SUNS  4329 Monday 23 November 1998



FINANCE: 20.5 BILLION DOLLARS PLEDGED TO IDA

Washington, Nov 19 (IPS) - The World Bank's soft-loan affiliate, the International Development Association (IDA), will have 20.5 billion dollars to disburse to 80 or more of the world's poorest countries from mid-1999 through mid-2002, the Bank said here Thursday.

Of the total amount, 11.6 billion dollars will be provided by 39 donor countries. The remainder will come mainly from repayments of earlier IDA credits and contributions from the World Bank itself.

As much as half of all the money is intended for sub-Saharan Africa, according to the Bank.

Donors stressed that IDA will offer loans only to countries which adopt Bank-approved policies, and those countries which are implementing policies deemed satisfactory by the Bank will receive a greater share of the funding.

The announcement was made in Copenhagen, the site of the last in a series of donors' meetings to decide on the terms of IDA's 12th Replenishment.

"At a time when the eyes of the world have been focusing on the global financial crisis, this agreement demonstrates that the international community has not forgotten the poorest countries that are not always in the headlines," said Sven Sandstreom, the Bank's Managing Director who chaired the IDA replenishment negotiations over the last nine months.

IDA has been replenished every three years since its creation in 1960 as the World Bank's arm which provides no-interest loans to poor countries with generous repayment terms. IDA loans carry a service charge, currently 0.75 percent per year.

The 80 countries which are IDA-eligible are those with per capita annual incomes of about 925 dollars. They represent some 3.3 billion people, all but 700 million of whom live in Asia, especially India and China.

Some 41 sub-Saharan African countries are also IDA clients, most them with per capita incomes of less than one US dollar a day.

In fiscal year 1998, which ended June 30, IDA's single biggest beneficiary was India, which received 2.1 billion dollars in new credits; followed by Pakistan (807 million dollars); Ethiopia (670
million dollars); Bangladesh (646 million dollars); and Vietnam (395 million dollars).

For the year, the agency lent 7.5 billion dollars for 135 projects, almost 20 percent of which was used to support policy reforms. In its announcement Thursday, the Bank stressed that lending for social-sector projects had increased substantially in FY 1998.

China received a total of 2.6 billion dollars in new loans from the World Bank group in FY 1998, of which only 293 million dollars of which were provided by IDA. IDA gradually has reduced its lending to Beijing as its per capita income has grown at one of the world's fastest rates during the past decade.

Donors stressed that IDA should make "special efforts" in sub-Saharan Africa where, despite economic reforms in most countries, foreign investment continues to lag and remains insufficient to sustain, let alone accelerate economic growth.

"IDA aims to provide 50 percent of IDA 12 resources to African countries that are committed to poverty reduction, economic reform, and sustainable, broad-based growth as long as the policy performance of individual countries justifies these allocations," said a Bank statement.

IDA lending to Africa came to about 2.9 billion dollars in FY 1998, less than 40 percent of total lending.

In addition, the statement called on IDA to concentrate its support on "priority social sector and environmental programmes" in several Asian countries, noting that the financial crisis in the region "has put at risk one of the most remarkable achievements in poverty reduction."

Indonesia, until last year the World Bank's star performer for poverty reduction, graduated from IDA in 1980. But the past year's economic collapse in what is the world's fourth most populist nation could return it to IDA eligibility. Bank officials have been discussing whether Jakarta, as well as some other hard-hit nations who were not IDA-eligible before the Asian financial crisis, may have recourse to the agency.

IDA 12 will begin Jun 30, 1999, with a clean slate. IDA 11's launch three years ago was clouded by the failure of the United States to fulfil its pledges to IDA's Tenth Replenishment. Washington cleared its last arrears to IDA just last month.

As in the past, the United States will be the largest single donor to IDA 12. The administration of President Bill Clinton pledged 2.49 billion dollars over the three-year period, or slightly over 800
million dollars a year. In real terms, its contribution will be slightly below its more recent commitments of 800 million dollars a year.

The U.S. contribution represents about 20.8 percent of the donor total. As in IDA 11, Japan will be the second largest donor with 19 percent of the total, followed by Germany at about 11 percent, and Britain and France at 7.3 percent each.

Developing countries which have also pledged contributions to IDA 12 include Argentina, Botswana, Brazil, South Korea, Kuwait, Mexico, Oman, Saudi Arabia, South Africa, and Venezuela.