancing is anticipated from the OPEC Fund reforms and investments. Cofinancing is for International Development ($5 million), as expected from IFAD ($10.8 million), the EDF well as the GTZ and CIDA ($3.9 million). Total ($1.9 million), and the FAC ($1.6 million). Total cost: $38 million. cost: $55.2 million. GUINEA: IDA-$18.4 million. The first five-year CHINA: IDA-$ 109 million. The incomes of more phase of a long-term plan for developing and than 1.5 million families are likely to increase strengthening research, extension, and farmer through a project designed to assist the Shandong organizations in the country will be financed. provincial government in its efforts to accelerate Cofinancing is anticipated from the EDF ($6.1 the development of its unproductive coastal million), IFAD ($1.9 million), and the FAC ($1.6 lowlands for culture fisheries, intensify crop million). Total cost: $30.9 million. production in existing low-yielding areas, HONDURAS: IBRD-$25 million. A fourth increase the value of livestock production and agricultural-credit project will not only provide processing in the Tuhai river basin, and upgrade funds to a vital sector, but will also improve the the production and processing of small livestock rural credit system by rationalizing interest rates, in the Yi Meng poverty area (one of the poorest imposing monitorable and enforceable in China), thus providing productive employment performance criteria by financial intermediaries, (primarily for women), alleviating poverty, and and identifying and promoting innovative ways reducing income disparities. Total cost: $272.3 to channel more credit to low-income producers. million. Total cost: $39.6 million. Agriculture and Rural Development 141 INDIA: IBRD-$ 165 million; IDA-$160 million. MADAGASCAR: IDA-$24 million. The first Agricultural production, incomes, and direct seven-year phase of a long-term support program employment opportunities will be increased for to strengthen national agricultural research and some 40,000 farm families through the make agricultural research more responsive to expansion of irrigation in Karnataka state's the needs of producers will be financed. drought-prone north. In addition, the means for Cofinancing ($10.4 million) is anticipated from the physical relocation and reestablishment of the France, the Federal Republic of Germany, social and economic resource base for the USAID, the SDC. the AfDB, and IFAD. Total population displaced as a consequence of the cost: $70.6 million. project will be provided. Institution-building MALAWI: IDA-$ 18.3 million. The marketing of assistance is included. Total cost: $542 million. smallholder crops will be improved through INDIA: IBRD-$30 million; IDA-$ 147 million. support for the government's efforts to develop a About 510,000 full-time jobs will be created multichannel marketing system that encourages through a national sericulture project that seeks private-sector participation in agricultural trade. to increase productivity and product quality; Total cost: $28.3 million. improve government supporting services and MALAYSIA: IBRD-$71.5 million. The facilities; and promote the operation, on a government will be helped in implementing the commercial basis, of public-sector grainage Sahabat land-settlement program in East Sabah, facilities and the involvement of the private with emphasis on consolidation and settlement of sector in other aspects of the industry. already planted areas. In addition, the Cofinancing is expected from the SDC ($25 implementation of an environmental- million). Total cost: $347.1 million. management plan for the Dent peninsula, INDIA: IDA-$150 million. By reorienting the designed to strengthen management and operations of selected public-sector seed protection of wildlife reserves and institution corporations along commercial lines, building in Sabah, will be supported. encouraging greater private initiative through the Cofinancing ($500,000) is anticipated from the provision of investment funds. and developing UNDP. Total cost: $216 million. the institutional environment to make it MOROCCO: IBRD-$ 190 million. Through a line conducive to long-term growth of the seed of credit and institution-building assistance, the industry, the development of a market- National Agricultural Credit Bank (CNCA) will responsive, financially viable seed industry will be assisted in adapting its organization and be promoted. Total cost: $177.5 million. procedures so that it can be responsive to an INDONESIA: IBRD-$ 118.2 million. Some accelerating investment rate by the private sector 60,000 families are to benefit from a tree-crop in the rural areas of the country. Cofinancing is processing project that seeks to raise the being discussed with the OECF ($ 100 million), efficiency of the tree-crop subsector, increase the AfDB ($70 million), the EIB ($60 million), smallholder and estate incomes, promote regional the KfW ($38 million), and the AFESD ($30 development, and increase exports of palm oil million). Total cost: $1,532 million. and rubber. Technical assistance is included. MOROCCO: IBRD-$28 million. At least 130,000 Cofinancing ($1.8 million) is expected from small farmers are to benefit from a project that Japan's grant facility. Total cost: $239 million. comprises a first, five-year time slice of a INDONESIA: IBRD-$35.3 million. The ten-year program to reform research and efficiency and relevance of the agricultural- extension services. Cofinancing, in the amount of research system for promoting continued, $15.6 million, is anticipated from the KfW, the sustained agricultural development will be GTZ, and France. Total cost: $60.8 million. increased through operational support of critical NEPAL: IDA-$30.5 million. People and resources elements of the ongoing research program and in Nepal's hill districts will be mobilized to the introduction of institutional and management establish a forest-management system that would reforms to improve research. Cofinancing ($3.4 conserve and expand the forest resources needed million) is expected from Japan. Total cost: to sustain traditional farming systems and $50.4 million. livelihoods. Cofinancing is expected from KENYA: IDA-$20.8 million. New technologies DANIDA ($6.9 million) and the UNDP and management methods, designed to raise the ($500,000, which is a part of an ongoing $2.3 productivity of smallholder farmers, get more out million project). Total cost: $45.4 million. of severely constrained land resources, and, at the NIGERIA: IDA-$ 100.9 million. Some 1.2 same tirne, promote environmental conservation, million smallholder farm families are to benefit will be tested through a set of small-scale from a project that provides funds for subprojects. Cofinancing ($5 million) is strengthening extension services, onfarm anticipated from the UNDP. Total cost: $35.5 adaptive research and technology testing, million. irrigation and rural water-supply works, farming 142 Summaries of Projects Approved and fishing inputs, road rehabilitation and SENEGAL: IDA-$16.1 million. Funds and maintenance, a training program for agricultural technical services will be channeled in this cooperatives, technical assistance, and training. second small rural operations project to small Total cost: $159.4 million. groups of rural people who will undertake to NIGERIA: IBRD-$85.2 million. Statewide provide labor and some funds for the agricultural-development programs (ADPs) in development of several types of directly four states will be assisted in this first of a future productive agricultural activities. Cofmancing series of ADPs that aims directly to support the ($5 million) is expected from IFAD. Total cost: objectives of renewed agricultural growth with $26.1 million. progress on the long-run sustainability of SOMALIA: IDA-$70 million. Recurrent import agricultural expenditures and institutions. Total requirements of the economy will be financed in cost: $125 million. support of significant policy reforms that include PAKISTAN: IBRD-$200 million. An agricultural- the continuation of reform in foreign-exchange sector adjustment loan has been designed to policies, the decontrol of the financing system. support the government's efforts to promote the elimination of subsidies on diesel fuel and competitive agriculture and enhance sustainable tractor rentals, the liberalization of all productivity and growth through the mobilization agricultural marketing, the improvement of land- of domestic resources, the rationalization of tenure institutions, and the expansion of private- investment programs in the agriculture and water sector participation in supplying and distributing sectors, and the introduction of institutional inputs and services to the economy. Cofinancing improvements. is expected from the ADF ($25 million) and the PAKISTAN: IDA-$40 million. In the wake of two BITS ($500,000). devastating floods that occurred in 1988, SOMALIA: IDA-$19 million. The second phase selected flood-damaged irrigation, drainage, of a project designed to maintain and improve the flood-protection, and road infrastructure will be long-term productivity of the country's central restored. Total cost: $55.6 million. rangelands and the living standards of PAKISTAN: IDA-$34.4 million. The viability of pastoralists will be pursued through steps taken an integrated private tubewell-development to minimize the degradation of vegetation, program, designed to increase agricultural improve on the understanding of rangeland production. will be tested through the provision production systems, and increase the productive of a coordinated incentive package of efficiency of livestock. Cofinancing ($11 million) electrification, credit, and supporting services to is anticipated from the ADF. Total cost: $33.3 predominantly small farmers. Technical million. assistance is included. Total cost: $50.3 million. SRI LANKA: IDA-$19.9 million. The PAPUA NEW GUINEA: IBRD-$ 19.6 million. implementation of a five-year time slice Constraints to investment stemming from the (1990-94) of the country's forestry master plan inability of the govermment to identify, mobilize, will be supported through a forest-sector and transfer lands with productive potential will development project that seeks to improve the be addressed through a project designed to performance of the sector in line with the improve the management of land administration. economic, social, and environmental Cofinancing ($6.4 million) is expected from expectations of the govemment. Cofinancing Australia. Total cost: $42.8 million. ($2.8 million) is anticipated from FINNIDA. PORTUGAL: IBRD-$90 million. To help make Total cost: $31.4 million. the country's agricultural sector more ST. VINCENT AND THE GRENADINES: competitive and efficient within the larger EEC IBRD-$1.4 million; IDA-$1.4 million. market, the agricultural-production structure of Through a program of divestiture of state-owned the Tras-os-Montes region will be transformed land to small-scale farmers, improvements to by focusing on investments in the most farm-access roads, and technical assistance and productive areas of Chavez. Terra Quente. and training, growth and diversification of the Douro valley and on privatization of the agricultural production will be promoted and sector. Cofinancing ($213.1 million) is expected income distribution of smallholder farmers from the EEC. Total cost: $415.8 million. improved. Total cost: $4 million. RWANDA: IDA-$19.9 million. Some 168,000 SUDAN: IDA-$20 million. A project in south farm families are to benefit from a project Kassala province seeks to increase crop and designed to improve agricultural productivity, as livestock production on a sustainable basis, well as farmer incomes and nutrition, through improve enviromnental management, and better and more cost-effective delivery of promote greater economic self-reliance among agricultural services (adaptive and onfarm the 200,000 refugees sheltered there. research, extension, seed production) on a Cofinancing ($10 million) is anticipated from the national scale. Total cost: $30.1 million. UNHCR. Total cost: $34.4 million. Development Finance Companies 143 TANZANIA: IDA-$25.1 million. Long-term dam and its associated irrigation canals. Total growth in the agricultural sector will be cost: $27.9 million. supported through a project that seeks to increase YEMEN, PEOPLE'S DEMOCRATIC REPUBLIC the nationwide production of cashewnuts for OF: IDA-$ 12 million. Some 1,250 farm export and the production of coconuts for the families are to benefit directly from a third domestic vegetable-oil market. Cofmancing is agricultural project in the Wadi Hadramawt area anticipated from the ODA ($6.3 million) and the that will provide a program for consolidating, Federal Republic of Germany ($5.7 million). expanding, and ensuring sustained development Total cost: $42.4 million. of land and water resources. Cofmancing is TANZANIA: IDA-$18.4 million. Existing anticipated from the KFAED ($11.9 million) and extension services will be rehabilitated and the AFESD ($8.5 million). Total cost: $41.8 consolidated into one efficient and cost-effective million. system able to disseminate appropriate ZIMBABWE: IBRD-$36.3 million. An agricultural technologies to farmers, thereby agricultural-credit and export-promotion project enabling them to increase production and rural seeks to enable smallholders to increase the incomes. Cofinancing ($8.8 million) is production of food, as well as cash and export anticipated from the ADF. Total cost: $30.4 commodities, while encouraging commercial million. farmers to diversify into export and import- TANZANIA: IDA-$8.3 million. The first stage in substitution crops for which they have a the longer-temm process of rehabilitating the comparative advantage. Cofinancing is expected country's agricultural-research system, will be from IFAD ($15 million), BADEA ($9.7 implemented: A consolidated and streamlined million), Japan ($1.8 million), and New Zealand organizational structure and management system ($200,000). Total cost: $116.9 million. for research will be put in place, staff trained, institution-building assistance provided, some priority programs rehabilitated, and a research Development Finance Companies maser lanpreard. ofiancngis expected BOLIVIA: IDA-S 11.3 million. Supplemental master plan prepared. Cofinancing iexctdfunds from IDA reflows will be provided to help from the ADF ($8.2 million), the United Kingdom ($2.9 million), the Netherlands ($2.7 finance the financial-sector adjustment credit, million), and the Federal Republic of Germany approved in fiscal 1988 in the amount of $70 ($1.6 million). Total cost: $25.3 million. million. TUNISIA: IBRD-$84 million. The CHINA: IBRD-$300 million. Through provision implementation of the second phase of the of industrial credit and technical assistance, the government's medium-term agricultural-sector China Investment Bank will be strengthened in adjustment program-designed to maintain both its traditional and new areas of activity, its agricultural growth in a time of reduced public resource base will be expanded and diversified, resources-will be supported. and investments financed in the modernization TURKEY: IBRD-$250 million. The lending and and restructuring of light industry and in the institutional-development program of the removal of operational bottlenecks. Total cost: Agricultural Bank of Turkey (TCZB), the $460 million. country's largest bank, will be supported. In CHINA: IBRD-$ 154 million. Industrial-sector addition to lending directly to farmers, the TCZB weaknesses will be addressed at the provincial will also channel funds to agricultural-credit level through a project in Tianjin that will attempt cooperatives, which lend primarily to small and to assist the authorities there in the identification medium-scale farmers. Total cost: $1,227 million. and resolution of policy and system-reform TURKEY: IBRD-$ 150 million. Lines of credit issues in conjunction with specific enterprise- will be provided to participating credit level restructuring. Total cost: $227.6 million. institutions for onlending as subloans to cover THE GAMBIA: IDA-$ 10 million. An integrated the direct and indirect foreign-exchange costs of package of financial resources, training, and private-sector agroindustry subprojects that are technical assistance, designed to result in a financially and economically viable. Technical smaller and improved public sector, a healthier assistance is included. financial system, and an invigorated small- and YEMEN ARAB REPUBLIC: IDA-$15 million. medium-sized enterprise sector, will be provided. Agricultural institutions, primarily the Eastern Total cost: $13.6 million. Region Agricultural Development Authority and GHANA: IDA-$30 million. A small and medium the Agricultural Research Authority, will be enterprise (SME) development project seeks to strengthened in order to address the long-term ease the constraints working against private agricultural-development needs of the Eastern SMEs. Technical assistance to SMEs, as well as Region and provide for the early and efficient use to governmental and nongovernmental of the productive potential created by the Marib organizations, is included. Cofinancing, in the 144 Summaries of Projects Approved amount of $6.3 million, is being sought. Total of promoting private industrial investment and cost: $57.4 million. developing equity markets, will help finance GHANA: IDA-$6.6 million. Supplemental funds viable private industries through a network of from IDA reflows will be provided to help participating financial institutions (PFIs), finance the financial-sector adjustment credit, including four major commercial banks and approved in fiscal 1988 in the amount of $ 100 three leading development banks. Technical million. assistance, aimed at accelerating the growth of GUINEA-BISSAU: IDA-$5 million. Income and equity markets and capital-market institutions, as employment opportunities among low-income well as strengthening the PFIs, is included. Total and unemployed urban and rural workers will be cost: $298 million. increased through support of activities having PHILIPPINES: IBRD-$300 million. Support will high economic and social rates of return. be provided the country's financial-sector reform Cofinancing, in the amount of $ 11 million, is program, which aims at strengthening the being sought. Total cost: $17 million. financial system, in particular, the commercial- INDIA: IBRD-$295 million. An integrated banking segment. Cofinancing, in an amount export-development program in four financial equivalent or close to the Bank loan, is institutions, which would help play a major role anticipated from the Export-Import Bank of in helping private-sector clients develop export Japan. plans for the production and marketing of their SAO TOME AND PRINCIPE: IDA-$5 million. products and in financing the resulting The social and economic cost of structural investments, will be supported. Cofinancing adjustment and economic decline will be ($2.7 million) is expected from Japan. Total cost: mitigated through a multisector project that seeks $730.4 million. to generate income and employment LAO PEOPLE'S DEMOCRATIC REPUBLIC: opportunities for low-income and IDA-$ 10 million. Small and medium-sized underemployed urban and rural households and rehabilitation and expansion projects, mainly in supports the development of the country's light industry. will be financed. In addition, emerging private sector. Cofinancing. in the technical assistance and training will be provided amount of $2 million, is being sought. Total cost: to the State Bank of the Lao PDR and various $8 million. borrowing enterprises. Cofinancing ($600,000) SRI LANKA: IDA-$43.8 million. Funds will be will be provided by France. Total cost: $10.6 channeled to private industries, the country's million. credit-delivery system strengthened, and issues MEXICO: IBRD-$500 million. The government's that constrain development of a more efficient objectives of stabilizing the economy and private manufacturing sector addressed. restoring growth will be supported through a Cofinancing ($40.5 million) is expected from the program that includes measures to reinforce the AsDB. Total cost: $124.3 million. government's fiscal efforts, consolidate reforms VENEZUELA: IBRD-$353 million. The first in the financial sector, strengthen prudential phase of the govemment's program of trade- regulations and supervision, and reduce interest policy reforms to improve domestic efficiency subsidies and fiscal transfers for them. Technical and international competitiveness will be assistance is included. supported. MOROCCO: IBRD-$23 million. The ZAIRE: IDA-$20 million. Technical assistance government's structural-adjustment reform will be provided to Gecamines, the country's measures will be carried out more efficiently leading mining company and foreign-exchange through a project that provides assistance in earner, to help it reduce costs, improve operating introducing improved financial and operational efficiency, accelerate its current rehabilitation management practices. Operational support to program, and prepare the next stage of that the government will be extended, as well, program. Total cost: $30 million. through financing consulting and advisory services, training and workshop activities, and Education equipment. Total cost: $39.8 million. THE BAHAMAS: IBRD-$10 million. Policies PAKISTAN: IBRD-$ 150 million. The will be implemented and institutions developed government's financial-sector reform program, for the management and financing of training which aims at broadening and deepening that would make more efficient use of available financial markets so as to support an expansion public and private training resources. In addition, of private investment and savings, will be planning of post-secondary education will be assisted. improved, training capacity primarily for the PAKISTAN: IBRD-$ 148 million; IDA-$2 hotel and tourism sectors will be upgraded and million. A third industrial-investment credit expanded, training opportunities for adults and project, which supports the govemment's policy out-of-school youth expanded, and the efficiency Education 145 and relevance of vocational training improved. LAO PEOPLE'S DEMOCRATIC REPUBLIC: Total cost: $17.4 million. IDA-$3.5 million. The government's objective CHAD: IDA-$22 million. An education- of reducing shortages of professional manpower rehabilitation project will address three priority will be supported by training engineers in the concerns: the sector's underfinancing and the basic disciplines required for development and need to ensure the sustainability and increase the by rehabilitating and equipping the National productivity of investments made by local Polytechnic Institute. Cofmancing ($13 million) communities; the poor leaming environment in is anticipated from the SDC. Total cost: $18.7 primary education (dilapidated schools, lack of million. textbooks and classroom supplies, reliance on MALAYSIA: IBRD-$58.8 million. locally recruited and untrained teachers, and Implementation of the government's education insufficient teacher supervision and support); sectoral policy and institution-building efforts and the Ministry of Education's institutional will be accelerated to improve the quality of weaknesses. Total cost: $25.2 million. education and the efficiency of education CHINA: IDA-$57 million. Textbooks will be management (through a national staff- improved at all school levels through a project development program), as well as to increase that, by providing technical assistance and access to better education (through training to assist the development of publishing implementation of a five-year investment and printing institutions, as well as modem program). Total cost: $159.8 million. printing equipment for new and existing MALDIVES: IDA-$8.2 million. By expanding publishing facilities, will result in improved the opportunities for higher-level training textbooks with respect to educational overseas and by increasing the capacity and effectiveness, content, variety, and physical improving the quality of secondary education quality. Total cost: $114.6 million. (including increased enrollment of females), COLOMBIA: IBRD-$100 million. A second skilled manpower shortages are expected to be subsector project for primary education, which alleviated. Total cost: $9.3 million. focuses mainly on rural areas, seeks to improve MALI: IDA-$26 million. The government will be resource management and mobilization for assisted in implementing an integrated package primary education and to raise educational of reforms and investments aimed at reshaping quality at this level while further expanding the country's unbalanced education system, access by school-age children. Total cost: $169.2 improving its performance and relevance, and million. promoting a more cost-effective use of scarce GUATEMALA: IBRD-$30 million. Through a resources. Total cost: $56.2 million. second basic-education project, net enrollment is MAURITANIA: IDA-$ 18.2 million. Support will to be increased, the quality and efficiency of be given to the government's education strategy lower primary education improved, and that gives priority to expansion of, and quality educational management strengthened. Total improvements in, primary education and to the cost: $68.3 million. restructuring of secondary and higher education INDIA: IBRD-$30 million; IDA-$250 million. in order to align the development of these two This first-ever Bank-assisted vocational training subsectors with current resource constraints and project in the country seeks to improve the trends in labor-market demands. Cofinancing efficiency of industry by providing well-trained ($17 million) is expected from the AfDB. Total workers (attention will be paid to promoting cost: $37.4 million. training for women in modern sectors and MOROCCO: IBRD-$83 million. Through the high-tech trades) in relevant skill areas. establishment and equipping of more than 11,600 Institution-building assistance is included. Total new classrooms and related school facilities, cost: $429.8 million. access to primary schooling in rural areas will be INDONESIA: IBRD-$18.4 million. To bring increased (in particular, for girls), as will about improved tree-crops subsector attendance, and the quality of primary education productivity, institutional capacity to manage will also be improved. Institution-building human resources will be strengthened, and assistance is included. Cofinancing ($40 million) training for staff and farmers will be provided. is anticipated from the AfDB. Total cost: $165 Total cost: $26.6 million. million. KOREA, REPUBLIC OF: IBRD-$16.4 million. NEPAL: IDA-$22.8 million. Immediate The government's priority for development in assistance will be provided in support of the technology-intensive sectors will be reinforced government's program to reconstruct or through assistance to improve the performance of rehabilitate about 2,350 schools damaged by the three national institutions involved in August 1988 earthquake. In addition, technological education and technical support earthquake-resistant design features will be services to industry. Total cost: $30 million. introduced into the reconstructed schools, thus 146 Summaries of Projects Approved improving their durability. Total cost: $30.2 development, will be supported. Cofinancing million. (DM26 million) is expected from the Federal NEPAL: IDA-$ 11.4 million. The enrollment Republic of Germany and, perhaps, Japan. capacity of the technician program and of the BANGLADESH: IDA-$87 million. The load engineering degree program of the Institute of growth in sixteen major towns up to the next ten Engineering (IOE) will be increased through the years will be met at least cost, system losses construction and rehabilitation of facilities at the reduced, and the quality and efficiency of three IOE campuses, and the quality of electricity supply improved. Institution-building engineering education increased through staff assistance to the Bangladesh Power Development training, curricula improvements, provision of Board is included. Total cost: $121.3 million. educational materials, and the raising of BRAZIL: IBRD-$94 million. A natural-gas admission standards. Institution-building distribution project seeks to substantially assistance is included. Cofinancing is anticipated increase the supply of natural gas to industrial, from the SDC ($8.5 million) and CIDA ($4 commercial, and residential consumers in the million). Total cost: $26 million. Sao Paulo area, as well as to strengthen the TUNISIA: IBRD-$95 million. The first phase of management and organization of the Companhia the government's reform program of the de Gas de Sao Paulo. In addition, environmental education and training system, designed to make pollution in Sao Paulo will be reduced through it more consistent with the country's medium- the substitution of clean-burning natural gas for term development needs, equitable, and cost- other fuels. Total cost: $285 million. effective, will be supported. Total cost: $183 CENTRAL AFRICAN REPUBLIC: IDA-$ 18 million. million. Through the construction of a dam to UGANDA: IDA-$22 million. A fourth education hamess the hydroelectric potential of the M'Bali project, designed primarily as a follow-up to the river, the rehabilitation of the power system in third project, seeks to continue the rehabilitation Bangui, and provision of institution-building of primary schools and the supply to them of measures and technical assistance to the power didactic materials and textbooks. In addition, and petroleum subsectors, the first step will be groundwork will be prepared for a more taken in restructuring the country's energy sector. comprehensive sector operation aimed at Cofinancing is expected from the ADF ($14.6 systemwide improvements. Total cost: $27.9 million), the CCCE ($13.3 million), BADEA and million. the OPEC Fund for Intemational Development VANUATU: IDA-$8 million. Principal ($8 million), the KFAED ($6.9 million), FAC investments in primary and secondary education ($4.8 million), and others, possibly including the over the medium term will be financed, and EDF ($2.7 million). Total cost: $75.7 million. assistance in implementing the education-sector DJIBOUTI: IDA-$9.2 million. Djibouti's objectives of the government's five-year dependence on imported fuel oil will be reduced development plan provided. Cofinancing ($7.7 through the further development of its million) is expected from the AIDAB. Total cost: geothermal resources. Institutional- $17.8 million. strengthening assistance is included. Cofinancing is anticipated from Italy ($22 Energy million) and the UNDP, together with the OPEC ARGENTINA: IBRD-$252 million. Support will Fund for Intemational Development ($1.4 be provided to help the government's electric million). Total cost: $38 million. power program meet the objectives of confining EGYPT, ARAB REPUBLIC OF: IBRD-$165 an expansion program to least-cost solutions, million. The Egyptian Electricity Authority will rehabilitating the finances of the national power be assisted in alleviating power shortages, utilities, promoting more rational use of thereby meeting the growing demand for electricity through a tariff system based on electricity; acquiring technology, particularly in economic costs, improving the efficiency of high-efficiency, combined-cycle power plant utilities, strengthening the institutional structure construction and operation; and in implementing of the sector, and establishing greater a program to protect and improve the environmental safeguards. Cofinancing ($250 environment. Institution-building assistance is million) is being provided by the IDB. Total cost: included. Cofinancing is anticipated from the $2,352.7 million. AfDB ($124 million), the AFESD ($123 BANGLADESH: IDA-$175 million. The million), the EIB ($57 million), and the IsDB government's energy-reform program, which ($15 million). Total cost: $848.5 million. consists of a number of significant improvements HAITI: IDA-$24 million. A fifth power project in the areas of resource development and seeks to provide power investments that are investment, energy pricing and demand urgently needed to ensure a reliable supply of management, and institutional performance and power necessary for economic growth, and, in Energy 147 particular, for industrial and commercial INDONESIA: IBRD-$337 million. A activities. Institution-building assistance to power-sector efficiency project seeks to improve Electricite d'Haiti is included. Total cost: $30.1 the efficiency of operations of diesel power million. plants, renovate small hydro plants in Java, HUNGARY: IBRD-$ 10 million. A project to extend distribution facilities to supply about develop and conserve energy is designed to 893,000 new customers, and augment the support significant improvements in the policy telecommunications facilities of the state and institutional framework of the energy sector, electricity corporation (PLN) in Java. Technical development of the oil and gas sector, and assistance to the PLN is included. Cofinancing preparation of an updated energy-conservation ($20 million) is expected from the Netherlands, program and financing of related investments. while an additional $67.6 million in cofinancing Total cost: $680 million. is being sought. Total cost: $597 million. INDIA: IBRD-$485 million. Assistance in KENYA: IDA-$40.7 million. The country will be meeting electricity demand in the northern assisted in preparing the necessary expansion of region will be provided through the addition of its electricity-generating capacity at least cost 1,500 mW of hydro capacity. In addition to the through the utilization of indigenous energy construction of a power station at Nathpa Jhakri, sources-in particular, the mobilization of a the transmission and distribution system in major geothermal program, to be implemented Himachal Pradesh state will be reinforced and over the next twenty years. Cofinancing, in the expanded. Cofinancing, in the amount of $300 amount of $9.5 million, is under consideration million, will be sought from bilateral donors, from the ODA, Japan, the KfW, FINNIDA. and suppliers' credits, and commercial banks. Total CIDA. Total cost: $59.6 million. cost: $1,474.6 million. MALAWI: IDA-$46.7 million. A 50-mW INDIA: IBRD-$400 million. Power supply in the hydroelectric power plant will be constructed western region will be increased through the and existing generating capacity rehabilitated so construction of a 1,000-mW addition to the as to maintain system efficiency. In addition, a Koyna hydroelectric power plant and woodfuel program, comprising nurseries, tree transmission/distribution lines. In addition, the plantations, forest management, and woodfuel Maharashtra State Electricity Board's finances conservation, will be extended. Cofinancing and management-information system will be ($17.6 million) is anticipated from Austria. Total strengthened. Cofinancing. in the amount of cost: $86.9 million. $150 million, is being sought. Total cost: $1,344 MALI: IDA-$33 million. The implementation of million. the power sector's reorganization and the INDIA: IBRD-$340 million. Through strengthening of the general and financial construction of a 1,454-kilometer oil-products management of Energie du Mali will be pipeline from the port of Kandla to Bhatinda, the supported. In addition, part of the power-sector Indian Oil Corporation (IOC) will be able to investment program for the period 1989-94 will reduce the cost of domestic transport of oil be financed. Cofinancing is expected from the products and to respond quickly to shifts in CCCE ($12.5 million), the ADF ($11.8 million), oil-product demand through imports, thus the KfW ($11.5 million), CIDA ($8.6 million), reducing costly and risky investments in new the EIB ($6.8 million), and the FAC ($1.9 refining capacity. In addition, IOC's capabilities million). Total cost: $103.2 million. in operating its pipeline network and distribution MEXICO: IBRD-$460 million. Two facilities will be strengthened. Export and hydroelectric power plants (rated 1,240 mW) suppliers' credits, in the amount of $75 million, will be constructed and those people affected by are expected. Total cost: $1,009 million. the construction resettled, and a social and INDONESIA: IBRD-$354 million. The environmental program, designed to strengthen generating capacity of the state electricity the government-owned national electric utility's corporation (PLN) will be expanded to meet ability to construct and operate hydroelectric expected growth demand through 1995; the use projects with due regard to affected people and of coal for electricity generation will be the environment developed. Technical assistance promoted; the PLN's project-implementation is included. Total cost: $1,440 million. capability will be developed; and the MOZAMBIQUE: IDA-$22 million. A variety of government's ability to monitor environmental commercial fuels to substitute for high-cost and effects, as well as to formulate and enforce scarce wood fuels and charcoal will be made environmental standards in the energy sector, available to urban households, a rapid