Public Disclosure Authorized

-- Asl932. Public Disclosure Authorized

J' -- \ > >~~~ ~~~~~~~~~~~~~~~~'I1

~~_- Public Disclosure Authorized

THE WORLD BAN:K ANNUAL REPORT 1991 Public Disclosure Authorized

THE WORLD BANK ANNUAL REPORT 1991

1J TThe World Bank IE! Washington, D.C. 20433 Photo Credits

Cover: Dacho Buranabunpot Page 86: Yosef Hadar/WorldBank Page 101: Herb Floyd Page III: UNDP Page 119: Edwin G. HuffmanlWorld Bank Page 127: Amy ZuckermanIUNDP Page 135: Jaime MartinlWorld Bank

Cover: An Aka girl washing her hands after coming back with her family from working in the fields near Chiang Rai in northern Thailand. It is an Aka traditionthat girls work in the fields. In the old days, opium was the main cash crop; more recently, with assistance provided by both the Thai royal family and the Bank, farmers have switched to corn, vege- tables, and flowers.

Cover design by Joyce C. Petruzzelli

ISSN 0252-2942 ISBN 0-8213-1830-6 3

The World Bank, the IFC, and MIGA

"The World Bank," as used in this Annual IDA's assistance, therefore, is concentrated on Report, refers to the International Bank for the very poor countries-those with an annual Reconstruction and Development (IBRD) and per capita gross national product of $580 or its affiliate, the International Development As- less (in 1989 dollars). More than forty countries sociation (IDA). The IBRD has two other are eligible under this criterion. affiliates, the International Finance Corpora- Membership in IDA is open to all members tion (IFC) and the Multilateral Investment of the IBRD, and 139 of them have joined to Guarantee Agency (MIGA). The Bank, the date. The funds used by IDA, called credits to IFC, and MIGA are sometimes referred to as distinguish them from IBRD loans, come the "World Bank Group." mostly in the form of subscriptions, general The common objective of these institutions replenishments from IDA's more industrial- is to help raise standards of living in developing ized and developed members, and transfers countries by channeling financial resources to from the net earnings of the IBRD. The terms them from developed countries. of IDA credits, which are made only to gov- The IBRD, established in 1945, is owned by ernments, are ten-year grace periods, thirty- the governments of 155 countries. The IBRD, five- or forty-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 141 countries. Legally and finan- fifteen to twenty years. 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, 1991, the con- considerations alone. vention establishing MIGA had been signed by The International Development Association 101 countries, of which seventy-six had also was established in 1960 to provide assistance 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, balance of payments than would IBRD loans. and port and power facilities, the centerpiece 4 The World Bank, the IFC, and MIGA

of its development strategy emphasizes invest- for women, strengthen population-planning, ments that can directly affect the well-being of health, and nutrition services, and develop the the masses of poor people of developing coun- private sector. The Bank's support of eco- tries by making them more productive and by nomic restructuring in many of its borrowing integrating them as active partners in the de- member countries is based on the knowledge velopment process. that the precondition for restoring economic The Bank's efforts to reduce poverty cut growth-the cornerstone of successful devel- across sectoral lines and include investments opment and poverty reduction-is structural to improve education, ensure environmental adjustment. sustainability, expand economic opportunities 5

Contents

Letter of Transmittal 10 Overview of World Bank Activities in Fiscal 1991 11 Section One. The Executive Board 17 Financial Policy Actions 17 Operations Evaluation; Project Implementation and Supervision 18 Operational Policy Actions 18 Administration 20 Development Committee 21 Committees of the Executive Board 21 The Joint Audit Committee 21 Committee on Personnel Policy Issues 22 Ad Hoc Committee on Criteria for Allocation of Shares of Bank Capital 22 Committee on Cost Effectiveness and Budget Practices 23 Committee on Directors' Administrative Matters 23 Ad Hoc Committee on Board Procedures 23 The Executive Directors' Steering Committee 24 Section Two. The Economic Scene: A Global Perspective 25 Major Industrial Countries 25 Low-income, Middle-income Countries 26 Debt, Investment, and Financial Flows 32 Primary-commodity Market Conditions 35 Trends in World Trade 36 The Environment 38 Section Three. The World Bank-Fiscal Year 1991 40 The Gulf Crisis and the Bank's Response 40 Eastern and Central Europe 42 The Special Program of Assistance for Sub-Saharan Africa 44 Strategies to Reduce Poverty 47 Analyzing country policy 48 Designing assistance strategies 49 Developing an information base 49 Implementing the strategy 49 Human-resource Development 52 Education 52 Women in development 55 Population, health, and nutrition 58 The Environment 59 Debt and Debt-service Reduction: A Review of Progress 64 Lower-middle-income countries with high levels of official debt 65 Severely indebted, low-income countries 66 Private-sector Development: Strengthening the World Bank Group's Effort 67 The business environment 67 6 Contents

Public-sector restructuring 68 Financial-sector development 68 Resource transfers and entrepreneurial development 68 Section Four. World Bank Finances 71 Financial Policy Actions 71 Loans 74 Disbursements 74 Lending rate 74 Declining interest-rate risk 74 Loans in nonaccrual status 74 Provisioning 74 Liquid-assets Investments 75 Resources 75 Borrowings 75 Capital 77 Reserves 77 Liability Management 77 Swaps 77 Deferred rate setting and anticipatory rate setting 77 IDA Finances 77 IDA commitment authority 77 IDA commitment fee 78 Cofinancing 78 Disbursements by Source of Supply 80 Section Five. World Bank Activities, IFC, MIGA, and ICSID 87 Operations Evaluation 87 Audits 87 Studies 87 Project analysis methodology 88 Application of findings 88 Help to developing countries 88 Other activities 88 Economic Development Institute 89 Research at the World Bank 91 Technical Assistance 93 Interagency Cooperation 95 Relations with nongovernmental organizations 96 Cooperation with the Organisation for Economic Co-operation and Development 98 Cooperation with the regional development banks 99 Cooperation with the International Monetary Fund 99 Cooperation on agricultural research 100 Personnel and Administration 102 Internal Auditing 104 International Finance Corporation 105 Multilateral Investment Guarantee Agency 106 Guarantee program 106 Policy and advisory services 107 Member relations 107 International Centre for Settlement of Investment Disputes 108 Section Six. 1991 Regional Perspectives 109 Africa 109 Subregional Perspectives 111 West Africa 111 Contents 7

Eastern and Central Africa 113 Southern Africa 113 Special Programs 114 Asia 117 Rapidly Industrializing Economies 117 China and India Show Mixed Results 119 Slower-growth Economies 120 Pacific Island Economies and the Maldives 122 Bank Operations and Strategy 123 Europe, Middle East, and North Africa 125 Performance in Pakistan and Turkey 125 Growth in the Maghreb Countries 127 Economic Developments in Four Middle Eastern Countries 128 Economic Developments in the Gulf Cooperation Council Countries 130 Economic Developments in Reforming Europe 130 World Bank Operations, Fiscal Year 1991 132 Latin America and the Caribbean 133 Pattern of Reform, 1983-91 134 Lessons Learned 136 Debt and Trade 137 Activities of the Bank, Fiscal 1991 139 Cooperation and Cofinancing 140 Section Seven. Summaries of Projects Approved for IBRD and IDA Assistance in Fiscal 1991 141 Financial Statements of the International Bank for Reconstruction and Development 187 Balance Sheets 188 Statements of Income 190 Statements of Changes in Retained Earnings 190 Statements of Changes in Cumulative Translation Adjustment 190 Statements of Cash Flows 191 Summary Statement of Loans 192 Summary Statements of Borrowings 195 Statement of Subscriptions to Capital Stock and Voting Power 197 Notes to Financial Statements 201 Report of Independent Accountants 206 Financial Statements of the International Development Association, the Special Fund Administered by IDA, and the Debt Reduction Facility for IDA-Only Countries Administered by IDA 207 Statements of Development Resources 208 Statements of Changes in Accumulated Surplus and Grants 209 Statements of Cash Flows 209 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 I 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 230 Index 235 Text Tables Operational and Financial Overview, Fiscal 1987-91 13 World Bank Adjustment Operations, Fiscal 1991 15 8 Contents

1-1 Aid Coordination Group Meetings Chaired by the World Bank in Fiscal 1991 20 2-1 G-7 Countries: Output, Inflation, Investment, and Unemployment, 1980-90 26 2-2 Current-account Balances of the G-7 Countries, 1983-90 28 2-3 Low- and Middle-income Economies: Growth of GDP and GDP Per Capita, 1981-90 30 2-4 Low- and Middle-income Economies: Gross Domestic Investment and Gross Domestic Savings as a Percentage of GDP, 1981-90 32 2-5 Long-term Financial Flows to Low- and Middle-income Economies, 1981-90 33 2-6 Low- and Middle-income Economies: Long-term Debt and Debt Service, Selected Years, 1985-90 34 2-7 Commodity Prices, 1983-90 36 2-8 Selected Trade-performance Indicators, 1965-90 37 3-1 Sub-Saharan Africa's GDP Growth, 1980-90 45 3-2 Sub-Saharan Africa: Selected Performance Indicators, 1980-90 46 3-3 Lending Operations Whose Primary Objective Is to Reduce Poverty, Fiscal 1990-91 51 4-1 IBRD Borrowings, Fiscal Year 1991 72 4-2 IBRD Borrowings, after Swaps, Fiscal Year 1991 75 4-3 World Bank Cofinancing Operations, by Region, Fiscal Years 1990-91 79 4-4 IBRD and IDA Foreign and Local Disbursements, by Source of Supply 80 4-5 IBRD and IDA Foreign Disbursements, by Source of Supply 80 4-6 IBRD and IDA Payments to Selected Supplying Part II Countries for Foreign and Local Procurement in Fiscal 1991 81 4-7 IBRD and IDA Payments to Part I and Selected Part II Countries for Foreign Procurement 82 4-8 IBRD and IDA Payments to Part I and Selected Part 11 Countries for Foreign Procurement, by Description of Goods, Fiscal 1991 83 4-9 IBRD and IDA Foreign Disbursments by Description of Goods, Fiscal 1989-91 84 5-1 Fiscal 1991 EDI Training Activities, by Region and Sector 90 5-2 Patterns in World Bank-NGO Operational Collaboration, Fiscal 1973-91 97 5-3 World Bank Budget by Expense Category and Work Program, Fiscal Years 1988-92 103 6-1 Africa: 1989 Population and Per Capita GNP of Countries That Borrowed during Fiscal Years 1989-91 109 6-2 Lending to Borrowers in Africa, by Sector, Fiscal Years 1982-91 110 6-3 Net Transfers to Africa 115 6-4 Asia: 1989 Population and Per Capita GNP of Countries That Borrowed during Fiscal Years 1989-91 117 6-5 Lending to Borrowers in Asia, by Sector, Fiscal Years 1982-91 118 6-6 Net Transfers to Asia 122 6-7 Europe, Middle East, and North Africa: 1989 Population and Per Capita GNP of Countries That Borrowed during Fiscal Years 1989-91 125 6-8 Lending to Borrowers in Europe, Middle East, and North Africa, by Sector, Fiscal Years 1982-91 126 6-9 Net Transfers to Europe, Middle East, and North Africa 131 6-10 Latin America and the Caribbean: 1989 Population and Per Capita GNP of Countries That Borrowed during Fiscal Years 1989-91 133 6-11 Lending to Borrowers in Latin America and the Caribbean, by Sector, Fiscal Years 1982-91 134 6-12 Net Transfers to Latin America and the Caribbean 139 7-1 Projects Approved for IBRD and IDA Assistance in Fiscal Year 1991, by Region 161 7-2 Projects Approved for IBRD and IDA Assistance in Fiscal Year 1991, by Sector 163 7-3 Statement of IBRD Loans Approved during Fiscal Year 1991 169 7-4 Statement of IDA Credits Approved during Fiscal Year 1991 174 7-5 Trends in Lending, IBRD and IDA, Fiscal Years 1989-91 179 Contents 9

7-6 IBRD and IDA Cumulative Lending Operations, by Major Purpose and Region, June 30, 1991 180 7-7 IBRD and IDA Cumulative Lending Operations, by Borrower or Guarantor, June 30, 1991 182 Boxes Becoming a Global Institution 12 2-1 The Unification of Germany 28 2-2 The Effect of the Gulf Crisis on the Developing Countries 29 3-1 The Economy of the Soviet Union 43 3-2 A Shift in Urban Policy 53 3-3 Commitments by the President of the World Bank 54 3-4 Policies for Vocational and Technical Education and Training 56 3-5 How to Get Girls to School (and Keep Them There) 57 3-6 The Global Environment Facility 61 3-7 The IBRD's Negative-pledge Policy and Debt and Debt-service Reduction Operations 66 6-1 Poverty Alleviation through Targeted Programs in the Social Sectors 138 Text Figures IBRD and IDA Lending to the Poorest Countries, Fiscal 1982-91 14 2-1 Nominal Six-month LIBOR Rates, 1983-90 27 2-2 Real Six-month LIBOR Rates, 1983-90 27 4-1 IBRD Reserves-to-Loan Ratio, Fiscal 1987-91 71 4-2 IBRD Gross and Net Disbursements to Countries, Fiscal 1987-91 74 4-3 After-swap Cost and Average Life of IBRD Borrowing Program, Fiscal 1987-91 76 10 Letter of Transmittal

The details of events covering the period it possible for the Bank to respond to the July 1, 1990, to June 30, 1991, are found in this exceptional challenges posed by the Gulf crisis Annual Report, which has been prepared by and the needs of Eastern European members the executive directors of both the Interna- with both flexibility and imagination. tional Bank for Reconstruction and Develop- The directors also take note of the volunteer ment (IBRD) and the International Develop- work that many staff members of the Bank ment Association (IDA) in accordance with the have undertaken to help the less fortunate in by-laws of the two organizations. Barber B. the Washington, D.C., metropolitan area-in Conable, president of the IBRD and IDA and particular, of the work of staff to help the chairman of the boards of executive directors, homeless. Staff volunteer assistance was rec- has submitted this Report, together with ac- ognized by the Coalition for the Homeless companying administrative budgets and au- when it gave the Bank its annual "Part of the dited financial statements, to the boards of Solution Award" in July 1991. governors. The annual reports of the International Fi- The directors express their appreciation to nance Corporation, the Multilateral Invest- the staff members of the Bank for their dedi- ment Guarantee Agency, and the International cation to the institution's ideals. They note that Centre for Settlement of Investment Disputes the continued professionalism of the staff made are published separately.

