Lending to Rise At World Bank

THE globe's largest lender of money to developing countries - the World Bank - plans to increase its lending modestly in coming months to help out East European borrowers. Loans in the current fiscal year, which started July 1, could go as high as $21 billion, up from $20.7 billion in fiscal 1990.

``We have the capacity to provide greater resources.... We can lend up to $21 billion a year,'' says Alexander Shakow, director of external relations for the bank. He says the bank could lend that amount annually through 1993, ``if the demands are there.'' The bank's current capital base is $171 billion; it was doubled during a general capital increase by member nations in 1988.

The World Bank, which released its annual report today, is composed of the International Bank for Reconstruction and Development (IBRD) and its affiliate, the International Development Association (IDA).

IBRD lending is geared toward countries at a more advanced stage of economic and social development. IBRD commitments alone for 1990 totalled $15.2 billion. The targeted number for 1991 is between $16 billion and $18 billion. ``If we were to exceed the $18 billion, that would be perfectly okay with us,'' Mr. Shakow says. ``We have room to grow.''

IDA commitments, assistance that concentrates on the very poor countries with an annual per capita gross domestic national product of $650 or less, totaled $5.5 billion in 1990. It is expected to remain at that level in 1991. ``Our resources there are limited,'' says a bank official.

The bank disburses a fraction of its total commitments in any given year, and it takes six to nine years to complete a typical loan.

Some loans, says Shakow, take longer than anticipated to disburse, ``especially given the prolonged negotiations for certain big loans.'' Packages for Argentina and Brazil, for example, where governments are expected to embark on tough economic reforms, take time to sort out.

Eight of the bank's borrowers are at least 180 days late on some payment: Guatemala, Liberia, Nicaragua, Panama, Peru, Sierra Leone, Syria, and Zambia Their arrearages amount to $3.1 billion out of a total $89 billion in outstanding loans.

The World Bank has a loan loss provision of $1.25 billion against the possibility of nonpayment of arrears and principal.

Finance ministers, central bank governors and commercial bankers will begin arriving in Washington late this week for the jointnual meeting of the World Bank and International Monetary Fund (IMF) Sept. 25-27.

A pressing issue will be the assistance these multilateral agencies might give to countries severely hurt economically by the current Gulf crisis. Last week the senior management of the bank assessed the situation of countries that have lost remittances from nationals leaving jobs in Kuwait or Iraq. These nations include Egypt, India, Pakistan, the Philippines, Sri Lanka, and Turkey.

Bank officials note that other developing countries reliant on oil imports also have been hit by the dramatic jump in oil prices. However, any immediate aid for countries hurt economically by the Gulf crisis should not undermine the bank's long-term efforts, they say.

Shakow says that some donors interested in assisting the ``crisis-impacted countries'' may try to use the World Bank as way to distribute aid. Japan, according to one bank official, might use the annual meetings as a vehicle for further assistance, on top of the $1 billion Tokyo has already pledged to Egypt, Jordan, and Turkey.

``This could catch all the Americans who are complaining about lack of Japanese help off guard,'' the official says.

New membership for Bulgaria, Czechoslovakia, and Namibia is expected to be ratified at the meetings. Shakow anticipates a $2.5 billion increase in IBRD loan commitments during 1991 due to the needs in Eastern Europe.

Membership of the Soviet Union is still distant, Shakow says. ``This will not happen in the next fiscal year.'' A 15-member Soviet delegation will have observer status at the meetings at the special invitation of the World Bank and the IMF.

You've read  of  free articles. Subscribe to continue.
QR Code to Lending to Rise At World Bank
Read this article in
QR Code to Subscription page
Start your subscription today