increase of will be strengthened. Export credits, in the electrification of urban areas facilitated, and coal amount of $274 million, are being sought. as is stoves provided to 10 percent of urban parallel cofinancing ($92 million). Total cost: households. Technical assistance is included. $1,117 million. Cofinancing is anticipated from BADEA ($ 10 148 Summaries of Projects Approved million), the Nordic Development Fund ($5.7 promotion of new private mining investment, and million), and DANIDA ($3 million). Total cost: the rehabilitation of the Corporaci6n Minero de $50.8 million. Bolivia. Cofinancing ($25 million) is anticipated PAKISTAN: IBRD-$250 million. The process of from the BITS and the IDB. Total cost: $126.8 energy-sector adjustment will be continued million. through the provision of finance to help cover the CHINA: IBRD-$ 137 million. The costs of investments to be made during the implementation of the first phase of the FY 1989-91 period of the sector's core investment program developed as a result of a investment program. Cofmancing ($250 million) phosphate-subsector study, undertaken during is being sought from the Export-Import Bank of project preparation, will be supported, thereby Japan. Total cost: $4,959 million. providing a model for future investments in the PHILIPPINES: IBRD-$65.5 million. A Manila integrated development of phosphate mines and power-distribution project has been designed to fertilizer plants. Institution-building assistance is improve the Manila Electric Company's included. Bilateral assistance ($100,000) is subtransmission and substation systems, being sought. Total cost: $510.6 million. facilitate better communication between DOMINICAN REPUBLIC: IBRD-$30 million. substations, and revitalize the organization's The govemment will be assisted in fomnulating maintenance capabilities. Total cost: $130 and implementing an effective and million. comprehensive strategy for the development of THAILAND: IBRD-$90 million. The financing new industrial free zones and the expansion of of the Electric Generating Authority of existing ones; reducing unemployment, Thailand's 1989-90 power-development increasing foreign-exchange eamings, and program, including the Bang Pakong combined- strengthening backward linkages with the cycle power plant and expansion of the Mae Moh domestic economy; alleviating scarcity in term lignite mine, will help meet the rapid growth in financing; and improving the capacity of power demand, while reducing the country's institutions involved in financing, regulating, and dependence on imported fuels. Total cost: $2,037 promoting industrial free zones. Cofinancing. in million. the amount of $1.4 million, is expected. Total TUNISIA: IBRD-$5.5 million. A petroleum cost: $51 million. exploration-promotion project will assist the HUNGARY: IBRD-$ 140 million. A third government and the Entreprise Tunisienne industrial-restructuring project will provide d'Activites Petroliere in developing the requisite credit facilities for restructuring of enterprises technical expertise for supervision, monitoring, with export orientation, as well as for small and management of the petroleum sector. In businesses and entreprenurial development addition, the rate of discovery and development (including the private sector). Measures for of the country's hydrocarbon resources will be efficient employment creation and new increased through provision of exploration- employment services to help alleviate the social promotion technical assistance, as well as costs of restructuring will also be developed. equipment and materials, and the acquisition, Technical assistance is included. Total cost: processing, and reprocessing of seismic data. $342.8 million. Total cost: $9 million. INDIA: IBRD-$210 million. Lines of credit to two major development finance institutions and a Industry loan to the govemment for manpower BANGLADESH: IDA-$25 million. Preshipment development and training will support the credit in foreign exchange will be provided to govemment's objective of developing an efficient eligible exporters. in particular, to small and new electronics industry, eventually capable of nontraditional exporters, and the export- intemationally competitive production. Technical financing and guarantee elements of the assistance is included. Cofinancing is anticipated country's credit-delivery system will be from the SDC ($16.2 million) and Japan ($2.7 strengthened. Technical assistance, designed to million). Total cost: $450 million. address policy and procedural issues that INDONESIA: IBRD-$284 million. An industrial- constrain the active development of the country's restructuring project has been designed to assist export potential. is included. Cofinancing ($1.2 existing industrial enterprises in the engineering, million) for the technical-assistance component pulp and paper, and textiles subsectors to is expected from USAID. Total cost: $31.2 undertake viable, environmentally sound, million. restructuring investments; strengthen BOLIVIA: IDA-$35 million. The govemment institutional capabilities and technical services will be assisted in the implementation of its assisting the three subsectors; and evaluate the mining-sector strategy through the creation of a restructuring potential of other industrial conducive legal and regulatory framework, subsectors. Total cost: $506.1 million. Nonproject 149 JAMAICA: IBRD-$30 million. The country's administration through the institutional emergency reconstruction program, occasioned development of the Ministry of Civil Service and by the destruction left in the wake of Hurricane Administrative Reform and the National Institute Gilbert, will be supported through the financing of Public Administration will be supported. Total of essential imports and the provision of a sound cost: $15.4 million. framework for overall reconstruction coordination and implementation. Multilateral Nonproject and bilateral cofinancing for the program is ARGENTINA: IBRD-$300 million. A second expected to amount to about $446 million. JAMAICA: IBRD-$15 million. Part of the implementation of the second phase of a program 1989-91 investment program of the Jamalco for integrating the country into the world Joint Venture, a 50-50 Joint venture between economy in which the government would address Alcoa and the wholly govermment-owned import protection, deregulate exports, and company, Clarendon Alumina Production, tighten the industrial-incentive system, which Limited, will be financed. Cofinancing ($8.9 tends to undercut the opening of the economy. million) is expected from the EEC. Total cost: BANGLADESH: IDA-$2.5 million. $90.2 million. Supplemental funds from IDA reflows will be KENYA: IDA-$53.7 million. Supplemental funds provided to help finance an industrial-sector from IDA reflows will be used to finance the credit, approved in fiscal 1989 in the amount of industrial-sector adjustment credit, approved in $190 million. fiscal 1988 in the amount of $102 million. $190 I -5io.en MEXICO: IBRD-$500 million. An industrial- BENIN: IDA-$45 million. Benin's sector policy loan is supporting the government's structural-adjustment program, aimed at a objectives of stabilizing its economy and fundamental reorientation of the country's resuming growth through removing distortions in development strategy from overemphasis on state goods, factor and service markets, and through intervention in the economy to greater reliance provision of an appropriate institutional and on private initiative and market forces, will be regulatory environment to enable industrial supported. enterprises meet the challenge of a more CAMEROON: IBRD-$150 million. The first competitive world economy. phase of the government's adjustment program, MEXICO: IBRD-$250 million. An industrial- whose objective is to redress the recent restructuring project aims at helping the substantial decline in gross domestic product and economy improve the efficiency of important to reestablish a positive rate of per capita growth, industrial subsectors and increase nonoil exports will be supported. by supporting private-sector restructuring CHAD: IDA-$16.2 million; African Facility- policies and programs and providing financial $21.3 million. The first phase of the and technical assistance to potentially government's adjustment program, whose competitive companies that are affected by trade principal objectives are to improve resource use liberalization. Total cost: $500 million. in public finance and the cotton sector, will be NIGERIA: IBRD-$27.7 million. A refineries- supported. Cofinancing is to be provided through rehabilitation project seeks to improve the special joint financing and from the ADE Nigerian National Petroleum Company's COSTA RICA: IBRD-$ 100 million. A second institutional approach to preventive maintenance, loan in support of the government's structural- decisionmaking on investments and repairs, and adjustment program, which seeks to accelerate rehabilitation of its assets; utilization and exports and increase domestic savings while efficiency of its existing refineries; and creating the preconditions for a recovery of monitoring and control of environmental economic growth and employment, will be pollution. Total cost: $439.2 million. provided. TURKEY: IBRD-$204.5 million. A second small THE GAMBIA: IDA-$23 million. The second and medium-scale industry (SMI) project seeks phase of the government's economic-recovery to promote efficient SMI investments and program, focusing on measures to reduce the operations, improve credit access for SMI by fiscal deficit, strengthen the performance of the significantly increasing the number of financial agricultural sector, and improve public-sector institutions that can channel credit to SMI management, will be supported. Cofinancing is efficiently, and improve SMI product quality and expected from the ADF ($6 million) and the expand its markets by providing effective Netherlands ($2.5 million). technical and marketing support services. Total GHANA: IDA-$120 million. The second phase of cost: $506 million. the govemment's structural-adjustment program, YEMEN ARAB REPUBLIC: IDA-$10.8 million. which aims to maintain an average growth rate of The govemment's efforts to improve public at least 5 percent a year, raise investment to 16 150 Summaries of Projects Approved percent of GDP by 1990, and raise national has been designed to increase the level of public saving to 8.5 percent of GDP, will be supported. revenues and savings to finance essential GUINEA-BISSAU: IDA-$23.4 million. The infrastructure and social investment while second phase of the govemment's structural- reducing the need for public-sector borrowing, to adjustment program will support and facilitate rationalize further trade and industrial policy, and the continued expansion of economic activity to streamline external-liability management. while reforms are being implemented. Cofinancing is anticipated from the OECF ($100 Cofinancing would be provided by the million) and may be forthcoming from the Netherlands ($4.8 million) and USAID ($4.5 AfDB, as well. million), while additional financing would be MOZAMBIQUE: IDA-$90 million. The provided by the ADF ($12 million). country's economic-rehabilitation program, HONDURAS: IBRD-$50 million. The designed to restore Mozambique to a sustainable government's three-year structural-adjustment growth path, will be supported. Cofinancing is program, designed to achieve growth of exports expected from the United Kingdom ($17.5 and efficient import substitution, increase public million), Switzerland ($12.8 million), the Federal and private savings, and make financial Republic of Germany ($10.9 million), Sweden intermediation more efficient through ($9.4 million), and Finland ($8.9 million). liberalization of interest-rate policies and NEPAL: IDA-$60 million. The second phase of institutional measures, will be supported. Future the government's structural-adjustment program, cofinancing from the OECF and other bilateral designed to accelerate sustained economic agencies is expected. growth by reorienting the economy towards a INDONESIA: IBRD-$350 million. The private path relying more on the private sector and on sector will be developed through support of improved allocation of public and financial governmental policy measures to provide a stable resources, will be supported. Cofinancing ($5 macroeconomic setting, develop a less million) is anticipated from the KfW. distortionary trade regime, reduce regulatory NIGERIA: IBRD-$500 million. The second in a restrictions on investment and marifime series of quick-disbursing loans, designed to transport, and promote a more competitive and support the government's structural-adjustment responsive financial system. program, will support the consolidation of the KENYA: IDA-$120 million. Wide-ranging policy exchange-rate and trade-policy initiatives that and institutional reforms in the financial sector, were aided by the first loan. In addition, designed to make it more efficient and market- measures to facilitate efficient investment are oriented, will be supported. included in the policy package. LAO PEOPLE'S DEMOCRATIC REPUBLIC: SENEGAL: IDA-$5.5 million. Supplemental IDA-$40 million. The government's funds from IDA reflows will be provided to add adjustment program. designed to reinvigorate additional financing for the third structural- economic growth by improving public-enterprise adjustment credit, approved in fiscal 1987 in the management, bolstering the private sector, amount of $45 million. introducing major fiscal reforms, and initiating TANZANIA: IDA-$135 million. The broadening financial-sector reforms, will be supported. of the government's economic-recovery program MADAGASCAR: IDA-$ 1.4 million. will be supported through reform in the trade Supplemental funds from IDA reflows will be regime and the initiation of restructuring and provided to finance the public-sector adjustment rehabilitation of the industrial sector. credit, approved in fiscal 1988 in the amount of Cofinancing is expected from the ADF ($24 $125 million. million), the United Kingdom ($15 million), MALAWI: IDA-$5.2 million. Supplemental Switzerland ($14 million), and the Netherlands funds from IDA reflows will be provided to ($ 10 million). finance the industry- and trade-adjustment credit, TANZANIA: IDA-$12.5 million. Supplemental approved in fiscal 1988 in the amount of $70 funds from IDA reflows will be provided to help million. finance the industrial trade-adjustment and MEXICO: IBRD-$500 million. Through a rehabilitation credit (see above). "disengagement" component to continue with TOGO: IDA-$ 100,000. Supplemental funds from the sale, liquidation, and merger of public IDA reflows will be provided to help finance the enterprises (PEs) and through a program of third structural-adjustment credit, approved in reforms in the policy and institutional fiscal 1988 in the amount of $45 million. environment of PEs, the heavy burden PEs UGANDA: IDA-$25 million. Supplemental impose on the economy and, particularly, the funds will be provided in support of the country's national budget, will be reduced. economic-recovery program. assisted through an MOROCCO: IBRD-$200 million. The next phase IDA credit, in the amount of $65 million, of the country's structural-adjustment program approved in September 1987. Population, Health, and Nutrition 151 UGANDA: IDA-$1.7 million. Supplemental supply and sanitation component. Total cost: funds from IDA reflows will be provided to help $103.5 million. finance the economic-recovery program, JORDAN: IBRD-$73 million. To develop an approved in fiscal 1988 in the amount of $65 increasingly knowledge-based and skills- million. adaptable workforce, support will be provided URUGUAY: IBRD-$ 140 million. The for the first phase of a ten-year reform program to government's medium-term structural- introduce into basic and secondary schooling adjustment and development program, designed policy, institutional, and quality-enhancement to increase exports and promote domestic measures. Cofinancing is expected from the savings, will be further supported. OECF ($73 million) and the ODA ($1.4 million). VENEZUELA: IBRD-$402 million. The Total cost: $252.5 million. government's structural-adjustment program, MOZAMBIQUE: IDA-$27 million. To help launched in February 1989 and aimed at improve the state of health and nutrition in the achieving balanced and sustainable economic country, institutional capacity in policy growth, will be supported. formulation and management will be strengthened, efficiency and service quality will Population, Health, and Nutrition be upgraded, and some of the social costs of BENIN: IDA-$ 18.6 million. National adjustment will be mitigated, in particular, health-policy reforms will be supported through through strengthening the urban food- quick-disbursing funds and program investments distribution system and a supplemental feeding to help the government improve the efficiency of program targeted to primary school children in the cuntr's helth-are sstemand epandMaputo and Beira. Cofinancing is expected from the country's health-care system and expand Switzerland ($5.3 million), the WFP ($4.4 service delivery in rural areas. Cofinancing million), UNICEF ($1.9 million), and NORAD ($11.3 million) is anticipated from Switzerland. ($200,000). Total cost: $42.5 million. BRAZIL: IBRD-$99 million. Over 16 million NIGERIA: IBRD-$27.6 million. The government BRAZIL: IBD-$99 milion. Over 6 millionof Imo state will be assisted in its efforts to people are to benefit from a project designed to improve the health and nutrition of its people and reduce malaria in the Amazon basin to a level to provide voluntary family-planning services. In that no longer constitutes a public-health addition, the federal Ministry of Health's problem and to reduce the risk of its capacity to assist state-level health planning and reintroduction to areas where transmission has project preparation will be strengthened, and already been interrupted. Institutional- federal health and population projects will be development assistance for the Superintendancy prepared for intemal and extemal financing. for Public Health Campaigns is included. Total Total cost: $36.8 million. cost: $198 million. PHILIPPINES: IBRD-$70.1 million. The CHINA: IDA-$52 million. Approaches that government's priorities of expanding and experiment, in three regions, with health-policy improving public health and primary care, initiatives relevant to integrated health planning, especially to high-risk groups, will be supported; chronic diseases, and health financing are the efficiency and effectiveness of the designed to serve as possible models in other Department of Health will be strengthened; parts of the country. Total cost: $113 million. collaboration among the govemment, local INDIA: IBRD-$1 1.3 million; IDA-$113.3 governments, and nongovemmental million. A sixth population project will support organizations in meeting community health shifts in the approach, emphasis, and orientation needs will be promoted; and improved to training health administrators, supervisors, mechanisms for future health-policy and workers. This will include more intensive development will be established. Cofinancing is in-service and on-the-job training, as well as the expected from Italy ($8.1 million) and Japan technical upgrading of family-welfare training ($4.3 million). Total cost: $108.4 million. staff. Total cost: $182 million. TURKEY: IBRD-$75 million. Provincial health INDONESIA: IBRD-$43.5 million. The delivery services will be reorganized and strengthened. of health services in the provinces of Kalimantan and measures to enhance efficiency in service Timur and Nusa Tenggara Barat will be delivery and improve financial prospects for the improved; policy measures, on a pilot basis, will sector will be initiated. Institution-building be implemented for increasing efficiency in the assistance to the Ministry of Health is included. use and availability of resources; and institutional Total cost: $146.3 million. capabilities at the local-government and central YEMEN, PEOPLE'S DEMOCRATIC REPUBLIC levels will be strengthened. Cofinancing is OF: IDA-$4.5 million. Primary health care in anticipated from Japan ($4 million) and from the two govemorates and one island district, with an AIDAB, which will finance the rural water- overall population of 400,000, will be upgraded 152 Summaries of Projects Approved and expanded, health manpower in those areas PHILIPPINES: IBRD-$60 million. A fourth small developed and upgraded, family planning and and medium-scale industries project seeks to health education promoted throughout the provide employment opportunitics, improve country, and management capabilities in the income distribution and regional development, public health sector strengthened. Cofinancing is and act as a catalyst for promoting general expected from the UNCDF ($500,000), economic growth and exports. Cofinancing is UNICEF, UNFPA, and WHO ($200,000 each). expected from the AsDB ($ 100 million), the Total cost: $7.9 million. ASEAN Japan Development Fund ($40 million), ZAIRE: IDA-$8.1 million. The country's and Japan ($3.6 million). Total cost: $358.7 National AIDS Control Program, which seeks to million. prevent HIV transmission; reduce the impact of AIDS on individuals, families, and communities; Technical Assistance and improve the database on AIDS in the ARGENTINA: IBRD-$28 million. Through a country, will be supported. Cofinancing is program of technical assistance to various expected from the EEC ($2 million), USAID ministries that are responsible for delivering ($1.7 million), UNICEF ($1.5 million), Belgium social services, major improvements may be ($1.5 million), Italy ($1.2 million), the UNDP expected in the efficiency of social-service and WHO ($1 million each), and the Federal delivery, additional resources will be mobilized, Republic of Germany ($600,000). Total cost: and the negative effect of the deteriorating $21.9 million. economic situation of the last decade alleviated. Cofinancing ($3.7 million) is expected from Small-scale Enterprises Japan. Total cost: $45 million. CHILE: IBRD-$75 million. Credit will be ARGENTINA: IBRD-$6.5 million. Through a provided to medium-sized industrties for program of technical assistance, the necessary investment in new plant, plant expansion, and financing will be provided for the execution of a permanent working capital. Total cost: $280 program intended to bridge the gap between the million. full realization of the benefits of a basic structural COLOMBIA: IBRD-$80 million. A fifth small reforn of the Directorate of Tax Administration and medium-scale enterprise (SME) project will and the need to counter the recent fall in tax help the country accelerate value added, create BOLIVIA. IDA-$9.7 million. An economic employment, and increase the supply of goods management-strengthening operation seeks to and services of SMEs through provision of a line rebuild the country's public institutions for of credit for onlending to SMEs and economic management so that the direction and microenterprises, primarily through changes in momentum of policy change achieved to date can public policies and institutional mechanisms be sustained. Cofinancing is anticipated from influencing SME access to credit, expansion of Switzerland ($2.5 million) and Italy ($2.4 the number of intermediaries making SME loans million). Total cost: $16.6 million. and the volume of credit, and through an increase CENTRAL AFRICAN REPUBLIC: IDA-$13.2 in SME access to technical-support systems. million. Through an integrated package of Total cost: $235.1 million. assistance and training, the core ministries INDONESIA: IBRD-$ 100 million. By providing responsible for managing the economy and for high-quality, cost-effective technical assistance implementing the ongoing structural-adjustment and term credit at market rates, the small and program will be strengthened. Cofinancing ($2 medium-scale industrial sector will be assisted million) is anticipated from the UNDP. Total and its potential to respond to new opportunities, cost: $16.6 million. to plan and implement investment and GUINEA: IDA-$9 million. The government's operational strategies, and to modermize, expand, capacity in the areas of social-policy design. and diversify, thereby increasing manufacturing coordination. and implementation will be output and jobs, will be demonstrated. strengthened, as will its ability to identify target Cofinancing is expected from the Netherlands population groups and to monitor the evolution ($6.1 million) and Japan ($3.1 million). Total of living conditions of households throughout the cost: $193.3 million. adjustment process and afterwards. In addition, NIGERIA: IBRD-$270 million. The resumption assistance will be provided in implementing a of growth and efficient employment generation priority social-action program, based on specific will be stimulated through the provision of credit subprojects aimed at upgrading the living and technical assistance to small and medium- conditions of the poor and disadvantaged groups. scale enterprises in the context of the new policy Cofinancing is anticipated from the ADF ($1.9 environment and the ongoing adjustment million) and CIDA ($840,000). Total cost: $13.5 process. Total cost: $415.8 million. million. Telecommunications 153 GUINEA: IDA-$14.5 million. An integrated UGANDA: IDA-$15 million. Financing will be package of mutually supporting operations- provided for local and international consultant short- and long-term consultant services, training services, training, equipment and materials, and programs, studies, and financing of equipment special studies, all aimed at strengthening the and vehicles-will be financed, thus helping to capacity of the govemment and key productive facilitate the implementation of the country's parastatal enterprises to sustain economic economic- and financial-recovery program. recovery. Total cost: $19.3 million. Cofinancing is anticipated from the FAC ($2.8 URUGUAY: IBRD-$6.5 million. A second million), the AfDB ($2.5 million), the UNDP technical-assistance project supports the ($2.2 million). USAID ($1.3 million), and the government's objectives to restore effective CCCE ($1.2 million). Total cost: $27.8 million. competition in domestic banking and to improve MADAGASCAR: IDA-$22 million. The social the regulatory framework and central bank costs of adjustment will be mitigated through a supervision of the banking system. Total cost: project that supports the government's efforts to $9.2 million. improve public-sector management; address the ZAIRE: IDA-$11.6 million. The govemment's plight of the more disadvantaged groups; and policy-formulation and -implementation capacity strengthen governmental capacity to monitor and in three key agricultural ministries (agriculture, address social issues, policies, and programs rural development, and environment) is to be consistent with its overall economic policy strengthened through technical assistance, framework and budgetary realities. Cofinancing training, and logistical support. Cofinancing is expected from Switzerland ($4.7 million), the ($2.5 million) is anticipated from Belgium. Total UNDP ($3.8 million), the ADF ($2 million), the cost: $16.6 million. AfDB's Technical Assistance Fund ($2 million), and others ($1.8 million), including various UN Telecommunications agencies, France, Italy, and Japan. Total cost: BENIN: IDA-$16 million. Support will be $40.9 million. provided for a program to improve institutional MALAWI: IDA-$11.3 million. Funds will be and management capacity in the provided to help establish and operate the telecommunications sector, service to present Malawi Institute of Management to train subscribers, and the sector's financial position managers in the public and private sectors in and performance. Cofinancing is expected from management techniques. In addition, the the AfDB ($16 million), the EIB ($14 million), Ministry of Finance will be helped to implement the CCCE ($9 million), CIDA ($3.5 million), and its development plan and its ongoing tax- the FAC ($300,000). Total cost: $65.3 million. modernization program. Cofinancing ($6 ECUADOR: IBRD-$45 million. This first million) is expected from the UNDP. Total cost: telecommunications project in the country will $18.9 million. expand local telephone service to 189,000 TOGO: IDA-$5 million. A grassroots- additional subscribers, rehabilitate the cable development initiatives project aims to strengthen network in Guayaquil. expand the long-distance government-nongovernmental organization network, extend service to rural communities, (NGO) collaboration and to improve directly the and expand and modernize international living standards and working conditions of some telephone, telex, and data services. Institution- of the poorest communities in the country by building assistance is included. Cofinancing is providing additional resources to NGOs engaged anticipated from the CDC ($27 million), France in poverty alleviation and in meeting ($47.2 million). Japan ($45 million), Mexico communities' highest-priority basic needs. Total ($8.1 million), Brazil ($7.7 million), Spain ($6.7 cost: $6.7 million. million), and Italy ($5.7 million). Total cost: TOGO: IDA-$5 million. A preinvestment project $330 million. will provide for the preparation of project FIJI: IBRD-$8.I million. A third feasibility studies and project execution plans, telecommunications project aims to improve studies of the investment needs and priorities of further the institutional environment of operating individual sectors in the country's economy, and entities and build the infrastructure, thereby training of staff to manage and supervise the improving availability of, and access to, modem studies. Total cost: $5.6 million. telecommunications services. Cofinancing is UGANDA: IDA-$18 million. Technical anticipated from Australia ($7.4 million) and the assistance will be provided to help increase the EIB ($6.4 million). Total cost: $47.9 million. financial management and administrative GHANA: IDA-$19 million. A second capacities of the Ministry of Finance and the telecommunications project will support a Bank of Uganda to help them plan, implement, program of institutional and management and monitor the country's ongoing economic- improvement, improve the quality of service reform program. Total cost: $23 million. offered to telecommunications subscribers, and 154 Summaries of Projects Approved offered to telecommunications subscribers, and CAPE VERDE: IDA-$4.7 million. A project that improve the financial performance of the Ghana combines both policy reform and investment is Posts and Telecommunications Corporation so as designed to improve the efficiency of the to eliminate government subsidies. Cofinancing transport and power sectors, support private- is anticipated from Japan ($92.4 million in grants sector development, strengthen local institutions, and suppliers' credits), the CCCE ($21.8 examine the possibility of developing indigenous million), the Netherlands ($18.8 million in loans sources of energy. and preserve the capital and suppliers' credits), and Ireland ($1.7 million investment already made in the country's road in suppliers'credits). Total cost: $173 million. network. Total cost: $5.1 million. TOGO: IDA-$ 16 million. The scope and CHAD: IDA-$60 million. A transport-sector availability of telecommunications services will adjustment and investment credit seeks to reduce increase to help meet likely demand increases the cost and the price of transport within the resulting from private-sector development and country thmugh a number of policy-based enhanced external trade. Institution-building components and the rehabilitation of some 1,800 assistance is included. Cofinancing is expected kilometers of priority roads. Cofinancing is from the EIB ($10.4 million), the AfDB ($4 anticipated from USAID ($23 million), the million), CIDA ($2.3 million), the CCCE Federal Republic of Germany ($22.7 million), ($600,000), the FAC ($300,000), and the UNDP the CCCE ($13.1 million), the ADF ($11.3 ($ 100,000). Total cost: $44.6 million. million), the BDEAC ($10.6 million), the EDF UGANDA: IDA-$52.3 million. A second ($4.8 million), the OPEC Fund for International telecommunications project aims at rehabilitation Development ($4.5 million), the FAC ($3.3 of economically critical facilities and increases in million), and the UNDP ($500,000). Total cost: the utilization of existing exchange capacity to $180 million. satisfy partly current unmet demand. Institution- CHINA: IBRD-$70 million; IDA-$80 million. building assistance to the Uganda Posts and The construction of a 948-kilometer single-track Telecommunications Corporation is included. rail line in Inner Mongolia running toward the Total cost: $58.8 million. industrial province of Jilin in the country's WESTERN SAMOA: IDA-$4.6 million. Priority northeast will facilitate the movement of coal and investments will be financed to upgrade the other products between the two provinces. Total telecommunications network and to build a basis cost: $349.9 million. for its future expansion, and to lay the CHINA: IBRD-$60 million; IDA-$50 million. groundwork for the development of rural A 319-kilometer four-lane highway in the telecommunications. Cofmancing is anticipated important corridor between Jinan, the capital of from the AsDB ($7.4 million) and the ITU Shandong province, and the port of Qingdao will ($100,000). Total cost: $16.3 million. be financed. Institution-building assistance and training are included. Total cost: $423.5 million. 