Executive Directors Alternates Ibrahim A. Al-Assaf Ahmed M. Al-Ghannam Fawzi Hamad Al-Sultan Mohamed W. Hosny J. S. Baijal M. A. Syed Mohamed Benhocine Salem Mohamed Omeish Rosario Bonavoglia Fernando S. Carneiro Felix Alberto Camarasa Nicolas Flafio E. Patrick Coady Mark T. Cox, IV John H. Cosgrove A. John Wilson Jacques de Groote Walter Rill Fritz Fischer Harald Rehm Eveline Herfkens Boris Skapin Jean-Pierre Landau Philippe de Fontaine Vive J. Ayo Langley 0. K. Matambo Jean-Pierre Le Bouder Ali Bourhane Ernest Leung Paulo C. Ximenes-Ferreira Einar Magnussen Jorunn Maehlum Moises Naim Gabriel Castellanos David Peretz Robert Graham-Harrison Frank Potter Clarence Ellis Masaki Shiratori Kiyoshi Kodera Vibul Aunsnunta Aung Pe Wang Liansheng Jin Liqun

August 20, 1991 Overview of World Bank Activities in Fiscal 1991

More than a billion people-about one third Some people-the old and the infirm, for of the total population in developing coun- example-will not be able to respond to these tries-live in poverty. Despite progress, as new opportunities. And others, although ben- measured by aggregate per capita consumption efiting, will still not have enough income to pay and improvements (in some countries) in social for basic necessities or will be vulnerable to indicators, poverty increased in many coun- such income-reducing shocks as drought or tries during the 1980s. loss of the family breadwinner. To help these In fiscal 1991, a comprehensive, long-term groups, a system of transfers and safety nets is strategy to address the protracted challenge of needed as a complement to the basic two-part poverty reduction was adopted by the Bank. approach. The strategy, which was designed to make sure Lending for social services-so essential to that the poor gain from growth and that they the poverty-reduction strategy-continued to contribute to growth, will ensure that all assis- increase dramatically during the year. Fiscal tance programs undertaken by the Bank are 1990 marked the first year in which lending for clearly geared to the reduction of poverty. education topped the $1 billion mark. In fiscal Fiscal 1991 was also a year that challenged 1991, Bank commitments for twenty-six edu- the Bank in other, extraordinary ways. The cation projects further increased to $2,252 mil- Bank had to respond promptly to the post- lion. Lending for population, health, and nutri- August 1990 events in the Gulf that threatened tion (PHN), which averaged $205 million a the development prospects of numerous coun- year during the five years before the president tries throughout the world. It also had to meet of the Bank pledged to double PHN lending the increasing need for advice and capital of (fiscal 1983-87), amounted to $1,568 million for the countries of Eastern and Central Europe twenty-eight projects in fiscal 1991. that are making the transition from command- The outbreak of the crisis in the Gulf created driven economies to those that are market- major uncertainties for Bank programs in oriented. terms of oil prices, the potential for a diversion At the same time, longer-standing chal- of financial resources, and the eventual re- lenges-concerning, among other things, the quirements of postwar reconstruction. Never- development of sub-Saharan African coun- theless, the Bank's response to the crisis was tries; the checking of environmental degrada- rapid: A program of additional assistance ($1 tion at the national, regional, and global levels; billion from the IBRD and 314 million in spe- the alleviation of the debt burden faced by cial drawing rights, or SDRs, from IDA in many countries; and efforts to encourage pri- fiscal 1991) to many of the Bank's current vate-sector development-continued to domi- borrowers that were most affected by the crisis nate the Bank's diverse agenda. as a result of losses of workers' remittances, Poverty reduction remains the centerpiece losses of revenue from services, and increases of the Bank's work. The strategy to reduce in oil prices was put into place during the year. poverty that was adopted during the year inte- The Bank also responded to the increased grates fully into the Bank's operations a two- needs of new member countries, especially in part approach for reducing poverty. The first Eastern and Central Europe. In fiscal 1991, part encourages broadly based economic lending to the reforming European countries growth through productive use of the poor's increased by $1,098 million over the previous most abundant asset-their labor. The second year's total, to $2,937 million. The Bank now part requires investment in social services- has an active program of lending and economic especially basic education and health, family and sector work in all the Eastern and Central planning, and nutrition-to improve living con- European countries with the exception of Al- ditions and increase the capacity of the poor to bania. Albania applied for membership in both respond to income-earning opportunities aris- the Bank (see box on the following page) and ing from economic growth. the International Monetary Fund in January 12 Overview of World Bank Activities in Fiscal 1991

Becoming a Global Institution

The Bank', founders en% isioned a global instILu- member ihat wiihdress in 1960). ihe Democratic lion. the membership ot sshich ssould eventualh People's Republic of Korea. the So%iet LJruon, conprise all nations. Shonil after the Bretton and Su&itzerland. Of these. Albania and SwOizer- W%oods meetings, however, it became apparent land are currently seeking membership. that the spirit of international cooperation had The events of the past year have brought the been supplanted b%an ideological split e.xiending Bank much closer to its founders' vision of a to the struciure of economic s%stems. The So%iet global economy and membership, as the coun- Union. although it sent delegates to Bretton tries of Central and Eastem Europe and other Woodo. did not become a founding member of planned economiies have quickl% developed polii- the Bank. The countries within its sphere of ical mandates for transition lo market economies. influence that were onginal members of the Bank These countries, basing found themsel%es in se- ,oon s ithdrew. riou, need of financial and technical asststance to Of the forts-fixe founding members in 194 7 make the transition a successful one. have tumed thirtN.tso wkere European or Latin American. to the Bank For that assistance. I The% utere joined during the subsequent decade However, the persistence of regional conflicts bs' mans Asian countries. and tn 196". follo%%ing gives renewed meaning to the Bank's original an influx of neuly independent African nations. mission of post"ar reconstruction and deselop- I membership stood at 1I06. Todahy. 155 countries ment. The challenge will be to meet the demands. are members of the Bank. and only five countries which are increauing in number as w&ell as com- stirh populations in excess of 3 million are cur- plexity, made of the institution b5 its no't nearl% rentls nonmembers: Albania. Cuba la former global membership.

1991, and an initial fact-finding mission was stantially to national output. Moreover, sucn undertaken. programs particularly help to slow population Continuity of assistance to the adjusting, growth and thus ease pressures on the environ- low-income countries in sub-Saharan Africa ment. was guaranteed through the launching of the Environmental concerns are now routinely second phase of the special program of assis- scrutinized and addressed in Bank activities. tance (SPA II). For the second phase of the In addition to fourteen projects that had pri- program, which covers the three-calendar-year marily environmental objectives, almost 40 period 1991-93, eighteen donors pledged $7.4 percent of projects approved in fiscal 1991 had billion in cofinancing and coordinated financ- significant environmental components (exclud- ing to support adjustment programs in these ing projects whose environmental costs or ben- countries. Commitments by IDA during the efits amount to less than 10 percent of total same period are expected to reach almost $3 costs or benefits). During the year, an 800-page billion. manual was completed that codifies all the In February 1991, the African capacity- Bank's environmental policies and guidelines building initiative (ACBI) was established. Co- into one source. All relevant sectors and all sponsored by the Bank, the United Nations types of projects with potential for major envi- Development Programme (UNDP), and the ronmental effects are addressed, with empha- African Development Bank, the ACBI has as sis on large infrastructure projects. its goal the building up of local capacity for In November 1990, the Global Environment economic analysis and management. Facility (GEF), to be run jointly by the Bank, The Bank's involvement with the range of the UNDP, and the United Nations Environ- activities that can benefit women and unlock ment Programme, was established. The three- their potential to contribute to the develop- year pilot program, which will start with com- ment process continued to expand. About 40 mitments of about $1.5 billion, has as its goal percent of the Bank's projects during the year the provision of resources to help finance included specific recommendations for action programs and projects in developing countries to integrate women into the development pro- in four areas: protection of the ozone layer, of cess. In fiscal years 1988, 1989, and 1990, the biodiversity, and of international waters, and comparable percentages were 11, 22, and 30, the limitation of emissions of greenhouse respectively. Operational activities that en- gases. Projects will be designed so as to ensure hance the well-being of women are designed that there is a clear distinction between GEF not only to help reduce the incidence of pov- and regular development programs and erty, but also to help increase national eco- projects. At the end of the fiscal year, twenty- nomic growth because women contribute sub- one countries (including eight developing Overview of World Bank Activities in Fiscal 1991 13

Operational and Financial Overview. Fiscal 1987-91 imillioni or LIS dollars unless oTherwise nmredi hlem 198S' 19S8 14S 1491) 191 IBRD Commitments, 14. I8 l .-hl 16 433 l5.1181 16.392 Gross disbursements' 11.383 11.636 I 1.3111 13.si9 11.431 Net disbursemenTsa 5.h5h .4'28 1.921 i.7 17 '.090) Borrowiiig, medium- to long-term .7'9 0.5C37 8.44 11.4X1 111.883 Net income 1.111 1.1.004 1.094 1.046 I .'U0 Subscribed capital S5.21 91.41h li.66S 15. 'h' 139 121' Statutor% lending limit 89.8t1 15.429 137.1!46 It!t!.3t152.1' Loans outstanding 5 7,92 81791 v77442 8'J.i)5 91163S Key ratios Loans outstanding ac a percenlage of lending limii 84 81 h2 65 Interest coverage ratio 1.1S 1.15 1.17 1 17 I I' Liquidit% ratio (percenti 50 o 52 4 51 Reser%es-to-loans ratio 'S 9 10 2 Iil.> 11 2 IDA Commilmenl. 3.486t 4.4i9 4.934 i.;" v.93 Gross disbiirsemenis I 'S9X 1. 3,i- 3_x S.i 4 54q Net disbursements 2.940 3.241 3,4)4 1.628 4.274 a. E%clud& loar. to ihe IFC. countries) had contributed a total of about $871 continued. During fiscal 1991, the responsibil- million to the GEF's core fund. ities and role of each member of the World Fiscal 1991 also saw the Bank continue to Bank Group in the implementation of the pri- provide support for the program of debt and vate-sector development action plan that had debt-service reduction. A $65 million stand- been adopted in 1989 were more clearly delin- alone loan was approved for Uruguay to reim- eated; improved procedures for cooperation burse that country for (a) a portion of the costs among the Bank, the International Finance of the cash buyback of its debt and (b) a Corporation (IFC), and the Multilateral Guar- portion of the costs of the purchase of the antee Agency (MIGA) were initiated; a pro- interest collateral associated with par bonds gram of country-specific private-sector assess- that had been converted from Uruguay's stock ments, which will form a basis for the Bank's of debt. Venezuela was provided with $150 strategy and work program for private-sector million in interest support, which will be uti- development, was begun; and selected divi- lized to purchase part of the collateral for the sions throughout the Bank were restructured, par bonds it issued. The interest-support expanded. and staffed to assume additional funds, together with related measures, will responsibility for supporting PSD. help the country implement its agreement, Total commitments by the World Bank dur- involving debt and debt-service reduction, ing fiscal 1991 amounted to $22,685.5 million: with its commercial-bank creditors. The Debt $16,392.2 million from the IBRD and $6,293.3 Reduction Facility for IDA-only Countries was million from IDA (see table above). Despite utilized for the first time during the year when the disruption of operational work caused by grants of $10 million each were extended to the Gulf crisis, commitments by the IBRD Niger and Mozambique. The grant to Niger, represented an increase of $1,212.5 million together with contributions from France and over fiscal 1990. Commitments from IDA were Switzerland, virtually eliminated all of Niger's $771.3 million above fiscal 1990's record commercial-bank debt. The grant to Mozam- amount of $5.5 billion. bique, together with contributions of up to World Bank assistance to the poorest coun- $12.87 million from France, the Netherlands, tries-those with a per capita GNP of $580 or Sweden, and Switzerland, would be sufficient less-totaled $9,355 million: $4,025 million to permit the purchase of all of that country's from the IBRD and $5,329 million from IDA eligible debt. (see figure on the following page). The strengthening of the Bank's efforts to Adjustment lending totaled $5,886.4 million, encourage private-sector development (PSD) or 26 percent of total commitments. Of that 14 Overview of World Bank Activities in Fiscal 1991

IBRD and IDA Lending to the Poorest Countries. Fiscal 1982-91 (US$ millioris) IDA amount 1RDIDAamount

- .. i i I X .