'lYansportation CHINA: IBRD-$76.4 million. The operating ALGERIA: IBRD-$63 million. Support will be efficiency and level of maintenance at the ports provided for a first phase in the rehabilitation and of Ningbo and Shanghai will be improved, modernization program for the key Algerian physical facilities there will be expanded and ports of Algiers, Annaba, and Oran. Total cost: modernized, and work on a comprehensive $127.8 million. strategy for future port development in BANGLADESH: IDA-$ 133.6 million. Priority mideastem China initiated. Training and infrastructure damaged by flooding will be insititution-building components are included. restored so as to promote efficient operation of Total cost: $340 million. the economy. The project also aims to ensure CHINA: IDA-$61 million. A Jiangxi provincial appropriate design and location of works and highway project will upgrade, through road and equipment to minimize the risks of damage or bridge construction, the heavily trafficked loss arising from future floods. Total cost: $157.8 Nanchang-Jiujiang highway, and, through million. provision of technical assistance, address specific BOLIVIA: IDA-$37 million. One of the country's policy, institutional, and technological objectives main obstacles to export growth-the lack of in the highway subsector. Total cost: $109 adequate infrastructure and efficient, reliable million. service in the country's principal transport CHINA: IBRD-$36 million. The operating corridors to the Atlantic and the Pacific-will be efficiency and level of maintenance at the port of addressed. Institution-building assistance to the Xiamen will be improved, physical facilities Bolivian National Railway, the Road Authority, there expanded and modemized, and the and the Ministry of Transportation and environmental impact of port operations and Communications is included. Total cost: $47.1 expansion irnproved. Training is included. Total million. cost: $90.3 million. Urban Development 155 ETHIOPIA: IDA-$72 million. The turnaround affected by the road construction. Total cost: $40 time of export/import cargo will be speeded up million. by directly addressing the bottlenecks in the port THAILAND: IBRD-$87 million. A three-year of Assab, freight forwarding, customs, and road (1989-91) time-slice of sector investments, transport-particularly, the road from Assab to designed to assist the government sustain an Addis Ababa. Cofmiancing is anticipated from efficient road-transport system and achieve the the AfDB ($55 million) and the EBB ($12.5 goals of its sixth development plan that include million). Total cost: $164.6 million. protection of past investments, reduction of GABON: IBRD-$30 million. Through the road-transport costs, improvements in highway financing of priority items of the govemment's transport services and moad safety. and abatement 1989-92 roads program, the adequate of vehicular air and noise pollution, will be maintenance of the country's road network financed. Cofinancing ($259.3 million) is during the current economic-adjustment period anticipated from the AsDB and the OECF. will be ensured. Cofinancing ($31.1 million) is UGANDA: IDA-$7 million. Assistance will be expected from the AfDB. Total cost: $1 10 provided to the Uganda Railways Corporation million. for implementing an initial program of GUATEMALA: IBRD-$31.5 million. Damaged improvements in organization and management secondary and regional roads of key economic and for improving performance on the Kampala- importance will be rehabilitated and maintained, Kaese line through repair and rehabilitation. the role of the private sector in the execution of Total cost: $8.8 million. public works promoted, and institution-building URUGUAY: IBRD-$80.8 million. Through assistance provided to the General Directorate of policy reform, institutional development, and Roads of the Ministry of Communications, financing of high-priority investments in the Transport, and Public Works. Total cost: $49.1 roads and ports subsectors, the govemment's million. objectives of reforming the transport sector, HUNGARY: IBRD-$95 million. A second strengthening its managerial and planning transport project will help finance investments in capabilities, and stimulating competition and railways, trucking, highways, and urban private-sector involvement will be supported. passenger transport, all designed to improve Cofinancing ($73.9 million) is anticipated from competition and operational efficiency in the the Export-Import Bank of Japan. Total cost: sector, increase foreign-exchange earnings by $257.4 million. carrying more traffic in international and transit YUGOSLAVIA: IBRD-$ 138 million. The reform trade, and promote technology transfer. Total program of the Community of Yugoslav cost: $250 million. Railways will be supported through the fnancing INDIA: IBRD-$ 170 million; IDA-$80 million. of the 1989-91 investment plans of four of the Policy and institutional improvements begun community's railway organizations, which, under the National Highway Project will be together, operate about 85 percent of the extended to the state level through a project, to be country's main trunk line. Cofinancing is implemented in four states, that will promote the anticipated from the EIB ($80 million) and use of modem maintenance-management Eurofima ($44 million). Total cost: $907.1 systems and introduce improved construction million. methods. Total cost: $450.2 million. ZAIRE: IDA-$75 million. Comprehensive KOREA, REPUBLIC OF: IBRD-$200 million. five-year rehabilitation programs for the Office Three principal road-related government National des Transports and the Societe objectives will be supported: enhancing transport Nationale des Chemins de Fer Zairois will be efficiency by upgrading the surface and supported to strengthen their performance in the alignment of existing roads and by improving transport sector in the context of a sustainable road maintenance and operations, expanding public-expenditure program. Cofinancing is traffic capacity by widening roads with high anticipated from the AfDB ($91.6 million), the transport demand, and increasing traffic safety. CCCE ($36.2 million), Belgium ($24.1 million), Total cost: $513.1 million. the KfW ($15 million), and the EEC ($6.2 NEPAL: IDA-$32.8 million. A 192 kilometer- million). Total cost: $280.1 million. long access road that will be built from Basantpur to the site of the Arun III power Urban Development station will also serve to link food-deficit areas in ARGENTINA: IBRD-$300 million. The the north with surplus areas to the south. The government will be supported in its efforts to government will also be assisted in reform policies in the housing sector through an implementing environmental-protection and increase in productivity in the housing programs conservation measures, as well as in planning financed by FONAVI, the national housing fund, and administering measures benefiting families improvements in FONAVI's financial 156 Summares of Projects Approved performance. and a reduction (with concurrent FINNIDA ($6.1 million) and Spain ($3.9 improvement of targeting) of subsidies. Total million). Total cost: $83.8 million. cost: $608 million. NEPAL: IDA-$41.5 million. The effective BRAZIL: IBRD-$100 million. Technical planning, delivery, and maintenance of assistance, training, and equipment will be infrastructure and muncipal services in town provided to municipalities and urban-sector panchayats (municipalities) will be supported. In institutions in Parana state to strengthen their addition, the government will be helped to financial management and overall administrative reconstruct housing damaged during the August capacities. In addidon, investments in urban 1988 earthquake, construction standards will be infrastructure will be provided to muncipalities improved. and earthquake-resistant features will throughout the state, and a pilot project fbr be incorporated into building codes. Technical low-income, self-help house construction will be assistance is included. Cofinancing is expected financed. Total cost: $226.9 million. from the UNDP ($5.1 million) and the GTZ BURUNDI: IDA-$21 million. A second urban ($1.7 million). Total cost: $54.8 million. project aims to strengthen the economy of RWANDA: IDA-$32 million. The govenmment's secondary towns through provision of necessary urban-sector reforms, which aim at reducing the infrastructure and community facilities, as well central government's role in urban development as employment opportunities. and through the and strengthening that of local govenmments and establishment of an institutional and financial the private sector, will be supported. Cofinancing environment that would help these semirural is anticipated from the UNCDF ($2.9 million). agglomerations evolve into actual urban centers. the FAC ($ 1.1 million), and the UNDP ($1 Total cost: $24.1 million. million). Total cost: $66.2 million. CAMEROON: IBRD-$ 146 million. A second SUDAN: IDA-$75 million. An emergency project, which constitutes the comerstone of the flood-reconstruction prject seeks to restore new urban policy, seeks to consolidate the basis productive facilities and essential infrastructure for sustainable and replicable urban-development damaged during the floods of August-September operations through components designed to 1988. restore social services and destroyed mobilize urban resources; rehabilitate priority housing, and outline requirements for an early- infrastructure in Yaounde, Douala. and waming system against future flooding. In secondary cities; and implement sector policy addition, the institutional framework needed to reforms, including parapublic-enterprise reform. carry out the reconstruction program will be Total cost: $253.5 million. strengthened. Total cost: $83.8 million. CHILE:- IBRD-$200 million. A second TUNISIA: IBRD-$58 million. The supply of housing-sector project supports govemmental affordable low- and medium-income housing efforts to increase the number of housing programs will be increased as domestic savings solutions for low-income people, offer a greater are mobilized by the newly formed Housing variety of new housing types to meet their needs Bank. to be supported through a line of credit and preferences, introduce programs to upgrade and technical assistance. In addition. the share of the existing housing stock, improve cost the formal private sector in land and housing recovery, and improve the resource mobilization development, as well as in surveying activities. and efficiency of the private mortgage-financing will be increased. Cofinancing is expected from system. Total cost: $1,134 million. USAID ($15 million); $2 million in additional CHILE: IBRD-$75 million. An institutional cofinancing is being sought. Total cost: $200 capability to manage effectively future urban million. street maintenance and rehabilitation will be ZIMBABWE: IBRD-$80 million. Subsector developed, and a program to bring the urban- loans will be made to specific urban authorities transponl system back to a condition of for their next five-year capital-investment maintainability will be financed. In addition, the programs for primary infrastructure and technical, economic, and financial viability of residential infrastructure. In addition, steps will less costly exclusive bus/tramways to be taken to maximize the role of accommodate increased demand and reduce nongovernmental investors in housing as a means public transport costs will be demonstrated. Total to relieve the government's financial burden. cost: $150 million. Institution-building and technical assistance are MOZAMBIQUE: IDA-$60 million. The included. Cofinancing is anticipated from the deterioration in basic urban infrastructure and Federal Republic of Germany ($21 million) and services in Maputo and Beira will be stemmed, SIDA ($3 million). Total cost: $580 million. and the social effects of strucural adjustment mitigated through the implementation of a Water Supply and Sewerage program of urban rehabilitation and employment BRAZIL: IBRD-$280 million. The capacity of generation. Cofinancing is expected from the Sao Paulo State Water Company to carry out ,A'ter SLjpp~,: and Sewerage 157 more efficient planning of investments, improved low- income beneticianes to stan productane internal mobilization of revenues, and increased acti% nie, t moml likel in%olh ing microenterprises efficiency of operations will be strengthened. and some turin of cooperati% e ov nership . Total Total cost: $600 million. cost: $'28.5 million. EGYPT, ARAB REPUBLIC OF: IBRD-$36 NIGERIA IBRD-S I173.2 million Access b% the million. A second project aims at improving residenis of Lago, to drinking-viaier supplies water distribution in the Alexandria Water will be increased through a doublimg of General Authority's (AWGA) network and produciion and di,tribution-nenwork capacities. improving AWGA's operation, maintenance, and subsidies tront the slate goLernnent to the Lagos metering practices, as well as its capital structure State W%aLer Corporation LSWCJ will be and fmancial performance. Cofinancing is graduallk eliminjted. and institution-building anticipated from Italy ($22.5 million) and the assistance pn!x ided to ihe LSWC. Cofinancing is GTZ ($5.5 million). Total cost: $102.5 million. expected from French comniercial banks v% ith GHANA: IDA-$25 million. The managerial, COF ACE guaraniee S $164.8 mi I lion). the El B financial, and technical capabilities of the Ghana ($47 4 million . Cl DA t 5 3.2 mill ion), and the Water and Sewerage Corporation will be UNDP i Sit)tIi0(. Total cost: $461.8 million. strengthened to enable it to effectively plan and PAKISTAN. I DA-$ 125 mi llion. The iupply of implement a meaningful development program, potable % aler v" iI be increased by almost a third and its operating and maintenance ability will be and Improvements made to sanilation by improved. Cofinancing is expected from Austria increases in ,e% erage coverage and treatment ($19.5 million) and the ODA ($14.6 million) and capacity in thi econd Karachi aler- supplv and is being sought elsewhere in the amount of $47.1 sanitation project. In ;n rution bbuIlding assitance million. Total cost: $125 million. to the Karachi X%iter and Se%%erage Board is GUINEA: IDA-$40 million. While financing key included. Cofinancing is e%pected from the investments in the water-supply sector, this AsDB ($81.9 million i and mixed credits fiom project will primarily focus on implementation of the United Kingdom t $5t 4 m 11 ion i. Tota I cost: needed institutional reforms and adequate $331.8 million. cost-recovery procedures, as well as YEMEN, PEOPLE S DENlOCRATIC REPUBLIC rehabilitation of operations and facilities. OF: IDA-$12 millhon. Water production for Al Cofinancing is expected from the AfDB ($23 Mukalla, the countrx \ second largest city. will million), the CCCE ($16.6 million), and the EIB be increased to meet effectine demand up to the ($11.3 million). Total cost: $102.6 million. year 2002 and to cl rengthen and ex pand the HAITI: IDA-$20 million. About 425,000 people existing primar) and hecondarN distribution in Port-au-Prince will benefit from a project systems. Institution-building assistance is designed to improve the supply of water and included. Cofinancing is expected from the expand its coverage. Institution-building AFESD and the KFAED ($9.7 million each). assistance to the Centrale Autonome Total cost: $34.7 million. Metropolitaine d'Eau Potable is included. YUGOSLAVIA: IBRD-$60 million. A water- Cofinancing ($9.5 million) is expected from the supply and sewerage project for the S lovene CCCE. Total cost: $35.5 million. coastal region and the west coast of the Istrian MEXICO: IBRD-$20 million. Some 200,000 peninsula has been designed to eliminate existing people are expected to benefit from a project that water shortages, provide additional water will provide water, sanitation, and health supplies needed for the expansjon of tourism. education, both to free women's labor for more reduce unaccounted- for v& ater. provide protection productive activities and to reduce community from pollution, and increase efficienc) in morbidity. In addition, credit and technical water-supply and seu erdge.-ser ices deliv.ery. assistance will be made available to help finance Total cost: $243.9 million. the investment and working capital needed by 158 Summaries of Projects Approved Table 7-1. Projects Approved for IBRD and IDA Assistance in Fiscal Year 1989, by Region (amounts in millions of US dollars) IBRD loans IDA credits Total Region and country Number Amount Number Amount Number Amount Africa Benin ................................. - - 3 79.6 3 79.6 Burkina Faso .............. ............ - - I 42.0 1 42.0 Burundi ............................... - - 2 54.1 2 54.1 Cameroon ............................. 3 330.6 - - 3 330.6 Cape Verde ............................ - - 1 4.7 1 4.7 Central African Republic . ............... - - 2 31.2 2 31.2 Chad ................................ - - 3 98.2 3 98.2 Djibouti ............................... - - 1 9.2 1 9.2 Ethiopia ............................... . .- 2 157.0 2 157.0 Gabon ................................ 1 30.0 - - 1 30.0 Gambia, The ...................... - 2 33.0 2 33.0 Ghana ................................. - - 6 260.0 6 260.0 Guinea ................................ - - 4 81.9 4 81.9 Guinea-Bissau .......... ....... - - 2 28.4 2 28.4 Kenya ................................ - - 3 235.2 3 235.2 Madagascar ........................... - - 2 47.4 2 47.4 Malawi ....................... ... - - 3 81.5 3 81.5 Mali ................................. - - 2 59.0 2 59.0 Mauritania ...... . ..................... - - I 18.2 1 18.2 Mozambique . . - - 4 199.0 4 199.0 Nigeria ................................ 6 1,083.7 1 100.9 7 1,184.6 Rwanda.. .............................. - - 2 51.9 2 51.9 Sao Tome and Principe ....... .......... - - 1 5.0 1 5.0 Senegal .............................. - - 1 21.6 1 21.6 Somalia ............................... - - 2 89.0 2 89.0 Sudan ................................. - - 2 95.0 2 95.0 Tanzania ............................. - - 4 199.3 4 199.3 Togo .................................. - - 3 26.1 3 26.1 Uganda .............................. - - 5 141.0 5 141.0 Zaire ..................... ............ - - 4 114.7 4 114.7 Zimbabwe ............................. 2 116.3 - - 2 116.3 Total ................................ 12 1.560.6 69 2.364.1 81 3,924.7 Asia Bangladesh .................. .......... - - 4 423.1 4 423.1 China ................................. 7 833.4 5 515.0 12 1,348.4 Fiji .................................. 1 8.1 - - 1 8.1 India ..................0............... to 2,136.3 1 900.3 11 3,036.6 Indonesia ... .......................... 9 1.640.4 - - 9 1,640.4 Korea, Republic of ..........2.......... 2 216.4 - - 2 216.4 Lao People's Democratic Republic .... - - 3 53.5 3 53.5 Malaysia .............................. 2 130.3 - - 2 130.3 Maldives ..................... ........ - - 1 8.2 1 8.2 Nepal ................................. - - 6 199.0 6 199.0 Papua New Guinea ......... ............ 1 19.6 - - 1 19.6 Philippines ............................. 4 495.6 - - 4 495.6 Projects Approved by Region 159 IBRD loans IDA credits Total Region and country Number Amount Number Amount Number Amount Asia (contintued) SriLanka .............................. - - 2 63.7 2 63.7 Thailand .......................2....... 2 177.0 - - 2 177.0 Vanuatu ............................... - - 1 8.0 1 8.0 Western Samoa ........... ............. - - 1 4.6 1 4.6 Total ................................ 38 5.657.1 24 2,175.4 62 7,832.5 Europe, Middle East, and North Africa Algeria ................................ 4 341.0 - - 4 341.0 Egypt. Arab Republic of ...... .......... 3 241.0 - - 3 241.0 Hungary ............................... 3 345.0 - - 3 345.0 Jordan ................................ 1 73.0 - - 1 73.0 Morocco .............................. 5 524.0 - - 5 524.0 Pakistan ............................. 4 748.0 3 201.4 7 949.4 Portugal ............................... 1 90.0 - - I 90.0 Tunisia ............................ ... 4 242.5 - - 4 242.5 Turkey ................................ 4 709.3 - - 4 709.3 Yemen Arab Republic ....... ........... - - 2 25.8 2 25.8 Yemen. People's Democratic Republic of - - 3 28.5 3 28.5 Yugoslavia .................2........... 198.0 - - 2 198.0 Total ................................ 31 3.511.8 8 255.7 39 3,767.5 Latin America and the Caribbean Argentina .............................. 5 886.5 - - 5 886.5 Bahamas. The ......1......... I 10.0 - - I 10.0 Bolivia ................................ - - 3 93.0 3 93.0 Brazil ................................. 6 707.0 - - 6 707.0 Chile .................................. 3 350.0 - - 3 350.0 Colombia ............................. 2 180.0 - - 2 180.0 Costa Rica .......... ..................1 100.0 - - I 100.0 Dominican Republic .................... 1 30.0 - - 1 30.0 Ecuador . ................ 1 45.0 - - 1 45.0 Guatemala ................._........... 2 61.5 - - 2 61.5 Haiti .................................. - - 2 44.0 2 44.0 Honduras .............................. 2 75.0 - - 2 75.0 Jamaica ............................... 2 45.0 - - 2 45.0 Mexico ................................ 6 2,230.0 - - 6 2,230.0 St. Vincent and the Grenadines ..... ..... 1 1.4 - 1.4 1 2.8 Uruguay ...................... I ........ 3 227.3 - - 3 227.3 Venezuela ............................. 2 755.0 - - 2 755.0 Total ................................ 38 5,703.7 5 138.4 43 5,842.1 Grand total ............. ............. 119 16,433.2 106 4,933.6 225 21,366.8 NOTE: Supplements, as well as B-loans, are included in the amounts, but are not counted as separate lending operations. Joint IBRD/IDA operations are counted only once. as IBRD operations. - Zero. 160 Summaries of Projects Approved Table 7-2. Projects Approved for IBRD and IDA Assistance in Fiscal Year 1989, by Sector (millions of US dollars) Sector' IBRD IDA Total Agriculture and Rural Development Algeria-Agricultural credit ........ ................... 110.0 - 110.0 Algeria-Agricultural credit ........................... 58.0 - 58.0 Algeria-Irrigation and drainage ....... ................ 110.0 - 110.0 Brazil-Irrigation and drainage ....... ................. 71.0 - 71.0 Brazil-Agricultural credit ......... ................... 63.0 - 63.0 Burkina Faso-Research and extension ...... .......... - 42.0 42.0 Burundi-Research and extension ....... .............. - 33.1 33.1 Cameroon-Livestock ................................ 34.6 - 34.6 China-Area development .............. I ............. - 106.0 106.0 China-Area development ......... ................... - 109.0 109.0 Egypt, Arab Republic of-Agroindustry ...... ......... 40.0 - 40.0 Ethiopia-Area development ........ ................. - 85.0 85.0 Ghana-Forestry ............... ..................... - 39.4 39.4 Ghana-Research and extension ....................... - 20.0 20.0 Guinea-Research and extension ....... ............... - 18.4 18.4 Honduras-Agricultural credit ......................... 25.0 - 25.0 India-Agroindustry .................................. - 150.0 150.0 India-Agroindustry .................................. 30.0 147.0 177.0 India-Irrigation and drainage ........ ................. 165.0 160.0 325.0 Indonesia-Agroindustry .......... ................... 118.2 - 118.2 Indonesia-Research and extension ...... .............. 35.3 - 35.3 Kenya-Agricultural credit ............................ - 20.8 20.8 Madagascar-Research and extension ...... ............ - 24.0 24.0 Malawi-Agricultural credit ........................... - 18.3 18.3 Malaysia-Area development . . ........................ 71.5 - 71.5 Morocco-Research and extension ..................... 28.0 - 28.0 Morocco-Agricultural credit ........ ................. 190.0 - 190.0 Nepal-Forestry ..................................... - 30.5 30.5 Nigeria-Area development ........ ................... 85.2 - 85.2 Nigeria-Area development ........ ................... - 100.9 100.9 Pakistan-Agriculture sector loan ...................... 200.0 - 200.0 Pakistan-Irrigation and drainage ..... ................ - 34.4 34.4 Pakistan-Irrigation and drainage ....... ............... - 40.0 40.0 Papua New Guinea-Agricultural credit ...... .......... 19.6 - 19.6 Portugal-Area development ........ .................. 90.0 - 90.0 Rwanda-Area development ........ .................. - 19.9 19.9 Senegal-Agricultural credit ........................... - 16.1 16.1 Somalia-Livestock ............ ..................... - 19.0 19.0 Somalia-Agriculture sector loan ....... ............... - 70.0 70.0 Sri Lanka-Forestry ............ ..................... - 19.9 19.9 St. Vincent and the Grenadines-Agriculture sector loan. . 1.4 1.4 2.8 Sudan-Research and extension ....... ................ - 20.0 20.0 Tanzania-Research and extension ....... ............. - 8.3 8.3 Tanzania-Research and extension ....... ............. - 18.4 18.4 Tanzania-Perennial crops ......... ................... - 25.1 25.1 Tunisia-Agriculture sector loan ........... ........... 84.0 - 84.0 Turkey-Agroindustry ................................ 150.0 - 150.0 Turkey-Agricultural credit ........................... 250.0 - 250.0 Projects Approved by Sector 161 Sector" IBRD IDA Total Agriculture and Rural Development (continued) Yemen Arab Republic-Area development ...1......... -5.0 15.0 Yemen, People's Democratic Republic of-Area development ................ ...................... - 12.0 12.0 Zimbabwe-Agricultural credit ....... ................. 36.3 - 36.3 Total ............. ............................... 2,066.1 1,423.9 3,490.0 Development Finance Companies Bolivia .............................................. - 11.3 1 j3b China .............................................. 154.0 - 154.0 China ............................................... 300.0 - 300.0 Gambia. The ........... ............................. - 10.0 10.0 Ghana ......... .................................. - 30.0 30.0 Ghana .............................................. - 6.6 6.6b Guinea-Bissau ....................................... - 5.0 5.0 India ............................................... 295.0 - 295.0 Lao People's Democratic Republic ..................... - 10.0 10.0 Mexico ............................................. 500.0 - 500.0 Morocco ........ ................................... 23.0 - 23.0 Pakistan ............................................ 150.0 - 150.0 Pakistan ............................................ 148.0 2.0 150.0 Philippines .......................................... 300.0 - 300.0 Sao Tome and Principe ............................... - 5.0 5.0 Sri Lanka ........................................... - 43.8 43.8 Venezuela .......................................... 353.0 - 353.0 Zaire ........................................... - 20.0 20.0 Total ............................................. 2,223.0 143.7 2,366.7 Education Bahamas. The . ..................................... 10.0 - 10.0 Chad ............................................... - 22.0 22.0 China ............................................... - 57.0 57.0 Colombia ..................... ..................... 100.0 - 100.0 Guatemala .......................................... 30.0 - 30.0 India ............................................... 30.0 250.0 280.0 Indonesia ........................................... 18.4 - 18.4 Korea, Republic of ................................... 16.4 - 16.4 Lao People's Democratic Republic ..................... - 3.5 3.5 Malaysia .......... ................................. 58.8 - 58.8 Maldives ............................................ - 8.2 8.2 Mali ...............................................- 26.0 26.0 Mauritania .......................................... - 18.2 18.2 Morocco... ......................................... 83.0 - 83.0 Nepal .............................................. - 1 .4 11.4 Nepal ............................................... - 22.8 22.8 Tunisia ............................................ 95.0 - 95.0 Uganda ............................................. - 22.0 22.0 Vanuatu ............................... ............ - 8.0 8.0 Total ............................................. 441.6 449.1 890.7 (continued) 162 Summaries of Projects Approved Table 7-2 (continued) Sector' IBRD IDA Total Energy Oil, gas, attd coal Brazil .............................................. 94.0 - 94.0 Djibouti ................................ ............ - 9.2 9.2 Hungary ............................................ I10.0 - 110.0 India .............................................. 340.0 - 340.0 Mozambique . ....................................... - 22.0 22.0 Tunisia ............................................. 5.5 - 5.5 Total ............................................. 549.5 31.2 580.7 Power Argentina ............................ .............. 252.0 - 252.0 Bangladesh ........................ ................. - 175.0 175.0 Bangladesh .......................................... - 87.0 87.0 Central African Republic .......... ................... - 18.0 18.0 Egypt, Arab Republic of ................... .......... 165.0 - 165.0 Haiti ............................................. - 24.0 24.0 India ............................................. 485.0 - 485.0 India ............................................. 400.0 - 400.0 Indonesia ........................................... 354.0 - 354.0 Indonesia .......................................... 337.0 - 337.0 Kenya ............................................. - 40.7 40.7 Malawi .................................-.......... 46.7 46.7 Mali ............................................. - 33.0 33.0 Mexico ............................................. 460.0 - 460.0 Pakistan ............................................ 250.0 - 250.0 Philippines .......................................... 65.5 - 65.5 Thailand ............................................ 90.0 - 90.0 Total ............................................. 2858.5 424.4 3.282.9 Industry Bangladesh-Industry sector loan ...................... - 25.0 25.0 Bolivia-Mining, other extractive ......................- 35.0 35.0 China-Industry sector loan ........ .................. 137.0 - 137.0 Dominican Republic-Industry sector loan .............. 30.0 - 30.0 Hungary-Industry sector loan ....... .............. 140.0 - 140.0 India-Industry sector loan ........ ................... 210.0 - 210.0 Indonesia-Industry sector loan ....... ................ 284.0 - 284.0 Jamaica-Industry sector loan ........................ 30.0 - 30.0 Jamaica-Mining, other extractive ....... .............. 15.0 - 15.0 Kenya-Industry sector loan .......................... - 53.7 53.7b Mexico-Industry sector loan ..... ................... 250.0 - 250.0 Mexico-Industry sector loan ........ ................. 500.0 - 500.0 Nigeria-Engineering ................................. 27.7 - 27.7 Turkey-Industry sector loan ........ ................. 29.8 - 29.8' Turkey-Industry sector loan ........ ................. 204.5 - 204.5 Yemen Arab Republic-Industry sector loan ............ - 10.8 10.8 Total ............................................. 1,858.0 124.5 1,982.5 Projects Approved by Sector 163 Sector' IBRD IDA Total Nonproject Argentina ........................................... 300.0 - 300.0 Bangladesh .......................................... - 2.5 2, 5 Benin .............................................. - 45.0 45.0 Cameroon ...... ... . 150.0 - 150.0 Chad .............................................. - 16.2 16.2 Costa Rica .......................................... 100.0 - 100.0 Gambia. The . ....................................... - 23.0 23.0 Ghana .............................................. - 120.0 120.0 Guinea-Bissau ....................................... - 23.4 23.4 Honduras ........................................... 50.0 - 50.0 Indonesia ... . ...................................... 350.0 - 350.0 Kenya .............................................. - 120.0 120.0 Lao People's Democratic Republic ..................... - 40.0 40.0 Madagascar ......................................... - 1.4 1.4 Malawi ............................................. - 5.2 5,2 Mexico ............................................. 500.0 - 500.0 Morocco ............................................ 200.0 - 200.0 Mozambique ............................ ........ - 90.0 90.0 Nepal .............................................. - 60.0 60.0 Nigeria ............................. ............... 500.0 - 500.0 Senegal .............................................. - 5.5 5.5 Tanzania ............................................ - 135.0 135.0 Tanzania ............................................ - 12.5 12.5 Togo .............................................. - 0.1 0. l Uganda ........................ ................... - 1.7 17b Uganda ............................................. - 25.0 25, 0 Uruguay ........................................... 140.0 - 140.0 Venezuela ..................................... ..... 402.0 - 402.0 Total ............................................. 2,692.0 726.5 3,418.5 Population, Health, and Nutrition Benin .............................................. - 18.6 18.6 Brazil .............................. ............... 99.0 - 99.0 China .............................................. - 52.0 52.0 India .............................................. 11.3 113.3 124.6 Indonesia ........................................... 43.5 - 43.5 Jordan .............................................. 73.0 - 73.0 Mozambique ........................................ - 27.0 27.0 Nigeria .............................................2 7.6 - 27.6 Philippines .......................................... 70.1 - 70.1 Turkey ............................................. 75.0 - 75.0 Yemen, People's Democratic Republic of ............... - 4.5 4.5 Zaire .............................................. - 8.1 8.1 Total ................ ............................ 399.5 223.5 623.0 Small-scale Enterprises Chile .............................................. 75.0 - 75.0 Colombia ........................................... 80.0 - 80.0 Indonesia ........................................... 100.0 - 100.0 Nigeria ............................................ 270.0 - 270.0 (con tinuied) 164 Summaries of Projects Approved Table 7-2 (continued) Sectora IBRD IDA Total Small-scale Enterprises (continued) Philippines .......................................... 60.0 - 60.0 Total ............................................. 585.0 - 585.0 Technical Assistance Argentina ........................................... 28.0 - 28.0 Argentina ...................... .................... 6.5 - 6.5 Bolivia .............................................. - 9.7 9.7 Central African Republic ......... .................... - 13.2 13.2 Guinea .............................................. - 14.5 14.5 Guinea .............................................. - 9.0 9.0 Madagascar ........................ ................ - 22.0 22.0 Malawi .................... ........................ - 11.3 11.3 Togo ............................................... - 5.0 5.0 Togo ............................................... - 5.0 5.0 Uganda ............................................. - 18.0 18.0 Uganda ............................................. - 15.0 15.0 Uruguay ............................................ 6.5 - 6.5 Zaire ............................................... - 11.6 11.6 Total ............................................... 41.0 134.3 175.3 Telecommunications Benin ............................................... - 16.0 16.0 Ecuador ............................................ 45.0 - 45.0 Fiji ............................................... 8.1 - 8.1 Ghana .............................................. - 19.0 19.0 Togo ............................................... - 16.0 16.0 Uganda ............................................. - 52.3 52.3 Western Samoa ...................................... - 4.6 4.6 Total ............................................. 53.1 107.9 161.0 Transportation Algeria-Ports and waterways ......................... 63.0 - 63.0 Bangladesh-Transportation sector loan ...... .......... - 133.6 133.6 Bolivia-Railways ............. ...................... - 37.0 37.0 Cape Verde-Highways .......... .................... - 4.7 4.7 Chad-Transportation sector loan ...... ............... - 60.0 60.0 China-Highways .................................... - 61.0 61.0 China-Ports and waterways ........ .................. 36.0 - 36.0 China-Ports and waterways .......................... 76.4 - 76.4 China-Highways ..... _ ........................... 60.0 50.0 110.0 China-Railways ..................................... 70.0 80.0 150.0 Ethiopia-Transportation sector loan ................... - 72.0 72.0 Gabon-Highways ................................... 30.0 - 30.0 Guatemala-Highways .......... ..................... 31.5 - 31.5 Hungary-Transportation sector loan ...... ............ 95.0 - 95.0 India-Highways .............. ...................... 170.0 80.0 250.0 Korea, Republic of-Highways ........................ 200.0 - 200.0 Nepal-Transportation sector loan ..... ............... - 32.8 32.8 Thailand-Highways ................................. 87.0 - 87.0 Uganda-Railways ......... ......................... - 7.0 7.0 Projects Approved by Sector 165 Sector" IBRD IDA Total Transportation (continued) Uruguay-Transportation sector loan ...... ............ 80.8 - 80.8 Yugoslavia-Railways ....... ........................ 138.0 - 138.0 Zaire-Transportation sector loan ....... .............. - 75.0 75.0 Total ............................................. 1,137.7 693.1 1,830.8 Urban Development Argentina ........................................... 300.0 - 300.0 Brazil .............................................. 100.0 - 100.0 Burundi ............................................. - 21.0 21.0 Cameroon ........................................... 146.0 - 146.0 Chile .............................................. 200.0 - 200.0 Chile .............................................. 75.0 - 75.0 Mozambique ........................................ - 60.0 60.0 Nepal .............................................. - 41.5 41.5 Rwanda ............................................. - 32.0 32.0 Sudan ............................................. - 75.0 75.0 Tunisia ............................................ 58.0 - 58.0 Zimbabwe ........................................... 80.0 - 80.0 Total ............................................. 959.0 229.5 1,188.5 Water Supply and Sewerage Brazil ..............................................2 80.0 - 280.0 Egypt. Arab Republic of .............................. 36.0 - 36.0 Ghana .............................................. - 25.0 25.0 Guinea ............................................. 40.0 40.0 Haiti. . .......... - 20.0 20.0 Mexico ............................................2 0.0 - 20.0 Nigeria ............................................ 173.2 - 173.2 Pakistan ............................................ - 125.0 125.0 Yemen. People's Democratic Republic of ............... - 12.0 12.0 Yugoslavia .......................................... 60.0 - 60.0 Total ............................................ 569.2 222.0 791.2 Grand total ........................................ 16,433.2 4,933.6 21,366.8 NOTE: For additional details, see Tables 7-3 and 7-4. - Zero. a. Many projects include activity in more than one sector or subsector. b. Supplementary financing to a previous loan, not counted as a separate operation. c. B-loan applied to an existing project, not counted as a separate operation. 166 Summaries of Projects Approved Table 7-3. Statement of IBRD Loans Approved during Fiscal Year 1989 Principal Borrower or guarantor amount Purpose Date of approval Maturities (USS millions) Algeria Desert locust control project ............ .............. Jan. 31, 1989 1994/2004 58.0 West Mitidja irrigation project ................ ........ May 30, 1989 1994/2004 110.0 Third ports project ................. June 29, 1989 1995/2004 63.0 Algeria (Guarantor) Agricultural credit project-Banque de l'Agriculture et du Developpement Rural ......................... Dec. 13, 1988 1994/2003 110.0 Argentina Social sector management technical assistance project ... July 26, 1988 1994/2003 28.0 First housing sector project ........ ................... Oct. 27. 1988 1994/2003 300.0 Second trade policy project ........ ................... Oct. 27. 1988 1994/2003 300.0 Electric power sector project .......................... Oct. 27. 1988 1995/2001 252.0 Tax administration technical assistance project .......... Jan. 24, 1989 1994/2004 6.5 Bahamas, The Second technical and vocational training project ......... Dec. 8, 1988 1994/2003 10.0 Brazil Jaiba irrigation project . .................. Dec. 22. 1988 1994/2003 71.0 Amazon basin malaria control project .................. May 25. 1989 1994/2004 99.0 Brazil (Guarantor) Parana land management I project-State of Parana ..... Jan. 31. 1989 1994/2004 63.0 Sao Paulo natural gas distribution project-Companhia de Gas de Sao Paulo ................................ Apr. 25, 1989 1994/2004 94.0 Parana municipal development project-State of Parana. . June 22, 1989 1994/2004 100.0 Sao Paulo state water sector project-Companhia de Saneamento Basico do Estado de Sao Paulo ..... ..... June 28. 1989 1994/2004 280.0 Cameroon Second urban development project . ............ Oct. 27. 1988 1994/2005 146.0 Livestock sector development project . ........... Jan. 10, 1989 1994/2005 34.6 Structural adjustment program ........... ............. June 14. 1989 1995/2006 150.0 Chile Urban streets and transport project ...... .............. Mar. 21, 1989 1994/2006 75.0 Second housing sector project ......................... Mar. 28. 1989 1994/2006 200.0 Second industrial finance project ...................... May 11. 1989 1995/2006 75.0 China / e Xiamen port project .................................. Dec. 13, 1988 1994/2008 36.0 Ningbo and Shanghai ports project ..................... Dec. 13, 1988 1994/2008 76.4 Tianjin light industry project ........ .................. Feb. 21, 1989 1994/2009 154.0 Inner Mongolia local railway project .. ....... .......... May 12, 1989 1994/2009 70.0 Hubei phosphate project .............................. May 23, 1989 1994/2009 137.0 Shandong provincial highway project ................... May 25. 1989 1994/2009 60.0 Fifth industrial credit project .......................... May 30. 1989 1994/2009 300.0 Colombia Second subsector project for primary education ..... .... Dec. 20. 1988 1994/2006 100.0 Colombia (Guarantor) Fifth small- and medium-scale enterprise project- Central Bank of Colombia ........................ Mar. 14, 1989 1994/2006 80.0 Statement of IBRD Loans 167 Principal Borrower or guarantor amount Purpose Date of approval Maturities (US$ millions) Costa Rica Second structural adjustment loan ....... .............. Dec. 13. 1988 1994/2005 100.0 Dominican Republic Industrial free zone development project ..... .......... Mar. 30, 1989 1994/2009 30.0 Ecuador (Guarantor) First telecommunications project-Instituto Ecuatoriano de Telecomunicaciones ................. May 4. 1989 1994/2006 45.0 Egypt, Arab Republic of Agricultural storage project ........ ................... May 25. 1989 1995/2009 40.0 Egypt, Arab Republic of (Guarantor) Second Alexandria water supply project-Alexandria Water General Authority ........ ................... Sept. 15, 1988 1994/2008 36.0 Fourth power project-Egyptian Electricity Authority ... June 28, 1989 1995/2009 165.0 Fiji Third telecommunications project ............... ...... May 25. 1989 1994/2006 8.1 Gabon Road maintenance project ......... ................... Apr. 27, 1989 1994/2004 30.0 Guatemala Second basic education project ................. ...... Dec. 6, 1988 1994/2009 30.0 Secondary and regional road rehabilitation project ....... Dec. 6, 1988 1994/2008 31.5 Honduras Structural adjustment loan . ........................... Sept. 15. 1988 1994/2008 50.0 Fourth agricultural credit ......... .................... Sept. 15, 1988 1994/2008 25.0 Hungary Second transport project .............................. Mar. 30, 1989 1994/2004 95.0 Hungary (Guarantor) Third industrial restructuring project-National Bank of Hungary ............. ..................... Feb. 7, 1989 1994/2004 140.0 Energy development and conservation project- Hungarian National Oil and Gas Trust and National Bank of Hungary .......................... May II, 1989 1995/2004 110.0 India States' road project .................................. Oct. 20. 1988 1994/2008 170.0 Nathpa Jhakri power project .......... .. ............. Mar. 2. 1989 1994/2009 485.0 Vocational training project . ................ Apr. 27. 1989 1994/2009 30.0 Upper Krishna (Phase 11) irrigation project ............. May 4. 1989 1994/2009 165.0 Export development project . ........ ...... May 12. 1989 1994/2009 120.0 National sericulture project ............. .............. May 18, 1989 1994/2009 30.0 Maharashtra power project . ................ June 15, 1989 1995/2009 400.0 Electronics industry development project . ......... June 15. 1989 1995/2009 8.0 Sixth population project .............. .......... ..... June 29, 1989 1995/2009 11.3 (continuled) 168 Summaries of Projects Approved Table 7-3 (continued) Principal Borrower or guarantor amount Purpose Date of approval Maturities (US$ millions) India (Guarantor) Petroleum transport project-Indian Oil Corporation Limited ........................................... Apr. 27. 1989 1994/2009 340.0 Export development project-The Industrial Credit and Investment Corporation of India, Limited ......... May 12, 1989 1994/2009 175.0 Electronics industry development project-Industrial Development Bank of India ........................ June 15. 1989 1995/2009 101.0 Electronics industry development project-Industrial Credit and Investment Corporation of India ........................................... June 15, 1989 1995/2009 101.0 Indonesia Tree-crops human resource development project ........ Sept. 15. 1988 1994/2008 18.4 Tree-crop processing project ........ .................. Nov. 15. 1988 1994/2008 118.2 Agricultural research management project ..... ......... Mar. 28, 1989 1994/2009 35.3 Third health project ............ ...................... Apr. 25, 1989 1994/2009 43.5 Small and medium industrial enterprise project .......... Apr. 25. 1989 1994/2009 100.0 Industrial restructuring project ....... ................. Apr. 25, 1989 1994/2009 284.0 Private sector development project ...... .............. June 6. 1989 1995/2009 350.0 Paiton thermal power project .......................... June 22. 1989 1995/2009 354.0 Power sector efficiency project ....... ................. June 22, 1989 1995/2009 337.0 Jamaica Emergency reconstruction import loan ...... ........... Dec. 22, 1988 1994/2005 30.0 Clarendon alumina production project ............. .... May 16. 1989 1995/2006 15.0 Jordan Human resources development sector investment loan ... June 29, 1989 1995/2006 73.0 Korea, Republic of Technology advancement project ....... ............... Apr. 18. 1989 1994/2004 16.4 Road improvement project .................. ......... May 16. 1989 1994/2004 200.0 Malaysia Second primary and secondary education sector project. . Aug. 2. 1988 1994/2003 58.8 Sabah land settlement and environmental management project ............................................ Apr. 25. 1989 1994/2006 71.5 Mexico (Guarantor) Industrial restructuring project-Nacional Financiera, S.N.C ............................................ Apr. 27. 1989 1994/2006 250.0 Hydroelectric development project-Nacional Financiera. S.N.C ............ ..................... June 8, 1989 1995/2006 460.0 Industry sector policy loan-Nacional Financiera. S.N.C .... ....................................... June 13. 1989 1995/2006 500.0 Public enterprise reform loan-Nacional Financiera, S.N.C ............................................ June 13. 1989 1995/2006 500.0 Financial sector adjustment loan-Banco Nacional de Comercio Exterior. S.N.C ......... ............. June 13. 1989 1995/2006 500.0 Water, women, and development project-Banco Nacional de Obras y Servicios Publicos. S.N.C ....... June 22. 1989 1995/2006 20.0 Statement of IBRD Loans 169 Principal Borrower or guarantor amount Purpose Date of approval Maturities (US$ millions) Morocco Structural adjustment loan ......... ................... Dec. 1, 1988 1994/2009 200.0 Rural primary education project ....... ................ Mar. 14, 1989 1994/2009 83.0 Agricultural research and extension project ..... ........ Apr. 18. 1989 1994/2009 28.0 Public administration support project ................... May 2. 1989 1995/2009 23.0 Morocco (Guarantor) National agricultural credit project-National Agricultural Credit Bank ............................ June 14. 1989 1994/2009 190.0 Nigeria Lagos state water supply project ....... ............... July 28, 1988 1994/2008 173.2 Second multistate agricultural development project ...... Aug. 25. 1988 1994/2008 85.2 Private small and medium enterprise development project ............................................ Oct. 20, 1988 1994/2008 270.0 Trade and investment policy loan ...................... Dec. 22. 1988 1994/2008 500.0 Imo health and population project ....... .............. Mar. 30. 1989 1993/2008 27.6 Nigeria (Guarantor) Refineries rehabilitation project-Nigerian National Petroleum Corporation ......... ................... June 29, 1989 1992/2004 27.7 Pakistan Agricultural sector adjustment loan ...... .............. Aug. 2, 1988 1994/2008 200.0 Third industrial investment credit project ............... Jan. 31, 1989 1994/2008 148.0 Financial sector adjustment loan ....................... Mar. 28, 1989 1994/2009 150.0 Second energy sector loan ......... ................... June 29, 1989 1995/2009 250.0 Papua New Guinea Land mobilization project ............ . ............... May 4, 1989 1994/2009 19.6 Philippines Fourth small and medium industries development project ............................................ Apr. 25, 1989 1994/2009 60.0 Financial sector adjustment program ...... ............. May 4, 1989 1994/2009 300.0 Health development project ........................... June 22, 1989 1995/2009 70.1 Philippines (Guarantor) Manila power distribution project-Development Bank of the Philippines ............................. June 8, 1989 1995/2009 65.5 Portugal Tras-Os-Montes regional development project ..... ...... Apr. 11. 1989 1994/2004 90.0 St. Vincent and the Grenadines Agricultural rehabilitation and diversification project ..... Jan. 26, 1989 1994/2006 1.4 Thailand Second highway sector project ....... ................. Dec. 13. 1988 1994/2008 87.0 Thailand (Guarantor) Power system development project-Electricity Generating Authority of Thailand .................... Mar. 21. 1989 1994/2009 90.0 (continued) 170 Summaries of Projects Approved Table 7-3 (continued) Principal Borrower or guarantor amount Purpose Date of approval Maturities (US$ millions) Tunisia Education and training sector loan ....... .............. May 11. 1989 1994/2006 95.0 Fifth urban project ................................... May 18, 1989 1994/2006 58.0 Second agricultural sector adjustment loan .............. June 1. 1989 1994/2006 84.0 Tunisia (Guarantor) Petroleum exploration promotion project-Entreprise Tunisienne d'Activites Petrolieres ...... ............. Feb. 21, 1989 1994/2006 5.5 Turkey Second financial sector adjustment project (B-Loan) ..... Sept. 14, 1988 1999/2000 29.8 Health project ....................................... May 11, 1989 1994/2006 75.0 Second small- and medium-scale industry project ........ May 23, 1989 1994/2006 204.5 Agroindustry project ................................. May 30, 1989 1994/2006 150.0 Third agricultural credit project . .............. June 15, 1989 1995/2006 250.0 Uruguay Transport project 1 ...... ............. Feb. 7, 1989 1994/2003 80.8 Second technical assistance project .................... June 8, 1989 1995/2004 6.5 Second structural adjustment loan .......... ........... June 8. 1989 1995/2004 140.0 Venezuela Trade policy loan .................................... June 15, 1989 1995/2004 353.0 Structural adjustment loan ............. ............ June 15. 1989 1995/2004 402.0 Yugoslavia (Guarantor) Seventh railway project-The Railway Transport Organizations of Belgrade, Ljubljana, Novi Sad, and Zagreb ....................... May 23. 1989 1995/2004 138.0 Istria and Slovene coast water supply and sewerage project-Rizana Water Works. Istrian Water Works. Pula Water Works .......................... May 23. 1989 1994/2004 60.0 Zimbabwe Agricultural credit and export promotion project ........ May 18, 1989 1995/2009 36.3 Urban sector and regional development project ..... .... June 1, 1989 1994/2009 80.0 Total . .16,433.2 International Finance Corporation (total amount for fiscal 1989). -a _b 179.1 Grand total .16,612.3 NOTE: All loans approved in fiscal year 1989 are at variable interest rates. a. Various loans approved throughout the fiscal year. b. Maturities vary for individual loans. Statement of IDA Credits 171 Table 74. Statement of IDA Credits Approved during Fiscal Year 1989 Principal amount (millions) Country US$ Purpose Date of approval Maturities SDR equivalent Bangladesh Industrial sector credit (supplemental credit) ................................ Mar. 13. 1989 1999/2028 1.9 2.5 Export development credit ...... .......... April 11, 1989 1999/2028 19.4 25.0 Energy sector adjustment credit ..... ...... April II, 1989 1999/2028 137.0 175.0 Power distribution (16 towns) project ....... May 16, 1989 1999/2029 64.7 87.0 Third flood rehabilitation (emergency) project ............................... June 27, 1989 1999/2029 102.8 133.6 Benin Telecommunications project ............... Nov. 8, 1988 1999/2028 12.5 16.0 Structural adjustment program ............. May 23, 1989 1999/2029 33.5 45.0 Health services development project ... ... June 6, 1989 1999/2029 14.1 18.6 Bolivia Economic management strengthening project ................................ Dec. 22, 1988 1999/2028 7.2 9.7 Financial sector adjustment credit (supplemental credit) ....... ............ Mar. 13. 1989 1999/2028 9.2 11.3 Mining sector rehabilitation project ......... May II. 1989 1999/2029 26.5 35.0 Export corridors project ....... ........... May 11. 1989 1999/2029 28.3 37.0 Burkina Faso Agricultural services project ............... Jan. 17. 1989 1999/2028 31.2 42.0 Burundi Second urban development project ..... .... Dec. 6. 1988 1999/2028 16.1 21.0 Agricultural services sector project ......... May 25. 1989 1999/2029 25.1 33.1 Cape Verde Infrastructure rehabilitation and technical assistance project ......... ............. Sept. 8. 1988 1999/2028 3.5 4.7 Central African Republic Economic management project ..... ....... Dec. 13. 1988 1999/2028 10.3 13.2 Energy project ...... . ................... Jan. 10. 1989 1999/2028 13.5 18.0 Chad Financial rehabilitation program ..... ...... July 26, 1988 1999/2028 11.9 16.2 Education rehabilitation program ........... Aug. 2, 1988 1999/2028 16.2 22.0 Transport sector adjustment/investment project .......................... ... April 25, 1989 1999/2629 45.4 60.0 China Jiangxi provincial highway project ......... Feb. 7. 1989 1999/2023 44.7 61.0 Shaanxi agricultural development project ... Mar. 28, 1989 1999/2023 78.8 106.0 Textbook development project ........... April 18. 1989 1999/2023 41.8 57.0 Integrated regional health development project ............................... May 2. 1989 1999/2024 39.4 52.0 Inner Mongolia local railway project . ...... May 12, 1989 1999/2024 58.6 80.0 Shandong agricultural development project. . May 16, 1989 1999/2024 82.5 109.0 Shandong provincial highway project ....... May 25. 1989 1999/2024 38.8 50.0 (continued) 172 Summaries of Projects Approved Table 74 (continued) Principal amount (millions) Country USS Purpose Date of approval Maturities SDR equivalent Djibouti Geothermal development project ........... June 29, 1989 1999/2029 7.1 9.2 Ethiopia . First peasant agricultural development project ................................ Oct. 18, 1988 1999/2028 66.0 85.0 Transport project ......................... April 11, 1989 1999/2029 55.8 72.0 Gambia, The Enterprise development project ............ Dec. 22, 1988 1999/2028 7.3 10.0 Second structural adjustment program ...... June 8, 1989 1999/2029 17.9 23.0 Ghana Second telecommunications project ........ July 26, 1988 1999/2028 13.8 19.0 Forest resource management project ....... Dec. 22, 1988 1999/2028 30.6 39.4 Financial sector adjustment credit (supplemental credit) ........ .......... Mar. 13, 1989 1999/2028 5.1 6.6 Private small and medium enterprise development project .................... Mar. 28. 1989 1999/2029 22.3 30.0 Second structural adjustment credit ........ April 18, 1989 1999/2029 89.2 120.0 Rural finance project ......... ............ June 14, 1989 1999/2029 15.2 20.0 Water sector rehabilitation project ......... June 14, 1989 1999/2029 19.3 25.0 Guinea National agricultural research and extension project ............................... Sept. 15. 1988 1999/2028 14.2 18.4 Second economic management support project ............................... Nov. 8. 1988 1999/2028 11.3 14.5 Second water supply project ............... Feb. 21, 1989 1999/2029 29.3 40.0 Socioeconomic development support project ................................ Mar. 28, 1989 1999/2029 6.9 9.0 Guinea-Bissau Social and infrastructure relief project ...... May 18. 1989 1999/2029 3.8 5.0 Second structural adjustment program ...... May 18. 1989 1999/2028 18.0 23.4 Haiti Fifth power project .......... ............. June 27. 1989 1999/2029 18.6 24.0 Port-au-Prince water supply project ........ June 27. 1989 1999/2029 15.2 20.0 India Third national seeds project ...... ......... Aug. 25. 1988 1998/2023 108.6 150.0 States' road project ....................... Oct. 20. 1988 1998/2023 62.2 80.0 Vocational training project ....... ......... April 27, 1989 1998/2023 189.2 250.0 Upper Krishna (Phase 11) irrigation project. . May 4, 1989 1999/2023 119.0 160.0 National sericulture project ................ May 18, 1989 1999/2024 113.8 147.0 Sixth population project ................... June 29. 1989 1999/2024 87.2 113.3 Kenya Geothermal development and energy preinvestment project ................... Dec. 22, 1988 1998/2023 31.6 40.7 Rural services design project ...... ........ Dec. 22, 1988 1998/2023 15.5 20.8 Industrial sector adjustment credit (supplemental credit) ........ ........... Mar. 13, 1989 1998/2023 41.4 53.7 Financial sector adjustment credit .......... June 27, 1989 1999/2024 92.9 120.0 Statement of IDA Credits 173 Principal amount (millions) Country US$ Purpose Date of approval Maturities SDR equivalent Lao People's Democratic Republic Industrial credit project .......... ........ July 26. 1988 1998/2028 7.4 10.0 National polytechnic institute project ....... April 11. 1989 1999/2029 2.7 3.5 Structural adjustment program ...... ....... June 14, 1989 1999/2029 30.8 40.0 Madagascar Economic management and social action project ................................ Dec. 6, 1988 1998/2028 17.1 22.0 Public sector adjustment credit (supplemental credit) ........ ........... Mar. 13, 1989 1998/2028 1.1 1.4 National agricultural research project ....... June 15. 1989 1999/2029 18.6 24.0 Malawi Agricultural marketing and estate development project .................... Dec. 1, 1988 1998/2028 14.2 18.3 Industry and trade adjustment credit (supplemental credit) ........ ........... Mar. 13, 1989 1998/2028 4.0 5.2 Energy I project ............ ............. Mar. 14, 1989 1998/2028 34.8 46.7 Institutional development project ..... ..... June 13, 1989 1999/2029 8.8 11.3 Maldives Education and training project ...... ....... Jan. 26, 1989 1998/2028 6.0 8.2 Mali Second power project ..................... Mar. 30, 1989 1999/2028 24.2 33.0 Education sector consolidation project ...... June 29. 1989 1999/2029 20.2 26.0 Mauritania Education sector restructuring project ...... July 19, 1988 1998/2028 13.2 18.2 Mozambique Urban rehabilitation project ...... ......... Aug. 2, 1988 1998/2028 44.0 60.0 Health and nutrition project ...... ......... Mar. 14, 1989 1998/2028 21.0 27.0 Third rehabilitation project ....... ......... May 18, 1989 1999/2029 68.2 90.0 Urban household energy project ..... ...... June 8. 1989 1999/2029 17.1 ' 22.0 Nepal Municipal development and earthquake emergency housing reconstruction project. Mar. 14, 1989 1998/2028 30.9 41.5 Arun III access road project ............... May 30. 1989 1999/2029 24.4 32.8 Hill community forestry project ............ May 30, 1989 1999/2029 23.5 30.5 Engineering education project ...... ....... June 22, 1989 1999/2029 8.8 11.4 Earthquake emergency schools rehabilitation project ................................ June 27, 1989 1999/2029 17.6 22.8 Second structural adjustment credit ........ June 27, 1989 1999/2029 46.2 60.0 Nigeria Third multistate agricultural development project ................................ June 13, 1989 1999/2024 75.0 100.9 (continued) 174 Summaries of Projects Approved Table 74 (continued) Principal amount (millions) Country US$ Purpose Date of approval Maturities SDR equivalent Pakistan Third industrial investment credit ..... ..... Jan. 31, 1989 1999/2023 1.5 2.0 Second Karachi water supply and sanitation project ................................ Feb. 28, 1989 1999/2023 97.1 125.0 1988 flood damage restoration project ...... April 11, 1989 1999/2024 30.6 40.0 Private tubewell development project ....... April 11, 1989 1999/2024 26.3 34.4 Rwanda Agricultural services project .............. May 30, 1989 1999/2029 15.5 19.9 Urban institutions sectoral development project . ............................... June 15. 1989 1999/2029 24.8 32.0 Sao Tome and Principe Multisector project ......... .............. June 14, 1989 1999/2029 3.9 5.0 Senegal Third structural adjustment credit (supplemental credit) ....... ............ Mar. 13, 1989 1999/2028 4.2 5.5 Second small rural operations project ....... Mar. 21, 1989 1999/2028 12.0 16.1 Somalia Central rangelands research and development project .................... Oct. 18, 1988 1999/2028 14.7 19.0 Second agricultural sector adjustment program ........................... ... June 1, 1989 1999/2029 54.2 70.0 Sri Lanka Third industrial development project .... July 26, 1988 1999/2028 31.7 43.8 Forest sector development project ..... .... June 15. 1989 1999/2029 15.5 19.9 St. Vincent and the Grenadines Agricultural rehabilitation and diversification project ................................ Jan. 26, 1989 1999/2023 1.1 1.4 Sudan Southern Kassala agricultural project ....... Nov. 8. 1988 1999/2028 15.6 20.0 Emergency flood reconstruction project ..... May 4. 1989 1999/2029 54.9 75.0 Tanzania National agricultural and livestock research project ................................ Dec. 13, 1988 1999/2028 6.0 8.3 Industrial rehabilitation and trade adjustment program ........ ............ Dec. 13, 1988 1999/2028 97.6 135.0 Industrial rehabilitation and trade adjustment credit (supplemental credit) ... Mar. 13. 1989 1999/2028 9.7 12.5 National agricultural and livestock extension rehabilitation project .................... Mar. 21. 1989 1999/2029 13.7 18.4 Cashew and coconut treecrops project ...... June 27. 1989 1999/2029 19.4 25.1 Togo Third structural adjustment credit (supplemental credit) ....... ............ Mar. 13, 1989 1999/2027 0.1 0.1 Grassroots development initiatives project . . Mar. 21. 1989 1999/2029 3.8 5.0 Preinvestment project ..................... May 18, 1989 1999/2028 3.9 5.0 Telecommunications project ...... ......... June 29, 1989 1999/2029 12.4 16.0 Statement of IDA Credits 175 Principal amount (millions) Country US$ Purpose Date of approval Maturities SDR equivalent Uganda Third technical assistance program ......... Aug. 23, 1988 1999/2028 13.8 18.0 Public enterprise project .... ........ Nov. 8, 1988 1999/2028 11.7 15.0 Fourth education project ............. .... Nov. 15, 1988 1999/2028 17.1 22.0 Railways project .......... ............... Feb. 21. 1989 1999/2029 5.2 7.0 Economic recovery program I (supplemental credit) ................................ Mar. 13. 1989 1997/2027 1.3 1.7 Second telecommunications rehabilitation project ................................ Mar. 14. 1989 1999/2029 38.3 52.3 Economic recovery program (supplemental credit) ................................ April 20. 1989 1997/2027 19.0 25.0 Vanuatu Primary and secondary education project ... Nov. 15. 1988 1999/2028 6.3 8.0 Western Samoa Telecommunications project ...... ......... June 8. 1989 1999/2029 3.6 4.6 Yemen Arab Republic Eastern Region agricultural development project ................................ Jan. 31. 1989 1999/2029 11.0 15.0 Institutional development for public administration project ................... May 12. 1989 1999/2029 8.2 10.8 Yemen, People's Democratic Republic of Al Mukalla water supply project ..... ...... July 19. 1988 1999/2028 8.7 12.0 Second health development project ......... Dec. 13. 1988 1999/2028 3.5 4.5 Third Wadi Hadramawt agricultural development project .............. June 22, 1989 1999/2029 9.3 12.0 Zaire National AIDS control program assistance project ................................ Sept. 8. 1988 1999/2028 6.2 8.1 Agricultural sector management and institutional development project ..... .... Oct. 20. 1988 1999/2028 9.0 11.6 First transport rehabilitation project .. ......... May 30. 1989 1999/2029 57.3 75.0 Second Gecamines technical assistance project ................... ...... June 27. 1989 1999/2029 15.4 20.0 Total 3,738.1 4,933.6 NOTE: Starting with the sixth replenishment of IDA. credits are expr-essed in special drawing rights (SDRs). The US-dollar equivalent of the original principal amount of credits denominated in SDRs is shown at the rate approved by the executive board. All credits approved in fiscal 1989 have a service charge of 0.75 percent on the unwithdrawn balance. 176 Summaries of Projects Approved Table 7-5. IBRD and IDA Cumulative Lending Operations, by Major Purpose and Region, June 30, 1989 (millions of US dollars) IBRD loans to borrowers, by region' Europe. Middle Latin East, and America North and the Purposeb Africa Asia Africa Caribbean Total Agriculture and Rural Development Agricultural credit ........ ............ 319.8 1,287.9 2,610.3 2,445.4 6,663.4 Agriculture sector loan ....... ......... 14.6 427.3 1,232.0 2,082.1 3,756.0 Agroindustry ......................... 30.0 325.2 1,049.7 1,126.9 2,531.8 Area development ......... ........... 1,464.6 1,639.9 1,004.5 2,927.4 7,036.4 Fisheries ............................. 0.0 106.7 48.0 16.2 170.9 Forestry ............................. 255.0 58.0 268.5 70.5 652.0 Irrigation and drainage ............. _ . 110.2 3,800.7 2,645.8 1,827.3 8,384.0 Livestock ............................ 170.7 318.0 236.0 1,042.0 1,766.7 Perennial crops . ....................... 528.5 1,218.0 108.0 123.0 1,977.5 Research and extension ................ 64.9 448.4 127.4 538.0 1,178.7 Total .............................. 2,958.3 9,630.1 9,330.2 12,198.8 34,117.4 Development Finance Companies ..... ..... 1,059.0 5.162.8 5,721.7 5,731.1 17,674.6 Education .............................. 392.1 2,520.0 1,926.8 1,212.7 6,051.6 Energy Oil, gas, and coal ......... ............ 167.2 4,278.8 1,630.8 1,122.2 7,199.0 Power ............................... 1,612.1 12,876.7 5,708.2 10,342.2 30,539.2 Total .............................. 1,779.3 17,155.5 7.339.0 11.464.4 37,738.2 Industry Engineering ..... .................... 27.7 10.0 11.0 9.5 58.2 Fertilizer and other chemicals .......... 0.0 1,701.1 776.4 848.5 3.326.0 Industry sector loan ........ ........... 0.6 1,776.1 1,901.0 1,359.5 5,037.2 Iron and steel ......... .............. 20.0 189.0 512.8 1,067.0 1,788.8 Mining, other extractive ...... ......... 533.5 0.0 212.2 547.5 1,293.2 Paper and pulp ........... ............ 48.4 105.5 263.3 20.0 437.2 Textiles .............................. 63.0 157.4 307.3 0.0 527.7 Tourism sector loan ........ ........... 54.5 25.0 96.6 187.5 363.6 Total .............................. 747.7 3,964.1 4,080.6 4.039.5 12.831.9 Nonproject ............................. 1,943.6 3,329.3 3,725.9c 4,335.6 13.334.4 Population, Health, and Nutrition ......... 104.8 434.8 232.2 478.8 1,250.6 Small-scale Enterprises ................... 440.7 1,291.5 808.0 1,935.6 4,475.8 Technical Assistance ......... ............ 124.8 23.0 8.8 173.3 329.9 Telecommunications ......... ........... 285.2 981.0 821.8 508.3 2.596.3 Transportation Airlines and airports ........ .......... 59.0 14.8 7.0 218.5 299.3 Highways ............................ 1,772.9 4,388.5 2.816.3 4,745.3 13,723.0 Pipelines ........................... 0.0 0.0 94.5 23.3 117.8 Ports and waterways ........ .......... 285.9 1,722.5 1,492.6 523.7 4,024.7 Railways ............................. 694.9 3,013.8 1,483.9 1,938.5 7,131.1 Transportation sector loan ...... ....... 61.6 377.2 372.0 128.6 939.4 Total ............ ................. 2,874.3 9,516.8 6.266.3 7,577.9 26,235.3 Urban Development ......... ............ 805.3 2,652.5 650.8 3,039.1 7.147.7 Water Supply and Sewerage ...... ........ 701.9 1,226.4 2,848.8 2.921.2 7,698.3 Grand total ......................... 14.217.0 57,887.8 43,760.9 55.616.3 171,482.0 a. Except for the total amount shown in footnote d, no account is taken of cancellations and refundings subsequent to original commitment. Amounts of cancellations and refundings are shown by countrv and purpose in the Statement of Loans and Development Credits. IBRD loans of $2,485.0 million to the IFC are excluded. b. Operations have been classified by the major purpose they finance. Many projects include activity in more than one sector or subsector. Cumulative Lending Operations, by Purpose and Region 177 IDA credits to borrowers, by region' Europe, Middle Latin East, and America North and the Total IBRD Africa Asia Africa Caribbean Total and IDA 366.6 2,154.3 304.0 23.5 2,848.4 9,511.8 237.7 327.7 40.0 1.4 606.8 4,362.8 333.4 676.9 138.0 15.0 1,163.3 3,695.1 1.562.1 1,345.9 200.6 51.1 3,159.7 10,196.1 46.9 147.7 54.1 0.0 248.7 419.6 311.7 710.0 1.7 12.8 1,036.2 1,688.2 827.1 4,922.9 1,214.2 18.5 6,982.7 15,366.7 416.4 331.2 49.5 67.5 864.6 2,631.3 425.6 471.3 15.0 3.2 915.1 2,892.6 347.9 735.1 101.9 0.0 1,184.9 2,363.6 4,875.4 11,823.0 2,119.0 193.0 19,010.4 53,127.8 709.8 397.1 273.7 108.5 1,489.1 19,163.7 1,428.6 1,461.9 598.6 73.6 3,562.7 9,614.3 334.5 368.7 111.0 33.0 847.2 8,046.2 915.1 3,528.0 341.1 189.7 4,973.9 35,513.1 1,249.6 3,896.7 452.1 222.7 5,821.1 43.559.3 16.7 0.0 0.0 0.0 16.7 74.9 35.0 884.0 76.4 0.0 995.4 4,321.4 212.6 36.4 29.5 0.0 278.5 5,315.7 40.0 0.0 0.0 0.0 40.0 1,828.8 20.9 16.0 0.0 49.5 86.4 1,379.6 50.0 0.0 0.0 0.0 50.0 487.2 20.0 104.7 7.0 0.0 131.7 659.4 18.0 20.2 48.5 0.0 86.7 450.3 413.2 1,061.3 161.4 49.5 1.685.4 14,517.3 2,604.7 2,969.1 395.0 204.1 6,172.9 19,507.3 361.2 821.3 80.2 0.0 1,262.7 2,513.3 98.7 236.5 88.8 0.0 424.0 4,899.8 608.9 155.2 44.6 24.2 832.9 1,162.8 339.3 787.8 142.7 0.0 1,269.8 3,866.1 14.0 0.0 2.5 0.0 16.5 315.8 2,269.7 1,042.0 282.3 167.3 3,761.3 17,484.3 0.0 0.0 0.0 0.0 0.0 117.8 376.9 327.7 44.7 16.0 765.3 4,790.0 471.6 1,124.2 138.5 45.0 1,779.3 8,910.4 222.0 334.5 0.0 0.0 556.5 1,495.9 3,354.2 2,828.4 468.0 228.3 6,878.9 33,114.2 538.2 1,326.3 226.3 90.0 2,180.8 9,328.5 520.2 1,125.6 424.9 38.6 2,109.3 9,807.6 17,102.0 28,890.2 5,475.3 1,232.5 52,700.0 224,182.0 c. Includes $497 million in European reconstruction loans made before 1952. d. Cancellations, terminations. and refundings amount to $1,925.6 million for the IBRD and $1,822.6 million for IDA, totaling $12,748.2 million. This amount includes $46.1 million of loans and $175.8 million of credits made to Pakistan in earlier years for development projects in its former eastern wing, now Bangladesh. The loans and credits were reactivated, in revised form, as commitments to Bangladesh. 178 Summaries of Projects Approved Table 7-6. IBRD and IDA Cumulative Lending Operations, by Borrower or Guarantor, June 30, 1989 (amounts in millions of US dollars) IBRD loans IDA credits Total Borrower or guarantor Number Amount Number Amount Number Amount Afghanistan ............................ - - 20 230.1 20 230.1 Algeria ............................... 39 3,077.0 - - 39 3,077.0 Argentina .............................. 40 5,120.8 - - 40 5,120.8 Australia ............................... 7 417.7 - - 7 417.7 Austria ............................... 9 106.4 - - 9 106.4 Bahamas, The .......................... 5 42.8 - - 5 42.8 Bangladesha ........................... 1 46.1 121 4,708.5 122 4,754.6 Barbados .............................. 9 74.2 - - 9 74.2 Belgium ............................... 4 76.0 - - 4 76.0 Belize ............................... 4 26.2 - - 4 26.2 Benin ................................ - - 28 360.6 28 360.6 Bhutan ............................... - - 5 22.8 5 22.8 Bolivia ............................... 14 299.3 26 455.2 40 754.5 Botswana .............................. 19 265.8 6 15.8 25 281.6 Brazil ................................ 177 16,412.6 - - 177 16,412.6 Burkina Fasob .. ........................ - 1.9 30 375.4 30 377.3 Burundi ............................... 1 4.8 36 470.9 37 475.7 Cameroon .............................. 40 1,219.9 15 253.0 55 1,472.9 Cape Verde ............................ - - 4 20.1 4 20.1 Caribbean Regiond ..........2........... 43.0 2 20.0 4 63.0 Central African Republic ....... ......... - - 17 217.3 17 217.3 Chadb ............................... - - 22 307.5 22 307.5 Chile ............................... 42 2,314.7 - 19.0 42 2,333.7 China ............................... 50 5,280.2 28 3.337.3 78 8,617.5 Colombia .............. ............... 122 6,376.4 - 19.5 122 6,395.9 Comoros ............................. - - 8 40.5 8 40.5 Congo, People's Republic of the .......... 9 200.9 8 74.6 17 275.5 Costa Rica ............................. 32 616.9 - 5.5 32 622.4 C6te d'lvoire e.. ........................ 52 2,037.8 1 7.5 53 2,045.3 Cyprus ................................ 27 331.8 - - 27 331.8 Denmark ............................... 3 85.0 - - 3 85.0 Djibouti ............................... - - 6 34.6 6 34.6 Dominica .............................. - - 3 11.0 3 11.0 Dominican Republic ..................... 19 472.9 3 22.0 22 494.9 East African Communityr . ............... 10 244.8 - - 10 244.8 Eastern and Southern Africa Regions ..... - - I 45.0 1 45.0 Ecuador ............................... 44 1,317.9 5 36.9 49 1,354.8 Egypt, Arab Republic of ................. 48 3,061.3 26 981.2 74 4,042.5 El Salvador ............................ 19 281.1 2 25.6 21 306.7 Equatorial Guinea ....................... - - 6 30.8 6 30.8 Ethiopia ............................... 12 108.6 45 1,189.6 57 1.298.2 Fiji ................................ 1 121.7 - - 11 121.7 Finland ............................... 18 316.8 - - 18 316.8 France ............................... 1 250.0 - - I 250.0 Gabonh............................... 8 149.3 - - 8 149.3 Cumulative Lending Operations, by Borrower 179 IBRD loans IDA credits Total Borrower or guarantor Number Amount Number Amount Number Amount Gambia. The ........................... - - 18 112.7 18 112.7 Ghanae ., ,,,,,,,,,. 9 207.0 47 1.263.0 56 1.470.0 Greece ................................. 17 490.8 - - 17 490.8 Grenada ............................... - - I 5.0 1 5.0 Guatemala ............................ 21 585.1 - - 21 585.1 Guinea ............................... 3 75.2 31 562.1 34 637.3 Guinea-Bissau .......................... - - 14 129.2 14 129.2 Guyana ................................ 12 80.0 5 54.3 17 134.3 Haiti .............................2.... I .6 26 363.4 27 366.0 Honduras ........................... _ 32 627.3 5 83.' 37 710.5 Hungary ..................... ......... 19 1,976.9 - - 19 1,976.9 Iceland ................................ l0 47.1 - - 10 47.1 India ................................. 124 17,211.2 177 16.123.3 301 33.334.5 Indonesia .............................. 138 13.196.6 46 931.8 184 14.128.4 Iran, Islamic Republic of ....... ......... 33 1.210.7 - - 33 1,210.7 Iraq ................................. 6 156.2 - - 6 156.2 Ireland ................................. 8 152.5 - - 8 152.5 Israel ............................... II 284.5 - - 11 284.5 Italy ................................. 8 399.6 - - 8 399.6 Jamaica ................................ 48 881.4 - - 48 881.4 Japan................................. 31 862.9 - - 31 862.9 Jordan ................................. 29 843.4 15 85.3 44 928.7 Kenya ................................. 46 1,200.0 44 1,195.8 90 2,395.8 Korea. Republic of ...................... 89 7.043.4 6 110.8 95 7,154.2 Lao People's Democratic Republic ........ - - I I 150.5 11 150.5 Lebanon ............................... 4 116.6 - - 4 116.6 Lesotho ......... ...................... - - 18 145.1 18 145.1 Liberia ............................... 21 156.0 14 114.5 35 270.5 Luxembourg ........................... 1 12.0 - - I 12.0 Madagascar . .......................... 5 32.9 45 850.5 50 883.4 Malawi ................................. 9 124.1 43 718.1 52 842.2 Malaysia .................. ............ 75 2,630.4 - - 75 2,630.4 Maldives ............................... - - 3 16.4 3 16.4 Malibc. . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . -1.9 38 569.6 38 571.5 Malta' ................................ I 7.5 - - 1 7.5 Mauritaniab .... ......................... 3 146.0 23 166.9 26 312.9 Mauritius ............................. 20 253.7 4 20.2 24 273.9 Mexico ................................ 116 14,756.1 - - 116 14,756.1 Morocco ............................... 84 4,695.2 3 50.8 87 4,746.0 Mozambique ........... ............... - - 8 349.9 8 349.9 Myanmark .............................. 3 33.4 30 804.0 33 837.4 Nepal ................................. - - 55 1,011.1 55 1,011.1 Netherlands .. .. ............... __ .... 8 244.0 - - 8 244.0 New Zealand .......... ................ 6 126.8 - - 6 126.8 Nicaragua ............................2.. 