-t 4

1982-86 1987 1988 annual average Total 8.989.5 Total 9,805.1 Total 8,474.9

_~~~~~~~~~3 _

1989 1990 1991 Total 11.178.6 Total 8.738.6 Total 9,354.6

Note The poorest countnes are defined as those with a per capita income ot S580 or less in 1989 U S. doliars

amount, $215 million was accounted for by caused, in part, by a decline during the year in debt and debt-service reduction assistance to Bank support for debt and debt-service reduc- Uruguay and Venezuela. The $5,671.4 million tion operations. In addition, a large percentage in structural-adjustment and sector-adjustment of the volume of adjustment lending was com- assistance represented an increase of $1,703 mitted in the last month of the fiscal year; million over fiscal 1990's total (see table on the disbursements on those operations will take following page). Most of the increase was the place early in fiscal 1992. IDA's net disburse- result of increased adjustment lending to coun- ments were up $646 million, to $4.3 billion. tries in Eastern and Central Europe. The IBRD borrowed the equivalent of $10.9 Net disbursements from the IBRD to mem- billion in the world's financial markets. Net ber countries declined to $2.1 billion, down 63 income was $1,200 million. percent from the previous year's total of $5.7 On July 13, 1990, the Republic of Yemen billion. The drop in net disbursements is the became a member of the IBRD and IDA fol- direct result of reduced gross disbursements lowing the merger of the Yemen Arab Republic Overview of World Bank Activities in Fiscal 1991 15

World Bank Adjustment Operations, Fiscal 1991 (million, of US dollars) World Bank financing

(ounir3 Project IBRD IDA Total Sectot -adjustment loans Algeria Enterprise and financial-sector restructurinm 350 t) - 350 0l Aionmetna Public-enterprise reform adjustment 300.0 - 300.0 Bangladesh Financial-sector aijustment (supplement) - 3 5 3 5 Bolfiia Fmanwial-sector adjustmnent IlIl (suiplement) - 14.5 14.5 Colombia Public-sector reform 304 0 - 304.0 Comoros Macroeconomic reform and caracitv building - 8 0 8 0 Indoncsia Pr,v>.le-se,tor development 11 250 0 - 250.0 Jamaica Trade and financial-sectot adjusiment 11 30.0 - 30 0 Kenya Agricultural-sector adjustmrnt 11 - 75.0 7 0 Ken%:t Export developn ent - 100.0 I00.0 Kenya Financial-sector adjustmenti - 67 3 67.3 Madagascar Puwlic-sector adju,tment isupplement) - I 7 1.7 Maltwvi Industry and trade adjustment isupplement) - 7 2 7 2 Mauritania Public-enterprise seLtor adjustment (supplementi - 4 0 4 0 Niexico Agi cultuial-sector adjustment II 4000 - 4000 NMexico Export-sector loan 300.0 - 300.0 Morocco Financial-sector des clopmcnt 235 0 - 235 0 Pakistan Energy-sector loan II (supplement) 28.)) - 28 0 Phililpines Environment and natural-resources management 158.I) 66 0 224 0 Poland Restructuitng and piivatization 280 0 - 280.0 Polanld Financial-institutions development 200.0 - 200.0 Sri Lanka Public manufacturing-enterpnses adijustment - I20.0 120 0 Tanzania Agricultural adjustment (supplermient) - 16 1 16 1 Togo Poptilatiot /ihealth adiustment - 14 2 14 2 w'ganda Agricultural-sector adjustment - 100.0 1t0 0 Totil 2,835.0 597.5 3.432 5 5swaci.l-ad,ilsbot1eult 1.anms Benitn Structural aJiustinent 11 - 55 0 55 0 Burkina l-aso Structural adjustment I - 80.0 80.0 Czeclo'los akia Structutlal adjustment 1 450 0 - 450.0 Egypt Structural adjustment 1 300.0 - 300 0 El Salvadur Structural adjustment 1 75 0 - 75.0 Ghanua Structutal adiustitment 11(lupplernetit) - 8 3 8.3 Ghana Private-investment promotion - 120 0 120 0 Guy anm Structural adjustment 11(supplement) - 18 0 18.0 Guj anI- Stituctural adjustment 11(supplement) - 4 3 4 3 Honduras Structural adjustment I (supplement) - 2( 0 20 0 londluiras Stnictuiual adjustment 11 90 ) - 90.0 hiungarv Structural adjustment 11 250.0 - 250 0 Malh Structural adjustmenit I - 70 0 70 0 Poland Slructural adliustment 1 300 1 - 300.0 Rwanda Structural adjustment I - 90 0 90.0 Senegal Structut il adjustment IV (supplement) - 7.1 7.1 Sii Lanka Economic restructurimg (supplement) - 7 0 7 0 Togo Structural adjustment IV - 55 0 55 0 Uganda Economic recovety prograin if (supp.ement) - 2.0 2.0 Zambial Economic recovery prolgram - 210 0 210 0 Zambia Economic recovery progiam (suipplement) - 27.2 27.2 Total 1,465.0 773 9 2,238 9 (Grantd total 4.3000 1,371.4 5,671.4

- Zero. ',oli Tu-ble .lws not inci.ic 5e:1., nrill,on ii, interest support to Venezuela and '(S million to Urugua) for debt and debt-service reduction support 16 Overview of World Bank Activities in Fiscal 1991 and the People's Democratic Republic of Ye- 1991. This brings total membership of the men. Czechoslovakia rejoined the IBRD and IBRD to 155 and of IDA to 139. became a member of IDA on September 20, At the end of the fiscal year, action was 1990. Bulgaria and Namibia became members pending on membership in the IBRD and IDA of the IBRD on September 25, 1990. Mongolia for Albania and Switzerland, and in IDA for joined the IBRD and IDA on February 14, Portugal. 17 Section One The Executive Board

Under the Articles of Agreement of the example, on the allocation of net income, staff Bank, all the powers of the Bank are vested in compensation, the environment) or periodi- a board of governors consisting of one gover- cally (for example, on the Bank's capital re- nor from each member country. With the ex- quirements, financial policies, lending terms, ception of certain powers specifically reserved sectoral priorities), it determines the direction to them by the Articles of Agreement, the of Bank policies; and (c) through its review of governors of the Bank have delegated their evaluations of completed Bank projects and authority to a board of executive directors that the Bank's experience in individual sectors and performs its duties on a full-time basis at the with particular policies, and through its consid- Bank's headquarters. This board consists of eration of proposals for future evaluation ac- twenty-two executive directors, each of whom tivities, the board ensures that the Bank and its selects an alternate. As provided for in the member countries can benefit from the lessons Articles of Agreement, five of the executive of experience. directors are appointed by the five members In fulfilling their responsibility to oversee having the largest number of shares of capital the IBRD and IDA financial and operating stock, while the rest are elected by the gover- programs, the executive directors approved, at nors representing the other member countries. the start of the fiscal year, a flexible borrowing The president of the Bank is the chairman of program for fiscal 1991 of $11 billion to $12 the executive directors. Formal votes by the billion equivalent, which was carried out ac- executive directors are rare since, in practice, cording to agreed broad parameters. Halfway most decisions of the board are reached by through the fiscal year, the board reviewed the consensus. The executive directors are respon- status of the 1991 fiscal year financial and sible for the conduct of the general operations operating programs and administrative budgets of the Bank, which includes deciding on Bank and discussed fiscal 1992 budget priorities and policy within the framework of the Articles of policy directions. The board also considered Agreement and approving all loan and credit the distribution of fiscal 1991 annual alloca- proposals. The president is the chief of the tions from IDA reflows and approved supple- operating staff of the Bank and conducts, un- mental credits to a number of countries. As a der the direction of the executive directors, the committee of the whole, the executive direc- ordinary business of the Bank. tors discussed the medium-term (fiscal 1992- The executive directors are also responsible 94) budget-planning framework. Before the for presenting to the board of governors at its end of the fiscal year, the board set indicative annual meetings an audit of accounts, an ad- IBRD lending for fiscal 1992 at between $17 ministrative budget, the Annual Report on the billion and $19 billion, with an indicative IDA operations and policies of the World Bank, and lending program of 4.8 billion in special draw- any other matters that, in their judgment, re- ing rights (SDRs). quire submission to the board of governors. Matters may be submitted to the governors at Financial Policy Actions the annual meetings or at any time during the An important financial policy issue that con- year. cerned the board during the course of fiscal The executive board exercises its authority, 1991 was the disposition of net income. The under the Articles of Agreement, in three gen- executive directors met several times during eral areas: (a) through its annual oversight of the year to discuss this issue, beginning with a the financial and operating programs, and ad- seminar on the uses of net income. In a subse- ministrative budgets, it determines the alloca- quent board session, the executive directors tion of financial and staff resources for the discussed the medium-term outlook and policy coming year; (b) through its review and ap- on annual allocation of net income and estab- proval of policy proposals, either annually (for lished a policy framework to guide the annual 18 The Executive Board

allocation of Bank net income. This policy margin of 20 percent. The board also autho- framework provides that: rized a global U.S.-dollar bond issue and asso- * the first claim against net income will be an ciated anticipatory and deferred rate-setting allocation to the general reserve sufficient to arrangements. achieve the reserve target at the end of the Late in the fiscal year, the board agreed to following year; revisions in the Bank's loan-loss provisioning * if the net income exceeds the amount policy and set Bank provisions, inclusive of a needed for allocation to the general reserve, long-standing special reserve, at 2.5 percent of consideration in the use of available income its total portfolio of outstanding loans and will first be given to increasing the general guarantees. reserve to allow for a waiver in the following Under the revised policy, the annual review year of up to twenty-five basis points on the of provisions will be based on an assessment of interest rate charged to borrowers who have collectibility risk of the total portfolio, includ- serviced all their loans in a timely fashion; ing a specific assessment for loans in nonac- * the executive directors will recommend to crual status. Only the latter assessment was the board of governors that available income made under the previous policy. The extension not required to implement a twenty-five basis- of the provisioning policy required an increase point waiver of interest charges be transferred in provisions to $1,990 million, compared with to surplus, with its use to be decided subse- $1,250 million in fiscal 1990. quently; In addition to considering these specific fi- * currencies held in surplus may be con- nancial policies, the executive directors fol- verted, as in the general reserve, to maintain lowed closely the status of the Bank's borrow- alignment with currencies on loan; and ing program through monthly briefings on * if the balance in surplus reaches 1.5 per- markets and quarterly reviews of funding-op- cent of callable guarantees and disbursed out- erations reports. standing loans net of loan-loss provisions, the executive directors will decide whether to rec- ommend further additions to surplus to the Operatons Evaluation; Project board of governors. Implementation and Supervision The board agreed that the guidelines pro- To fulfill its responsibility to review project vided in the policy framework were intended to evaluations and proposals for future evaluation be used with flexibility, especially in extraor- activities, the board continued to give particu- dinary circumstances such as those that arose lar attention to the Operations Evaluation from the Gulf crisis. Department (OED). The OED, under the di- Later in the year, the board considered the rection of the director-general, is linked admin- allocation of fiscal 1990 net income that had istratively to the Bank's president, but is di- been retained as surplus from a year earlier. rectly responsible to the executive directors. This income, amounting to $296 million equiv- The board considered the OED report on its alent at the end of fiscal 1990, had been ex- work program and staff budget for fiscal 1991, empted from the newly established framework the current status of the department's work, on net income. The board agreed to recom- and the report on operations evaluation. The mend to the governors that the equivalent of up executive board also discussed the OED's an- to SDR200 million be given as a grant to IDA nual review of evaluation results and agreed and that any balance of the surplus be trans- that the review should be published for distri- ferred to the Global Environment Trust Fund. bution outside the Bank. The board was also involved in issues con- In addition, the board considered the six- cerning the Bank's practices with respect to teenth annual report on project implementation countries in arrears. It approved the recom- and supervision, which summarized the status mendations contained in a report by the of ongoing operations in fiscal 1990. The re- board's Joint Audit Committee and approved port, an annual product of the Bank's opera- additional workout programs in countries with tions complex, highlighted assessments of the protracted arrears. The board also reviewed Bank's initiatives in the areas of poverty alle- the Bank's capital adequacy and a modification viation, the environment, and women in devel- of the Bank's general conditions with respect opment. to the Bank's lending limit and approved mod- ifications to IBRD repayment terms for mid- Operational Policy Actions dle-income borrowers applicable to new loans In fiscal 1991, the board dealt with several committed between July 1, 1991 and June 30, issues fundamental to the Bank's operational 1994 and agreed that future calculations of the priorities and strategies. Following on their statutory lending limit should include a safety work in fiscal 1990 on the Bank's operational Operational Policy Actions 19 guidelines and procedures concerning debt cial-intermediary lending, its impact on the strategy, the executive directors considered the financial sector, and the respective roles of the Bank's negative-pledge policy with respect to IBRD and the International Finance Corpora- debt and debt-service reduction operations tion in lending to financial intermediaries. 6 (DDSR) and approved clarifications and affir- The board also carefully followed the devel- mations of the Bank's policy on waivers to the opments in the international economic and negative clause, including continuing the policy political environment and their effect on mem- of granting waivers in connection with Bank- ber countries. The board kept abreast of (a) the financed DDSR operations.' The board also impact of the Gulf crisis on member countries reviewed the Bank's progress under the pro- through timely updates on the Bank's response gram to support DDSR, with the executive to the Gulf crisis, (b) the effect of the Gulf directors generally agreeing that the program crisis on the Bank's portfolio risk, and (c) the was working according to its objectives and that effect of oil-price increases; the Bank's assis- while no changes in the guidelines were neces- tance strategy for countries affected by the sary at that stage, continued flexibility in imple- Gulf crisis was also reviewed.' mentation would be needed in future cases.2 The board received a number of briefings on In preparation for the meetings of the Devel- a study prepared by the Bank, in conjunction opment Committee, the board considered a with other international agencies, at the re- report on the implementation of the debt strat- quest of the July 1990 Houston economic sum- egy and its impact on the development pros- mit, on the economy of the Soviet Union.8 The pects of severely indebted countries. The De- board also discussed in a seminar the issues of velopment Committee subsequently reaffirmed the transformation towards a market economy its support for the strengthened debt strategy of the Eastern and Central European coun- and the progress achieved so far and encour- tries, including the progress made to date and aged the Bank and the International Monetary future prospects. Fund (IMF) to continue to provide support, The role of the environment in the Bank's with the necessary flexibility under the estab- operations remained an important issue for the lished guidelines, for debt and debt-service board. Directors discussed the first annual reduction packages negotiated between debt- report on the Bank and the environment cov- ors and commercial banks. ering fiscal year 1990 and endorsed its publica- With regard to debt operations in individual tion and submission to the Development Com- countries, the board kept abreast of the status mittee as background material for its fall of debt negotiations in Uruguay and approved meetings. In addition, the board held two sem- negative-pledge waivers for Uruguay and Ven- inars to discuss the Bank's approach to the ezuela. forestry sector. The board also approved res- The board also reaffirmed the importance of olutions that enabled the Bank to accept con- poverty alleviation as an integrating theme in tributions from participating countries to the all Bank assistance. The board considered the Global Environment Facility and to implement Bank's assistance strategies to reduce poverty programs for protecting the global environ- and agreed that the Bank should integrate the ment. The facility, which began as a proposal two-part poverty-reduction strategy set out in at the 1989 annual meetings, will address pro- World Development Report 1990 into its coun- tection of the ozone layer, reduction of emis- try-assistance programs to support and com- sions of greenhouse gases, protection against plement countries' own approaches for reduc- degradation of international water resources, ing poverty.3 and protection of biodiversity. With total fi- In the area of private-sector development, nancing available of about $1.5 billion, the the board took note of a report on Bank Group facility became operational in mid 1991.9 efforts in strengthening private-sector develop- The board also reviewed in regular board ment.' sessions, committees of the whole, seminars, The board reviewed the results of the Bank's and briefings a number of sector reports cov- pilot program of expanded cofinancing, which ering Bank policies and "best practice." These is intended to support borrowers' access to private capital markets within the context of For details, see page 66. the Bank's overall country-assistance strate- 2For details, see page 64. gies and risk-management constraints. The ex- For details, see page 47. ecutive directors approved the continuation of For details, see page 67. the program and agreed to review it again For details, see page 79. 5 within twelve to eighteen months. As a com- 6 For details, see page 69. 1For details, see page 40. mittee of the whole, the executive directors For details, see page 43. discussed the Bank Group's approach to finan- 9 For details, see page 61. 20 The Executive Board