7 233.6 4 60.0 31 293.6 (confinued) 180 Summaries of Projects Approved Table 7-6 (continued) IBRD loans IDA credits Total Borrower or guarantor Number Amount Number Amount Number Amount Nigerb. . ..............................,, - 31 430.6 31 430.6 Nigeria ............................... 73 5,061.1 3 136.4 76 5,197.5 Norway ................................ 6 145.0 - - 6 145.0 Oman ............................... I 1 157.1 - I 1 157.1 Pakistan' .............................. 67 3,557.6 80 3,028.7 147 6,586.3 Panama ............................... 31 696.3 - - 31 696.3 Papua New Guinea ...................... 19 344.1 9 113.2 28 457.3 Paraguay ............................... 27 458.1 6 45.5 33 503.6 Peru ............................... 60 1,711.9 - - 60 1,711.9 Philippines ............................. 107 5,809.3 3 122.2 110 5,931.5 Portugal ............................... 32 1.338.8 - - 32 1,338.8 Romania ............................... 33 2.184.3 - - 33 2,184.3 Rwanda ............................... - - 34 382.2 34 382.2 Sao Tome and Principe ........ .......... - - 4 21.9 4 21.9 Senegalb" ................ ............. 19 164.9 44 647.7 63 812.6 Seychelles ............................. 1 6.2 - - 1 6.2 Sierra Leone ............................ 4 18.7 12 116.1 16 134.8 Singapore .. ............................. 14 181.3 - - 14 181.3 Solomon Islands ........................ - - 5 17.0 5 17.0 Somalia ............................... - - 37 437.5 37 437.5 South Africa ............................ 11 241.8 - - 11 241.8 Spain ............................... 12 478.7 - - 12 478.7 Sri Lanka .............................. 12 210.7 48 1,180.4 60 1,391.1 St. Vincent and the Grenadines ........... 1 1.4 1 6.4 2 7.8 Sudan ................................ 8 166.0 46 1,254.7 54 1,420.7 NOTE: Joint IBRD/IDA operations are counted only once, as IBRD operations. When more than one loan is made for a single project, the operation is counted only once. Details may not add to totals because of rounding. a. Includes $46.1 million in IBRD amount and one IBRD loan, as well as $175.8 million in IDA credits, which replace commitments originally made to Pakistan. b. One IDA project, in fiscal year 1974, for drought relief, is shared by the following countries: Burkina Faso-$2 million; Chad-$2 million: Mali-$2.5 million; Mauritania-$2.5 million; Niger-$2 million; Senegal-S3 million. The amounts are included in each country's total, but the operation is counted only once, against Senegal. c. One IBRD loan of $7.5 million, in fiscal year 1954, is shared in amounts of $1.875 million each by Burkina Faso, C6te d'Ivoire, Mali, and Senegal, but is counted as one operation, against C6te d'lvoire. One IBRD loan, of $23 million, in fiscal year 1978, is guaranteed by Burkina Faso and C6te d'lvoire, but is counted as one operation, against Cote d'lvoire. d. One IBRD loan of $20 million in fiscal year 1976 and one IBRD loan of $23 million and one IDA credit of $7 million in fiscal year 1980 were made for the benefit of the following IBRD/IDA members-The Bahamas, Barbados, Grenada, Guyana, and Jamaica-and for the benefit of the territories of the United Kingdom's Associated States and Dependencies in the Caribbean Region. The members are severally liable as guarantors to the extent of subloans made in their territories. One IDA credit of $7 million in fiscal year 1983 was made for the benefit of the following IDA members-Dominica. Grenada, St. Lucia. and St. Vincent and the Grenadines-and for the benefit of the United Kingdom's then Associated State, St. Kitts and Nevis, and the United Kingdom Dependency, Montserrat: Antigua and Barbuda would become eligible after admission to IDA membership. The members are severally liable for the credit to the extent of subloans made in their territofies, while Montserrat is eligible to borrow as a Dependency of the United Kingdom. One IDA credit of $6 million in fiscal year 1987 to the Caribbean Development Bank. which is relending the proceeds to the beneficiary states of Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines, supports a regional vocational and technical-education project. e. Of the one IBRD project, of $60 million, in fiscal year 1976, $49.5 million has been lent to Ciments de l'Afrique de l'Ouest (CIMAO) and is jointly guaranteed by Cote d'lvoire, Ghana, and Togo. The remaining amount of $10.5 million has been assigned in equal shares to each of the three countries. The operation is counted only once, against Togo. Two IDA credits in fiscal year 1983-one of $9.3 million to Ghana and one of $5.7 million to Togo-for the restructuring of CIMAO are counted as one operation, against Togo. f. Jointly guaranteed by Kenya. Tanzania, and Uganda. g. The credit is shared equally, in amounts of $15 million each, by Burundi, Rwanda, and Zaire. Cumulative Lending Operations, by Borrower 181 IBRD loans IDA credits Total Borrower or guarantor Number Amount Number Amount Number Amount Swaziland .............................. 11 75.8 2 7.8 13 83.6 Syrian Arab Republic ....... ............ 17 613.2 3 47.3 20 660.5 Tanzania ............................... 18 318.2 64 1,255.6 82 1,573.8 Thailand ............................... 91 4,042.6 6 125.1 97 4,167.7 Togo' .............................. 1 20.0 30 415.9 31 435.9 Tonga ................................. - - 1 2.0 1 2.0 Trinidad and Tobago ....... ............. 13 124.8 - - 13 124.8 Tunisia ................................ 80 2.383.2 5 74.6 85 2,457.8 Turkey ................................ 97 9,839.0 10 178.5 107 10,017.5 Uganda ................................ 1 8.4 34 876.1 35 884.5 Uruguay ................................ 31 920.6 - - 31 920.6 Vanuatu ............................... - - 3 12.0 3 12.0 Venezuela .............................. 15 1,138.3 - - 15 1.138.3 Viet Nam . ............................ - - 1 60.0 1 60.0 Westem Africa Region' ..... .... 1 6.1 3 52.5 4 58.6 Western Samoa ............ ............ - - 7 26.5 7 26.5 Yemen Arab Republic ................... - - 53 558.0 53 558.0 Yemen, People's Democratic Republic of.. - - 32 240.8 32 240.8 Yugoslavia ............................. 87 5,122.7 - - 87 5.122.7 Zaire .................................. 7 330.0 53 1,055.2 60 1.385.2 Zambian .................. ............ 28 679.1 19 317.1 47 996.2 Zimbabwe' .... .......................... 19 690.1 3 53.9 22 744.0 OtherP ............................. 14 329.4 4 15.3 18 344.7 Total ............................. - 3,055 171,482.0 1,904 52,700.0 4,959 224,182.0 h. One IBRD loan of $35 million, in fiscal year 1959, is jointly guaranteed by the People's Republic of the Congo, France, and Gabon. i. The IDA credits include an amount of $45 million for the Sixth Highway Project approved in fiscal year 1983. In fiscal year 1984, $20 million of this amount was transferred to the Special Fund administered by the International Development Association. j. IBRD loan made to Malta with the guarantee of the United Kingdom before Malta's independence from the United Kingdom. The loan has been repaid. k. Formerly Burma. 1. Excludes $46.1 million in IBRD amount and one IBRD loan, as well as $175.8 million in IDA amount and ninetcen IDA credits, which were replaced by commitments made to Bangladesh. m. One loan of $6.1 million and one credit of $14 million in fiscal year 1983. counted as one operation. and one credit of $3 million in fiscal year 1980 are to the Banque Ouest Africaine de Developpement (BOAD), the regional development bank of the Union Monetaire Ouest Africaine (UMOA), which is a monetary union of six francophone states-Burkina Faso, Benin, Cote d'lvoire, Niger. Senegal, and Togo. One credit of $30 million in fiscal year 1984 is shared in equal parts by Benin and Togo, and is counted as one operation. One credit of $5.5 million in fiscal year 1986 helped establish an institution to train middle-level and high-level managerial staff of private and parapublic-sector enterprises in the six member states of the West African Economic Community (CEAO) and other neighboring countries, as well. The borrower was Senegal, which passed the proceeds of the credit on to the CEAO. n. Includes one IBRD loan of $80 million, made in fiscal year 1956 to Northern Rhodesia (now Zambia) and Southern Rhodesia (now Zimbabwe). at the time of the Central African Federation and before independence, and one IBRD loan of $7.7 million, made in 196$ to (Southern) Rhodesia and newly independent Zambia. Both loans were assigned in equal shares to Zambia and (Southern) Rhodesia, but are now counted only once, against Zimbabwe. The loans are quaranteed by the United Kingdom, Zambia, and Zimbabwe. o. Includes three IBRD loans, made in 1952, 1958, and 1960 and totaling $43.1 million, to (Southern) Rhodesia (now Zimbabwe). The loans were guaranteed by the United Kingdom and have been repaid. p. Represents IBRD loans and IDA credits made at a time when the authorities on Taiwan represented China in the World Bank (prior to May 15, 1980). 182 Summaries of Projects Approved Table 7-7. Trends in Lending, IBRD and IDA, Fiscal Years 1987-89 (millions of US dollars) 1987 1988 1989 Sector IBRD IDA Total IBRD IDA Total IBRD IDA Total Agriculture and Rural Development 1,946.3 984.0 2,930.3 2,932.1 1,561.8 4,493.9 2,066.1 1,423.9 3,490.0 Development Finance Companies 2,204.9 93.0 2.297.9 1,490.0 222.5 1,712.5 2,223.0 143.7 2,366.7 Education 173.5 266.3 439.8 654.9 209.1 864.0 441.6 449.1 890.7 Energy Oil, gas, and coal 605.4 82.0 687.4 325.1 63.0 388.1 549.5 31.2 580.7 Power 2,857.0 159.9 3,016.9 1,908.0 98.9 2,006.9 2,858.5 424.4 3,282.9 Industry 411.4 7.0 418.4 2,062.7 161.9 2,224.6 1,858.0 124.5 1,982.5 Nonproject 1,790.0 647.1 2,437.1 1,020.0 667.0 1,687.0 2,692.0 726.5 3,418.5 Population, Health, and Nutrition 33.3 20.8 54.1 109.0 195.9 304.9 399.5 223.5 623.0 Small-scale Enterprises 405.5 16.0 421.5 493.0 20.0 513.0 585.0 - 585.0 Technical Assistance 15.0 88.9 103.9 15.2 80.5 95.7 41.0 134.3 175.3 Telecommunications 654.5 27.8 682.3 36.0 - 36.0 53.1 107.9 161.0 Transportation 1,145.8 600.1 1,745.9 2,117.2 525.3 2,642.5 1,137.7 693.1 1,830.8 Urban Development 1,234.6 234.5 1,469.1 1,108.5 607.8 1,716.3 959.0 229.5 1,188.5 Water Supply and Sewerage 711.0 258.4 969.4 490.3 45.0 535.3 569.2 222.0 791.2 Total 14,188.2 3,485.8 17,674.0 14,762.0 4,458.7 19,220.7 16,433.2 4,933.6 21,366.8 NOTE: Details may not add to totals because of rounding. Table 7-8. Trends in Lending, IBRD and IDA, Fiscal Years 1987-89 (percentage) 1987 1988 1989 Sector IBRD IDA Total IBRD IDA Total IBRD IDA Total Agriculture and Rural Development 13.7 28.2 16.6 19.9 35.0 23.4 12.6 28.9 16.3 Development Finance Companies 15.5 2.7 13.0 10.1 5.0 8.9 13.5 2.9 11.1 Education 1.2 7.6 2.5 4.4 4.7 4.5 2.7 9.1 4.2 Energy Oil, gas, and coal 4.3 2.4 3.9 2.2 1.4 2.0 3.3 0.6 2.7 Power 20.1 4.6 17.1 12.9 2.2 10.4 17.4 8.6 15.4 Industry 2.9 0.2 2.4 14.0 3.6 11.6 11.3 2.5 9.3 Nonproject 12.6 18.6 13.8 6.9 15.0 8.8 16.4 14.7 16.0 Population, Health, and Nutrition 0.2 0.6 0.3 0.7 4.4 1.6 2.4 4.5 2.9 Small-scale Enterprises 2.9 0.5 2.4 3.3 0.4 2.7 3.6 0.0 2.7 Technical Assistance 0.1 2.6 0.6 0.1 1.8 0.5 0.2 2.7 0.8 Telecommunications 4.6 0.8 3.9 0.2 0.0 0.2 0.3 2.2 0.8 Transportation 8.1 17.2 9.9 14.3 11.8 13.7 6.9 14.0 8.6 Urban Development 8.7 6.7 8.3 7.5 13.6 8.9 5.8 4.7 5.6 Water Supply and Sewerage 5.0 7.4 5.5 3.3 1.0 2.8 3.5 4.5 3.7 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 NOTE: Details may not add to totals because of rounding. 183 Financial Statements of the International Bank for Reconstruction and Development Balance Sheets 184 Statements of Income 186 Statements of Accumulated Net Income-Unallocated 186 Statements of Changes in General Reserve 186 Statements of Cash Flows 187 Summary Statement of Loans 188 Summary Statements of Borrowings 192 Statement of Subscriptions to Capital Stock and Voting Power 194 Notes to Financial Statements 198 Report of Independent Accountants 202 184 IBRD Financial Statements Balance Sheets June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars 1965' 1988 Assets DUE FROM BANKS Unrestricted currencies (including interest-bearing demand deposits $104,104-1989. $160,057-1988) .................................................... i 225.t96 $ 284,318 Currencies subject to restrictions-Note A ............ ............. ........ 7o6 ,61 381,932 790.41 7 666,250 INVESTMENTS-Note B Obligations of governments and their instrumentalities ............................... . .39589). 10,423,804 Time deposits and other obligations of banks and financial institutions ..... .............. . 1003,, Sr 7,678,836 19 '.84 584 18,102,640 CASH COLLATERAL INVESTED-Note B .2 7531 43 2,291,174 NONNEGOTIABLE, NONINTEREST-BEARING DEMAND OBLIGATIONS ON ACCOUNT OF SUBSCRIBED CAPITAL (subject to restrictions-Note A) .......... .................. I48,.58 1,306,820 AMOUNTS REQUIRED TO MAINTAIN VALUE OF CURRENCY HOLDINGS-Note A Amounts due .... ............ ........................................... ... .. 810,104 Amounts deferred ........ . ........................................ . 333,645 I .359t. 1,143,749 RECEIVABLES-OTHER Net receivable from currency swaps-Note D ................ 4 8 A 112,467 Receivable from investment securities sold ................. ...........1... 090 82t. 2,660,084 Accrued income on loans ............. .......... ................. ............ I92, 2,009,894 Accrued interest on investments ......tu...................................... .. l6/t.2 165,195 3r49763 4,947,640 LOANS OUTSTANDING (see Summary Statement of Loans and Note C) Total loans ...... ................... ....... 9........ 12"f,418 21)iJ 127,963,846 Less loans approved but not yet effective .............................. ......... 14 971 51)10 10,049,900 Less undisbursed balance of effective loans ............................ ......... 35 004 .955 36,122,575 94 1.845 81,791,371 OTHER ASSETS Land and buildings (less accumulated depreciation $34,907-1989, $32,341-1988) ........ 23 618 270,277 Unamortized issuance costs of borrowings .5. 390 570,157 Miscellaneous ...... ... 35: 317,135 1_ 3 I '4 -,3) 1,157,569 110'3 158 SS, $111,407,213 Balance Sheets 185 a _ __ 1988 Liabilities, Capital and Reserves BORROWINGS (see Summary Statements of Borrowings) Short-term ........................................... ................. t $ 4,663,146 Medium- and long-term ... . ! . . 79,750,621 84,413,767 PAYABLE FOR CASH COLLATERAL RECEIVED ..................... .... ..... 2,291,174 AMOUNTS REQUIRED TO MAINTAIN VALUE OF CURRENCY HOLDINGS-Note A Amounts due ............................................................ 6;'541 49,161 Amounts deferred ......................................................... .43 Ei ) 545,919 4ill de 595,080 OTHER LIABILIT ES Accrued charges on borrowings . ............................................... 2 . . 2,512,556 Net payable for currency swaps-Note D ...................... .. ..............1 1 ,920,830 Payable for investment securities purchased .............1 1,530,297 Due to International Development Association and Special Facility for Sub-Saharan Atrica-Note G ....... ......................... ............... IF. f 923,291 Accounts payable and other liabilities ............... .............. .... 6_ j___ 6__463,637 4 .C 7,350,611 ACCUMULATED PROVISION FOR LOAN LOSSES-Note C ...................... .1...... o.)j)I'llI 500,000 CAPITAL AND RESERVES Capital stock (see Statement of Subscriptions to Capital Stock and Voting Power and Note A) Authorized capital (1,420,500 shares-1989 and 1988) Subscribed capital (958,827 shares-1989, 757,953 shares-1988) .......1 f.r. , 8 I I ' 91,435,660 Less uncalled portion of subscriptions .......... ........................... ,-Iiu 145 83,726,464 ,8 5 l ;5u 7,709,196 Payments on account of pending subscriptions (see Statement of Subscriptions to Capital Stock and Voting Power) ............ .......................... . 18,274 Special reserve-Note E ........... ................. ........................ .... I 292,538 General reserve (see Statements of Changes in General Reserve) Accumulated net income ........................ .....'.i......7... . .. 7696,101 Cumulative translation adjustments ........ II 1 1`4 (463,758) b4 7,232,343 Accumulated net income-unallocated (see Statements of Accumulated Net Income-Unallocated) ................ .......... ......................... 1,004,230 I ..1 1.'8 $111,407,213 See Notes to Financial Statements. 186 IBRD Financial Statements Statements of Income For the fiscal years ended June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars Income 1,.*, ) 1** Income from loans: Interest . .. . . . . . . . . . . . . . . . . . . . . .;.. . Commitment charges ......7 ... . ... .1 2 1 , ; r,, t Income from investments-Note B ........6 .1 1 X*2 rIj Other income-Note F ........ ..........21 I Total income ........... ... .... . ... ..x 722 Expenses Borrowing expenses: Interest on borrowings-NoteD ...0 ........9 :'; l Amortization of issuance costs and other borrowirni, : 1m5 -X6 li r Administrative expenses-Notes F and H .. .... E- ,52. - Provision for loan losses-Note C ............ 30, IA 4 Other expenses .......................i?.. 41 1 i Total expenses ................... 1 7 4'k 14'S Operating Income ............ . ... ...... 11 '124 11 IC.t Contributions to special programs-Note F ...... 60r N et Incom e ... .. ...... .... ...... ...... 1ii Statements of Accumulated Net Income- Unallocated For the fiscal years ended June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars 1 .'8 .... 1988 Accumulated net income-unallocated at beginning of fiscal year .................... 1 (4 'I $1,112,930 Allocation to General Reserve-Note E .. .4... I X 0IJ I (1,012,930) Transfer to International Development Association-Note G .. ...................- (100,000) Net income for fiscal year .1.............................. . ....1 j .3 R., 1,004,230 Accumulated net income-unallocated at end of fiscal year ............ ... . 1 ,9 $1,004,230 Statements of Changes in General Reserve For the fiscal years ended June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars 1982 1988 Accumulated Net Income Balance at beginning of fiscal year ... ... ..1...................... ., '. 101 $6,683,171 Allocation from Accumulated net income-unallocated . . . ... 1 0(14 2i9 1,012,930 . 70(I331 7,696,101 Cumulative Translation Adjustments Balance at beginning of fiscal year ...................... ..... .. ..5.8.. . 146 , 6 P n (466,804) Translation adjustments for fiscal year .............Lti....l 41l 3.046 I1. 14 F.S83) (463,758) Balance at End of Fiscal Year ..... ..... ....... .... .... , h 1 ' $7,232,343 See Notes to Financial Statements. Statements of Cash Flows 187 Statements of Cash Flows For the fiscal years ended June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars L:'3C I lifj.-Ti.rc,' LI 4-: 13' Li I'j1 i.1. ('3 j' 1 11. Il~II* 1 *r] -j ,-! |iITS-il: h iSvl -, hi j"' Itl Flljl ~1P~lIjI 4r. 1 _- C.`. W.t1 !'1 I l,,j- ;,iii,'i,I 'i,'TKfl,II.il ?67it:4, 1: .1 21: .:. 1 Ii T C:, 31T r' * ', '11. , -2 1 |I|tlIjSltt,lCT,, 1l l1 ll 7 _1 . P 1 I 11 ( W,1 .: ;.T Irl l-, ll-: '; A 1l - 6% s.3 i. -1. l I : i 1i-i IT, 1 ir , I r,,- , jr.,1 'Is -rI 1.sr r Iii - ' 114 1i ri S46 41 : A -rF pr,,-r; '0 i-liiii,-'J i.iJ-c i 1,': t 4 .'r 1 -1 1 3r, liilmiiij-h 'li 1 rI:ri'574 I 7 jh5. ,l,lI, I j. .d,- 1j ''Ti- ' b; .. 4 .1: t- I ,I wi - Ir - : -5 ri, 4 1, i Ic'l - 3'r Jr|:.sF lt- I '3 'Ti'-,.i, ,.dii -: *'.t - :;4 1>.. 1 1 (:1 - r L'.. :c.; ,, .I: : I Yin6 s4q 1' PI Eii-jr 'i -:v..:i3I.: ,I2 K j-T :. c i -:ri J,-,- toJlj'~ 'i 5 I': * H iji5J i::. ' '- in, *: r IF,9 I Jul.J IT. 11 Q'1 j lJJl i Ii:I ir,r : Li'-'Ji iifK ii iii 1 *:3- 1, ., 4g 1 'a iii < ,i, 1 'r : i * : .liW '-nI:,i ' r 1,,l:,i 'i3i' i; - I, 1p . ' i -' :. g - -I l:r'iil 3 ,,, j ; ,- 14- 4-t - I, ji I.I In. I , 1:j IJ'l ,-) 1 I I OT , I JI 4 r ,Ji 4 See Notes to Financial Statements. 188 IBRD Financial Statements Summary Statement of Loans June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars June 30, 1989 Loans approved but Percentage of not yet Undisbursed Loans total loans Borrower or guarantor' Total loans effective' loansC outstanding outstanding Algeria . $ 2,209,156 $ 640.000 $ 732,012 $ 837,144 1.07 Argentinad .................. ........ 4,014,122 406,500 1,413,937 2,193.685 2.81 Australia' ........................... 8,735 - - 8,735 0.01 Bahamas, The .... ................... 33,845 - 19,127 14,718 0.02 Bahamas, Barbados, Grenada, Guyana, Jamaica. Trinidad and Tobago, and United Kingdome . 32,418 - - 32,418 0.04 Bangladesh .......................... 59,780 - - 59,780 0.08 Barbados ........................... 52,150 - 16,619 35,531 0.05 Belize ............................ 26,916 - 15,301 11,615 0.01 Bolivia' ............................ 195,567 - 118 195,449 0.25 Botswana ........................... 187,428 - 40,288 147,140 0.19 Brazil ............................ 12,462,077 1,244,000 3,541.672 7,676,405 9.85 Cameroon .... ................... ., 1,075,290 150,000 449,425 475,865 0.61 Chile ............................ 1,984,347 150,000 361,706 1,472,641 1.89 China ..... 5,231,832 757,000 2,531,244 1,943,588 2.49 Colombia ........................... 4,835,617 230,000 1,079,921 3.525,696 4.52 Congo, People's Republic of the ...... ..... 156,259 - 10,144 146.115 0.19 Costa Rica .......................... 489,344 100,000 25,804 363,540 0.47 Cote d'lvoire' ........................ 1,722,949 - 203,745 1,519,204 1.95 C6te d'lvoire, Ghana, and Togog ...... ..... 12.304 - - 12,304 0.02 Cote d'lvoire and Senegal' ........ ....... 5,083 - 982 4,101 0.01 Cyprus . ........................... 124,904 - 95,929 28,975 0.04 Dominican Republic ........... ........ 353,291 30,000 141,958 181,333 0.23 Ecuador ....................... ... 964,276 45.000 248,989 670,287 0.86 Egypt, Arab Republic of ........ ........ 2,311,604 241,000 699,542 1,371,062 1.76 El Salvador ......................... 195,119 - 56,903 138,216 0.18 Ethiopia ............................ 31,484 - - 31,484 0.04 Fiji ............................ 84,161 8,100 14,230 61,831 0.08 Finland . ........................... 198 - - 198 Gabon ............................ 87,786 30,000 30,000 27,786 0.04 Ghana ............................ 111,083 - - 111,083 0.14 Greece ............................ 48,125 - - 48,125 0.06 Guatemala .......................... 467,085 160,500 60,703 245,882 0.32 Guinea ... ......................... 37,136 - - 37,136 0.05 Guyana . ........................... 79,625 - - 79,625 0.10 Honduras ..... ..................... 561,662 25,000 49.556 487,106 0.62 Hungary ....... .................... 1,953,772 205,000 583,182 1,165,590 1.50 Iceland ........................... 10,698 - - 10,698 0.01 India ............................ 14,514,843 1,966,300 6,845,374 5,703,169 7.32 Indonesia ........................... 11,704,544 1.503,800 2,592,350 7,608,394 9.76 Iran, Islamic Republic of ........ ........ 167,124 - - 167,124 0,21 Iraq ............................ 46,008 - - 46.008 0,06 Ireland . .......................... 14,059 - - 14,059 0.02 Jamaica ............................ 717,887 15,000 76,276 626,611 0.80 Japan . ......... .......... ........ 30.614 - - 30,614 0.04 Jordan ............................ 691,114 109,000 204,985 377,129 0.48 Kenya, . ........................... 898,469 - 44,554 853,915 1.10 Kenya, Tanzania, and Uganda' ............. 3,338 - - 3,338 Korea, Republic of .............. ...... 3,779,273 216,400 342,240 3,220,633 4.13 Lebanon ......................... 34,604 - - 34,604 0.04 Liberia ....................... ...... 123,745 - 1,801 121,944 0.16 Statement of Loans 189 June 30. 1989 Loans approved but Percentage of not yet Undisbursed Loans total oans Borrower or guarantor3 Total loans effectiveb oansc outstanding outstanding Madagascar .... . $ 26,786 $ - $ - $ 26,786 $ 0.03 Malawi ............................ 96.859 - 8.357 88,502 0.11 Malaysia .......................... . 1,600,045 71,500 707,906 820,639 1.05 Mauritania ......................... . 61,721 - - 61,721 0.08 Mauritius .......................... . 201.269 - 32,563 168,706 0.22 Mexico ............................ 11.286,855 1,945,000 2.512,806 6,829,049 8.76 Morocco ............................ 3.692,908 414,000 823,352 2,455,556 3.15 Nicaragua ........................... 205,388 - - 205,388 0.26 Nigeria ............................ 4,531,834 903,200 1,032,190 2,596,444 3.33 Oman ............................ 114,071 - 62,491 51,580 0.07 Pakistan ............................ 2,778,587 400,000 1,215,970 1,162,617 1.49 Panama ............................ 527,206 - 94,091 433,115 0.56 Papua New Guineaa ........... ........ 266,424 19.600 112,564 134,260 0.17 Paraguay ........................... 332,899 - 56,955 275,944 0.35 Peru ........................ .... 1,360,930 - 360,604 1,000,326 1.28 Philippines .......................... 4,407,333 495,600 787,999 3,123,734 4.01 Portugal ............................ 626,790 150,000 84,219 392,571 0.50 St. Vincent and the Grenadines . ........... 1,400 1,400 - - I Senegal ............................ 93,046 - 9 93,037 0.12 Seychelles .......................... 6,378 - 2,237 4,141 0.01 Sierra Leone ......................... 8,926 - - 8,926 0.01 Singapore ...... ......... .......... 13,696 - - 13,696 0.02 Spain ............................ 17,702 - - 17,702 0.02 Sri Lanka ........................... 93,094 - 17,232 75,862 0.10 Sudan ............................ 30,245 - 30,245 0.04 Swaziland ........................... 53,488 - 1,217 52,271 0.07 Syrian Arab Republic ................... 424,376 - 29,925 394,451 0.51 Tanzania' ............................ 244,590 - - 244,590 0.31 Thailand ............................ 2,716,509 469,927 2,246,582 2.88 Togo ............................ 1,029 - - 1,029 1 Trinidad and Tobago . .................. 23,146 - - 23,146 0.03 Tunisia ............................ 1,754,051 242,500 496,661 1,014,890 1.30 Turkey ............................ 8,553,861 679,500 2,331.085 5,543,276 7.11 Uganda! ............................ 37,217 - - 37,217 0.05 United Kingdoma ..... ................ 22 - 22 Uruguay ........................ ... 614.957 227,300 117,477 270,180 0.35 Venezuela ........................... 755,000 755,000 - Yugoslavia .......................... 3.117,256 318,000 450,818 2,348.438 3.01 Zaire ............................ 125,057 - 87,808 37,249 0.05 Zambia' ............................ 466,929 - 4,418 462,511 0.59 Zimbabwe' .......................... 623,338 116,300 191,075 315,963 0.41 Subtotal members** ......... ......... 126.836.071 14,971,500 34,622,573 77,241,998 International Finance Corporation . ......... 1,076.786 - 382,282 694,504 0.89 Otherk .................... . 5.343 - - 5,343 Total-June 30 19891 ¶'1 7.5 t, ii 5 .t ti.1 " 114 .-. i-I 'i1 c4 i I Total-June 30, 1988 .......... ........ $127,963,846 $10,049,900 $36.122,575 $81,791,371 Less than 0.005 percent. " May differ from the sum of individual figures shown because of rounding. (continued) 190 IBRD Financial Statements Summary Statement of Loans (continued) June 30, 1989 and June 30, 1988 NOTES a member country and the IBRD There were no such undisbursed grant participations at June 30, 1989 Of the undisbursed balance, the IBRD has a. In some instances loans were made, with the guarantee of a member, in entered into irrevocable commitments to disburse $1,105,377,000 terr tories wh ch at the time were included in that member's membership but ($1 220,014,000-1988). which subsequently became independent and members of the IBRD. In order to avoid double counting, liabilities for these loans are shown under the d. One loan with an outstandinc balance equivalent to $2,879,000 name of the original member (whose guarantee continues unaffected). These ($4,491,000-1988) is shown under Bolivia (Guarantor) but is also loans are shown below together with an indication of the member under guaranteed by Argentina. whose name they are listed. e Loans made to the Caribbean Development Bank for the benetit of the territories of the members listed (in the case of the United Kingdom, the GUARANTORS US$ thousands territories are those of its Associated States and Dependencies in the Borrowers l.A I Caribbean region). The members will be severally liable as guarantors to the AUSTRALIP extent of sub oans made in their territories. Papua N- G ,f , m t One loan with an outstanding balance equivalent to $10,346,000 UNITED KlID . i. 11 ($13,228,000-1988) is shown under Cote d'lvoire (Guarantor) but is also Zambia a: JU. partially guaranteed by Burkina Faso g Members are jointly and severatly uab e Loans made for joint benefit of territories isted h Loan made to the West African Development Bank for the benefit of the b. Loan agreements totaling $6,279,900,000 ($3,760,500,000-1988) territories of the members listed. The members will be severally liable as have been signed. but the loans do not become effective and disbursements guarantors to the extent of subloans made in their territories. thereunder do not start until the borrowers and guarantors, if any, take i. Includes porions ot loans made to corporations of the East African certain actions and furnish certain documents to the IBRD Loans totaling Community. $8,691,600,000 ($6,269,400,000-1988) have been approved by the lBRD but the related agreements have not been signed. I. Represents portions of loans made to corporations of the East African c. In 1988. these amounts inc uded grant participations of $1,158.000 The Community. grant participations represented participations on a grant basis taken in a k. Represents soans made at a time when the authorities on Taiwan number of loans under the terms of an aid cooperation agreement between represented China in the IBRD (prioe to May 15, 1980). Statement of Loans 191 Summary of Currencies Repayable on Loans Outstanding *"':i,r .. . li.r... 1 4r 14'4 I r ;J i.,,: 4' II j-, Vi- 1 'r: i I ., 4 '. a"-' - 1 ' ' 1 TI Ti)'' I 3~~~~~~~ 4k :tg, '"r: Vf" I ri '' i ,,IriI*i I' l 3L. I 2I. J, lr 1 %4 a4 a: r. -, i 4I Al m- '- J ,, 14, 4 ,, 1 i2,a _11l:11lll.1111* 9 - I; - IJ r,- . i -, u l, If,. 4 A 911 J. U!a! 'Ui 1 Jl lC . C. I riJi IT 'flI ' I t -I, I , I I *' 1 - Il|l,-,l, r:,. 1 - 41 1 , jf" i "1 5b r , q ,i-lijil 1 * 4644 4 ' -, I.,T,j nr'ir i,jI " L I'p 1 4 ;',i) . 1I. : . I i.-n i:. - J 41 .10,0 ir dr .ll ,-I I'., 1i ':I. ' -:.', I,- III ,,, '- 1a14 July 1. 1990| to June 34 1 391 1 | j11 l M r- I tl l . ... IJLy 1,19911 0 June 31' i'3'i :t, . *41, Jaulyi,192y Junect3r i'1Lans Per1iods ,,l>1l-j 1 1.' J. uly li 1, 198 to. June 3,1 1 Y-11 :, _14 ,1- 1--, 1 ',1,.E,1_ July 1,,19931 June 3 1 i *x 44 jI,- i P July 1, 1994 to June 3)1 1 i' i ' Ju 'ly 1, 1- :199 .,_ Jun 3. ;, '14 41 44 l1 :, 2 l , :, July 1, 1999 to June 3'l 11 41 July 1, 1999 to June 31 1 .: 1.4l f - . July 1, 2004 to June 3 1 1 11 ;' 4 4 Undeterminedly ... I t ' ! Total ...i t.. . . Includes undishursed balance of effective loans Represents cancellations and other adjustmnents which have not been al ocated to specific maturities See Notes to Financial Statements. 192 IBRD Financial Statements Summary Statements of Borrowings June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars Medium- and Long-term Borrowings and Currency Swaps Medium- ond long-term barrow elgo Cirrency swap agreennenrsa Weighted Weighted average average Payable coat Pr ncipal outstanding5 coat I%) (rece nab et (rerurfl)% Net currency obl[galions a," 0n dine 3d June 31 ciu Ii June 30,1st~C Juea 30, aJ 1988 t989 to-n I' 1088 1rie 19880 Auatratian dal aros i. $ 407,029 t3.05 8 rif0(' '~- 13 10) t !55 $ 2 547 Austrian ach lings 4V 476,387 7 84 - '' a 383 717 Belgian francs 6 -n 00.065 0.66 Ž'-' (8.871 iOn 8"' 2,8092 Canadi an dellars . V 1,334,2t19 107 j. -. -r 11851 ,40,17 Danrsh kroner 220,743 10 17 ir 10 t6Ot- 2 185 Oeutscne murk.1,0185 34il 4 8655 i f' a 4 wh 168,44 070 ~~jo 1.4, 58901 European currency uitsr t .~' 1431,903 8860 'jj I , 887 ji. 8 57,1 Focan marbaoa . ~~~~~~~~208,044 0 82 i 02123 French franca .44' 358,t90 9807 i: I , 111 051 3C .41 t85.579 HeongKongedaI1ars . Io - 1015 ri (10 17) tral an lire L 334,210 it 81 (11t 30) tt. 42,373 Japanese yea 238605,740 8 28 'Al'58.i r 4503 "I a~~~~~i - 18~(6441 Kuwalt uInars t77,988 759 - I 177,9688 Lobyan dinara . . - -. t02,410 128 - - .-.. ~ 102,410 Luaembourg franca tlO.058 787 i rBi a' 1818 58,637 Netherlands gui derso. 4,954 344 708 6 r' -- 880 I nc e 5,844,588 P 18~~~~~~~~673) New Zeaoand eollars - 13 54 0.', 13 54) Nerwegiae kroner '4 v11 75 552 t8 33 --- 14 aj 75,552 Pounes sterling 20830892 10861 ;1 I..".. (10 00) I1,383,554 Spanion peseasra . . . C ' 82.288 11 386,~t' (11 38) 1,788 Swedion kroner 58,788 10.03 r11 4J al> 7 tt) ,1 Swioa franca . ~~~~~11 580,838 5 73 ai 4 r-'. 5,44 .1 18n' t,076,821 drited Arab Errirates derhams 8,177 - -- 8,1 77 drited States dol ars -r i 1,5,8c 90 "rv ' .20 R'h14 12,211.186 - (10824)' Unitee Stoles dolilars Swissa franc flanked - 130 506 - 130,506 Pr ne pal at face value 78,881 051 7 72' Less nel unamortized eiocounts one premiLms . . . . ''r 50 430 Taota I" A Ir 34 79.750.621 a See Notes to F nuncual Stutements-Note D. 0. Includes zena coupon bonnowings which have been necorded at theit discounted values. The aggnegate face amnounts und discounted val088 ofthese bonnowings (in US dollan equivolents) urn: Aggregute Discountee fuce amount value Currency fur,1: Li) 1159, June 30, 1888 Jun?~ 51) 1 ,j.9. hi - 30, 1988 Australiian dollars .1... . l .r.25O $ 110,100,000 ,-~~ i lul'00 i - 540,000 Canadian dolilars:-t "ii- o.5 rl Deutsche monk it - .y. .ri3r,i 1,098,237,000 ..,; 11''w4i 1561,000 Swiss frnacs ..2. . ..1 "i ii 861,212,000 1' I dr, ji,i I 1i847,o00 United Slates dol a1s . . . -~ i''Ž ' 3r 2,081,009,000 tC: J 4 1'.1871,000 c. Incudes Canadoan do Ions 200.000.000 (US eugivalent $187,518,000--19891 $164,325,000--1988) a) vaniable nlenest rote borownnwgs d. Includes $853,550,000 )S1,200,000,100-1988) of variab e eute borrowings and $177,408,000 ($180093 000--1988) bonnowed trom the Interest Subsidy Fune The Intenesf Subsidy Fond, which obtained its resounces teem volutenruy contrhbutions trom member governments, moo esatblisand to subsidize tbe intoresl payments to the IBRD on selected loans mode to pooern developing countnies e no ides inceme ondexnpense from nlerest note swaps The IBRD boas entered into interest rota swap agreemnents wibh nespect to notional principal umounts aggregating $2,070,400,000 )5138,500.000--1988) and Swedish kronor 300,000,000 (US equivalent $45,059,000-1989. $47.973,000-1908). fThe weighed average cost of medium- one long-tenin borrewings outstanding ot June 30, 1989, after adeustmenl ton smop activities, was 7 24% Statements of Borrowings 193 Maturity Structure of Medium- and Long-term Borrowings Outstanding Periods ,Ij{lr- la S July 1, 1989 to June 30, 1990 ............... - s4 .-59. July 1, 1990 to June 30, 1991 9s3................. 9'1;2 CI_ July 1, 1991 to June 30, 1992 6............... J1 9U. July 1, 1992 to June 30, 1993 ............... July 1, 1993 to June 30, 1994 t............... F4E. 'i4: July 1,1994 to June 30, 1999 ............... July 1,1999 to June 30, 2004 ............... July 1, 2004 to June 30, 2009 ...............4 July 1, 2009 to June 30, 2014 ...... ......... 3.I7 Thereafter ..............................ci t i U Total ................................,, 15 4 Short-term Borrowings ill-, l,Fi I,,-, *.1' I,1 ,.t C I W ,. 1. 8 Short-term Notes (US dollars) - r j r I I 3 i J I j r,. j i I r.-i r . JiiI V ' 4 . L- r:: hir 3iriii 1r . I - rI pur , 14 ) 3I. I. : :.r't , , .- ,G , ? l'j Central Bank Facility (US dollars) 2i9 0 o 4 1 (4 < It, Continuously Offered Payment-Rights (Swiss francs) 7F.9 - ;F Totl [£. I64 .6Y 14It l4 Ii See Notes to Financial Statements. 194 IBRD Financial Statements Statement of Subscriptions to Capital Stock and Voting Power June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars June 30, 1989 Subscriptions Voting power Percentage Number Percentage of Total Amounts paid Amounts subject of of Members Shares total amounts in (Note A) to call (Note A) votes total Afghanistan ............... 300 0.03 $ 36,191 $ 3,619 $ 32,572 550 0.06 Algeria .5,192 0.54 626,337 52,390 573,947 5,442 0.55 Antigua and Barbudaa .292 0.03 35,225 445 34,780 542 0.05 Argentina .10,052 1.05 1.212,623 103,803 1,108,820 10,302 1.03 Australia .21,610 2.25 2,606,922 171,430 2,435,492 21,860 2.19 Austria .11,063 1.15 1,334,585 80,728 1,253,857 11,313 1.14 Bahamas, The .601 0.06 72,502 3,731 68,771 851 0.09 Bahrain .619 0.06 74,673 3,910 70.763 869 0.09 Bangladesh .2,724 0.28 328,610 26,234 302,376 2,974 0.30 Barbados .948 0.10 114,362 4,496 109,866 1,198 0.12 Belgium .20,986 2.19 2,531,646 186,841 2,344,805 21,236 2.13 Belize .329 0.03 39,689 837 38,852 579 0.06 Benin .487 0.05 58,749 2,514 56,235 737 0.07 Bhutan .269 0.03 32,451 202 32,249 519 0.05 Bolivia .1,002 0.10 120,876 7,968 112,908 1,252 0.13 Botswana .615 0.06 74,191 1,987 72,204 865 0.09 Brazil .12,083 1.26 1,457,633 125,293 1,332,340 12,333 1.24 Burkina Faso .487 0.05 58,749 2,514 56,235 737 0.07 Burundi .402 0.04 48,495 1,831 46,664 652 0.07 Cameroon .857 0.09 103,384 6,575 96,809 1,107 0.11 Canada .27,454 2.86 3,311,913 272,176 3,039,737 27,704 2.78 Cape Verde .285 0.03 34,381 371 34,010 535 0.05 Central African Republic' 484 0.05 58,387 2,482 55.905 734 0.07 Chad .484 0.05 58,387 2,482 55,905 734 0.07 Chile .6,931 0.72 836,121 49,568 786,553 7,181 0.72 China .25,142 2.62 3,033,005 263,907 2,769,098 25,392 2.55 Colombia .3,565 0.37 430,064 35,115 394,949 3,815 0.38 Comoros .282 0.03 34,019 339 33,680 532 0.05 Congo, People's Republic of the 520 0.05 62,730 2,868 59,862 770 0.08 Costa Rica2 ... . 131 0.01 15,803 1,580 14,223 381 0.04 Cote d'lvoire .1,412 0.15 170,337 12,425 157,912 1,662 0.17 Cyprus .820 0.09 98,921 6,044 92,877 1,070 0.11 Denmark .10,251 1.07 1,236,629 74,610 1,162,019 10,501 1.05 Djibouti .314 0.03 37,879 679 37,200 564 0.06 Dominica .283 0.03 34,140 350 33,790 533 0.05 Dominican Republic .1.174 0.12 141,625 9,793 131,832 1,424 0.14 Ecuador .1,555 0.16 187,587 13,822 173,765 1,805 0.18 Egypt, Arab Republic of a 3,989 0.42 481,213 39,627 441,586 4,239 0.43 El Salvador .141 0.01 17,010 1.701 15,309 391 0.04 Equatorial Guinea .401 0.04 48,375 1,601 46,774 651 0.07 Subscriptions to Capital Stock and Voting Power 195 June 30, 1989 Subscriptions Voting power Percentage Number Percentage of Total Amounts paid Amounts subject of of Members Shares total amounts in (Note A) to call (Note A) votes total Ethiopia ................... 549 0.06 $ 66.229 $ 3,170 $ 63,059 799 0.08 Fiji .................... 554 0.06 66,832 3,222 63,610 804 0.08 Finland .................... 5,555 0.58 670,127 50,995 619,132 5,805 0.58 France .................... 47,227 4.93 5,697,229 440,129 5,257,100 47,477 4.76 Gabon .................... 554 0.06 66,832 3,556 63,276 804 0.08 Gambia, The ................. 305 0.03 36,794 660 36,134 555 0.06 Germany, Federal Republic of ..... 72,399 7.55 8.733,853 542,921 8,190,932 72,649 7.29 Ghanaa ..................... 856 0.09 103,264 10,326 92,938 1,106 0.11 Greece .................... 945 0.10 114,000 11,400 102,600 1,195 0.12 Grenada' ,.... ............... 298 0.03 35,949 510 35,439 548 0.05 Guatemala .................. 1,123 0.12 135,473 9,251 126,222 1,373 0.14 Guinea .................... 725 0.08 87,460 5,037 82,423 975 0.10 Guinea-Bissau ................ 303 0.03 36.552 562 35,990 553 0.06 Guyanaa .................... 594 0.06 71,657 3,651 68,006 844 0.08 Haiti .................... 599 0.06 72,260 3,697 68,563 849 0.09 Honduras ...........I........ 360 0.04 43,429 1,324 42,105 610 0.06 Hungary .................... 8.050 0.84 971,112 58,031 913,081 8,300 0.83 Iceland .................... 1,258 0.13 151,759 6,832 144,927 1,508 0.15 India .................... 25,140 2.62 3,032,764 262,598 2,770,166 25,390 2.55 Indonesiaa .................... 9,722 1.01 1,172,813 91,243 1,081,570 9,972 1.00 Iran, Islamic Republic of ......... 13,293 1.39 1,603,601 138,221 1,465,380 13,543 1.36 Iraq .................... 2,808 0.29 338,743 27,093 311,650 3,058 0.31 Ireland .................... 5,271 0.55 635,867 37,077 598,790 5.521 0.55 Israel .................... 2,666 0.28 321,613 25,664 295,949 2,916 0.29 Italy .................... 25,140 2.62 3,032,764 263,705 2,769,059 25,390 2.55 Jamaica .................... 1,447 0.15 174,559 12,692 161,867 1,697 0.17 Japan .................... 93,770 9.78 11,311,944 703,452 10,608,492 94,020 9.43 Jordan .................... 779 0.08 93,975 5,607 88,368 1,029 0.10 Kampuchea, Democratic ......... 214 0.02 25,816 2,582 23,234 464 0.05 Kenya .................... 2,461 0.26 296,883 15,900 280,983 2.711 0.27 Kiribati .................... 261 0.03 31,486 133 31,353 511 0.05 Korea, Republic of ............. 5,260 0.55 634,540 53,018 581,522 5,510 0.55 Kuwait .................... 7,453 0.78 899,093 76.341 822,752 7,703 0.77 Lao People's Democratic Republic .. 100 0.01 12,064 1,206 10,858 350 0.04 Lebanon ........ ......... 340 0.04 41,016 1,086 39,930 590 0.06 Lesotho .................... 372 0.04 44,876 1,294 43,582 622 0.06 Liberia .................... 463 0,05 55,854 2,570 53,284 713 0.07 Libya .................... 4,400 0.46 530,794 44,508 486,286 4,650 0.47 Luxembourg .................. 1,072 0.11 129,321 7,700 121,621 1,322 0.13 Madagascar .................. 798 0.08 96,267 5.812 90,455 1,048 0.11 (continued) 196 IBRD Financial Statements Statement of Subscriptions to Capital Stock and Voting Power (confinuec3 June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars June 30, 19B9 Subscriptions Voting power Percentage Number Percentage ot Total Amounts paid Amounts subject oa ot Members Shares total amounts in (Note A) to call (Note A) votes total Malawi .................. 614 0.06 $ 74,070 $ 3,860 $ 70,210 864 0.09 Malaysiaa ................. 4,627 0.48 558,178 46,401 511,777 4,877 0.49 Maldives ................. 263 0.03 31,727 137 31,590 513 0.05 Malia .................. 652 0.07 78,654 4,263 74,391 902 0.09 Malta .................. 603 0.06 72.743 3,741 69,002 853 0.09 Mauritaniaa ............... 505 0.05 60,921 2,704 58,217 755 0.08 Mauritius ................. 697 0.07 84,083 4,739 79,344 947 0.10 Mexico .................. 10,553 1.10 1,273,061 109,120 1,163,941 10,803 1.08 Morocco ................. 2,791 0.29 336,692 26,939 309,753 3,041 0.31 Mozambique .............. 522 0.05 62,971 3,281 59,690 772 0.08 Myanmara ................ 1,575 0.16 190,000 12,788 177,212 1.825 0.18 Nepal .................. 543 0.06 65,505 3,106 62.399 793 0.08 Netherlands ............... 19,925 2.08 2,403,652 208,421 2,195,231 20,175 2.02 New Zealand .............. 4,696 0.49 566,502 42,708 523.794 4,946 0.50 Nicaragua ................ 341 0.04 41,137 1,098 40.039 591 0.06 Nigera .................. 478 0.05 57,664 2,419 55,245 728 0.07 Nigeria .................. 7,102 0.74 856,750 72,610 784,140 7,352 0.74 Norwaya .................. 6,737 0.70 812.718 60,833 751,885 6,987 0.70 Oman .................. 876 0.09 105,676 6,626 99,050 1,126 0.11 Pakistana ................. 5,241 0.55 632,248 52,926 579.322 5,491 0.55 Panama .................. 216 0.02 26,057 2,606 23.451 466 0.05 Papua New Guinea .......... 726 0.08 87,581 5,049 82,532 976 0.10 Paraguay .... - ..... ... 690 0.07 83,238 4,661 78,577 940 0.09 Peru ................... 2.992 0.31 360,940 29,050 331,890 3,242 0.33 Philippines ................ 3,841 0.40 463,359 38,029 425,330 4,091 0.41 Poland .................. 6,122 0.64 738,527 62,275 676.252 6,372 0.64 Portugal .................. 5,460 0.57 658,667 38,503 620,164 5,710 0.57 Qatar .................. 1,096 0.11 132,216 8,965 123,251 1,346 0.14 Romania ................. 2,251 0.23 271,549 24,139 247,410 2,501 0.25 Rwanda .................. 587 0.06 70,813 3,574 67,239 837 0.08 St. Kitts and Nevis .......... 275 0.03 33,175 302 32,873 525 0.05 St. Lucia ................. 552 0.06 66.591 1.512 65,079 802 0.08 St. Vincent and the Grenadines . 278 0.03 33,537 297 33,240 528 0.05 Sao Tome and Principe ....... 278 0.03 33,537 297 33.240 528 0.05 Saudi Arabia .............. 25,140 2.62 3,032,764 263,830 2,768,934 25,390 2.55 Senegala .................. 1,163 0.12 140,299 9,681 130.618 1,413 0.14 Seychelles ................ 263 0.03 31,727 154 31,573 513 0.05 Sierra Leone .............. 403 0.04 48,616 1,841 46,775 653 0.07 Singapore ................ 320 0.03 38,603 3,860 34,743 570 0.06 Solomon Islands ........... 288 0.03 34,743 403 34,340 538 0.05 Subscriptions to Capital Stock and Voting Power 197 June 30. 1989 Subscriptions Voting power Percentage Number Percentage of Amounts paid Amounts subject of of Members Shares totau Total amounts in (Note A) to call (Note A) votes total Somalia ................. I ... 552 0.06 $ 66,591 $ 3,322 $ 63,269 802 0.08 South Africa .................. 7,555 0.79 911,397 77,443 833.954 7,805 0.78 Spaina ...................... 10,529 1.10 1,270.166 108,828 1,161,338 10,779 1.08 Sri Lanka .................... 2,142 0.22 258,400 20,065 238,335 2,392 0.24 Sudan ................... . 850 0.09 102,540 7,238 95,302 1,100 0.11 Suriname .................... 412 0.04 49,702 1,954 47,748 662 0.07 Swaziland ................... 440 0.05 53,079 2,015 51,064 690 0.07 Sweden ..................... 14,974 1.56 1,806,388 110,202 1,696,186 15,224 1.53 Syrian Arab Republic ....... .... 1,236 0.13 149,105 10.458 138,647 1,486 0.15 Tanzania' .................... 727 0.08 87,702 7.942 79,760 977 0.10 Thailand .................... 3,563 0.37 429,823 35,114 394.709 3,813 0.38 Togo .................... 620 0.06 74,794 3,924 70,870 870 0.09 Tonga ...................... 277 0.03 33,416 287 33,129 527 0.05 Trinidad and Tobago ....... ..... 1,495 0.16 180,349 13,406 166,943 1,745 0.18 Tunisia .................... 719 0.07 86,737 5,658 81,079 969 0.10 Turkey ...................... 7,379 0.77 890,166 52,947 837,219 7,629 0.77 Uganda ..................... 617 0.06 74,432 4,376 70,056 867 0.09 United Arab Emirates ........ ... 2,385 0.25 287,714 22,643 265,071 2,635 0.26 United Kingdom ......... ...... 69,397 7.24 8,371,707 539.526 7,832,181 69,647 6.99 United States ................. 162,523 16.95 19,605,962 1,627,623 17,978,339 162,773 16.33 Uruguay ..................... 1,578 0.16 190,362 14,084 176,278 1,828 0.18 Vanuatua .................... 329 0.03 39,689 838 38,851 579 0.06 Venezuela ................... 11,427 1.19 1,378,496 118,452 1,260,044 11,677 1.17 Viet Nam .................... 543 0.06 65,505 6,550 58,955 793 0.08 Western Samoa ......... ...... 298 0.03 35,949 510 35,439 548 0.05 Yemen Arab Republic ....... .... 573 0.06 69,124 3,420 65,704 823 0.08 Yemen, People's Democratic Republic of .......... ...... 918 0.10 110,743 7,084 103,659 1,168 0.12 Yugoslavia ................... 4,381 0.46 528,502 46.463 482,039 4,631 0.46 Zaire' ...................... 2,643 0.28 318,838 25.379 293,459 2,893 0.29 Zambiaa ..................... 1,577 0.16 190,241 15,556 174,685 1,827 0.18 Zimbabwe ................... 1,866 0.19 225.105 17,136 207,969 2,116 0.21 Toi;fl-1ijrp 30O l4Iq --., 7 110111ut11 r I 1 h U4 Lt: i rti c:r). 4% t rl Total-June 30, 1988 ....... .... 757,953 $ 91,435,660 $7,709,196 $ 83,726,464 795,703 a. Amounts aggregating the equivalent of $60,097,400 have been received from members on account of increases in subscriptions which are in process of completion: Antigua and Barbuda $57,000, Cameroon $2,000, Central African Republic $1,131,000, Costa Rica $532,0C0, Egypt, Arab Republic of $9,550,000, Ghana $47,000, Grenada $759,000, Guyana $56,0D, Indonesia $2,000. Malaysia $10883000. Mali $400, Mauritania $32,000, Myanmar $2,000, Niger $167,000, Norway $1,176,000, Pakistan $11,232,000, Senegal $104,000, Spain $24,131,000, Tanzania $107,000, Vanuatu $93,000, Zaire $15,000, Zambia $1 9,000 * May differ from sum of individual figures shown because of rounding. See Notes to Financial Statements. 198 IBRD Financial Statements Notes to Financial Statements June 30, 1989 and June 30, 1988 Summary of Significant Accounting the IBRD if principal, interest, or other charges with respect to any such loan and Related Policies are overdue by more than six months, unless IBRD management determines that the overdue amount will be collected in the immediate future Interest Translation of Currencies and other charges on nonaccruing loans are included in income only to the extent that payments have actually been received by the IBRD. The IBRD The IBRD's principal financial statements are expressed in terms of US begins to make provisions for losses on loans made to or guaranteed by a dollars solely for the purpose of summarizing the IBRD's financial position member of the IBRD when the loans are p aced in nonaccrual status. The and the results of its operations for the conven ence of its members and Accumulated Provision for Loan Losses is periodically adjusted based on a other interested parties. review of the prevailing circumstances. Any such provisions are recorded as a reduction of income and will be used to meet actual osses on such loans. The IBRD is an international organization which conducts its operations in Should such losses occur in amounts in excess of accumulated provisions the currencies of all of its members and Switzerland. The IBRD's resources tand of the amount of the Special Reserve), the excess would be included are derived from its capital, borrowings, and accumulated earnigs n those in the determination of net income various currencies. The IBRD has a number of general policies aimed at minimizing exchange rate risk in a multicurrency environment The IBRD matches its borrowing obligations in any one currency with assets in the Investments same currency, as prescribed by its Articles of Agreement, primarily by ho ding or lending the proceeds of its borrowings in the same currencies in Investment securities are recorded at cost or amortized cost. Gains or losses which they are borrowed. The currencies of borrowed funds include funds on sales of investments, measured by the difference between proceeds of which have been swapped into other currencies In addition, the IBRD sales and cost (on a last-in, first-out basis), are recorded as an element of periodically undertakes currency conversions to match the currencies income from investments. From time to time, the IBRD enters into foiward underlying its reserves with those of the outstanding loans. With respect to contracts for the sale or purchase of investment securities, these transac- its other resources, the IBRD does not convert one currency into another tions are recorded at the time of settlement. Financial futures and options are except for small amounts required to meet certain obligations and valued at market, with both rea zed and unrealized gains and osses operational needs. inc uded in income from investments Assets and iabilities are translated at market rates of exchange at the end Due to the nature of the investments held by the IBRD and its policies of the period. Income and expenses are translated at the market rate at the governing the level and use of such investments, the IBRD classifies the dates on which they are recognized or an average of the market rates of investment portfolio as an element of liquidity in the Statements of Cash exchange in effect during each month. Translation adjustments, with the Flows. exception of those re ating to capital subscriptions described in Note A. are charged or credited to the General Reserve. Disposition of Income and General Reserve Valuation of Capital Stock The IBRD has not declared or paid any dividends to its members. Commencing in 1950, a portion or all of the accumulated net income has In the Articles of Agreement, the capital stock of the IBRD is expressed in been allocated to the Genera Reserve. terms of "US dol ars of the weight and tineness in effect on July 1, 1944" From net income of fiscal years 1994 to 1987, the IBRD transferred to the (1944 do lars). Fo lowing the aboition of gold as a common denominator International Deve opment Association the portion of each year's income of the monetary system and the repeal of the provision of the US aw that was not needed for a location to reserves or otherwise required to be defining the par value of the US dollar in terms of gold, the pre-existing retained in the IBRD's business and accordingly could have been prudently basis for translating 1944 dollars into current dollars or intu any other distributed as dividends. In October 1985, the IBRD made a similar transfer currency disappeared On October 14, 1986, the Executive Directors of the to the Special Facility for Sub-Saharan Africa which is administered by the IBRD decided, with effect starting on June 30, 1987 and until such time as International Development Association. These transfers were recorded as a the relevant provisions of the Artcles of Agreement are amended, to interpret charge to Accumulated Net Income-Unallocated. No such transfer was the words "US dollars of the weight and hneness in effect on July 1, 1944" made from net income for the fisca year ended June 30, 1988. in Article II, Secfion 2(a) of the Articles of Agreement of the IBRD to mean the Special Drawirg Right (SDR) introduced by the International Monetary Fund, as the SDR was valued in terms of US dollars immediately before the Reclassifications introduction of the basket method of valuing the SDR on July 1, 1974, such value being equal to $1 20635 for one SDR (the 1974 SDRt. Certain recassifications of prior year information have been made to conform with the current year's presentation. Loans Note A-Capital Stock, Restricted Currencies, All of the IBRD's loans are made to. or guaranteed by, members with the and Maintenance of Value exception of loans to the International Finance Corporation. The prncipal amounts of loans are repayab e in the currencies lent. For loans negotiated Capital Stock: At June 30, 1989, the IBRD's capital comprised since July 1980 (and for pontions of certain earlier loans), the repayment 1,420,500 (1,420,500-1988) authorized shares, of which 958,827 obligations of borrowers in various currencies are determined on the basis (757,953-1988) shares had been subscribed. Each share has a par value of a currency pooling system, which is designed to equa ize exchange-rate of 100,000 1974 SDRs, valued at the rate of $1.20635 per 1974 SDR Of the risks among borrowers Interest on loans is accrued in the currencies lent subscribed capital, $8,591,850,000 '$7,709,196,000-1988) has been paid Incemetaldirct ost asocitedwit orgnaingloas o enensd ~ in, and the remaining $101,078,245,000 f$83,726,464,000-1988) is incurred as such amounts asciate nsitdeh mriginating loans are expensed as subect to cell only when required to meet the obligations of the IBRD created by borrowing or guaranteeing loans. As to $92,534,476,000 The IBRD does not reschedule interestor principal payments on its loans or ($73,148,528,000-1988) the restriction on calls is imposed by the Articles participate in debt rescheduling agreements It is tMe policy of the IBRD to of Agreement and as to $14,541,769,000 ($10,577,936,000-1988) by place in nonaccrual status all loans made to or guaranteed by a momber of resolutions of the Board of Governors. Notes to Financial Statements 199 Restricted Currencies: The portion of capital subscriptions paid in At June330, 1989, the noans made to or guaranteed by certain member to the IBRD is divided into two paorts (1) $859,185,000 countries with an aggregate principal balance outstanding of ($770,920,000-1988) initial y paid in gold or US dollars and (2) $3,193,392,000 ($2,924,190,000-1988), of which $626 092,000 $7,732,665,000 ($6,938,276,000-1988) paid in cash or non-interest- ($378,851,000-1988) was overdue, were in nonaccrual status If these bearing demand obligations denominated either in the currencies of the oans had not been in nonaccrual status, income from loans for the fiscal respective members or in US dollars. Ot this second portion, an amount of year ended June 30, 1989 would have been $262,670,000 $513,570,000 ($152,989,000-1988) was subsequenty repurchased by ($320,744,000-1988) higher. A summary ot borrowers in nonaccrua members with US dollars The amounts mentioned in (1) above which are status follows: paid in gold or US dollars and the amounts subsequent y repurchased with US dollars are freely usable by the IBRD in any of its operations. The IS$ thousands remaining amounts paid in the currencies of the members or in US dollar June 30 1989 denominated notes, referred to as restricted currencies, are usable by the lBRD in its lending operations only with the consent of the respective Income members The equivalent of $4,362,213,000 ($4,456,793,000-1988) has Principal Principal not Nonaccrual been used for lending purposes, with such consent. Borrower outstanding overdue accrued since Maintenance of Value: Article II, Setion 9of the Articles of Agreement Guyana ... $ 79,625 S 18.342 $ 5,938 December 1986 provides for maintenance of value, as of the time of subscription, of such Honduras . 487,106 26.641 42.215 Apr. 1989 restricted currencies, requiring (1) the member to make additional payments Liberia . 121,944 30.440 10.447 June 1987 to the IBRD in the event that the par value of its currency is reduced or the Nicaraga 205,300 05 526 17,522 December 1984 foreign exchange value of its currency has, in the opinion of the IBRD. depreciated to a significant extent in its territories and (2) the IBRD to Panama . 433,115 7i.598 34,958 May 1988 reimburse the member in the event that the par value of its currency is Peru . . . 1,000.326 258,898 82.715 August 1987 increased. Sierra Leone 8,926 2.335 453 August 1987 Since currencies no longer have par values, maintenance of value amounts Syrian Arab are determined by measuring the foreign exchange vaue of a member's Republic 394,451 79,893 31,193 February 1987 currency against the standard of value ot IBRD capital based on the 1974 Zambia . . . 462,511 70.417 37.229 August 1987 SDR. Members are required to make payments to the IBRD if their currencies $3,193,392 $626,092 $262,670 depreciate significantly relative to the standard of value. Furthermore, the - - Executive Directors decided to adopt a policy of reimbursng members whose currencies appreciate signiticantly in terms of the standard of value. An analysis at the changes to the accemulated provision for losses on loans made to or gearaoteed by all member countries in nonnaccrual states appears With respect to restricted currencies out on loan, maintenance of value below: obligations become effective only as such currencies are recovered by the IBRD. The maintenance of value amounts relating to restricted currencies out US$ thousands on loan are included in Amounts Required to Maintain Value of Currency Holdings-Amounts Deferred June 30 Note B-Investments and Cash Collateral Balance, beginninr * ,' !1 c''K t . a Invested Provision for loan I - hf 4.1 4. Translation adjustr-' I lt I The market value of investment securities and invested cash collateral Baance end at fif: received on loaned securities, including investments not traded in the B e o_,n__ market which were valued at their cost of $11,899,823,000 ($9,698,707,000-1988), was $22,175,789,000 ($21,223,549,000- Cofinancing and Guarantees: The IBRD has entered ioto agree- 1988), compared with a cost or amortized cost of $22,138,427,000 ments for loansesyndicated by other financial institutions either by a direct ($21,175,264,000-1988). Obligations of the United States Government participation in, or a partia guarantee of, loans for the benefit of member and its instrumentalities having a cost or amortized cost of $292,538,000 countries. The IBRD's direct participations in syndicated loans are included ($292,538,000-1988) and a market value ot $302,211,000 in weported loan balances. Guarantees of $932,863,000 as ot June 30, 1989 ($292,891,000-1988), set aside in respect of the Spec al Reserve, as ($933,682,000-1988) are not included in reponed oar balances. None of described in Note E, are included under this heading. these guarantees were subiect to cail at June 30, 1989. Income from investments includes a net loss of $95,781,000 (net gain of The IBRD has partially guaranteed the timely payment of interest amounts on $135,272,000-1988) resulting from sales of investments The annualized certain oans that have been sold At June 30 1989 these guarantees, rate of return on the average investments held during the fiscal year ended approximating $15,241,000 ($17,958,000_1988), were subject to call. June 30, 1989, including net gains/!osses from sales of investments was Statutory Lending Limit: Under the Articles, the total amount 8.20% (8.51%-1988). outstand ng of guarantees, participations in loans, and direct loans made by the IBRD may not be increased to an amount exceeding 100% of the sum Note C-Loans, Cofinancing, and Guarantees at subscribed capital, reserves, and surplus. On February 17, 1987, the BRD's Execu,tive Directors issued guidelines pursuant to which oill Loans: At June 30, 1989, principal installments of $3,340,000 and guarantees issued by the 18RD will be counted towards this limit at the time interest and other charges of $3,745,000 payable to the IBRD on loans other they first become ca lable, irrespective of the likelihood of an actual call. As than those referred to in the following paragraph were overdue by more than ot June 30, 1989, the tota amount of callable guarantees and disbursed and three months. The aggregate principal amount outstanding on these oans outstanding participations in loans and direct loans was approximately was $80,319,000. The aggregate principal amount outstanding on a I loans $77,957,086,000 or 62% (810%-1988) of the sum of subscribed capita, to any borrowers, other than those referred to in the following paragraph, reserves, and surplus. with any one loan overdue by more than three months was $172 820,000 (continued) 200 IBRD Financial Statements Notes to Financial Statements (continued) June 30, 1989 and June 30, 1988 Note D-Borrowings and Swaps Note F-Income and Expenses The IBRD has entered into currency swaps in which proceeds of a borrowing Other income includes gains of $7,353,000 ($5,128,000-1988), resulting are converted into a different currency and, simultaneously, a forward from repurchases of obligations of the lBRD prior to maturity, and net gains exchange agreement is executed providing for a schedule of future from oan soa o oft$6,494.000 ($16,659,000-1988). exchanges of the two currencies in order to recover the currency converted. Administrative expenses are net of the management fee of $259,000,000 The effect of a currency swap is to transform the cost of the orignal ($263,400,0001 1988) charged to the International Development Associa- borrowing to a cost which reflects the market rate of the currency obtained tion and of the service and support fees of $3,501,000 ($3,390,000 1988) in the conversion. The IBRD also underakes interest rate swaps, which charged to the International Finance Corporation and $415,000 to the transform a fixed-rate payment obligation in a paricular currency into a Multilateral Investient Guarantee Agency Contributions to special pro- floating-rate obligat on in that currency and vice versa. The average cost of grams represent grants for agricultural research, the control of onchocer- borrowings outstanding, inclding short-term borrowings, during the fiscal cgasis, andother developmentalgactuvities year ended June 30, 1000 was 7 38% (7.47%-1988), reflecting a reduction of cost of $305.462,000 ($250,991,000-1988) as a result of In May 1987, the IBRD announced a reorganization to improve its efficiency swaps Net receivable from currency swaps of $274,828,000 and effectiveness. The direct costs of the reorganization consisted of the ($112,467,000-1988) and net payable from currency swaps of costs of staff separation, training of staff for improving their skills, office $1,256,811,000 f$1,920,830,000 -1988). resulting primarily from ex- moves, and certain modifications to the IBRD's computer-based information change rate movements occurring subsequent to the dates of the swaps, are and data systems. The original cost estimate was included in Administrative shown under the headings Receivables-Other and Other Liabi ities, Expenses in the Statement of Incorne for the fiscal year ended June 30, respectively 1987. In September 1987 the cost estimate was revised and increased by $48,300,000. The porton of the ncrease which relates to the IBRD, Note E-Reserves and Net Income $35,900,000, is included in Administrative Expenses in the accompanying Statement of Income for the fiscal year ended June 30, 1988. The balance In August 1988. the IBRD allocated the entire $1,004,230,000 net income has been charged to the International Development Association. earned in the fiscal year ended June 30, 1988 to the General Reserve. In June 1989, the Executive Directors approved the allocation of all but Note G-Transfers to the International $100,000,000 of the net income earned in the fiscal year ended June 30, Development Association and to the Special 1989 to the General Reserve, effective Ju y 1989. The resulting allocation to Fb the General Reserve amounted to $993,887,000 Facility for Sub-Saharan Afnca The Special Reserve cons sts of loan commissions set aside pursuant to The IBRD has authorized transfers by way of grants to the International Anicle IV, Section 6, of the Articles of Agreement which are to be held in Development Association totaling $2,510,706,000 ($2,567,371,000-1988) liquid assets. These assets may be used only for the purpose of meeting from net income for the fiscal years ended June 30, 1964 through June 30, liabilities of the IBRD on its borrowings and guarantees in the event of 1987. Of these transfers, $716,626,000 remained payable at June 30, 1989 defaults on loans made, participated in, or guaranteed by the IBRD The ($773,291,000- 1988) Special Reserve assets comprse obligations of the United States Govern- During the fiscal year ended June 30, 1986 the IBRD authorized a transfer ment and its instrumentalities and are included under the heading by way of a grant to the Specia Faci ity for Sub-Saharan Africa of Investments. The allocation of such commissions to the Special Reserve was $150,000,000 from net income for the fiscal year ended June 30, 1985. discontinued, in 1964, with respect to subsequent loans and no further These funds were paid to the Specia Facility for Sub-Saharan Africa in the additions are being made to it. fiscal year ended June 30, 1989. Notes to Financial Statements 201 Note H-Staff Retirement Plan The portion of this cost that relates to the IBRD, $21,496,000, is included in Administrative Expenses for the fiscal year ended June 30, 1989. The The IBRD has a defined benefit retirement plan covering substantia ly all of balance has been charged to the International Development Association. its staff. The Plan also covers the staff of the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency The following table sets forth the Plans funded status at June 30, 1989: (MIGA). Under the Plan, benefits are based on years of service and average compensation, with the staff contributing a tixed percentage of pensionable Actuarial present value of benefit ob igations remuneration, and the IBRD contributing the remainder of the actuarially Accumulated benefit obligation determined cost of future Plan benefits. The IBRD uses the aggregate Vested .. . ... ............. . $(2,218,260,000) method for determining its contribution to the Plan. The amount of that Nonveste .(114,127,000) contribution approximates the net periodic pension cost as detailed below. All contributions to the Plan and all other assets and income held tor the Subtotal ......... . ........ ..... (2,332,387,000) purposes of the Plan are held by the IBRD separately from the other assets Effect of projected compensation evels . . . . (769,631,000) and incomeof the IBRD, IFC, and MIGA and can be used only for the benefit Projected benefit obligation.. . (3,102,018,000) of the participants in the Plan and their beneticiaries, untl a I liabilities to Plan assets at fair value. 3,135,976,000 them have been paid or provided for. Plan assets consist primari y of equity and fixed income securities, with smaller holdings of cash, real estate, and Plan assets in excess of projected benefit ob igation . 33,958,000 other investments. Remaining unrecognized net asset existing at date ot Net periodic pensionr cost for the liscal year ended June 30, 1989 consisted initial app ication .(181.842,000) of the tollowing components: Unrecognized net gain . .. . ..... .. .... 147,884,000 Prepaid pension cost . .. . . . . $ 0 Service cost-benefits earned during the period . . . $ 97,278,000 Interest cost on projected benefit obligation . .... . 185,089,000 The weighted-average discount rate used in determining the actuarial Actual return on plan assets . .......... (424,684,000) present value of the projected benefit obligation was 7.562%. The effect of Net amortization and deferral . . . ..... .. .. 175,854,000 projected compensation levels was calcuated based on a scale that provides Net periodic pension cost ....... . . .. .... $ 33,537,000 for a decreasing rate of salary increase depending on age, beginning with 13% at age 20 and decreasing to 7.6% at age 64. The expected long-term rate oa return on assets was 10% 202 IBRD Financial Statements Report of Independent Accountants 1801 K Street, N.W. Telephone 202 833 7932 Washington, DC 20006 Price Jjiiterhouse 0 July 26, 1989 President and Board of Governors, International Bank for Reconstruction and Development In our opinion, the financial statements appearing on pages 184 through 201 of this Report present fairly, in all material respects, in terms of United States dollars, the financial position of the International Bank for Reconstruction and Development at June 30, 1989 and 1988, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles in the United States and International Accounting Standards. These financial statements are the responsibility of management of the International Bank for Reconstruction and Development; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. 203 Financial Statements of the International Development Association, the Special Fund Administered by IDA, and the Special Facility for Sub-Saharan Africa Administered by IDA Statements of Commitment Resources 204 Statements of Changes in Liquid Funds 207 Statements of Condition 208 Summary Statement of Development Credits 210 Statement of Voting Power, and Subscriptions and Contributions 213 Notes to Financial Statements 216 Report of Independent Accountants 219 204 IDA, Special Fund, and African Facility Financial Statements Statements of Commitment Resources For the fiscal years ended June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars Changes in Commitment IDA Special Fund African Facility Resources 1989 1988 1989 1988 1989 1988 COMMITMENT AUTHORITYa Current period transactions: Subscriptions and contributions ........... ....... $5002 403 $4521.511 $ 17,754 Retlows available for advance commitments and annual allocations ............ ................ 751.772 Transfers from IBRD-Note F ................ .. .. 100,000 Income from investments ............_........... 11585 5,754,175 4,621,511 29,339 Less development credits approved . ............... .. 4932.590 4,458,710 $27.900 112,600 Effect of current period transactions on resources available for commitment ......... ........ 821,585 162,801 (27,900) (83,261) Translation adjustments ncIroi- commitment authority .... 107.468 (44,519) (9.516) (20,478) Increase (decrease) in commitment authority ......... .. 929,053 118,282 (37416) (103,739) Commitment authority, beginning of fiscal year ..... ..... (1 78.326) (296,608) 37.416 141,155 Commitment authority, end of fiscal year .. . $ 750.727 $ (178,326) $ - $ 37,416 CHANGES TO FULLY COMMITTED REPLENISHMENTS Current period allocations: Cancellations of development credits ................ $ 207,063 $ 153,479 $148,492 $ 192 Repayments of development credits not available for commitment .. ... . . ... 159,447 Grant participation in development credits ........... . 2.973 (4,376) Income from investments . .............. 135,283 106,785 6.793 $ 5,932 14.352 Income from operations . . .......... ... 12,492 48,039 Total current period allocations . . 357811 463,374 155.285 5,932 14,544 Translation adjustments on resources under fully commited replenishments ................. (139.559) (140,670) (14,893) (2,076) 14,958 Increase in resources under fully committed replenishments . 218.252 322,704 140.392 3,856 29,502 Surplus in resources under fully committed replenishments, beginning of fiscal year .... ................... 382.769 60.065 31.943 28,087 - Surplus in resources under fully committed replenishments, end of fiscal year ....... .. $ 601.021 $ 382,769 $172,335 $31,943 $29,502 COMMITMENT RESOURCES Commitment authority, end of fiscal year.$ 750.727 $ (178,326) - $ 37,416 Surplus in resources under fully committed replenishments, end of fiscal year ..... .. ..... .... 601.021 382.769 $172.335 $31,943 $29,502 - Total commitment resources . .. . $1.351,748 $ 204,443 $172,335 $31,943 $29,502 $ 37,416 Commitment Resources 205 a IDA reviews periodically the resource position under fully committed replenishments and, if necessary, allocates portions of the resources that become available for commitment during the period to those replenishments For IDA, these allocations will include income trom operations until it equals the cumulative losses from operations for the period July 1, 1979 to December31, 1984, totalmg $353,815,000. Losses incurred during that period were not reduced from commitment authority in accordance with the decision of the Executive Directors that IDA's commitment authority not be reduced by the amount of deficits during the sixth replenishment period The decision reflected the expectation that future income would be available to reduce these losses Alt income earned subsequent to that period, amounting to $352,142,000 at June 30, 1989, has been allocated for this purpose. The Executive Directors have reviewed IDA's resource position under tully committed replenishments and, on September 23, 1988, approved a scheme to increase commitment authority by permitting IDA to make advance commitments against the reflows that IDA is projected to receive in future years. Composition of Commitment Resources IDA Special Fund African Facility 1989 1988 1989 1988 1989 1988 Liquid funds .8.............. ..... ....... 1444458 $1,233,202 $ 59,850 $ 64,748 $172.170 $107,831 Cash not immediately available for disbursement- Note A ...................... . 