Table 1-1. Aid Coordination Group N\eetings Chaired hy the World Bank in Fiscal 1991 iconc.-nlIS. CuJnStilPiii ur*,up;. Jnd aid iuoap.i Datc Country Uycation

Octoher 23 Nepal aid group Paris October 2i Sri Lanka3 aid group Paris November h'-b Boli ia consultative gr.up Paris Nosember l'Q-2i.i Kcnra conmul:atiie grLoup Pans December 3-4 Nicaragua consultative group Paris December M Hondur3s consulatiaC group Paris Dlcember 1!-12 Mlozambique consultative group Paris

Februarv 2-2o Philippines consultative group Hong Kong Mlarch I -10 Zambia consulhative group Paris MNIarch 21-22 Uganda consultative group Paris Nlav '-3 Pakistan consorTium Paris N1a!- Its Caribhean Group for Cooperation in Nlerida Economic Development Nilel.coi Nla 14-I1 Ghan3 consulatifve group Paris Mlac It- lr El Sjlvador con;ulthirve group Pwi< MayI: 1'7l Nicaraguni consultative group Paris Nrav%>°-'iI BanoladeTh aid group Parts a .Wi30-31 Papua Nce% Guinea cotnsultative groUp Singapore Junc 2-t-2i- T'anzania con,uliative group Parns

included vocational training in developing The board also discussed the policy-frame- countries,"° urban policy and economic devel- work papers of sixteen countries that were opment," lessons of tax reform, the extent of jointly prepared by Bank and IMF staffs and the relevance of issues of governance in bor- the countries concerned. The board heard rowing members under the Articles of Agree- briefings on the outcome of the Bank's consul- ment, and a colloquium on policy directions. tative-group and aid-group meetings (see Table The board also reviewed a number of the major 1-1), the progress of the onchocerciasis-con- products of the Bank's policy, research, and trol program, and the meetings of the Consul- external affairs complex, including the annual tative Group on International Agricultural Re- report on the Bank's research program, the search. work program of the Economic Development The board monitored the progress of the Institute, a report on global economic pros- Bank's lending program through quarterly pects, and the outline and final draft of World briefings from the senior vice president, oper- Development Report 1991. ations, and through discussions of the flow of Recognizing the importance of the interna- Bank operations to the board. In addition, the tional economic environment for development board held biannual discussions of its own prospects, the board also discussed reports on work program, as recommended by the exec- the developing countries and the short-term utive directors' Steering Committee, covering outlook for the global economy, held a briefing fiscal year 1991. on the World Debt Tables, and attended a two-day colloquium on global savings. Administration The board also followed the development The board continued to be active in terms of strategies of many member countries. This setting major policies for the Bank's adminis- included discussions of economic and develop- tration. In connection with personnel policies, ment issues in each of the Bank's four regions the executive directors held informal meetings and country-strategy reviews of twenty-eight and seminars on staff benefits in preparation countries that receive IDA funds in accordance for their formal board review of benefits pol- with guidelines established by the executive directors in fiscal year 1990 in response to a recommendation in the report sent to gover- 10For details, see page 56. nors in fiscal 1990 on the IDA-9 replenishment. "'For details, see page 53. Commiifees of the Executive Board 21 icy. They approved a revised benefit plan for the whole to discuss the preliminary agenda staff that included changes in the medical- and the outlines for the background papers in insurance plan and changes in financial assis- order to ensure that the main issues and con- tance and dependency allowances for staff. cerns of Development Committee members They reviewed the situation with regard to were reflected in the documentation. interim measures that they had approved in In preparing for the Development Commit- fiscal 1990 to protect non-U.S. Bank staff from tee's biannual meetings, the board discussed a the effect of a 1988 change in U.S. estate-taxes broad range of background papers that touched law. In the wake of the Gulf crisis, the board on many of the most important issues for the was also briefed on the issue of security of Bank such as poverty alleviation, debt and Bank staff on mission in the Middle East. debt-service reduction, private-sector develop- Through the work of its Committee on Person- ment, the effect of industrialized countries' nel Policy Issues, the board received a prog- policies on development, and women in devel- ress report on the Bank's human-resources opment. strategy. In the light of the Bank's revised The executive directors' Steering Commit- compensation system, the board reviewed the tee reviewed the communiques released by the compensation for executive directors' assis- Development Committee following its biannual tants and, as it does each year, considered a meetings and made suggestions to ensure that review of staff compensation and approved an the board's work program was responsive to annual salary adjustment. the directions set out by the Development The executive directors considered the nom- Committee. ination of Lewis T. Preston as president of the IBRD, IDA, the IFC, and MIGA and unani- Committees of the Executive Board mously selected him to be the institution's The Joint Audit Committee. Established in eighth president. He will succeed Barber B. 1970, the Joint Audit Committee represents Conable on September 1, 1991. On the occa- shareholders in overseeing the soundness of sion of the selection of Mr. Preston, the exec- the Bank's financial practices and the ade- utive directors expressed their deep apprecia- quacy of the work of the operations evaluation tion to Mr. Conable for his leadership of the and internal audit units. The committee pro- World Bank Group. vides a channel through which the internal and In the area of collaboration with the IMF, external auditors can communicate with the the board discussed a progress report on Bank- executive directors. IMF collaboration and emphasized the need In pursuing its responsibilities during fiscal for, and importance of, continued close collab- 1991, the committee nominated a firm of pri- oration between the two institutions to serve vate, independent, internationally established member countries effectively."2 The board also accountants to conduct the annual audits of the reviewed the desirability of establishing a joint Bank. The committee reviewed the scope of Bank/IMF Committee on Administrative Mat- the independent accountants' examination and ters. The board members decided against es- their annual audited financial statements. In tablishing such a committee, but agreed that addition, through regular meetings with the informal consultations would be sought be- Bank's senior financial officers, the committee tween the personnel committees of the institu- helped to provide assurance to the executive tions' two boards to improve collaboration. board that the financial affairs of the Bank After authorizing in fiscal 1989 a plan for the were properly conducted. In this regard, the rehabilitation of the Bank's main complex, the committee reviewed and endorsed recommen- board continued to follow closely the progress dations pertaining to the fiscal 1991 implemen- of the program, including the approval of a tation of the IBRD's policy for loan-loss pro- special capital-budget supplement in fiscal visioning. The committee also reviewed the 1991. situation of countries in arrears and endorsed measures for additional support for workout Development Committee programs in countries with protracted arrears, The executive directors were actively in- which would be implemented on a case-by- volved with the Development Committee, as- case basis. sisting committee members in preparing for As part of its oversight function, the com- their meetings, considering the draft provi- mittee undertook its annual review of the work sional agenda, and discussing the president's programs of the Operations Evaluation and reports and background papers that were used Internal Auditing Departments. Through two as the basis for the ministers' discussions. In addition, several months prior to each meeting, the executive directors met as a committee of 12 For details, see page 99. 22 The Executive Board subcommittees, it examined specific audit re- Committee on Criteria for Allocation of Shares ports to determine whether the departments of Bank Capital was established by the execu- had performed their functions adequately and tive directors in August 1989. Under its terms efficiently. In addition, the committee re- of reference, the committee reviews criteria viewed numerous papers by the Operations applied in the past for special share allocation, Evaluation Department as part of an ongoing considers options for new criteria, and makes effort to identify problems or policy issues for recommendations on the criteria that would be consideration by the executive directors. applicable to all member countries. In this The committee consists of eight executive context, the committee also reviews the issue directors who are appointed by the board after of the voting power of small member countries each regular election for a term of two years. on the basis of the final report of the Ad Hoc E. Patrick Coady has served as chairman of the Committee on Voting Power of Smaller Mem- committee since December 1990. bers. In approaching this mandate, the com- Committee on Personnel Policy Issues. The mittee is called upon to take into account the committee, which was established in 1980, is timing of the decision on the ninth general charged with keeping under continuing review, review of quotas by the IMF and, in any case, and, where appropriate, advising the executive to report periodically to the executive directors directors on, staff compensation and other on its work programs and progress. significant personnel-policy issues, and main- The committee's activities were summarized taining close liaison with the executive direc- in a progress report that was endorsed by the tors of the IMF on these issues, bearing in executive directors in October 1990. The re- mind the need for general parallelism between port noted that, initially, the committee con- the two institutions. sidered the central question of whether the The major topics addressed by the committee present share-allocation system, which is during the past year were the Bank's human- based on parallelism with actual IMF quotas, resources strategy, changes in benefits policy, should be modified. After reviewing various and the 1991 review of staff compensation. considerations underlying parallelism, the Following extensive review of the 1989 up- committee supported the retention of parallel- date of the Bank's human-resources strategy, ism with IMF quotas for reasons that have the committee, in a report to the board, stated justified its use in the past. that a number of areas merited attention. They The committee's subsequent work concen- were managerial development, recruitment, trated on addressing issues relating to criteria use of consultants, staff-diversification objec- for share adjustments. The committee dis- tives, centralized and decentralized functions, cussed relevant background material on the staff planning and technical expertise, and staff subject, several technical notes on the issue, as morale. The committee's work program in- well as a possible approach for adjusting share cludes a follow-up to these items, as well as a allocations. Because of a divergence of views consideration of management's responses to among committee members, the committee the 1990 Staff Attitude Survey. was unable to reach a consensus on the form During the year, the committee reviewed that a new set of share-allocation criteria might management proposals for changes in benefits take. policy. As a result, management refined its In terms of special share allocations to par- proposals and recommended changes in the ticular subgroups of countries, most committee Bank's medical-insurance plan, in financial as- members supported the use of some mecha- sistance, and in dependency allowances; the nism to safeguard the voting power of smaller changes were subsequently approved by the members. On the question of which smaller board. The benefits study also outlined a flex- members should be eligible for special consid- ible benefits program that the management of eration, the committee preferred a restrictive the Bank is considering. If approved by the definition. With respect to countries that had board, the program is expected to be ready in forgone shares in the past, many committee time to be implemented at the start of fiscal 1993. members saw no need for any additional spe- The committee considered the 1991 review cial adjustment and urged that adjustments of staff compensation, which was the third based on an agreed formula be used to restore compensation review based on the 1989 re- their shares to some extent. vised compensation system. Referring to the Bank's strong capital posi- The committee consists of eight executive tion, many committee members did not feel directors. Jonas H. Haralz has served as chair- that there was a pressing need for a selective man of the committee since November 1990. capital increase to follow the IMF ninth gen- Ad Hoc Committee on Criteriafor Alloca- eral review of quotas. Given the absence of tion of Shares of Bank Capital. The Ad Hoc agreement on criteria for share allocations, the Committees of the Executive Board 23 committee concluded that it would be desirable program also includes review of technical as- to defer further work on share-allocation crite- sistance and efficiency indicators. ria until a selective capital increase was immi- The committee is composed of eight execu- nent. The committee also noted that, should a tive directors. J. S. Baijal has served as chair- consensus be reached on ad hoc share alloca- man of the committee since November 1990. tions before a selective capital increase, the Committee on Directors' Administrative executive directors could consider the appro- Matters. The committee was established in priate procedure at that time. 1968. It considers, makes recommendations, The committee is composed of seventeen and reports its findings to the executive direc- executive directors and is chaired by Masaki tors for their decision on administrative mat- Shiratori. ters relating to executive directors, alternates, Committee on Cost Effectiveness and Bud- advisers, and their staffs. get Practices. The committee was established The committee's terms of reference charge it in 1986 to examine aspects of the Bank's busi- with responsibility for assisting executive di- ness processes, administrative policies, stan- rectors in the formulation and implementation dards, and budget practices that significantly of new administrative policies and changes in affect the cost-effectiveness of its operations. existing policies. Matters taken up during the During the past year, the committee com- year included executive directors' travel-sub- pleted and forwarded to the board its "Report sistence expenses, directors' travel to member on Budget Process," which accompanied the countries outside their constituencies, staffing report of the Budget-Process Task Force. The of executive directors' offices, travel of exec- report on the budget process was the result of utive directors' assistants, the status of the collaborative reviews by the committee and a Bank's main-complex rehabilitation, and com- task force on the Bank's process for planning pensation for executive directors' assistants and budgeting. The committee supported the within the revised compensation system. Budget-Process Task Force's main recommen- The committee coordinates many of its rec- dations, the aims of which were to strengthen ommendations with a similar committee estab- and simplify procedures for setting priorities, lished by the executive directors of the IMF. In increase transparency, strengthen accountabil- this regard, the committee had a joint meeting ity, heighten cost consciousness, and increase with the Committee on Executive Board Ad- efficiency and promote simplicity in planning, ministrative Matters of the IMF to review budgeting, and monitoring. compensation for executive directors' assis- Supplementing the task force's recommen- tants within the revised compensation system. dations, the committee recommended that an In its recommendations, the committee tries informal colloquium of executive directors and to maintain a balance between the organiza- senior Bank managers be held annually to tional and administrative objectives of the in- discuss the Bank's priorities, and that each stitution and the unique circumstances faced year's retrospective review of the previous by the directors in discharging their dual re- year's budget be discussed by the committee sponsibilities. rather than by the full board. The committee The committee meets as frequently as nec- also asked that budget figures and tables be essary, normally about once a month. The presented, where feasible, in both real and membership consists of six executive direc- nominal values, following examples that were tors. Felix Alberto Camarasa has served as its used in the fiscal 1991 budget document. chairman since November 1990. In September 1990, the board approved the Ad Hoc Committee on Board Procedures. recommendations contained in both the com- The ad hoc committee was established in Feb- mittee and task-force reports. At the same ruary 1991 to review the functioning and pro- time, the board considered a report on the cedures of the executive board and to report to progress and future role of the committee and, the board on ways to conduct the board's work as recommended therein, confirmed the com- more efficiently. Included in the committee's mittee as a standing board committee and work program are reviews of board procedures expanded its mandate to include examination as they relate to policy discussions and policy of the retrospective review. The committee's implementation, discussions of Bank country- terms of reference remain unchanged. assistance policy, consideration of the external The committee subsequently considered the environment, lending operations and board re- fiscal 1990 retrospective review and, in accor- ports, and board discussions in general. The dance with the fiscal 1991 work program, un- committee was scheduled to complete its work dertook to examine the Bank's special-grants by July 1991. program and externally funded programs (trust The committee is composed of six executive funds and reimbursable programs). Its work directors and is chaired by Jonas H. Haralz. 24 The Executive Board