10.484 184,817 Receivables on account of subscriptions and contributions ........................... . 19 446.967 22,330,292 283,689 327,893 9 115,247 Subscriptions and contributions not yet available tor commitment .i......................... . 4.321,215) (8,103,696) Receivables from International Bank for Reconstruction and Development-Note F . ... . 716.626 773,291 - 150,000 Other assets ......... .................. . 146.508 156,974 268 274 814 242 Reflows available for advance commitments and annual allocations ................. .......... 751 772 - Of which amounts received during period . . . . . . . . . . 1184.636i 567.136 - Less undisbursed credits, accounts payable and other liabilities ........... ...... ..... 16 659.216 16.370,437 171.472 360.972 143,491 335,904 Total commitment resources .......... $ 1351.748 $ 204,443 3172.335 $ 31,943 $ 29.502 S 37.416 See Notes to Financial Statements. Changes in Liquid Funds 207 Statements of Changes in Liquid Funds For the fiscal years ended June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars IDA Special Fund African Facility 1989 1988 1989 1988 1989 1988 SOURCES OF LIQUID FUNDS Operations: Income from development credits-Notes C and G: Service charges ............. ............... 271 492 $ 246,480 Commitment fees ............. .............. 64,959 Less management fee to IBRD-Note G . . . ............259000 263,400 Income from development credits less management tee 1 2. 4 9 2 . ..... ... . . 12,492 48.039 Income from investments-Note G . .... 140,242 109,354 6 793 $ 5,932 $ 14.352 $11,585 Less amortization of subscription advances .... . 4.959 2,569 Non-cash items. . .. 25,675 (39,902) 28 125 (572) 21 Liquid funds from operations ...................173.450 114.922 6,821 6,057 13 780 11,606 Drawdown of subscriptions and contributions . 3467.970 ...........3 3,337,566 28,293 51,635 262 504 386,156 Grant participations in development credits.27 ............. 3.9 (4,376) Repayments of development credits ...... . .. . . 184 636 159,447 _ _ Total sources of liquid funds 3... ........829,029 3,607,559 35.114 57,692 276.284 397.762 USES OF LIQUID FUNDS Development credit disbursements 3.559. 206 .. 3,559,206 3,339,203 37.670 57,585 209,612 350,984 Effect of current period transactions on liquid funds 2 6 9 ................ .. . 269 823 268,356 (2.556) 107 66.672 46,778 TRANSLATION ADJUSTMENTS ... . ........ ..5. .58,567) (12,579) (2,342) 158 (2,333) (353) Increase (decrease) in liquid funds . .... . 211.256 255,777 (4,898) 265 64,339 46,425 Liquid funds, beginning of fiscal year .... 1.233,202 977.425 64,748 64,483 107,831 61,406 Liquid funds, end of fiscal year .$ . . ... . $1.444.458 $1,233.202 $59,850 $64,748 $172.170 $107,831 See Notes to Financial Statements. 208 IDA, Special Fund, and African Facility Financial Statements Statements of Condition June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars IDA Special Fund African Facility Assets 1989 1988 1989 1988 1989 1988 Unrestricted assets LIQUID FUNDS Cash available for disbursements: Noninterest-bearing demand deposits . ....... S 80.949 $ 14416 S 715 5$ 275 $ 3.074 $ 9.854 Interest-bearing demand deposits ....... ..... 48.246 17,861 4.384 3,517 432 2,356 Investments: of governments and their instrumentalities ................ ..... 683.134 533,397 - 2,533 17,092 22,444 Iluig.-r: of banks and financial institutions . ... 631.523 798,145 54751 58,423 151,572 73,177 Receivable for investment securities sold ..... . 12,490 41,380 - - - Payable for investment securities purchased ... . (11.884) (171,997) - - - 1.444.458 1,233,202 59.850 64,748 172.170 107,831 CASH NOT IMMEDIATELY AVAILABLE FOR DISBURSEMENT-Note A .10 484 184.817 CASH COLLATERAL INVESTED ... ... 118,337 37,354 RECEIVABLES ON ACCOUNT OF SUBSCRIPTIONS AND CONTRIBUTIONS (,r,r,-,] ,',n,,,-, noninterest-bearing demand 1,I,i1o,,r t4 724,701 14,612,984 283,689 327,893 9 115,247 Subscriptions and contributions-Note E: Amounts due .............................. 131,287 133,431 Amounts not yet due ............ ............ 4 590 979 7,583,877 19.446.967 22,330,292 283.689 327,893 9 115,247 RECEIVABLES FROM INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT-Note F ... . 716.626 773,291 - 150,000 DEVELOPMENT CREDITS OUTSTANDING (see Summary Statement ot Development Credits and Note C) Total development credits .......... ........... 51900.844 49,082,916 Less undisbursed balance ...... ............... 16,556.580 16,274,159 35.344.264 32,808,757 SPECIAL FUND CREDITS OUTSTANDING (see Summary Statement of Development Credits and Note C) Total development credits ........ ............ 442.848 608,398 Less undisbursed balance ....... ........... 171.472 360,972 271.376 247,426 AFRICAN FACILITY CREDITS OUTSTANDING (see Summary Statement of Development Credits and Note C) Total development credits ... . ........... 1.167.496 1,200,650 Less undisbursed balance .......... ............ 143.446 335,874 1,024,050 864,776 OTHER ASSETS Accrued charges on development credits ...... ..... 82,255 95,726 Accrued interest on investments ....... .......... 19.682 18.433 245 274 814 242 Miscellaneous-primarily advances for project preparation facilities ............. ..... 44,571 42,815 23 146,508 156,974 268 274 814 242 Total unrestricted assets ............... 58,523,070 58,636,889 343.807 392,915 172,993 373,320 Restricted assets on account of subscriptions-Note B ........... .... 265.713 262,694 Total assets .... .. . . . $58,788 783 '? ^. r ..3 $343,807 $392,915 $172,993 $373,320 Statements of Condition 209 IDA Special Fund African Facility Sources of Assets 1989 1988 1989 1988 1989 1988 Unrestricted sources ACCOUNTS PAYABLE AND OTHER LIABILITIES (for IDA this includes payable to IBRD for management fee of $96,765-1989, $87,765-1988) ...........S... . $ 102.636 $ 96,278 $ $ - 45 $ 30 PAYABLE FOR CASH COLLATERAL RECEIVED . . 118,337 37,354 SUBSCRIPTIONS AND CONTRIBUTIONS (see Statement of '.,:,im.t Power, and Subscriptions and Contributions and Note E) .................... 53.795 836 53,367,708 CONTRIBUTIONS TO SPECIAL FUND (see Statement of Voting Power, and Subscriptions and Contributions) Total 565.372 581,260 Disbursed ...................... .... 254,507 216,836 (254,507) (216,836) Undisbursed 310 865 364,424 CONTRIBUTIONS TO AFRICAN FACILITY (see Statement of Voting Power, and Subscriptions and Contributions) Total 1.021,733 1,024,482 Disbursed .......................... 1,040,791 831,179 (1.040,791) (831,179) Undisbursed .(19,058) 193,303 CONTRIBUTION BY SWITZERLAND-Note D . . . 51.173 51,173 TRANSFERS FROM INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT-Note F ......... ..... 2,430.801 2,487,466 150,000 150,000 ACCUMULATED (DEFICIT) SURPLUS ........ (3,254) (92.460) 32,942 28,491 42,006 29,987 CUMULATIVE TRANSLATION ADJUSTMENTS ON DISBURSED AND OUTSTANDING DEVELOPMENT CREDITS: IDA ..................... ........ 732,115 1,577,168 Special Fund . ...................... 16,869 30,590 African Facility ...... ..... (16,741) 33,597 732.243 1,641,355 Total unrestricted sources ....... 58.523.070 58,636,889 343,807 392,915 172,993 373,320 Restricted Subscriptions-Note B.... 265,713 262,694 Total sources of assets ......$.. 58,788,783 $58.899,583 $343,807 $392,915 $ 172,993 $ 373,320 See Notes to Financial Statements 210 IDA, Special Fund, and African Facility Financial Statements Summary Statement of Development Credits June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars June 30. 1989 IDA Special Fund African Faciliy Total Percentage Total Credits Total Credits Total Credits Total Credits of credits Borrower or guarantor -Credits' outstanding credits outstanding credits outstanding credits -outstanding oLtstanding Afghanistan $ 79,207 $ 79,207 $ - $ - $ - $ - S 79 207 $ 79,207 0 22 Bangladesh 4,664,868 3,182,269 25,807 2.703 - - 4,690,675 3,184,972 8 69 Benin 360,665 202.1 96 10,344 9,762 - - 371,009 211,958 0 58 Bhutan .. .. 26,804 11,117 - - - 26,804 11.117 0.03 Bolivia . 435 684 286 414 - 435,684 286,414 0 78 Botswana .14031 14,031 - - - - 14,031 14,031 0 04 Burkina Easo 365.286 234 166 - - - 365,286 234,166 0 64 Burundi . . 484,030 286.537 - - 17,828 17.828 501 858 304,365 0 83 Cameroon 238,699 238,678 - 238,699 238 678 0 65 Cape Verde 19,449 8.397 - - - - 19.449 8,397 0 02 Central African Republic 220,338 145.321 - - 17 454 17,454 237.792 162 775 0 44 Chad . 269,693 107.611 - - 25 558 9.705 295 251 117 316 0 32 Chile . . 15,256 15,256 - - 15,256 15,256 0 04 China . . 3.445,610 t.824.772 70.814 61 868 - - 3,516 424 1,886,640 5 15 Colombia .15,540 15,540 - - - 15,540 15,540 0 04 Comoros ... 43,379 32,549 - - - 43.379 32.549 0.09 Congo, People's Republic of the 73,305 72,806 - - - - 73.305 72,806 0 20 Costa Rica . 3,626 3.626 - - - - 3,626 3.626 0.01 C8te dilvoire ., 7,050 7,050 - - - 7,050 7,050 0 02 Djibouti ...38.708 24,252 - - - 38,708 24,252 0.07 Dominica .11,320 7.860 - - - - 11.320 7.860 0 02 Dominican Republic . 20,490 20.490 - - - - 20,490 20,490 0 06 Ecuador .32,774 32,774 - - 32,774 32,774 0 09 Egypt, Arab Republic of 930,926 892,696 - - - 930 926 892,696 2 44 El Salvador 24,284 24,284 - - - - 24 284 24,284 0.07 Eguatorial Guinea 33.163 24,762 - .- 4,488 4.400 37.651 29 162 0 08 Ethiopia . 1,198,139 664,034 - - - - 1,198,139 664,034 1 81 Gambia The 117.508 60,063 - 12 218 12,217 129,726 72,280 0 20 Ghanla . 1,261.423 705.961 42,264 41,189 167.434 145,603 1,471,121 892 753 2.43 Grenada . 6,234 3.547 - - - 6.234 3 547 0.01 Guinea 551,729 261.346 - 19.449 19,449 571.178 280 795 0 77 Guinea-Bissau 132.069 85.839 4,862 4 859 10,597 9,779 147,528 100 477 0 27 Guyana 47,002 34.138 - - - 47,002 34,138 0 09 Hail,i 344,791 282,189 14,961 4,626 - - 359,752 286,815 0.78 Honduras . 79,169 79.169 - - - - 79,169 79 169 0 22 India , . 16,095,801 11,943,832 80,926 7.541 - - 16,176,727 11,951.373 32 62 Indonesia 859,052 857.151 - - - - 859.052 857.151 2 34 Jordan 78,920 78,920 - 78,920 78.920 0 22 Kenya .. 1,054,099 656.063 47,126 8.437 52,861 52.861 1.154.086 717,361 1 96 Korea, Republic at 101 337 101,337 - - - 101.337 101 .337 0 28 Lao People's Democratic Republic . 149,162 66,366 - - - - 149.162 66,366 0.18 Lesotho .. 140 613 90,562 - - - - 140 613 90,562 0 25 Liberia . 113,879 97,597 - - .- 113,879 97,597 0 27 Madagascar .802 014 516,812 34,783 33,997 127,290 79.607 964.087 630,416 1 72 Malawi , .707,605 485,255 16,332 12,060 56 975 56.975 780,912 554,290 1.51 Maldives .15,946 7 375 - - - 15,946 7,375 0 02 Mali .582.348 384,112 13,290 10 998 8,852 - 604,490 395,110 1.08 Mauritania , . 1 72.842 122,1 77 - - 26 680 26.680 199.522 1483,857 0 41 Mauritius 19.086 19,086 - - - - 19,086 19,086 0 05 Morocco . .40.298 40 298 - - - - 40,298 40,298 0 11 Statement of Development Credits 211 June 30, 1989 IDA Specal Fund African Factlity Total Total Credits Total Credits Total Credits Total Credits " - Borrower or guarantor credits' outstanding credits outstanding credits outstanding credits outstanding outstand ng Mozarbique $ 346,089 $ 126.998 $ - $ - $ 18078 $ 11205 $ 364.167 $ 138,203 038 Myanmar 824 507 600.383 - - - 824.507 600.383 164 Nepa, 1,025,900 497.724 - - 1025 900 497,724 1.36 N caragua 59,699 59,697 - - - - 59 699 59,697 016 N ger 425,641 281.500 - 81.037 74.354 506 678 355,854 0 97 Niger a 123,990 30 486 - - 123 990 30,486 008 Pakistan 2,980,856 1.825 313 - - - 2980856 1,825,313 498 Papua New Guinea 111,348 111 348 - - - 111 348 111.348 030 Paraguay . 42,750 42.750 - - - 42 750 42,750 012 Philipp nes 102,850 102 850 - - 102 850 102,850 028 Rwarda . 410,665 262,042 - 28,051 15 251 438 716 277,293 0.76 St V ncent and the Grenadines 2244 215 4,987 3,916 - 7231 4.131 001 Sdo Tome and Principe 22,940 11.042 - - 2867 930 25807 11972 003 Senegal . 634359 444,379 22,067 21.660 89,016 89.012 745442 555,051 152 S erra Leone . . 122 219 75,228 - - - - 122.219 75,228 021 So omon Islands . . 18448 10,946 - - - - 18.448 10,946 003 Somal,a . . . 440,815 289.560 - - 35 781 35,265 476,596 324,825 0 89 Sri Lanka . 1,144,880 661,056 - - - - 1.144.880 661,056 180 Sudan . 1,188,439 800,359 11,958 11,958 - - 1200.397 812.317 222 Swaziland . . . 7,024 7,024 - - - - 7.024 7.024 0.02 Syrian Arab Republic 45,466 45,466 - - - 45.466 45,466 012 Tanzania . . 1,202,562 882,119 - - 71.936 71,936 1,274,498 954.055 2.60 Thailand . .. 110357 110,357 - - - - 110,357 110,357 030 Togo . 424,651 261,770 23,002 23,002 12.592 12,592 460.245 297,364 0.81 Tonga . 1,995 1,394 - - - 1,995 1,394 Tunisa . 61,516 61516 - - - 61,516 61,516 0.17 Turkey 163,667 163,667 - - 163,667 163,667 045 Uganda . 910,213 582,010 - - 23.439 23,409 933.652 605,419 165 Vanuatu . 11,777 2187 - - - - 11,777 2,187 Viet Nam . 59.399 59,399 - - - - 59,399 59.399 016 Western Samoa . 24,778 13,668 - - - 24,778 13,668 004 Yemen Arab Republic 537,655 331,814 - - 537,655 331,814 091 Yemen People's Dem Rep of 238,275 172,161 12.343 8924 - 250.618 181,085 049 Zare 1.092,977 711,368 - - 192,618 173,141 1,285,595 884,509 241 Za nb a . 324,926 171,953 6.982 3.876 64,397 64,397 396,305 240,226 0 66 Z mbabwe 59,459 58,365 - - - - 59,459 58,365 016 Sustotal members . 51.850,587 35308004 442.848 271,376 1,167,496 1024,050 53,460,931 36,603,430 (continued) 212 IDA, Special Fund, and African Facility Financial Statements Summary Statement of Development Credits (continued) June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars June 30, 1989 IDA Special Fund African Faclity Total , ,- I , . Total Credits Total Credits Total Credits Total Credits I, - ii Borrower or guarantor creditsa outstanding credits outstandng credits outstanding credits outstanding outstanding Regional development banks: West African Deve opment Bank' $ 19010 $ 12,559 $ - $ $ - $ - $ 19,010 $ 12,559 003 Caribbean Development Bank' 20,568 13,022 - - - 20,568 13,022 004 Subtotal regional development banks 39,578 25,581 -- 39 578 25,581 Otherd 10,679 10,679 - - - - 10,679 10,679 002 Tota JLer 3L 1989 851 900844 $35344264 $442848 g,1 376 S1 167494 Si 024050 353511 188 536639690 10000 Total-June 30. 1988 $49,082,916 $32,808,757 $608,398 $247.426 $1,200,650 $ 864.776 $50.891,964 $33,920,959 Less than 0.005 percent a. Of the undisbursed balance at June 30, 1989. IDA has entered into irrevocable commitments to disburse $162,913,000 ($283,807,000-1988) b These development credits are for the benefit of Benin, Burkina Faso, Cdte d'lvoire, Niger, Senegal, and Togo. c These development credits are for the benefit of Grenada and territories of the United Kingdom (Associated States and Dependencies) in the Caribbean Region d Represents development credits made at a time when the authorities on Taiwan represented China in IDA (prior to May 15, 1980) Maturity Structure of Development Credits* June 30, 1989 Periods IDA Special Fund African Facility Total July 1, 1989 to June 30, 1990 .... ........ $ 224,978 $ - $ - $ 224,978 July 1, 1990 to June 30, 1991 .. .... ........ 274,923 - - 274,923 July 1,1991 to June 30, 1992 ....... ........... 321,557 - - 321,557 July 1,1992 to June 30, 1993 ...... . .......... 370,469 75 - 370,544 July 1, 1993 to June 30, 1994 ........ .... I..... 435,206 1,641 - 436,847 July 1,1994 to June 30, 1999 ....... ........... 3,260,595 22,823 31,828 3,315,246 July 1,1999 to June 30, 2004 ................... 5,576,468 26,028 58,375 5,660,871 July 1, 2004 to June 30, 2009 . ................. 7.359,998 66,221 122,031 7,548,250 July 1, 2009 to June 30, 2014 ........ .... 8,512,713 66,221 175,124 8,754,058 July 1, 2014 to June 30. 2019 .. . ........... 8,311,382 66,221 175,124 8,552,727 July 1, 2019 to June 30, 2024 .7............... .. 7.779,961 66,221 175,124 8,021,306 July 1, 2024 to June 30, 2029 ............ ...... 5,901,121 66,221 175,124 6,142,466 July 1, 2029 to June 30, 2034 .................. . 3,015,239 61.176 175,124 3,251,539 July 1, 2034 to June 30, 2038 ....... ........... 556,234 - 79,642 635,876 Total .$51.900.844 $442,848 $1,167,496 $53.511,188 Includes undisbursed balance See Notes to Financial Statements. Voting Power, and Subscriptions and Contributions 213 Statement of Voting Power, and Subscriptions and Contributions June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars June 30, 1989 IDA Number Percentage Subscriptions Special African of of and Funld Facility Members, votes total, contributions conrifiutonas contributions Part I Members Australia 89 809 1 39 $ 1 003,529 $ Austria . ..41,288 0 64 396,201 16,577 Belgium ..76,534 1 18 820,199 44,597 8,028 Canada .206,627 3 20 2,542,023 160,687 78.252 Denmark 60,648 0.94 590 821 30,762 23.000 Finland . ..37,375 0 58 342,820 17,368 France . . .247,446 3.83 2,971,726 130,459 227,382 Germany, Federal Republic atof 446.547 6 91 6,213,862 - - Iceland .15 130 0.23 6,808 - Ireland .. 18,744 0 29 58 562 - 2 143 Italy .176,890 2 74 1,981,420 85,020 227,954 Japan 601,204 9 30 10,767,589 - - Kuwait .62,222 0.96 598,398 - Luxembrourg . 16,011 0 25 26,329 NetreirIands 134,224 2 08 1,842,573 164,522 New Zealand . .18,512 0.29 55,478 - Norway 59,257 0 92 568,8B06 40,175 37,838 South Africa .19,940 0.31 56.799 - Sweden . 135,445 2 10 1,430,712 73,672 68,758 United Arab Emirates 15,942 0 25 136,536 United Kingdom 375,488 5 81 4,515.798 - United States .1,124,213 17 40 14,764,907 ~ --136,580 Subtotal . 3,979,496 61 59 51,691,896 565,372 1,008,402 Part 1I Members Afghanistan 13,557 0 21 1,341 - Algeria . 18,481 0 29 5,163 - Argentina .81,053 1.25 49.092 - Bangladesh 39,239 0.61 7.051 - BeI~ze . 1,788 0 03 243 Benin ,. 4 800 0 07 622 Bhutan ..3,543 0.05 61 Bolivia ., 13,748 0 21 1.328 Botswana 11,745 0 18 205 - Brazi 110lt,398 1 71 63,472 - Burktna Faso 9,720 0 15 645 - Burundi. . . 12,667 0 20 983 - Camneroon . 13.854 0.21 1,309 Cape Verde . 516 0 01 96 Central African Republic . 10.920 0 17 651 - C1had , 6,624 0 10 645 - Chile IIIII30.612 0.47 4,514 CPria 128,133 1 98 39,503 CoombnSa .32,781 0.51 22,453 ,omoros . 8.827 0 14 104 - Ccrgc People's Republic ot the . 6 685 0 10 638 csta R,ca 7,844 0 12 254 - a vo!re 7,771 0 12 1,289 - 17 646 0 27 1,018 - 532 001l 193 - (continued) 214 IDA, Special Fund, and African Facility Financial Statements Statement of Voting Power, and Subscriptions and Contributions [continued) June 30, 1989 and June 30, 1988 Expressed in thousands of US dollars June 30. 1989 IDA Number Percentage Subscriptions Special African of ot and Fund Fadiit Members' votes total, conltributions contributions contributicns Part 11 Members (continued) Dominica 68213 0 10 $ 100 $ - $ - Dominican Republic 15,726 0 24 581 Ecuador 13,709 0 21 818 - - Egypt, Arab Republic of 28.424 0 44 6,434 - El Salvador 6,244 0 10 381 -- Equatorial Guinea .1.967 0.03 401 Ethiopia 13,109 0 20 669 - Fji~ .... .2,130 0 03 701 - - Gabon .2,093 0 03 627 - Gambia, The .....10.644 0 16 339 - Gbana .. 15.362 0.24 2,962 - - Greece . 27.429 0 42 12,590 - - Grenada . 14 468 0 22 121 - - Guatemala .... 12,713 0 20 513 - Guinea I . . . .. ... 17,221 0 27 1,314 Guinea-Bissau . . 528 0 01 169 - - Guyana . .. 17,891 0 28 1.023 - Haiti .... .14,143 0 22 1,016 - - Honduras ...... . . 12,290 0 19 402 - Hungary . . .... 49,609 0 77 17,687 - India .. .204,834 3 17 53,637 Indonesia . 65,975 1 02 14,365 - - Ifan. Islamic Republic of 15,455 0 24 5.845 - - Iraq .....9,407 0 15 992 - Israel . .9,386 0 15 2.401 Jordan . 15,388 0 24 394 - - Kampuchea, Democratic .7,826 0 12 1,284 - Kenya .. . ..16,021 0 25 2.149 - - Kiribati .512 0 01 72 - - Korea, Republic ot 22,420 0 35 37,619 - Lao People's Democratic Republic .. 11.723 0 18 627 - Lebanon . .... . 8,562 0 13 564 - Lesotho . .. . . . . .10,487 0.16 204 Liberia .13,867 0 21 1,016 Libya . 7.771 0.12 1,301 Madagascar ..702 0.01 1,218 Malawi ..14,143 0 22 972 - Malaysia .25,860 0 40 3.397 Maldives . .14,238 0 22 39 - Mali .. 13,507 0 21 1,153 - Mauritania .. 6,685 0 10 636 - Mauritius. . 18,142 0 28 1.163 - - Mexico ..... 37,696 0 58 46,673 - Morocco .. 30,612 0 47 4 668 Mozambique 774 0 01 1.653 - - Myanmar .23,560 0 36 2,735 Nepal . 16,254 0.25 654 - - Nicaragua . 10D,896 0 17 386 - Niger . 16,044 0.25 657 - Nigeria . 4,057 0 06 4.211 - - Voting Power, and Subscriptions and Contributions 215 June 30. 1989 IDA Number Percentage Subscriptions Special Af rican of of and Fund Facility Membefs' votes total' contributions contributions contributions Oman .15,490 0 24 $ 430 $ S Pakistan 60,087 0.93 13,257 - Panama 5,657 0 09 25 - Papua New Guinea ..13,050 0 20 1,130 - Paraguay 11,124 0 17 382 Peru .854 0 01 2,135 - - Philippines .. 16.583 0 26 6,481 - Poland . . 157,729 2.44 46,515 Rwanda . .12,687 0.20 1,012 - - St Kilts and Nevis . 526 0 01 158 - Sr Lucia . . 13,544 0 21 203 St Vincent and the Grenadines . . . 514 0.01 84 - Sao Tom6 and Principe . . . 514 0 01 84 Saudi Arabia .. 203,813 3.15 1,593,213 - Senegal.. ,17,830 0 28 2,206 - Sierra Leone . . .12.667 0 20 953 - - Solomon Islands 518 0 01 109 - - Somalia .. . 10,506 0.16 953 - - Spain . 83,604 1 29 182,455 - 13,331 Sri Lanka .28,244 0.44 3,939 - - Sudan 13,884 0 21 1,289 - - Swaziland 11,073 0 17 407 - Syrian Arab Republic 7,651 0.12 1,202 - Tanzania . 16,021 0 25 2,112 - Thailand . 28 244 0.44 4,072 - Togo .14 143 0.22 998 - - Tonga .. 11.380 0 18 94 - - Trinidad and Tobago . 770 0 01 1,629 - Tunisia . 2,793 0 04 1,893 - - Turkey . 41 .842 0 65 18.093 - - Uganda .16,021 0 25 2,106 Vanuatu . 4,932 0 08 235 - Viel Nam . . . 8,889 0 14 1,893 - Western Samoa . 8,768 0 14 115 - Yemen Arab Republic . 11.468 0 18 554 - Yemen People's Dem. Rep of . 15,576 0 24 1.582 - - Yugoslavia . 41,855 0 65 19,110 - Za: re . 12.164 0 19 3,785 - - Zambia 19,730 0 31 3.384 - Z,mbabwe .1,324 0 02 4,970 - - Subtotal .2,482,250 38 41 2,369,653 ____ 13,331 3i '980, 0461 746 1000 co 54 061 549 6565 372 61 021 733 Total-June 30. 1988 . 5,835,575 $53,630,402 $581,260 $1,024,482 a See Notes to Financial Statements-Note 8, for an explanation of the two categories of membership bTotal may differ from the sum of individual percentages shown because of rounding See Notes to Financial Statements. 216 IDA. Special Fund, and African Facility Financial Statements Notes to Financial Statements June 30, 1989 and June 30, 1988 Summary of Significant Accounting The subscriptions and contributions provided under the fourth replenish- and Related Policies ment and thereafter are expressed in members' currencies or SORs and are payable in members' currencies Prior to July 1, 1986, amounts receivable Organization and Operations and amounts received but not yet disbursed were translated at market rates of exchange at the end of the accounting period Amounts which had been IDA: IDA was established on September 24, 1960 to promote economic disbursed or converted into other currencies were translated at market rates development, increase productivity, and raise the standard of living of its of exchange on dates of disbursement or conversion. Beginning July 1, developing country members 1986, amounts received but not yet disbursed, as well as amounts disbursed or converted info other currencies, are translafed at market rates of exchange Special Fund: On October 26, 1982, IDA established the Special Fund on the dates they were made available for disbursement in cash to IDA. constituted by funds to be contributed by members of IDA and administered by IDA, to supplement the regular resources available for lending by IDA Special Fund and African Facility: Undisbursed contributions are The arrangements governing the Special Fund may be amended or translated at market rates of exchange at the end of the period. Disbursed terminated by IDA's Executive Directors subject to the agreement of a contributions are translated at market rates of exchange effective on the qualified majority of the contributors to the Special Fund. The resources of dates of disbursement. the Special Fund are kept separate from the resources of IDA. African Facility: On May 21, 1985, IDA established the Special Facility for Development Credits Sub-Saharan Africa (the African Facility) constituted by funds to be All development credits are made to member governments or to the contributed by the International Bank for Reconstruction and Development government of a territory of a member except for development credits which (IBRD) and other donors to provide financing for countries of the have been made to regional development banks for the benefit of members Sub-Saharan region The African Facility is administered by IDA. The or territories of members of IDA) It is IDA's policy to place in nonaccrual resources of the African Facilty are kept separate from the resources of IDA status all development credits made to a member government or to the government of a territory of a member if principal or charges with respect Translation of Currencies to any such credit are overdue by more than six months, unless IDA management determines that the overdue amount will be collected in the IDA: IDA is an international organization which conducts its operations in immediate future. Charges on nonaccruing credits are included in income the currencies of all of its members and Switzerland Assets and liabilities only to the extent that payments have actually been received by IDA. IDA has are translated at market rates of exchange at the end of the accounting not suffered any losses on development credit receivables and has period Income is generally translated at an average of the market rates of established no provision for credit losses because no losses are anticipated exchange in effect during each month Subscriptions and contributions are IDA: The repayment obligations of IDA's development credits funded from translated in the manner described below Translation adjustments relating resources through the fifth replenishment are expressed in fhe development to the revaluation of development credits denominated in Special Drawing credit agreements in terms of 1960 dollars Pending resolution of the Rights (SDRs) are charged or credited to Cumu ative Translation Adiust- valuation issue, as an iterim measure, payments were accepted at the rate ments on Disbursed and Outstanding Development Credits. Other transla- of $1 20635 per 1960 dollar. On June 30, 1987, the Executive Directors tion adjustments are charged or credited to the Accumulated (Deficit) decided to value such credits at that rate on a permanent basis Development Surplus credits funded from resources provided under the sixth replenishment and Special Fund and African Facility: Assets of the Special Fund and the thereafter are denominated in SDRs, the principal amounts disbursed under African Facility are translated at market rates of exchange at the end of the such credits are to be repaid in amounts equivalent to the value in terms of period Contributions are translated in the manner described below SDRs of currencies disbursed Special Fund: Special Fund credits are denominated in SDRs The principal Valuation of Subscriptions and Contributions amounts disbursed under such credits are to be repaid in amounts equivalent to the value in terms of SDRs of currencies disbursed IDA: The subscriptions and contributions provided through the third Special Fund credits are made on the same terms as regular IDA credits replenishment are expressed in terms of US dollars of the weight and except that the proceeds of Speciel Fund credits may ho used only ol finance fineness in effect on January 1, 1960' (1960 dollars). Following the expernditures for goods or services from Ia) Part s1 members of IDA: tb) Part abolition of gold as a common denominator of the monetary system and the xmembers contributing to the Special Fund, and P ca Pat I embers repeal of the provision of the United States law defining the par value of the contributing to the regular resources of IDA through IDAs FY84 Account US dollar in terms of gold, the preexisting basis for translating 1960 dollars who have notified IDA that such contributions are to be treated in the same into current dollars or any other currency disappeared On June 30, 1987. mave at contributions to be treat an th e the Executive Directors of IDA decided, with effect on that date and until manner as contributions to the Specal Fund for purposes of any future such time as the relevant provisions of the Articles of Agreement are adtustment of tne votng rghts of fhe members of IDA amended, to interpret the words United States dollars of the weight and African Facility African Facility credits are denominated in SDRs The fineness in effect on January 1, 1960 in Artic e II, Section 2(b) of the principal amounts disbursed under such credits are to be repaid in amounts Articles of Agreement of IDA to mean the Special Drawing Right 1SDR) equivalent to the value in terms of SDRs of currencies disbursed introduced by the International Monetary Fund, as the SDO was valued in African Facility credits am made to member countries of IDA in Sub-Saharan terms of United States dollars immediately before the introduction of the Africa which are eligible for deveiopmert credits of IDA and have undertaken basket method of valuing the SDO on July 1, 1974, such value being equal or are committed to undertake medium-term programs of policy reform and to $1 20635 for one SDR (the 1974 SDR), and also decided to apply the stabilizafion measures acceptable to IDA Proceeds of African Facilty credits came standard of value to amounts expressed in 1960 doilars in the relevant equivalent to the amount contributed by the IBRD are used in the same resolutions of the Board of Governors manner as the regular resources of IDA The remaining proceeds are used The subscriptions and contributions provided through the third replenish- only to finance expenditures for goods produced or services supplied from ment are expressed on the basis of the 1974 SDR Prior to the decision of (a) Part II members of IDA, (b) Part I members contributing to the African the Executive Directors, IDA had valued these subscriptions and contribu- Facility: and (c) countries which maintain special joint financing arrange- tions on the basis of the SOR at the current market value of the SDR ments with IDA Notes to Financial Stotements 217 Investments June 30,1989 Investment securities are recorded at cost of amortized cost which US$ thousands approximates market. Gains or losses on sales of investments, measured by the difference between proceeds of sales and cost (on a last-in, first-out Principal Principal Income Nonaccrual basis), are recorded as an element of income from investments Borrower outstanding overdue effect since Afghanistan . $ 79,207 $ 26 $ 346 June 1989 Reclassiflcations Honduras 79,169 569 539 April 1989 Liberia 97,597 588 616 April 1988 Certain reclassifications of prior year information have been made to Nicaragua. . . 59,697 1,643 443 April 1988 conform with the current year's presentation. Sierra Leone 75,228 743 521 April 1988 Syrian Arab Republic 45,466 2,055 341 April 1988 Note A-Cash Not Immediately Available for Zambia . ... 240,226 167 1,146 April 1988 Disbursement $676,590 $5,791 $3,952 Under the Articles of Agreement and the arrangements governing replen- ishments, IDA must take appropriate steps to ensure that, over a reasonable Note D-Contribution by Switzerland period of time, the resources provided by donors for lending by IDA are used on an approximately pro rata basis Donors sometimes contribute cash IDA has received grant contributions in the amount of Swiss francs substantially ahead of their pro rata share. Unless otherwise agreed, IDA 181,480,000 from the Swiss Confederation which is not a member of IDA. does not disburse these funds ahead of donors' pro rota shares Cash Not The agreements between the Confederation and IDA provide for converting Immediately Available for Disbursement represents the difference between these grant contributions into subscriptions or contributions if Switzerland the cash contributed and the amount available for disbursements on a pro should become a member of IDA rata basis Note E-Subscr3ptions and Contributions Note B-Restricted Assets and Subscriptions Maintenance of Value Article IV, Section 2(a) and (b) of IDA's Articles of For the purposes of its financial resources, the membership of IDA IS Agreement provides for maintenance of value payments on account of the divided into two categories. (1) Part I members. which nake payments of local currency portion of the initial subscription whenever the par value of subscr ptions and contrbutions provided to IDA in convertible currencies the member's currency or its foreign exchange value has, in the opinion of whic may be freely used or exchanged by IDA in its operations: (2) Part II IDA, depreciated or appreciated to a significant extent within the members' members, wnich make payments of 10% of their initial subscriptions in territories so long as and to the extent that such currency shall not have freely convertible currencies and the remaining 90%0 of their initial been initially disbursed or exchanged for the currency of another member. subscriptions, and all additional subscriptions and cortributions in their The provisions of Article IV, Section 2(a) and (b) have by agreement been own currencies or in freely convertible currencies IDA's Articles of extended to cover additional subscriptions and contributions of IDA through Agreement and subsequent replenishment agreements provide that the the third replenishment but are not applicable to those of the tourth and currency of any Part 11 member paid in by it may not be used by IDA for subsequent replenishments protects financed by IDA and located outside the territories of the member except by agreement between the member and IDA The Executive Directors decided on June 30, 1987, that setiement of maintenance of value obligations, which would result from the resolution of the valuation issue on the basis of the 1974 SDR, would be deferred until Note C-Development Credits the Executive Directors decide to resume such sehlements Speciai Fund and African Facility Development Credits Outstandng ale Eighth Replenishment. On June 26, 1987, the Board of Governors of IDA included in the Statements of Condition of IDA since principal repayments adopted a resolution authorizing the eighth replenishment of IDA's re- on these credits shall become part of the general resources of IDA, unless sources. The amount of replenishment, including supplementary contribu- otherwise provided in a decision of IDA's Executive Directors to terminate tions provided by certain members and a grant from Switzerland, is administration of the Special Fund and/or African Facility by IDA equivalent to approximately $12 4 billion (at the exchange rates determined pursuant to a formula agreed among the contributing members) The eighth At June 30, 1989, no development credits, other than those referred to replenishment, which became effective on March 4, 1988 is providing IDA below were overdue by more than three months with resources to fund credits committed during the period July 1. 1987 to At June 30. 1989, the development credits made to or guaranteed by certain June 30, 1990 As of June 30, 1989, 32 contributing members (including 21 member countries with an aggregate principal balance outstanding of Part I members) have notified IDA that they will contribute the equivalent ox $676,590,000 ($528,859,000-1988) of which $5,791,000 $3.414.000- approximately $12.9 billion, at current rates of exchange, to the eighth 1988) was overdue, were in nonaccrual status If these credits had not been replenishment Payment of eighth replenishment subscriptions and contri- n nonaccrual status, income from credits for the fiscal year would have been butions is due in three equal annual installments, unless IDA agrees to a $3,952 000 ($8.981,000-1988) higher This nonaccrual policy went into different schedule effect n Apn 1988 A summary of borrowers in nonaccrual status follows' (continued) 218 IDA, Special Fund, and African Facility Financial Statements Notes to Financial Statements (continued) June 30, 1989 and June 30, 1988 For purposes of credit commitments by IDA. all contributions to the eighth Note F-Transters from The International Bank replenishment are divided into three equal annual tranches. The first and for Reconstruction and Development (IBRD) second tranches became available for commitment as of the effective date of the replenishment (except to the extent already available in the form of IDA The IBRD has authorized transfers by way of grants to IDA totaling advance contributions)and as of November30, 1988, respectively. The third $2510706,000 ($2,567,371,000-1988) from net income of the IBRD for tranche will become available for commitment by IDA for credits as of the fiscal years ended June 30, 1964 through June 30, 1987. Of the total November 1. 1989, unless a contributing member authorizes IDA to use amount, $79,905,000 ($79,905,000-1988) has been disbursed for grants such amounts earlier. Contributions may not be released in their entirety by for agricultural research, the control of onchocerciasis, and other develop- other contributing members it any contributing member with a share in the mental activities Of the balance of $2,430,801,000 ($2.487,466,000- replenishment of more than 20% which has deposited with IDA a Qualified 1988) available for general purposes of IDA, $1714,175,000 Instrument of Commitment has not deposited notifications of unqualifed ($1,714,175,000-1988) has been received and $716,626,000 commitments for the third tranche of its contnibution by October 31, 1989. ($773,291,000-1988) is reflected as a receivable from the IBRD. In this situation, other contributing members have the right to reduce their Atrican Facility: The IBRD authorized a transter to the African Facility of third tranche on a pro rata basis $150,000,000 Ftrom net income of the IBRD for the fiscal year ended Ninth Replenishment: Currently, negotiations are under way among IDA's June 30. 