The Executive Directors' Steering Commit- vides a consultative framework on various tee. The Executive Directors' Steering Com- board issues. In addition, the committee re- mittee, an informal advisory body of executive views the Development Committee's communi- directors composed of the dean and the codean ques to ensure that the implications for the of the board and the chairmen of the other executive directors' work program are fully standing board committees, meets monthly to considered. consult on, and review with the Bank's vice The meetings of the committees of the exec- president and secretary, the executive direc- utive board are open to participation by all tors' work program. The committee also pro- executive directors. 25 Section Two The Economic Scene: A Global Perspective

In many respects, 1990 was a year of set- credit, inflation and interest rates drifted up- backs for the global economy. The longest ward over the latter half of the 1980s. The postwar run of economic expansion in the synchrony of the G-7 business cycles may have industrialized countries appears to have ended been disrupted, however: The preliminary data in 1990-91, as the economies of the major for 1990 suggest that the cycles of the G-7 industrial countries slowed and as North countries diverged in 1990 (Table 2-1). America and the United Kingdom slipped into The performance of the United Kingdom, recession. The growth in the volume of world Canada, and the United States, as measured by trade, which had already slowed to 7.5 percent the growth of real gross domestic product in 1989 from 9 percent in 1988, continued its (GDP), slackened in 1990, with all three coun- downward trend and was only 5 percent in tries growing by less than 1 percent in real 1990. Moreover, the easing of oil prices, which terms (as opposed to between 1.9 percent and characterized much of the past decade, was 3 percent in 1989). The economies of the abruptly interrupted by the Gulf crisis that United Kingdom and Canada were clearly in followed Iraq's invasion of Kuwait. recession during the second half of the year, Other noteworthy events during the year and, toward the end of 1990, the United States included the inconclusive state of the Uruguay also appeared to have entered a recession. Round of the multilateral trade negotiations France and Italy grew moderately in 1990, with under the auspices of the General Agreement business indicators recording a moderate de- on Tariffs and Trade and instability in West celeration of growth in both countries. Ger- Asia in the aftermath of the Gulf war. many and Japan, however, were centers of The past year also left its mark in other growth and sources of import demand: Ger- ways. There were some promising develop- many grew by more than 4 percent, and growth ments, as well, such as the unity of resolve to in Japan was more than 5 percent. achieve a stable international political order, as The unification of Germany, the Gulf war, evidenced by the concerted response to the and contrasting monetary policies may explain Gulf crisis of countries in different economic some of these differences. A common theme, circumstances; the quickening and deepening however, underlies the performance of all the of economic reform in all the countries of G-7 countries: the persistence of relatively Eastern and Central Europe, including Alba- high real interest rates (Figures 2-1 and 2-2). nia, which has applied for membership in the The normal cyclical upswing in the demand for Bank; continued high levels of growth in the credit was reinforced by the fiscal deficit of the developing countries of Asia; solid indications United States and by a sharp shift into deficit that the process of economic reform is begin- in Germany as a result of unification. In many ning to pay dividends in the low-income coun- G-7 countries, monetary policy offset an actual tries of sub-Saharan Africa; the completion of or expected acceleration of inflation and lim- the process of German unification, which cul- ited the growth of credit. minated in orderly elections in the newly inte- In Canada and the United States, higher real grated nation; and indications that, despite the interest rates increased the burden of servicing Gulf crisis, the superpowers are likely to con- the debt that had accumulated during the pe- tinue to reduce their military expenditures. riod of economic expansion, cutting into profit margins and hence investment. Growth in the Major Industrial Countries supply of credit in the United States was Over most of the past decade, the seven major industrial countries (G-7) had expanded in a more or less synchronized fashion.' Be- cause the concerted expansion had led to an The G-7 countries are Canada, France, Germany, Italy, increase in the demand for both labor and Japan, the United Kingdom, and the United States. 26 The Economic Scene: A Global Perspective

Table 2-1. G-7 Countries: Output. Inflation, Investment, and Unemployment. 1980-90 la.cr.e .nnual pcrceniage hin e uperprplo',ntr i,tev in per.CnLI C. -~~~~~~~~~~~~~~~~~~~~~~~~~~

Re.[ GNP or GDP- GNP Ot GDP dellator'

C(Xnada 3 4 O I 4) 45 4.8 3 1 I-ranc 2.3 3.9 .R.0 3.1 2.7 Germjn% 2 1 3.8 4.5 2 2.6 3.4 lIa 2 4 30 2.0 '1. 6 o 7. S J.pan 4 ' 47 i. h.( IS 1.8 Linkied Kingdom 3 0 I .9 t). h 5 8 6.8 6.1 Uniled Stuie.; I 2 t.911.9 4.1 4 1 A£greg.tle v.eichied a%erae ' 3 . 2.h 4332 1.7 G3ro^ Oled in.esilment Unnrnplo,ment rate

Canalda 4.4 41. -24 9. 7.5 8.1 Fr.ance 2.4- 5 4.1) 9.1 9. 4 9.0 GermJn% 1.9 7.' 8. 8 5. 5.h6 S 1I;I1. 2.2 4 31.1 10.4 12.1 Il. Japan .6 8 9 11.8 2. 2.3 2.1 Linited Kin!dom S.4 J.t 1.9 9. 3 6.2 5.5 tinited Suite, 3.9 I 6 - .1 -. 5.3 Agcrs.Ale %.cIhtLda%era.e' 4.0 4.8 ;Ao 6h7 ' 6

, Dii ,re I .i-qolreeiurrote of the pen..n a.erale b. Prelrrinjrs c(ro.- nlrt.l.)n pri,dLICT ,NP rlor GermiI. Jaepn .. nd [he Unled SlateC GDP for orher-. 1Thepin m GJermn:,norre,pondinr r, iht coLinmr ' esrern 1 7d.r., e Aggrcj.tr ire e .hicd on the hbasl ol 19S- aues ol CGNP or GDP eprr,,cd n 118i1.L S dollars SutI kicE ()rpnv,ilvjoi for Economic Csoopermoron .nJ Dc.clcrnmenl OECD,

probably slowed by the contraction of savings Although the Gulf crisis was not the primary and loan banks and the loan-quality and capi- explanation for economic developments in the tal-adequacy problems of commercial banks. G-7 countries in 1990, the surge of oil prices In Germany, heavy government borrowing that followed the invasion of Kuwait may have and restrictive monetary policy helped to drive contributed to the slowdown of investment in rates upward. High rates did not suppress an most of the G-7 countries by reducing profit acceleration of growth in the western lInder. margins. It may also have reduced consump- In contrast, the eastern lander began a difficult tion through its effects on real income and adjustment (Box 2-1). In Japan, monetary pol- consumer confidence. icy was used to slow price inflation and the inflation of certain asset markets. Neverthe- Low-income, Middle-income Countries less, Japan had the highest growth rate of the Growth in the low-income and middle-in- G-7 countries and performed better than it did come countries (LMICs), of 2.3 percent in during most of the 1980s. Growth was sus- 1990, was considerably lower than the already tained by a continued shift toward domestic low rates that have characterized recent years demand and a vigorous expansion of invest- (see Table 2-3). The disappointing nature of ment. economic performance in the LMICs in 1990 Growth in Japan and Germany at a rate might be underscored by noting that it was the faster than in the United States helped narrow lowest growth rate since 1982; to find a period long-standing current-account imbalances (Ta- when developing countries grew at a pace ble 2-2). The trend was reinforced by the shift slower than the industrialized countries, one toward domestic demand in Japan and by the has to go as far back as 1966 and 1967, years in unification of Germany. Moreover, a 6.5 per- which both China and India contracted. The cent depreciation during calendar 1990 in the fall in income was accompanied by a sharp effective exchange rate of the dollar, along with reduction in consumption and investment in past depreciation, improved the competitiveness Eastern and Central Europe; a very low rate of of U.S. goods and services and thus contributed investment in Latin America, especially Bra- to the narrowing of the imbalances. zil; a fall in per capita consumption in sub- Low-income, Middle-income Countries 27

Figure 2-1. Nominal Six-month LIBOR Rates, 1983-90 (annual percentages)

12

10 / U.S. dollar

18

Yen

6 ,.**. ^w|. **. ,.

DeilIscre mark . ' .,..

4 I , I " _ 1983 1984 1985 1986 1987 1988 1989 1990

Source IMF and OECD

Figure 2-2. Real Six-month LIBOR Rates, 1983-90 (annual percentages)

8 U.S. dollar 7

6

5 Yen -

3 ,,

2 , Deuische rnark . * '

1983 1984 1985 1986 1987 1988 1989 1990

Note: Daia are the corresponding nomrrinal rales adilusted ry ihe lo,al-currency GNP rde:lator korthe respective country Source IMF and OECD. 28 The Economic Scene: A Global Perspective

Box 2-1. The Linirlcation or Germany

Unitication broutght an e\pansionar\ fiscal polics most imporant re3ionf was a lack of international Ihat %timlulated growth in the :est ern /hlfdstt of compcutiveness German%. In l91i. iran,fers to the ea,t shifted The freeing of price, pres.ured each enterprise the ft-der3l geoernment fiscal balanne into a def- toi lover its price to wkorld le%e1a.\ ages were icit of about D1145 billion. The transfers vcre AlsO freed: nominal Uages in the east rose under mostly subsidcle to the eastern social-securti; the influence of national wkage aiccords and be- 5%stem nnd local goserrinients. Most of these cause of the emigiation of ;killed labor. Labor funds apparenth came bdck to the wvestern productiiits. how ever. remained relati%ely low-. iil,dcr in the form of demand for consumer parth because of %sidespread overemplos ment. goods. Another wa%e of immigration from the So. falline output prices and rising wkage costs eastern l/a'lJ rand from outside of Germjns ilso iqueezed profit mareins Nloreo%er. technical reinforced gro. th in the west, and quality problems presenied some German The nominal income ot the eastern (iwitder firms in the east from finding customers in the contracted Ns about 20 percent in 1990. Therr market economies. wkhile the breakup of the ",ere mans reasons for ihe contriction. For ex- Councoi for Muiual Economic .Assistance and the ample. the difficult, of estblishinq pro)pert slump in Eastern Europe litnited trade with tra- rnghts. an excess of deutsche mark-denominated ditional partners. The resulting loss of profit, debt and liabilit: for past damage from pollution ,hut dov.n some enterprises and increased unem- probabl discoura ged foreign ,nvestment BHutthe plo%ment in ihe east.

Table 2-2. Current-account Balances of the G-7 Countries. 1983-90 G.' counir% 19S3 hJS4 11f85 Fi;Ot IN7 1yiS I1ls4Y t9i I B/lho,,; i or l 5. dollur' Canlada 25 21 -1. -7.3 -h.9 -8.3 -14.1 -13 7 France -4 S -L.2 -0)3 I.8 -5.0.l -4 4 -4.h - . 8 Germarn' 1 9.b 64 39.5 45.9 SI,5 i57 2 47 9 hatal .I7 - -361.4 -1.1 - 5. -11(.6 -14.4 Jaran 20! 8 35.ti 49.2 8i.8 ' )0 -9 h 3' ' 35.8 Uinited Kinodorn '. 24 35 -0.1 -'.1 -27.6 - 6 - 22.

UInited Stais -40a 1 -991 -122.3 -145.4 h2.3 -128 14 -I 10.0 -99.3 Total G-- -X 9 -531 --5X.6 -2'.2 -49 5 -44. -S. -4.1

Canada tl.b 1 F6 -1) 4 -2 i! -1,'I I.' -2.h -2.4 France -1.9 -II., -1.1 ' i.2 - 0.6h 0. -0.i S -1t.6 Germrrian' .8 I 2 h 4.4 4.1 4.2 48 ItahS i1.4 -06i' -Ut.4 ('.4 -11 1 - -I -1.3 Japan 17~~ 2 Xi 3.6 .1.3 3.6 2 ' 2. 1.2 United lKinrdom 1.2 1.16 1)7 tIil0 - l.U -33 - 3.9 -2.4 United State. -1.2 -26 - 0 - 3.4 - 36 -2a -2.1 -1.8 67 a'erage Oil -0 3 -1) -1. 1 -(.5 -ii 4 -11.4 -1 6

a Det,11cil' r.a noL ;dd- a. :dils becjoue of raunding * Pren,?hir.jr%

b Thr part .! (icrniarn cur-opondinu mhetI. c:.o,jntr', I Cei.crn ,'aiajor SOL RCE. OiECD

Saharan Africa from the level of the previous tern of the aggregate picture; all geographic year; and a deliberate slowing of economic regions, excluding East Asia, showed a lower activity by China. All regions were affected, in growth rate in 1990 than in the previous year. varying degrees, by the Gulf crisis (see Box At mid year, it appeared that sub-Saharan 2-2). Africa was going to register an increasing The regional breakdown of economic perfor- growth rate for the third year in a row. But the mance of the LMICs mostly follows the pat- unanticipated surge in oil prices in the second Low-income, Middle-income Countries 29

Box 2-2. The Effect of the Gulf C(risis on the De%eloping Countries The Gulif crisis had a profound and continuing in this group tincluding Pakistanil paid more for economic and financ ial effect on ihe global econ- refined petroleum as a result of lost refiner; oms. In particular. many de%eloping countries capacitk in the Gulf countries. suffered signiricant losses. The brunt of the aIdn;Eastern and Central European counrnes losses %;as bome b! the ' front-line" states- faced speciAl hardship because. since the begin- Eg}pt. Jordan. and Turkey. A number of other ning of 19901.the% could no lonaer pa% for oil countries. heasil) dependent on %%orkers remit- Imported from the So-iet Union 'sith noncon tances, as well as on trade nith Iraq and Kuwat. veruble currenc; Furthermore. bccau'e some of vere also immediatel% affected In addition. these countrIeie ere importing oil from Kuw%ait man; countries dependent on imported oil for and Iraq under special irade arrangements that their enere% needs. especialls in Eastern and could no longer he honored. they had to make Central Europe and in sub-Sthar-an Africa. Aere new%arrangements. Most of the countries in sub- seriousl1 atfected. Suharan Africa faced a %%orsnningol their ester The first-wa%e impact ofihe crisison the world nal-pasrments position as a result of higher oil econorm; as that of an oil-price shock. After price, and slower growth of world trade: in Iraq's in%saion otf Kuait in August and the addition. Sudan ' ad%erselI affected bs lo,ses subsequent United Nations' embargo of oil ex- in maorkers rernitrances Other countries ithose ports front Kuluait and Iraq. oil prices rose esteinal-balance position wur,cned .Ippreciahl sharpl]. from around $18 3 barrel in July to aS included Ihe Domintcan Republic. Guyana Haiti. high as nearlh $40 a barrel. Although oil price; Honduras.. Jamaica. Nicaragua. Papua Ni.t. declined fronm this peak to%ards the end or the Guinca. and L ruguav ;ear as o4Lher oil-producing n.,tion. srepped uip Some ,,t the disruptions leading to thc- escep- produitioni. the; continued to fluctuate a a. tiunal lo'se; hase perstited blesond the end of the result at uncerlaint in.the oil markleti recardine Gulf tvsar thus oftsettung Ini. terms.otf-trade im- the outcome of the cri,is Bs the end of hostili- pro'nement resulting front a decline in oil price; iies. oil pricesi had declined to around $Jtu a In addition. the financil cost of re,onsiruction in barrel KRuI arl. and it an ec%n greater estent in Ir:q, The three front-line states. %;hich had esleri us.ill betlarge. and the resulting demand for long- site economic ticsli ;tous at and Iraq. faced ihk term inmestment funds mifll e%aceibate the capital largest losses as a result of thc etieci, of the Gulf short i.e in ihe international financia.l mi.rkets events. These included losses ol %arketl remit tin a po'itite note, the internatinal conimu. lunceq itoi Eg%pt and Jord.,ni. sloses in tourisnl nit icted promptl% to assist countrice adversely resenues. luises in resenues for tran'poiilion aifected bs the trui, For c.ample. the *%orld services iSuez canal :.nd uirti an'port tees fa,t Bank made as ail.ible additon.il financial ai,is- Eg pt. trucking revenues for Jordan. old-pipeline tance to the,e countries. $1 hillion bs the IBRD fee, for Turke\ i. and the loss of Kussai and and hDR3 4 million hb: IDA in fiscal se.r 1991. A Iraqi markets f'or esport,. In addition. forgone kes' role in moibilizinz reiources tor sountries diebt ser, ice due b! Iraq pi imaril\ affected Tur most directl 'tleeledb% the Gulf crisis w%as keu and. ito a smaller e\tent. Jordan. u hich had plJa ed b; the Gulf Crim-s Frnancial Coordination extended trade credits to Iraq While Egsp? stood Cioup. sshkise memrbershun includcd most of the to gain somess hat from higher Oil prices. Jordan coiunlries of the Orgianisation for Economic Co and Turke) faced higher impart bills. operation and Deselopment. the RerpLblic of Noa For most c'of the other COiunries that .%ete rea. Ku\%ait. Qatar Saudi Arabia. the U;nited immediatels aftected hb ihe Gult crisis. shaip Arab F ntrate'. and the Cormmnission f the Eu- drops in %aorkers remittances represenied a sig ropean Communities The Bank .and the Inlernn nificant sethack, as did increa'ed outka;' for tional Mlanetar; Fund prosided Lechnical ads ice imported ltl. For Morocco. losse, in touri,sm and anal.tical suppon to the group revenues were ubsiantial. The Asian countrics

half of the year adversely affected the growth and 12.8 percent of GDP, respectively, in 1990; of the majority of African countries that are oil see Table 2-4). Thus, the prospects for raising importers. Nigeria, however, appears to have and sustaining a growth rate of 5 percent or been a major beneficiary during 1990 of im- higher through the 1990s, as envisioned in the provement in the terms of trade. The current World Bank's long-term perspective study for preliminary estimate for growth in sub-Saharan sub-Saharan Africa, appear to be daunting.2 Africa over the entire year is 1.1 percent. In per capita terms, this translates into a negative 2See Wand Bank. Sub-Saharan Africa: From Crisis ro growth rate of 2.1 percent. The investment and Sustainable Growth-A Long-Term Perspecrive Srudy saving rates were also very low (15.8 percent (Washington. D.C.. 1989). 30 The Economic Scene: A Global Perspective

Table 2-3. Lo%w- and Middle-income Economies: Grow-th of GDP and GDP Per Capita. 1981-90 Iv_ .i.,.Ziiri perceniai?3 age uhng.,less otherwi,,e nonedj G1lP 19i9 GDP Re - or !rinmegr.lup fl 1z 14,_7 ]N is 195' 1p$4i(' bilOiJnit

Lcs and midd!C-1.1come ccincomies 3.94 3.r 41.2 3.2 3.3.51301.3

Sub-Sahbrjn Uric' l.S 0.3 2.o 3.0 1.1 Ib0-.6 East Asia:I 'N. 9 9. 5.t) 6.2 821.') South AXid- 5.2 4.3 8.1 4.' 4.4 3-5.3 Euroipe. Mliddle Eist. and North frica'- 7 1. 2.1 2.tl 0.4 1.-(L.- LaiLn America and [he Caribhcan 3 1 1I.o 1.4 -1).7 943.6

L.om-incomr e,ononiies' r'. o.l ¶ 4.5 4.3 Mtiddle-inci:me economiesh . 2.5 ' 2 1.3 2.651' Suvcrerl indebted. middle-income ecConfc'fie,' I. .9 1.3 1.3 - 1.6 1.U71.1

*. Pr!limlrinr. h EsLIuJ- S.:,uh AftikJ. CW.ri. Ft,. Ir,d..Je-L. Demi.cr ic Ktrnmpuchea, Kinb.Atu. Republic of K.rca. Lac. Peopl,'; Demiocr4ric Republic. Macao. t.3 -..MNtcnvoli,. P,pu- N\, -uinea. The Philipptnes Soomniln slnds. Thniland. Tolri. \arnuata. ilei Nam. .nd \Acsterr, Sam., d B inel-et4. Bhui.,n. India. k.Id,seM. Nt aJ-lr. Nepal. Paki,rjn. and Sri Lmnk.j. e 4iehbraii,ri. Xlger.i. Butei,ri. CzeChbosto ±i, Egpi. GreScc. HIunear\. 1slirim Republicot Ir,n. Iraq. Jordan, L-banor.

However, the currently active countries cov- tries, among others, were adversely affected ered by the special program of assistance by the events in the Gulf and suffered higher (SPA) for Africa, which have been implement- import bills, reduced exports, losses of work- ing reforms, showed positive growth of per ers' remittances, and the costs of resettling capita income for a second straight year, dem- returning workers. Domestic political prob- onstrating that commitment to adjustment can lems, as well as natural disasters (in the Phil- foster growth, even in difficult times.3 ippines), were also a contributing factor. In 1990, Asian LMICs grew slightly faster The growth rate was nearly zero for the than they did in 1989. China sought to cool countries in the Europe, Middle East, and down its economy by contracting the de- North Africa region. In per capita terms, mand for investment, but slower-than-average growth was negative (-1.3). The regional ag- growth in China was offset by the vigorous gregate is the result of disparate sets of pro- gains achieved in Indonesia, Malaysia, and cesses and events, however. Thailand. This pattern is likely to continue in A number of the Middle Eastern countries in the short run. India's economy grew at a the region were directly affected by the Gulf steady rate in 1990, and, while it is likely to crisis. In addition to the effects mentioned continue to do so in the short run (provided earlier, these countries also suffered from the weather conditions remain favorable), the loss of tourism revenues and oil-passage fees. sharp curtailment of imports brought about by For Egypt and Turkey, while the Gulf events a shortage of foreign exchange will have a caused economic activity in 1990 to worsen, negative influence. India's financial difficulties the prospects for improved performance in the go beyond the temporary effects of the Gulf near future are promising: Egypt is receiving crisis, encompassing as they do heightened substantial debt relief and has initiated an indebtedness, slim reserves, and a growing ambitious program of structural reform; Tur- public deficit. Furthermore, the fluidity of the key is likely to receive considerable compen- current political situation makes it difficult to sation and to have improved access to com- introduce needed fiscal reform. A number of mercial-bank lending. Jordan, which along countries in the region, including Bangladesh, Pakistan, the Philippines, and Sri Lanka, had weak economic growth in 1990. These coun- For details, see page 44. Low-income, Middle-income Countries 31

19?9 G)DP per caplpi popularlun Imillionsi 195sI-ar 19N lh a I1rw Ii^5, Rceiori 2r rc:,iriC uroup 4.051.2 I M 1.4 2.1 I .t 0.I Lo%k -nd rniddle-income econornie

Bri t-i..'rhlr 1,r. pip 480.4 -1.3 --2 S -11 6 -ti ' I SUhS Lihar.in .Africi" 1.5;1.4 6.4 71 7 4 3.8 4.3 Ea,[ ANIXa' 1.130 8 2.8 2.U ' .7 2.f South- A,.r' 433.2 I.h - 1.4 (l I l. I -I . Luiope Middle Fi.pr. and North Atrica' 421.4 -0.6 1.tJ -1.4 -tI - 2.6 Latin Arnerica ind the Caribbean

2.94.4 4.3 9 '.' 2 I ' I Lov-inLneMC ezonormnein 1.10)4.9 i. S ( 4 (I h t).' --ti f Nliddle-incone einiooniieh' Se%trt, indehied. nlrddle.incone 554 3 -0.3 0.S - -o h -3 4. econOrnieN Lib%a. Malta. Nlorocco. :mann. Poland Poriu ..l Rkmnrim., S- rian Ar.b Repoblic. Tur-,ij. Turk: .. Reruhlli-if1 cmc n. and Yrugilslak , t dIl American and Ct:rihbean ecornimie, i-,ulh .-r he Uniimd si.,i e ..,epr C uh., . E.onomrie> |.ih j ;;NP per :.r.it.a .f ''ij *..r le- In 1ri- h. Ec.no,g ei "ilh a G.NP pfr capici i' rn,,.rl ih1.1 SI tiUll1 . [har 9. L1 F. 19-

A.Xenirnj. Bili.ia. Braz.l. Ch,4. rhe Coni, C-irm R-,2. I 6i,: J. I:. r EJ:rL' E;rr H.'ndur. Hunear Mc.'. NMorocco. Nicar-guj Perj. the Ptilippine.. P,l,nJ S,vA I- rueu., . inJ \k,neflCl.i

with Egypt and Turkey sustained some of the Hungary, Poland, and Yugoslavia have em- heaviest losses, is also receiving some assis- barked on wide-ranging stabilization programs, tance, but is likely to need a great deal more. Poland opting for "shock treatment," with an The Maghreb countries continued to do well attendant sharp fall in GDP. Poland has re- in 1990. The increase in oil prices enabled ceived a significant amount of debt relief from Algeria to improve its financial situation; de- bilateral donors and is expected to face im- spite adverse effects on the economies of Mo- proved prospects in the near future. In Yugo- rocco and Tunisia caused by the Gulf crisis slavia, any significant economic recovery through higher oil prices, as well as losses of awaits the resolution of political difficulties. In tourism income and workers' remittances, all the countries in this group, the importance both countries performed well during the year. of effective legal and financial institutions as a In addition, Morocco was able to reschedule prerequisite for a successful transition to a its debt. market economy is becoming apparent. The European countries in the region- The GDP growth rate was also stagnant in Czechoslovakia, Hungary, and especially Bul- the Latin America and the Caribbean region, garia, Poland, Romania, and Yugoslavia-ex- with a sharply negative performance in per perienced negative growth rates because of capita terms. Moreover, it was the only region several factors, both domestic and external. in 1990 to have a positive resource balance. The domestic factors come primarily from the The economic situation in Argentina, Brazil, disruptions characteristic of the transitional, and Peru continued to be precarious, with but possibly long-drawn-out, phase these econ- Brazil and Peru having a particularly dismal omies are going through as they attempt to year owing to a severe terms-of-trade shock. restructure their current economic system Their experience underscores the importance toward one that is more market-based. The of reducing the debt overhang before political external factors, apart from the repercussions support for a sustainable structural-reform pro- of the Gulf crisis, include the decline in re- gram is further eroded. While Chile's growth gional trade, the movement toward increased rate (1.8 percent) showed a sharp decline from convertible-currency trade, and the shortfall in its 1989 high (about 10 percent), the outlook is the production and export of oil in the Soviet for sustained growth at respectable rates of 4 Union. percent to 5 percent a year. Mexico's growth 32 The Economic Scene: A Global Perspective

Table 2-4. Low- and Mliddle-income Economies: Gross Domestic Investment and Gross Domestic Savings as a Percentage or GDP, 1981-90 Reg,un or Ircome group 1981 198x' 1483 19S4 198i 1i6 C8- Istm 19S9 199tP Los% - and middle-income economie; In esimeni 2- 0 24.5 23 5 22.6 24 2 24.8 24.7 26.1 2%7. 25.3 Sa%ineg '4.4 23.2 23 7 23.6 24.9 244. 2i.8 2'.1 28.4 25.2