1985 These funds were paid to the African Facility in the fiscal donor members for the ninth replenishment of IDA's resources, which will year ended June 30, 1989 provide resources to IDA for the period from July 1, 1990 through June 30, 1993. Note G-Income and Expenses Subscriptions and Contributions Not Yet Due: At June 30, 1989 and IDA IDA pays a management fee to the IBRD representing its share of the 1988, the composition of unrestricted subscriptions and contributions administrative expenses incurred by the IBRD During fiscal year 1987 the (expressed in thousands of US dollars) not yet due will become due as IBR0 announced a reorganization to improve its efficiency and effectiveness follows. IDAs original share of accrued reorganization costs was included in its management fee to IBRD in fiscal year 1987. In September 1987 the cost Fiscal years 1989 1988 estimate of the reorganization was revised, and IDAs share was in- creased.The portion of the increase which related to IDA of $12,400,000 is IOA included in Management Fee in the accompanying Statements of Changes 1989 . $ -- $2,785,778 in Liquid Funds for the period ended June 30, 1988 1990. 2 833 802 2,786'984 1991 . .. . . . 646 457 - Special Fund and African Facility: The service and commitment charges 1992 . 93 438 - payable by borrowers under Special Fund and African Facility credits are Undetermined . . 1.017,282 2,011.115 paid directly to IDA to compensate it tor services as administrator of the Total $4 590 979 $7 583 877 Special Fund and the African Facility Income from investments of the Total $4,590,979 $7,583,877 Special Fund and the African Facility becomes part of the resources of the Special Fund and the African Facility, respectively Report of Independent Accountants 219 Report of Independent Accountants 1801 K Street. NW. Telephone 202 833 7932 Washington, DC 20006 Price "laterhouse 0 July 26. 1989 President and Board of Governors, International Development Association, Special Fund Administered by the International Development Association, and the Special Facility for Sub-Saharan Africa Administered by the International Development Association In our opinion, the financial statements appearing on pages 204 through 218 of this Report present fairly, in all material respects, in terms of United States dollars, the financial position of the International Development Association, Special Fund Administered by the International Development Association, and the Special Facility for Sub-Saharan Africa Administered by the International Development Association at June 30, 1989 and 1988, and the changes in their commitment resources and their liquid funds for the years then ended in conformity with generally accepted accounting principles in the United States and International Accounting Standards. These financial statements are the responsibility of management: our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. D \ /s IBRD/IDA Appendices 221 IBRD/IDA Appendices 1 Governors and Alternates of the World Bank 222 2 Executive Directors and Alternates of the World Bank and Their Voting Power 225 3 Officers and Department Directors of the World Bank 227 4 Offices of the World Bank 229 222 IBRD!IDA Appendices Governors and Alternates Appendix 1 of the World Bank June 30, 1989 Member Governor A ternate Afghanistan ......................... Hamidullah Tarzi .Zalmai Ahmadi Algeria .......................... Sid Ahmed Ghozali .Mokdad Sifi Antigua and Barbuda'. .... John E. St. Luce .Ludolph Brown Argentina .......................... Jesus Rodriguez .Enrique Garcia Vazquez Australia .......................... P. J. Keating .Bob Dun Austria .......................... Ferdinand Lacina.d .Lac m Othmar Haushoter Bahamas, The' .............. ........ Sir Lynden O. Pindling. Ethelyn C. Isaacs Bahraina .... ................... Ibrahim Abdul Karim .Isa Abdulla Borshaid Bangladesh ......................... A. K. Khandker .Enam Ahmed Chaudhury Barbadosa .......................... L. Erskine Sandi frd .Winston A. Cox Belgium .......................... Philippe Maystadt .Jean Godeaux Belize ........................... Dean Barrow .Yvonne S. Hyde Benin .......................... Simon Itede Ogouma .Saliou Aboudou Bhutan .......................... Daw a Tsering .Karma Dorjee Bolivia .......................... Fernando Romero .Jacques Trigo Botswanat. s w a na.............. . P. S. Mmusi .Baledzi Gaolathe Brazil .......................... Mailson Ferreira da Nobrega .Elmo de Araujo Camoes Burkina Faso ....................... Pascal Zagre .Henri Bruno Bessin Burundi .......................... Gerard Niyibigira .Salvator Nkeshimana Cameroon .......................... Elizabeth Tankeu .Simon Ngann Yonn Canada .......................... Michael H. Wilson .Margaret Catley-Carlson Cape Verde ........................ Arnaldo C. de Vasconcelos Franca .. Antonio Hilario Cruz Central African Republic ................ Thierry Bingaba .Robert Amedi Chad .......................... Mahamat Soumaila. Ahmed Kerim Togoi Chile .......................... Enrique Seguel Morel .Pablo Ihnen de la Fuente China .......................... Wang Bingqian .Chi Ha bin Colombia ......................... . Luis F. Alarc6n-Mantilla .Francisco J. Orega Comoros.Miro s . . Mikidache Abdourahim .Tadiiddine Ben Said Massond Congo, People's Republic of the ...... .... Dieudonne Diabatantou .Andre Batanga Costa Rica .......................... Fernando E. Naranjo .Eduardo Lizano Fait C6te d'lvoire ........................ Abdoulaye Kon .Leon Naka Cyprus .......................... George Syrimis .Michael Erotokritos Denmark ........................... Uffe Ellemann-Jensen. Ole Loensmann Poulsen Djibouti ........................... Mohamed Djama Elabe .Ahmed Samireh Omar Dominica .......................... Mary Eugenia Charles .Alick B. Lazare Dominican Republic ............ ....... Roberto B. Saladin Selin .Manuel E. Gomez Pieterz Ecuador .......................... Jorge Gallardo Zavala .Edison Ortiz Duran Egypt, Arab Republic of ......... ....... Kamal El-Ganzoury .Maurice Makram-Allah El Salvador ....................... . Remo Bardi Cevallos .Mauricio Antonio Gallardo Equatorial Guinea ........... ......... Antonio Fernando Nve Ngu .Juan Efua Efua Asangono Ethiopiah................. Wollie Chekol. .C heko Seyoum Alemayehu Fiji ........................ .. J. N. Kamikamica .Rigamoto Taito Finland .......................... Erkki Liikanen. Osmo Sarmavuori France .......................... Jacques de Larosie re .Jean-C aude Trichet Gabon .......................... Pascal Nze .Jean-FP1ix Mamalepot Gambia, The ........................ Saihou S. Sabally .Mamour M. Jagne Germany, Federal Republic of ............ Juergen Warnke .Hans Tietmeyer Ghana .......................... Kwesi Botchwey . . ..... . . .. Kwesi Bekoe Amissah-Arthur Greece .......................... Panagiotis Roumeliotis .Roumeliotis Yannis Papantoniou Grenada .......................... Herbert Augustus Blaize .Lauriston F. Wilson. Jr. Guatemala .......................... Rodolfo Paiz Andrade. Oscar Pineda Robles Guinea .......................... Edouard Benjamin .Kerfalla Yansane Appendix 1 223 Member Governor Alternate Guinea-Bissau ....................... Pedro A. Godinho G6mes ....... Jose Lima Barber Guyana ........................... Cart Greenidge ................. Winston Murray Haiti ........................... L eonce F. Thelusma .............. Jacques Vilgrain Honduras ............. ............. Carlos Falck Contreras ............ Gonzalo Carias Pineda Hungary ........................... Imre Tarafas .................... Tibor Melega Iceland ........................... Jon Sigurdsson ......... ....... Olafur R. Grimsson India ........................... S. B. Chavan ................... G. K. Arora Indonesia ........................... J. B. Sumarlin ..... . ..... Hasudungan Tampubolon Iran, Islamic Republic of ......... ....... Mohammad Javad Iravani .......... Ali Majedi Iraq . ............... Hikmat Omar Al-Hadithi .... ...... Subhi Frankool Ireland .......................... Albert Reynolds ................. Sean P. Cromien Israel ........................... Michael Bruno ................. Yaacov Lifshitz Italy ........................... Carlo Azeglio Ciampi ............. Mario Sarcinelli Jamaicaa' ... ...................... Seymour Mullings ... Harold W. Milner Japan ........................... Tatsuo Murayama ............... Satoshi Sumita Jordan ........................... Taher H. Kanaan ................ Mohammad H. Al-Saqqaf Kampuchea, Democratic ................ (vacant) .................. ... (vacant) Kenya ........................... George Saitoti .................. Charles S. Mbindyo Kiribati ........................... Teatao Teannaki ................ Baraniko Baaro Korea, Republic of .. ................... Kyu Sung Lee ................. Kun Kim Kuwait ........................... Jassim Mohamed Al-Kharafi ........ Bader Meshari Al-Humaidhi Lao People's Democratic Republic ......... Sisavath Sisane ................. Soulingong Nhouyvanisvong Lebanon .... : Habib Abou-Sakr ............... Raja Himadeh Lesotho .......................... Michael M. Sefali .............. Tom Liphapang Tuoane Liberia .......................... Elijah E. Taylor ................. G. Pewu Subah Libya ........................ .. Mohamed El Madni Al-Bukhari ...... Bashir Ali Khallat Luxembourg ............ ............ Jacques Santer ..... ...... Raymond Kirsch Madagascar ................ ........ Pascal Rakotomavo ............... Jean Robiarivony Malawi .......................... L. Chimango .............. .... C. D. Nthenda Malaysia ........................... Daim Zainuddin ................. Zain Azraai Maldives .......................... Fathulia Jameel ................. Khadeeja Hassan Mali .......................... Anthioumane N'Diaye ............. Oumar Kassongue Maltaa .. .......................... George Bonello Du Puis ........... Edgar Wadge Mauritania ................ ......... Mohamed Ould Nany ............. Mohamedou Ouid Michel Mauritius .......................... Beergoonath Ghurburrun ........... Madnukarlall Baguant Mexico ......... ........ ..... Pedro Aspe ............ ....... Jose Angel Gurria Morocco ........................... Mohamed Berrada ............... Mustapha Faris Mozambique ........................ Abdul Magid Osman .............. Eneas da Conceigao Comiche Myanmarl ... D. 0. Abel ............. . Min Aung Nepal .......................... Bharat Bahadur Pradhan ........... Lok Bahadur Shrestha Netherlands ......................... H. 0. Ruding ............ ...... P. Bukman New Zealand .............. ......... Graham C. Scott ................ Chris N. Pinfield Nicaragua .......................... Joaquin Cuadra Chamorro ........ Pedro Antonio Blandfn Lanzas Niger .................... ...... Yahaya Tounkara ................ Ali Sabo Nigeria .......................... Chu S. P. Okongwu .............. Aliyu Mohammed Norway .......................... Gunnar Berge ........... ....... Arne Arnesen Oman .......................... Qais Abdul-Munim Al-Zawawi ....... Mohammed Bin Musa Al-Yousef Pakistan .......................... V. A. Jafarey ................... Izharul Haque Panama .......................... Gustavo R. Gonzalez J ............ Orville K. Goodin Papua New Guinea .................... Paul Pora ..................... Morea Vele (continued) 224 IBRD/IDA Appendices Governors and Alternates Appendix 1 of the World Bank (continued) June 30, 1989 Member Governor A ternate Paraguay .......................... Enzo Debernardi .Oscar Jacinto Obelar Peru ..... .................... Cesar Vasquez Bazan .Pedro Coronado Labo Philippines ......................... . Vicente R. Jayme .Solita C. Monsod Poland ........................... Zdzislaw Pakula .Grzegorz Wojtowicz Portugala . . . .... ..... ........ . Miguel Cadihe .(vacant) Qatara ........................... Abdul Aziz Khalifa Al-Thani Madhat Abdul Latif Masoud Romaniaa. Ion Patan. Gheorghe Popescu Rwanda ........................... Benoit Ntigulirwa .Emmanuel Ndahimana St. Kitts and Nevis .................... Kennedy A. Simmonds .William V. Herbert St. Lucia ........................... John G. M. Compton .Dwight Venner St. Vincent and the Grenadines ...... ..... James F. Mitchel .Henry A. Gaynes Sao Tome and Principe .... Agapito Mendes Dias .Manuel de Nazareh Mendes Saudi Arabia ........................ Mohammad Abalkhail .Hamad Al-Sayari Senegal ........................... Djibo Laity Ka .Youssouf Diop Seychellesa ......................... Danielle de St. Jorre .Bertrand Rassool Sierra Leone ........................ Hassan G. Kanu .A. M. Doherty Singapore'. .... Richard Hu Tsu Tau .T a Lee Ek Tieng Solomon Islands ..................... Christopher C Abe .Leonard Palmer Maenu'u Somalia ........................... Mo hamed Sheikh Osman .Abdulkadir Aden Mohamud South Africa ......................... G. P. C. de Kock .J. A. Lombard Spain ........................... Carlos Soichaga .Mariano Rubio Jimenez Sri Lanka .......................... D. B. Wijetunge .R. Paskaralingam Sudan ..............in.......... . Omer Nour E ldaim .El Sayid Ali Zaki Suriname' ....................... . . Subhas Ch. Mungra .R. W. Braam Swaziland .......................... Andreas Fakudze .Noreen N. Maphalala Sweden ........................... Kjell-Olof Feldt .Lena Hjelm-Wallen Syrian Arab Republic ................ . Mohammed Khaled Mahayni .Marwan Kodsi Tanzania ........................... Cleopa D. Msuya .Simon Mbilinyi Thailand ................ .......... Pramual Sabhavasu .Panas Simasathien Togo ....................... .... Barry Moussa Barque .Kwassi Klutse Tonga ........................... James Cecil Cocker .Selwyn Percy Jones Trinidad and Tobago ................... Selby W ilson .Wiliam Demas Tunisia ........................... Mohamed Ghannouchi .Zein Mestiri Turkey ........................... Namik Kemal Kilic .Mabi Egilmez Uganda ........................... Joshua Mayanja Nkangi .Suleiman Kiggundu United Arab Emirates .......... ....... Hamdan bin Rashid Al Maktoum Ahmed Humaid Al-Tayer United Kingdom ..................... . Robin Leigh-Pemberton .John Cainesc United States ........................ Nicholas F. Brady .Richard T. McCormack Utuguaya ........................... Ricardo Zerbino Cavajani .Ariel Davtieux Vanuatu ........................... Sela Molisa .George Pakoa Venezuelaa ........... ...... .... Miguel Rodriguez .Eduardo Quintero Viet Nama. .................. . Cao Si Kiem .(vacant) Western Samoa ...................... Tuilaepa S. Malielegai .Kolone Va'ai Yemen Arab Re public .................. Mohammed Saeed A-Attar . Kaid Mohammed Al-Hirwi Yemen, People's Democratic Republic of ... . Farag Bin Ghanem .Abdulla Saeed Abaddan Yugoslavia ..... ............ ....... Branimir Zekan .Boris Skapin Zaire ........................... Katanga Mukumadi ya Mutumba Mbonga Magalu Engwanda Zambia ...................... Gibson G. Chigaga .Leonard Nkhata Zimbabwe .... ..................... B. T. G. Chidzero. K. J. Moyana a. Member of the IBRD only b. Formerly Burma c. Succeeded by Timothy Lankester July 1, 1989 Appendix 2 225 Executive Directors and Alternates Appendix 2 of the World Bank and Their Voting Power June 30, 1989 IBRD IDA Total % of Total % of Executive director Alternate Casting votes of votes total votes total Appointed E. Patrick Coady ............ Mark T. Cox, IV ....... United States .... .............. 162,773 16.47 1,124,213 17.47 Masaki Shiratori ........ Yukio Yoshimura ...... Japan ....................... 94,020 9.51 601,204 9.34 Gerhard Boehmer ........ Michael von Harpe ... Federal Republic of Germany ........ 72,649 7.35 446,547 6.94 Frank Cassell ........ J. A. L. Faint ......... United Kingdom ................. 69,647 7.05 375,488 5.84 Helene Ploix ........ Stephane Pallez ....... France ....................... 47,477 4.80 247,446 3.85 Elected Jacques de Groote ......... Bahar Sahin ..... Austria, Belgium, Hungary, (Belgium) (Turkey) Luxembourg, Turkey .49,800 5 04 225,284 3.50 Frank Potter . Clarence Ells . .... Antigua and Barbuda', The Bahamas', (Canada) (Guyana) Barbados', Belize, Canada, Dominica. Grenada, Guyana, Ireland, Jamaicaa, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines . 41,872 4.24 280,315 4.36 Jonas H. Haralz ....... Veikko Kantola....... Denmark, Finland, Iceland, Norway, (Iceland) (Finland) Sweden .40,025 4.05 307,855 4.78 Mario Draghi ....... Rodrigo M. Guimaraes . Greece. Italy, Maltaa, Poland, Portugal'. 39.520 4.00 362,048 5.63 (Italy) (Portugal) Jorge Pinto .... Francisco Vannini5 ... Costa Rica, El Salvador, Guatemala, (Mexico) (Nicaragua) Honduras, Mexico, Nicaragua, Panama, Spain, Venezuela .37,071 3.75 176.944 2.75 Chang-Yuel Lim. ....... Robert G. Carling . ... Australia, Kiribati, Korea (Republic of), (Republic of Korea) (Australia) New Zealand, Papua New Guinea, Solomon Islands, Vanuatu, Western Samoa .35,468 3.59 158,521 2.46 Paul Ariman. .. .. Cvitan Dujmovi6 . . Cyprus. Israel, Netherlands, Romanial, (Netherlands) (Yugoslavia) Yugoslavia .31,293 3.17 203,111 3.16 C. R. Krishnaswamy Rao Sahib. . M. Mustafizur Rahman. . Bangladesh, Bhutan, India, (India) (Bangladesh) Sri Lanka. 31,275 3.16 275,860 429 Fawzi Hamad Al-Sultan ....... Mohamed W. Hosny . . Bahrain', Egypt (Arab Republic of), (Kuwait) (Arab Repubic of Iraq, Jordan, Kuwait, Lebanon, Egypt) Maldives, Oman, Pakistan, Qatara, Syrian Arab Republic, United Arab Emirates. Yemen Arab Republic . 30,908 3.13 248,879 3.87 Mourad Benachenhou ......... Salem Mohamed Omeisn Afghanistan, Algeria, Goana, Iran (Algeria) (Libya) (Islamic Republic of), Libya, Morocco, Tunisia, Yemen (People's Democratic Republic of) .30,469 3.08 119,607 1.86 (continued) 226 IBRD/IDA Appendices Executive Directors and Alternates Appendix 2 of the World Bank and Their Voting Power (continued) June 30, 1989 IsRD IDA Total % of Total % of Executive director Alternate CasUng votes ot votes total votes total Eduardo Wiesner. ........ Pedro Sampaio Ma(an Brazil, Colombia, Dominican Republic, (Colombia) (Brazil) Ecuador, Haiti, Philippines, Surinamea. Trinidad and Tobago .............. 26,724 2.70 204,110 3.17 J. S. A. Funna ... ... Jabez A. Langley ...... Botswana, Burundi, Ethiopia, The (Sierra Leone) (The Gambia) Gambia, Guinea, Kenya, Lesotho, Liberia, Malawi, Mozambique, Nigeria, Seychelles', Sierra Leone, Sudan, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe ... 25,623 2.59 215,455 3.35 Zhang Junyi ................ Jin Liqun ....... ... China ...... 25,392 2.57 128,133 1.99 (China) (China) Jobarah E. Suraisry ............ Abdulaziz Al-Sehail .... Saudi Arabia .. 25,390 2.57 203,813 3.17 (Saudi Arabia) (Saudi Arabia) Raymundo Morales ............ Felix Alberto Camarasa. Argentina, Bolivia, Chile, Paraguay, (Peru) (Argentina) Peru, Uruguaya .................. 24,745 2.50 137,391 2.14 Mohd. Ramli Wajib ...... Le Van Chau .Fiji, Indonesia, Lao People's (Malaysia) (Viet Nam) Democractic Republic, Malaysia, Myanmarc, Nepal. Singaporea, Thailand, Tonga, Viet Nam ................. 24.324 2.46 194,015 3.02 Andre Milongo ......... ... Jean-Pierre Le Bouder . . Benin, Burkina Faso, Cameroon, Cape (People's Republic (Central African Verde, Central African Republic, Chad, of the Congo) Republic) Comoros, Congo (People's Republic of the), Cote d'lvoire, Djibouti, Equatorial Guinea, Gabon, Guinea-Bissau, Madagascar, Mali, Mauritania, Mauritius, Niger, Rwanda, Sao Tome and Principe, Senegal, Somalia, Togo, Zaire .21,843 2.21 197,741 3.07 In addition to the executive directors shown in the foregoing list, the following also served after October 31, 1988 Executive director End of period of service Executive director End of period ot service Mitsukazu Ishikawa ......... June 7, 1989 Murray A. Sherwin ......... May 31, 1989 (Japan) (New Zealand) Robert B. Keating .... .... May 18, 1989 (United States) NoTE: Democratc Kampuchea (464 votes in IBRD and 7,826 votes in IDA) and South Africa (7,805 votes in IBRD and 19,940 votes in IDA) did not participate in the 1988 reguiar election of executive directors a. Member of the 18RD only. b. Succeeded by Edgar Ayares (Costa R ca), July 1,1989. c Formerly Burma. Appendix 3 227 Officers and Department Directors Appendix 3 of the World Bank June 30, 1989 President .......................................................... Barber B. Conable* Senior Vice President, Policy, Planning, and Research .............................. W. David Hopper** Senior Vice President, Operations ............................................ Moeen A. Qureshi** Senior Vice President, Finance . ............................................. Ernest Stern** Senior Vice President, External Aftairs and Administration . .......................... Willi A. Wapenhans'* Finance Vice President and Controller ............................................... Sune B. Carlsson Vice President ard Treasurer .......................... Donald Roth Vice President, Financial Policy and Risk Management ............ .. ............... D. Joseph Wood Operations Vice President, Latin America and the Caribbean Regional Office ........ .. ............ S. Shahid Husain Vice President, Cotinancing and Financial Advisory Services .......... .. ............. Kunihiko Inakagea Vice President, Africa Regional Office ....................... Edward V. K. Jaycox Vice President, Asia Regional Office .....................t................... . Attila Karaosmanoglu Vice President, Europe, Middle East, and North Africa Regional Office ....... .......... Wilfried P. Thalwitz Policy, Planning, and Research Vice President, Development Economics and Chief Economist ......... .. ............. Stanley Fischer Vice President, Sector Policy and Research .................. ................... Visvanathan Rajagopalan Operations Evaluation Director-General, Operations Evaluation ........................................ Yves Rovani Legal Vice President and General Counsel ........................................ brahim F. I. Shihata** Secretary's Vice President and Secretary ............................................. Timothy T. Thahane** External Affairs and Administration Vice President, Personnel ............................................... William J. Cosgrove Finance Director, Cashier's Department ............................................... Hywel M. Davies Deputy Treasurer and Director, Treasury Operations .............................. . Stephen 0. Eccles Director, Financial Operations Department ................. ..................... Jessica P. Einhorn Director, Investment Department .............................................. Bernard J. Holland Director, Tokyo Office ..................................................... Akira lidab Director, Loan and Trust Fund Department ...................................... James H. Jennings Director, Resource Mobilization Department ..................................... Basil G. Kavalsky Director, Risk Management and Financial Policy Department ......................... D. C. Rao Operations Director, Cotinancing and Financial Advisory Services .............................. David R. Bock Director, Economic Advisory Staff ............................................ Vinod Dubey Director, Central Operations Department ........................................ Ducksoo Lee Director, Operations Staff .................................................. Heinz Vergin Africa Regional Office Director, Country Department ....................... ....... .............. M ichael J. Gillette Director, Country Department ........... .................................... Paul Isenman Director, Country Department, . . ....................................... Caio K. Koch-W eser Director, Country Departm ent ..... .......................................... Callisto E. Madavo Director, Country Department ............................................... Sven Sandstrom Director, Country Department .......................... M. Ismail Serageldin Director, Technical Department .............................................. Hans Wyss Asia Regional Office Director, Country Department ....................... ........................ Bilsel Alisbah Director, Country Department ................................................ Shinji Asanuma Director, Country Department .................................. ..... Shahid Javed Burki (continued) 228 IBRD/IDA Appendices Officers and Department Directors Appendix 3 of the WorloId Bank (continued) June 30, 1989 Director, Country Department ................................................ Russell J. Cheetham Director, Country Department ................................................ Gautam S. Kaji Director, Technical Department . . .................. ....... ................ Amnon Golan Europe, Middle East, and North Africa Regional Office Director, Country Department ...... . ........................................ Kemal Dervis Director, Country Department ................................................ Hans-Eberhard Kopp Director, Country Department ... .......... ................................. Eugenio F. Lari Director, Country Department .......................... ..................... Everardus J. Stoutjesdijk Director, Technical Department .............................................. Abderraouf Bouhaouala Latin America and the Caribbean Regional Office Director, Country Department ....... ..................... .................. Pieter P. Bottelier Director, Country Department ......... ...................................... Armeane M. Choksi Director, Country Department . .............................. ................ Ping-Cheung Loh Director, Country Department. .................. ............................ Rainer B. Steckhan Director, Technical Department .............................................. Everardo C. Wessels Policy, Planning, and Research Director, Internatonal Economics Department .......... .......................... Jean Baneth Director, Industry and Energy Department ....................................... Anthony A. Churchill Executive Secretary, Consultative Group on International Agricultural Research ......... ... Curtis Farrarc Director, Population and Human Resources Department ............................. Ann D. Hamilton Director, Country Economics Department ........... ............................ John A. Holsen Director, Agriculture and Rural Development ............ . ....................... Michel J. Petit Director, Planning and Budgeting Department ...................................... Robert Picciotto Director, Environment Department .. ................ ................... Kenneth Piddington Director, Infrastructure and Urban Development Department ....... ................. Louis Y. Pouliquen Director, Strategic Planning and Review Department ............................... Alexander Shakow Director, Economic Development Institute ....................................... Christopher R. Willoughby Operations Evaluation Director, Operations Evaluation Department ...................................... Ram Kumar Chopra Legal Associate General Counsel .................... ............................ Hugh N. Scott External Affairs and Administration Director, External AHairs Department ................................. ........ Francisco J. Aguirre-Sacasa Director, Personnel Operations Department ...................................... Alberto de Capitani Director, Publications ........... ......................................... James K. Feather Director, Personnel Policy Department ........................................ Ian M. Hume Director, Health Services Department .......................................... Dr. Michael H. K. Irwin Director, Information. Technology, and Facilities Department ......................... Harinder S. Kohli Director. European Office .................................................D. Olivier Latourcade Auditor General, Internal Auditing Department .................................... Alan Douglas Legg Director, General Services Department ...R............. ......... _ ....... Bichard B. Lynn Director of Information; and Chief, Media and Communications Division ........... ..... Frank R. Vogl Chairman, President's Council. Member, President's CouncP a. Succeeded by Koc Kashiwaya as of June 30, 1989. b Succeeded by Nobuaki Kemmochi as of June 30, 1989 c. Succeeded by Alexander von der Oster as of June 6. 1989 Appendix 4 229 Offices of the World Bank Appendix 4 June 30, 1989 Headquarters: 1818 H Street, N.W. d.r-,tirr D.C. 20433, U.S.A. New York Office G. David Loos The World Bank Mission to the Special Representative to the United Nations/New York OHice United Nations 747 Third Avenue (26th floor) New York, N.Y. 10017, U.S.A. European Office Olivier Latourcade The World Bank Director 66, avenue d'lena 75116 Paris, France Geneva Office Wolfgang E. Siebeck The World Bank World Bank Representative to ITC E.. . United Nations Organizations- 54, rue de Montbrillant Geneva Geneva, Switzerland (mailing address: P.O.Box 104 1211 Geneva 20 CIC, Switzerland) Tokyo Office Akira lidae The World Bank Director Kokusai Building (Room 916) 1-1 Marunouchi 3-chome Chiyoda-ku, Tokyo 100, Japan Regional Mission Peter Eigen The World Bank in Eastern Africa Director Reinsurance Plaza (5th and 6th floors) Taita Road Nairobi, Kenya (mailing address: P.O. Box 30577) Regional Mission Elkyn Chaparro The World Bank in Western Africa Chief Corner of Booker Washington & Jacques AKA Streets Cocody, Abidjan 01, Cote d'lvoire r, - l address: B.P. 1850) Regional Mission Philippe E. Annez The World Bank in Thailand Chief Udom Vidhya Building (5th floor) 956 Rama IV Road, Sala Daeng Bangkok 10500, Thailand Bangladesh Francis S. B. L. van Gigch Resident M ssion Chief The World Bank 3A Paribagh Dhaka 1000, Bangladesh (mailing address: G.P.O. Box 97) Benin Shigeo Katsu The World Bank Resident Representative Zone Residentielle de la Radio Cotonou, Benin (mailing address: B.P. 03-2112) Bolivia Fernando Mendoza Banco Mundial Resident Representative Edificio BISA, Piso 9 16 de Julio 1628 La Paz, Bo ivia (ma ling address. Casilla 8692) (coent mued) 230 IBRD/IDA Appendices Offices of the World Bank (continued) Appendix 4 June 30, 1989 Brazil George Papadopoulos Banco Mundial Resident Representative Setor Comercial Sul, Quadra 02 Edificio OK. No. 78 Quarto Andar Brasilia 70.300, Brazil Brazil George Papadopoulos Banco Mundial Resident Representative c/o Furnas Centrais Eletricas S.A. Rua Real Grandeza, 219 Bloco C, Nono Andar Rio de Janeiro, RJ 24000 Brazil Brazil Edward B. Rice Banco Mundial, S/127 Resident Representative Edificio SUDENE Cidade Universitaria 50,000 Recife PE. Brazil Burkina Faso Claude R. Delapierre The World Bank Resident Representative Immeuble BICIA (3eme 6tage) Ouagadougou, Burkina Faso (mailing address: B.P. 622) Burundi Maurice Gervais The World Bank Resident Representative 45, avenue de la Poste Bujumbura, Burundi (mailing address: B.P. 2637) Cameroon Raymond Rabeharisoa The World Bank Resident Representative Bastos Yaounde, Cameroon (mailing address: B.P. 1128) Central African Jean-Paul Dailly The World Bank Republic Resident Representative Rue des Missions Bangui. C.A.R. (mailing address: B.P. 819) Chad Horst Scheffold The World Bank Resident Representative P.O. Box 146 N'djamena, Chad China Edwin R. Lim The World Bank Chief Xiyuan Hotel Compound Building No. 3 (3rd floor) Erligou Xi Jiao Beijing. China (mailing address: P.O. Box 9509) Colombia P. Hari Prasad Banco Mundial Resident Representative Carrera 10, No. 86-21, Piso 3 Bogota D.E., Colombia (mailing address: Apartado Aereo 10229) Congo, People's Republic Mamadou Dia The World Bank of the Resident Representative Avenue Amilcar Cabral immeuble ARC (5erne etage) Brazzaville, Congo (mailing address: B.P. 14536) Appendix 4 231 Ethiopia Michael Paysonb The World Bank Resident Representative l.B.T.E. New Telecommunications Building (1st floor) Churchill Road Addis Ababa, Ethiopia (mailing address: P.O. Box 5515) Ghana Seung Hong Choi The World Bank Resident Representative 69 Eighth Avenue Extension Northridge Residential Area Accra, Ghana (mailing address: P.O. Box M27) Guinea Vacant Banque mondiale Cite des Nations, Villa 39 Conakry, Guinea T,j,I, address: B.P. 1420) Guinea-Bissau Yves J. Tencalla Banque mondiale Resident Representative Rue 7, Apt. 4 Bissau, Guinea-Bissau (mailing address: P.O. Box 78) India Jochen Kraske Resident Mission Chiet The World Bank 55 Lodi Estate New Delhi 3, India (mai ing address: P.O. Box 416) Indonesia Attila Sonmez The World Bank Director Jalan Rasuna Said, Kav. B-10 (Suite 301) Kuningan, Jakarta 12940. Indonesia (mailing address: P.O. Box 324/JKT) Madagascar Jose A. Brontman Banque mondiale Resident Representative 1, rue Patrice Lumumba Antananarivo 101, Madagascar (mailing address: Banque mondiale B P 4140) Malawi John M. Malone The World Bank Resident Representative Development House Li ongwe 3. Malawi (mailing address: P.O. Box 30557) Mali Monique P. Garrity The World Bank Resident Representative Immeub e CNAR Rue Square Lumumba Bamako, Mali (mailing address: B.P. 1864) Mauritania Sunil Mathrani The World Bank Resident Representative Vi la No. 30, ILOT A Quartier Socotim Nouakchott, Mauritania (mailing address: B.P. 667) (continued) 232 IBRD/IDA Appendices Offices of the World Bank (continued) Appendix 4 June 30, 1989 Mexico Marko Volic Banco Mundial Resident Representative Nacional Financiera, S.N.C. Isabel La Catolica No. 51 Primer Piso Colonia Centro 06006 Mexico City, D.F. Mexico Nepal Nigel Roberts The World Bank Resident Representative Jyoti Bhawan, Kantipath Kathmandu, Nepal (mailing address: P.O. Box 798) Niger Helmut Sanger The World Bank Resident Representative Immeuble BDRN Niamey, Niger (mailing address: Banque mondiale B.P. 12402) Nigeria Tariq Husain The World Bank Resident Representative Plot 1309A Karimu Kotun Street Victoria Island Lagos, Nigeria (mailing address: P.O. Box 127) Pakistan Luis de Azcarate The World Bank Chief House #36 Street 1, F6/3 Islamabad, Pakistan (mailing address: P.O. Box 1025) Philippines Rolando R. Arrivillaga The World Bank Resident Representative Centra Bank of the Philippines Multi-storey Building, Room 200 Roxas Boulevard Manila, Philippines Rwanda Melvin J. Loewen The World Bank Resident Representative Blvd. de la Revolution BRD Building Kigali, Rwanda (mai ing address: P.O. Box 609) Saudi Arabia Roger E. Rowec Resident Mission Director The World Bank Riyadh, Saudi Arabia (mailing address: P.O. Box 5900) Senegal Francois-Marie Patorn: The World Bank Resident Representative Immeuble S.D.I.H. 3 Place de l'lndependance Dakar, Senegal Somalia Brian H. Falconer' The World Bank Resident Representative Savoy Centre (2nc floor) Mogadishu, Soma ia (mailing address: P.O. Box 1825) Appendix 4 233 Sri Lanka Hari C. Aggarwat The World Bank Resident Representative Development Finance Corporation of Ceylon (DFOC) Build ng 1st Floor 73,15 Galle Road Colombo 3, Sri Lanka (mailing address: P.O. Box 1761) Sudan Abhay Deshpande The World Bank Resident Representative AAAID Building Block 9 East Khartoum, Sucan (mailing address: P.O. Box 2211) Tanzania Ian C. Porter The World Bank Resident Representative N. C. Building (7th floor. B) Dar es Salaam, Tanzania , address: P.O. Box 2054) Togo Emmanuel Mbi The World Bank Resident Representative 169, rue du 13 janvier Immeuble BTCI (8eme etage) Lome, Togo (mai ing address: B.P. 3915) Turkey James Chatfey The World Bank Resident Representative Ataturk Bulvari 211 Gama-Guris Building Kat 6 06683 Kalvaklidere Ankara, Turkey Uganda Grant Slade The World Bank Resident Representative P.O. Box 4463 Kampala, Uganda Zaire Jerome Chevallier The World Bank Resident Representative Building UZB Avenue des Aviateurs Kinshasa 1, Repub ic of Zaire (mailing address: P C. Box 14816) Zambia Uche G. Mbanefo The World Bank Resident Representative CMAZ Bui ding Ben Bella Road Lusaka, Zambia (mailing address: P.O. Box 35410) Zimbabwe Mahmud A. Burney The Wor d Bank Resident Representative CABS Centre (12th tloor) Stanley Avenue Harare. Zimbabwe (mailing address: P.C. Box 2960) a. Succeeded by Nobuaki Kemmochi as of June 30 1989. b Succeeded by T. James Goering as of July 1 1989. c Position vacant as ot July 7, 1989. d. Succeeded by Luciano Borin as ot Ju y 1, 1989 U The World Bank Headquarters 1818 H Street, N.W - Washington, D.C. 20433, U.S.A. Telephone: (202) 477-1234 Facsimile: (202) 477-6391 Telex: WUI 64145 WORLDBANK RCA 248423 WORLDBK Cable Address: INTBAFRAD WASHINGTON DC European Office 66, avenue d'Iena 75116 Paris, France Telephone (1) 40.69.30.00 Facsimile: (1) 47.20.19.66 Telex: 842-620628 Tokyo Office Kokusai Building 1-1, Marunouchi 3-chome Chiyoda-ku, Tokyo 100, Japan Telephone: (3) 214-5001 Facsimile: (3) 214-3657 Telex: 781-26838 [SSN 0252-2942 ISBN 0-8213-1300-2