Sub-SaKaran Arrica Inmesiment 2U.6 17.5 14.1 Il) 8 12.1 15.1 1'.7 1I.5 15.2 15.8 Sa%ingo 14 10.i 96 10.6 12.2 11 J 12.3 11.1 12.0 12.8 EaSI Asia Ih've,tmen[ 2'.' 29 ii 2'J.7 292 35.5 33.7 33.f 3b63 38.9 40.1 Sanimi .x S.6 2r0. 30.2 34.0 34.1 36 2 38.4 39.4 41.1 South ASIJ Jrvestrimnt '4.1 2,.6 1.' 21.2 23.6 2.'2 I I6 22.2 22.2 21.4 Sa%ings 19.2 I .6 I .4 17.2 18.8 .S, I 8I 18.1 18.4 17.8 Europe, MMiddle Edit. arnd Norlh Africa inmeqirrent 31.6 26 3 2 I" 6 2.5 'I.8 2. 1 26.4 29.4 24.0 K i,\ n 2' ' 2161 2'.' 24 25.4; 26 S 25 5 2 h 24.2 n . Latin Arm,ric, and tht Carihhean In%eeintent 24.3 211 1- 4 If.9 1'.6 i'. 2I 5 21.1) 21.4 18.7 S.1n,I. "2I 21. 22 O "2 19.9 231 23.6 24.6 20.i

B. ir.i -'rPt- .i,p Lou.v inconic In%esimncnt 25 h '4.3 23 23. S b.9 28.7 'S. (1IS 32.0 31 1 Saune2 23 4 21.8 'Is1 22.4 25 6 25. It,.9 28 2 29.8 30.6 NMiddle inconme In.e,rnent 'h 't 24 _2. 22.0 31I.1 23.0 24 2 2S 2 23.3 Si%inv, 24 3'9 S 24.2 '4 1 2452 4.4 5.3 2h6 2.7 2' .3 n i Not a.-dahl .- Prel rr.in.

performance of 3.4 percent, attributable in part up of net flows of long-term lending, foreign to favorable oil prices, was particularly en- direct investment, and official grants-to de- couraging. Strong oil prices might also facili- veloping countries continued their recovery tate financing for Venezuela. from the low point reached in 1987 (see Table The group of twenty severely indebted middle- 2-5). The increase in 1990 was mainly the result income countries (SIMICs) 4 also experienced of growth in net official lending, with a sub- negative income growth in 1990, primarily as a stantial proportion being absorbed in purchas- result of the sharp decline in Brazil and, espe- ing collateral in Brady-initiative debt and debt- cially, in Poland. In many countries in this cate- service reduction operations rather than in gory, slowing inflation has been a priority objec- financing increased imports. Foreign direct in- tive for some time, and the very low (sometimes vestment (FDI) continued at the higher level negative) growth rates reflect the short-term de- reached in 1988. During the five-year period flationary effect of adjustment policies. Rising 1986-90, FDI increased greatly over the pre- interest rates and domestic financial and political ceding five years: FDI to the twenty largest difficulties have also contributed to the pro- recipients grew from $40.5 billion in 1981-85 longed adjustment process. to $65.5 billion in the five years ending in 1990. Net private lending continued to be de- Debt, Investment, and Financial Flows Preliminary data indicate that, in 1990, ag- gregate long-term net resource flows-made The SIMICs are listed in footnote i of Table 2-3. Debt Investment, and Financial Flows 33

Table 2-5. Long-term Financial Flow%s to Low- and Mliddle-income Economies. 1981-90 ibillions c.l LIS dollaro

Iterr, S101 19S l"s lA4s 19Y' [email protected] 198- 1*'s 195.4w l9'w. Long-term apgregate net re.ource r1okl> Y9.9 S8 4 ht8 2 61 9 6.6 8i1.2 40 I 61019 l. 1.(1 Official development finance 33.7 33 h 31 6 34.0 31.8 33.6 32 ' 2 366 46.9 Official grant; 11 4 IU4 99 11.4 1l 2' 14.10 14'J 18.11 I8.h I9.5 Net o'rficial lending 22 x 23 4 21.' 22.h l.6 19.6 I7. 3 1^.3 18.1.' 27.4 Bilater-l 120 11.9 ILI 6I M'.3 l. 4 fh. 4.9 h., 6. I II 4 fijildnrjter,l 9.4 11.5 11 0 12.4 1'.2 I 1.3 12.4 11 ' 11.9 16.9 Nei pri%ate lolans 51.3 41 6 '-S.1 19.6 14 1 8.1 II 5' 4.3 2.3 Commer.iIl banks 44.l 311.4 19 _8 14.fi 4 2.42 - I I 0).7 3.01 n :1. Bonds 13 48 1.0L t). .1I 1.3 '112 2.2 '3.3 n r. Other.; 8.11 -.S 7 4 4 7 4 5 4.4 l.h 2.6 1.(1 n.:i Foreign direct investment 12.9 11.1 S. ' x.4 1%i.5 9.s 13.2 19.1 2'.4' 21.8 Long-term aggregale net irun%fers; 4'.' ".4 10 i -I1.9 -7 4 -111.11 - 16.5 -4 5 -I 01 3 * .. N,t uv;,mIhlc a Preliminar, b E;rirnute t,It.tcurmn da~regatk net re ,durce 11.,w| n,inu. IniLre'i ra: mtnt, in-. rc'.n .ied Jr,n rcm,tted pr.lIiIv S4)L.hCL Lo.ni '.%rld Bank Deltor RtpurTnsg Sksrcr,. trr.ign diti- in%-rmenrT 1\11t gr.nl; )ECD.

pressed.5 Thus, the shift in the composition of reduction, and, notwithstanding the impact net flows that took place in 1987-away from of adverse terms of trade on some severely commercial-bank lending and toward official indebted, middle-income countries (Cote grants, net official loans, and foreign direct d'Ivoire and the Philippines, for example), the investment-persisted in 1990. strong export performance of many of the Aggregate net (long-term) transfers-aggre- severely indebted, middle-income countries gate net resource flows minus the cost of (Costa Rica and Mexico, for example). servicing the stock of external capital, includ- The nominal value of the debt of the devel- ing interest on debt and reinvested and remit- oping countries increased by about 6 percent in ted profits-turned positive in 1990 after hav- U.S. dollar terms in 1990. Two factors, in ing been negative since 1984; the magnitude is particular, were responsible: an increase in net still well below the level of the early 1980s, lending flows and a significant appreciation in however. The decline in aggregate net trans- the dollar value of the nondollar debt stock. fers since the early 1980s has been chiefly the Also, the strong export performance of many result of the decline in private lending as SIMICs contributed to an improvement in the highlighted by the substantial negative trans- debt-to-exports ratio. While nondollar interest fers on account of long-term debt in this period rates rose sharply in 1990, dollar interest rates (see Table 2-6). The increase in aggregate net declined. This factor, along with the continued transfers in 1990 was caused mainly by an implementation of the Brady initiative and increase in net lending from official sources, improved terms on Paris Club reschedulings, much of which, as noted earlier, was used to resulted in a lower ratio of debt service to purchase collateral. exports. As for the debt situation, the debt indicators showed a modest improvement in 1990. The factors responsible for the improvement in- Toward the end of 1990, an important development in clude major debt-relief operations such as the voluntary commercial lending to highly indebted sovereign implementation of the Brady initiative for pri- borrowers in Latin America did take place. Following vate debt, forgiveness of official development reentry into the international capital markets by Mexican assistance (ODA) debt, easier terms on Paris and Venezuelan corporate borrowers, Chile obtained a $20 million loan from a Dutch bank at a rate one percentage Club reschedulings of official debt, continua- point above LIBOR, the first totally voluntary unsecured tion of other programs of debt and debt-service sovereign bank loan to the region since late 1982. 34 The Economic Scene: A Global Perspective

Table 2-6. Low- and Nliddle-income Economies: Long-term Debi and Debt Service, Selected 1'ears. 1985-90 billions ei LS doliar :,nd perceni i All lom -and Se.ereh indebtei. middl-in.orne middl-inL'Oimc econolrriie ecnomnies SibSjharan Africs

Item lYMS 1489 IY9' I 19Xs 1Q89 !e99 148 1489 I9Q41 7 Debt ouiiandine 't67x 95i8 1,l15.1 419.3 46 .S 474 3 76.1 124.6 139.1 O}fficial 1 ;I 38.3 47.4 SI 3 ,9 38 2 43 7 ht,.1 70.! 7 . Priiate I'; I 26 48 72.17 hl 8 5h 1.934 29.9 2'.89

Deblt -, of GNP 3'.4 34.9 36.4 56 .2 45 4 4' . 4-2.6 83.3 96.,8

DeNm Net' c ''.5.2 115.3 1196 49.5 45 2 43 1 9.1 6.7g 9.4 Inierevt pa%meni, -3.4 51.9 52. 3t2.4 253 21S .4 3.3 4.7 (lfiLilal I, I 21.1 32.1 38.3 133 26.1 3.1.4 3-1.1 52.1 65.- Pr%mte j i ,s.9 6'.9 61h. S6.3 73 9 68.t 65.9 47 9 34.3 Principal repa menl SI 9 nu.4 h7.4 171 19.4 21 7 4 4.7 Official 1'I 2t4.5 33.9 3.7 242 34 7 25 252 455 5.7 Pn'.lie ¾-i 7.5 h66.1 64.3 7 5 53 67.5 74 8N 54.5 47.3

Dehi-ser% iceratio 24.tl 1 ,S 1 9 31.-I 1I.'' 20 23 1 l6.9 210.6

A%erasze n[ere't rale on ne\t commItmenk I; 6.7 n.a b 7 4 n a. 59 34 n.a. OffICi.al '` 8. 3 5.6 n .,. 7.h 66 n.a. 4.1 3 3 n.a. Pri . tI[ .I 9 .5. n a .5 9 A n.a. 9.h 8.6 n.a.

Di,:tur;emenit S4.7 8. 9- 1 29 6 2.5 33 f S 3 9 I Iii I tffic i..l U 'I 36.4 46 I 52.9 38 (I 51.1 5ki I 66.6 79.9 Pri\ak -i 63.1.I 1.9 47.1 h2 (I 48.9 41 3 4h 9 13.4 2).1

Net reoLource tlo%% un lonl-term IendingI 32 .9 22. 3 9.8 12 2.6 12 3 2 6 !.h 5.3 Net tr.insferson long-term lendirni -2i.5 -' Y.6 -22.5 -19.9 -2'.- -Y 5 -119 2.3 0.7

C a. Ni -.-. iahle Ct-.:cr I I, .ounzr.c. in Ihe Wcrld Bank Detior Repr..nin S- rem

D:bt ,r. .c, r.er.c-n'ane oi c-.port- of.olid- i-er'

L. D,Lnur-,menl, rnum, j ,uAl,'prinfL li repj\menir on oingtrm lendini Nei re'-:.cc ni1o,, niina- aId Ih miereir '3nmenu on l.-nQ-ierm dehl

Brady-initiative operations have been con- stance) and the diverse interests of its creditor cluded, in chronological order, in Mexico, the banks. Philippines, Costa Rica, Venezuela, and, in Several new financial instruments evolved in 1991, Uruguay. Morocco has a conditional the course of 1990-for example, collateralized agreement with its Bank Advisory Committee, par bonds with low fixed-interest rates, bonds and other operations within the framework of with low initial interest rates that rise over the initiative are under discussion. The initia- time, and recapture clauses linking debt ser- tive calls for a negotiation between the given vice to objective indicators. As a result of the country and its creditor banks, utilizing a mar- four operations completed in 1990, the face ket-based menu of options so that a balance value of commercial-bank debt has been re- can be reached between the specific needs of duced by $11.5 billion: In net terms, the prin- the country (cash-flow relief, debt-service re- cipal of most commercial-bank debt has been lief, and reduction of debt overhang, for in- effectively offset in Mexico and has been re- Primary-commodity Market Conditions 35 duced by 62 percent, 8 percent, and 54 percent, hicles such as the World Bank's SPA for respectively, in Costa Rica, the Philippines, debt-distressed African countries and the In- and Venezuela. Some of the new instruments ternational Monetary Fund's structural-adjust- have reduced interest rates and have converted ment facility (SAF) and enhanced structural- floating-rate debts to fixed-rate ones. The col- adjustment facility (ESAF). lateralization of principal and the buyback For some of these countries, this external were financed through multilateral and bilat- support is likely to help restore healthier eral (principally Japan) disbursements on loans growth and ease balance-of-payments pres- of $6.4 billion, as well as through use of the sures, although the effects for the oil importers countries' reserves. In addition, new funds, are likely to be delayed. For other countries, a amounting to $3.5 billion, have been provided deeper concessionality in debt-relief measures by commercial banks (to Mexico and Venezu- is needed. In this regard, one proposal (the ela, in particular). so-called Trinidad terms), made by the U.K. The results have been very positive for Mex- Chancellor of the Exchequer at the time, John ico, in terms of both growth and improved Major, and another by the Netherlands Minis- financial condition, through return of flight ter of Development Cooperation, Jan P. Pronk, capital, increased foreign direct investment, would represent significant advances.7 For ex- and access to external capital, albeit at higher ample, the Trinidad terms would increase the spreads. It should also be noted that Mexico grant element from about 20 percent under the has benefited from increased oil prices, as well current Toronto terms to 67 percent. as from its strong adjustment program. In the The limited access of developing countries case of the other countries, the impact of the to external resources continues to be a vexing Brady-initiative operations is not yet clear. problem. Although net flows of resources to For many of the middle-income countries, developing countries have recently increased, the burden of official debt is also significant. they have been absorbed by interest payments, Traditionally, reschedulings of official debt by profit remittances, and, more recently, by have been handled in the Paris Club and bilat- purchases of collateral, by debt buybacks, and erally. In September 1990, the Paris Club by debt-equity swaps, leaving little to finance agreed to provide longer maturities and grace additional imports. In fact. in a reversal of the periods on reschedulings and to provide for the trend prior to the 1980s, developing countries possibility of debt swaps. Through January as a group have been running a surplus in trade 1991, four lower-middle-income countries (the in goods and nonfactor services with the high- Congo, El Salvador, Honduras, and Morocco) income industrial countries. and one low-income country (Nigeria) had benefited from the new terms. In addition, Primary-commodity Market Conditions understandings that reduced the net present As growth slowed markedly in the industrial value of future debt-service payments by 50 countries, the World Bank's nominal-dollar percent were agreed to with Poland and Egypt. price index of nonoil primary commodities Bilaterally, official creditors have contributed declined 6.4 percent in 1990, following a 2 to debt relief for countries implementing strong percent fall in 1989 (Table 2-7). The price adjustment through provision of new finance, decline in 1990 was more pervasive than in reduction of concessional debt stock, reduc- 1989, and all the major groups (beverages, tion of interest rates, and debt forgiveness. The cereals, fats and oils, and metals) but energy main beneficiaries in 1990 were Egypt, some of were affected. Because the U.S. dollar depre- the smaller Latin American countries, and ciated against the other major currencies in some East African countries. 1990, the decline in the primary-commodity Low-income, severely indebted countries price index was much higher in real terms are concentrated in sub-Saharan Africa. Al- (using the unit-value index of exports of man- most 70 percent of their $116 billion external ufactured goods from the G-5 countries- debt is owed to official, mainly bilateral, cred- France, Germany, Japan, the United King- itors. During 1990, almost four dozen of these dom, and the United States-to the developing countries received relief in the form of debt countries, or the MUV index for short, as the forgiveness totaling an estimated $4 billion deflator) and in terms of special drawing rights (Senegal and Madagascar had about $600 mil- (SDRs) than the nominal drop. The constant- lion in debts forgiven, while some $500 million dollar index, after deflation by the MUV index, of Zaire's debt was forgiven). The Paris Club fell 11.9 percent. rescheduled about $2.3 billion of seven coun- tries' official bilateral debt under Toronto terms' with concessional options, and multilat- 6 See page 66 for details of Toronto terms. eral institutions provided support through ve- 7 See footnote 7 on page 46 for details of Trinidad terms. 36 The Economic Scene: A Global Perspective

Table 2-7. Commodity Prices. 1983-90 ia%erage anriial percenl 4 e ih.Cnge

Comrrirridals pticeIS ~19.L.8 I1INS99 9 In currewll-d.'ll'r 1hi0 F.o.od and be%eragew -0.2 IK.3 -5.9 -7.6 Nonfood agriuliure - 2.2 1.f -tJ I -t! 2 Mierals anJ mtneral i.o 38.5 3.5 -6.9 Toial nonoil 1.8 20 ' -0 f -6.4 Petroleum - 13. 5 -2 1.01 19 8 30.2

f(i rl:Ld rrtiro' TLital nonoil - 4 4 12.1 - I.- -11.9 Petro!um -188 -'h 1.3 2.3 22.2

I11 Srpe ihil fus. !llg Iigillt TL'1:rl nonoil -2 9 15.7 1 3 -11 2 Petroleum - 17 .6 24.1 '6.3 23.6 NotE \%eigha in the -,Tmm)dit -price tndeke' are ..orn-mditv e,.r- o all de,elopmjn; ctuntne~. ri Dellaieki tb uniiv.wlu. r,de\ ot rnanuf.,iurec e\pormntr.rn ihe t:, counI.riF ne. German%. Japar, the Unmled Kingdorr,. Ind the lnited Sidie, to the &\ielopine o.s,trar..

Coffee prices declined 17.4 percent in 1990 percent, and relatively smooth mine produc- in current-dollar terms, the first full year after tion. the collapse of the International Coffee Agree- Crude oil prices declined during the first half ment's export-quota system. Large increases of 1990 (the result of higher output from mem- in coffee exports, some from accumulated ber states of the Organization of the Petroleum stocks, contributed to the price decline. Cocoa Exporting Countries, or OPEC), and then rose and tea prices continued to be depressed, sharply in the wake of Iraq's invasion of Ku- despite dry weather in West Africa for cocoa wait. Although about 4 million barrels a day of and supply disruptions in India and Bangladesh Iraqi and Kuwaiti crude oil vanished from the for tea. Among cereal crops, the drop in wheat market, this volume was quickly offset by prices was the steepest (22.4 percent), as world increased production by other countries; nev- wheat production in both wheat-importing and ertheless, prices increased and remained vola- wheat-exporting countries increased sharply. tile at high levels mainly because of concerns The prices of rice and coarse grains fell, though about disruptions to supplies in the event of to a smaller extent, for the same reasons. war. The backdrop of sluggish demand for World sugar production also increased sharply petroleum products did not seem to have had in 1990, by 4.3 percent, pulling prices rapidly an effect in this situation. Petroleum prices downward in the second half of the year. remained the only exception to the otherwise Prices of most fats and oils generally declined downward trend of all commodity prices. because of higher production in the 1989-90 season, although prices of groundnut and soy- Trends in World Trade bean oil rose somewhat. In 1990, the volume of world merchandise Among the industrial raw-material commod- trade increased by 5 percent, a deceleration ities, cotton prices increased because of poor from the 7.5 percent expansion in world trade production in the Southern Hemisphere and in 1989 (see Table 2-8). The value in U.S. relatively strong demand. Natural-rubber dollars of world merchandise trade, inflated by prices declined only moderately despite slack- the weakening of the dollar against European ened demand from the automobile industry, as currencies, expanded by 13 percent to a record Malaysian production was adversely affected level of $3,470 billion. The value of trade in by bad weather, and higher petroleum prices commercial services also expanded signifi- increased the cost of synthetic rubber. The cantly, by 12 percent, to $770 billion. Prelimi- prices of most metals and minerals weakened nary figures indicate that, as of December substantially, clearly signaling the end of the 1990, for most countries, the effect of the Gulf price boom of the preceding three years. The crisis on merchandise trade was minimal; it did main causes were the slowdown in the growth substantially affect the trade in commercial of industrial production in the industrialized services, particularly air transport, however. countries, from 3.7 percent in 1989 to 1.8 Several countries were adversely affected by a Trends in World Trade 37

Table 2-8. Selecled Trade-performance Indicalors. 1965-90 .. rage .nnu.tl percenraage chAn6vi

Commlr group and indicator 14.'II-A)ISi-' 1'@0 1I4_A

Import volume 5.4 .4 9 ' 4 E'.port %olurne 5 2 h ;' Ttrm- ot trade LI 5 -'. 3.2 -0.2 Sat-ueh,artin A./l a Import volunie 33 -5 2' 4.3 Export %oIlume 2 I -g 7 ' 9 Term,, of Lr.ide -4, 1 7'T IJ.n

Impon volume '.' '. 14.3 h.- E porT olume 8.4 9 7 It.4I,, Trms of trade -0.2 -'] f 3 - It'

Ebuopei. VIddI/tLa i. ml .E 'ii It tiitd- Import 'olume 4.., 1 9 h.2 4 h F t'rtPon IU1o7 4 ; 5 3 4 , 2 Term, of trade tl I -- 1.5 -u. i

Laia .4kil,^lk .i.tL J III t (it'C h.l"I a1 Impon %oilume -1.II t3, .2 E\porr 'olunie 3 -1 .4 4 5 1. Terms of trade I - 3.2* .4 1I

Mcinotlrlaitha/lll irt- Wofrld trade 4 ; 4 '

NUTrF T,

agriculture and textiles and clothing, previ- tions, no final resolution will be possible before ously excluded from normal GATT rules, and other important matters are settled. In July to new areas such as services, to trade-related 1991, however, the Commission of the Euro- investment measures, and to intellectual prop- pean Communities approved a proposal- erty; and to strengthen the institutional basis of which must still be acted on by the members of the GATT. The result of these endeavors will the European Community (EC-that would shape the trading system for many years to revamp the EC's agricultural program by re- come. ducing production and cutting subsidies to The interests at stake for developing coun- farmers. The proposal represented the most tries are considerable. A recent report, pre- fundamental reshaping of the EC's common pared by the staffs of the Bank and the IMF, agricultural policy since its inception thirty documents the effects that numerous agricul- years ago. With so many central issues to be tural and industrial policies-including domes- resolved, the negotiations may well continue tic subsidy and price-support programs, as well through 1992, although many countries have as tariffs, quotas, and other nontariff barriers expressed a desire to complete them by the end to trade-have on developing countries. Al- of 1991. though it is difficult to put a precise number on these effects, several studies have concluded The Environment that the annual costs in forgone income to the Environmental issues continued to receive a developing countries amount to about twice great deal of attention as countries grappled the annual interest they pay on their public with the question of the sustainability of eco- external debt and are about twice the annual nomic growth. While most would agree that volume of the official development assistance sustainability is a desirable objective, there is they receive from the industrial countries as yet no consensus as to how to evaluate the -although the benefits may differ substan- long-run viability of alternative development tially from one country to another. strategies. At the meeting of the Trade Negotiations The momentum for addressing environmen- Committee in Brussels during the week of tal problems has been accelerated by the forth- December 3, 1990, ministers failed to reach coming United Nations Conference on Envi- agreement on the conclusion of the negotia- ronment and Development, to be held in Brazil tions. Several outstanding issues remained, the in 1992. National governments and interna- most prominent of which is liberalization in the tional organizations have begun preparatory agricultural sector. Following the suspension work on environmental priorities and policy of negotiations in December 1990, the director- proposals that will contribute to an Earth Char- general of the GATT conducted a series of ter and an environmental agenda for the twen- informal discussions to reengage the negotia- ty-first century. Preparatory committee meet- tions. As a result of those discussions, par- ings are being held to commission research and ticipants agreed to conduct negotiations on review and organize material for the upcoming agriculture to achieve specific binding commit- conference. The World Bank is devoting World ments in each of three areas: domestic support, Development Report 1992 to the theme of market access, and export subsidies. With this environment and development. breakthrough, the Trade Negotiations Com- The issue of global warming continued to be mittee met in February 1991 and resumed the debated in international fora. There is some negotiations. evidence that the burning of fossil fuels, defor- The impasse on agriculture has slowed prog- estation, some agricultural practices, and other ress and prevented the conclusion of agree- human activities will raise global temperatures ments in the other areas covered in the nego- through a "greenhouse effect." There remains tiations. The resolution of many of these considerable uncertainty, however, about the outstanding issues would appear to hinge on magnitude and consequences of such an effect. substantive progress being made on agricul- Moreover, the question of burden sharing is ture. Furthermore, the developing coun- critical, since past accumulations of green- tries-which have participated more actively house gases have come largely from the indus- in these multilateral trade negotiations than trial countries, while future growth in emis- ever before-are reluctant to make conces- sions is likely to come increasingly from the sions in several areas until there is tangible developing countries. progress on issues of importance to them, The first meeting to establish a framework including textiles. Although the broad outlines for an international treaty to address global of a consensus had emerged toward the end of warming was held in Chantilly, Virginia, in 1990 on plans to phase out the Multi-Fibre February 1991. Although there is still uncer- Arrangement's regime of textile trade restric- tainty about global warming, there was a con- The Environment 39 sensus on the need for further research and for tional waters, and biodiversity. The total fi- increases in energy efficiency to reduce carbon nancing available, $1.5 billion, will be provided emissions. The European Community, as well by a number of donors in tranches over a as a few national governments, has committed three-year period.8 As of June 30, 1991, twen- itself to stabilizing its carbon-dioxide emis- ty-one countries, including eight developing sions by the year 2000 and reducing them countries, had contributed funds to the facility. thereafter. It is expected that results of GEF activities will The Global Environment Facility (GEF), to be incorporated into the ongoing lending pro- bejointly implemented by the World Bank, the grams of the World Bank and the regional United Nations Development Programme, and development banks. the United Nations Environment Programme, An agreement governing exploitation of the was launched in 1990. The GEF is a three-year Antarctic was drafted in Madrid in April 1991. pilot program to provide concessional financ- The members of the thirty-year-old Antarctic ing for projects that help developing members Treaty have agreed not to mine the Antarctic address global environmental issues. For ex- for fifty years. This agreement was an impor- ample, developing countries that incur incre- tant example of how countries can forge trea- mental costs for complying with the targets for ties that serve the global commons, even reductions in chlorofluorocarbons, agreed to where there are conflicting national claims. under the Montreal Protocol, could receive reimbursements from the facility. GEF funds are intended for projects in the areas of green- house gases, ozone-layer depletion, interna- 8For details, see page 61. 40 Section Three The World Bank-Fiscal Year 1991

The Gulf Crisis and the Bank's Response The Bank's response included: * preparation, where needed, of emergency- The Gulf crisis, which affected a large num- assistance operations to help countries resettle ber of developing member countries of the and integrate returning workers and improve Bank, both inside and outside the Middle East infrastructure and social services; region, triggered a swift reaction by the Bank * plans to increase cost-sharing limits to to help those members whose near-term pros- enable the Bank to finance a higher proportion pects were put in jeopardy. of costs of ongoing and new projects; By mid September 1990, staff analysis of the * where feasible and appropriate, plans to effects of the crisis indicated that many devel- accelerate disbursements, advance lending op- oping countries would be seriously affected, at erations, supplement ongoing operations, and least in the near term, primarily as a result of increase lending for structural and sectoral higher oil prices (these are the MSA, or most adjustment; seriously affected, countries). In addition, * provision of policy advice, based on a some ten or so countries (the MlI, or most careful case-by-case review, on how countries immediately impacted, countries) were imme- could further adjust their economies to cope diately affected by losses in revenue from with the crisis and sustain their poverty-reduc- tourism, workers' remittances, trade and re- tion efforts; and lated services, and Iraqi debt service, as well * use of existing mechanisms, such as con- as by substantial reflows of workers who sultative groups and the special program of would need to be resettled.t assistance for Africa, to help mobilize and co- The Bank gave immediate priority in its ordinate support for the affected countries as dialogue with its borrowing member countries required. to designing and implementing appropriate pol- The Gulf assistance program led to an in- icy responses that recognized the uncertainties crease in IBRD lending of $1 billion in fiscal ahead. Initial results were encouraging. Sev- 1991 and an increase in IDA lending of SDR314 eral oil-exporting developing countries (Indo- million over the previously planned IDA com- nesia, Mexico, Nigeria, and Venezuela, for mitments. example) acted on the assumption that the Funds needed for the additional IDA lending extra oil revenue would be temporary and thus were covered by the use of existing mecha- did not increase the volume of their domestic nisms (carryover of funds, totaling SDR190 spending; many oil-importing developing coun- million, from the eighth replenishment of IDA, tries prudently treated the oil-price increase as or IDA-8, that had not been committed in fiscal permanent and adjusted domestic petroleum year 1990 and reprogramming of resources prices. available under the ninth replenishment, or The Bank prepared an operational response IDA-9, totaling SDR80 million) and additional that, because of the volatility of the situation, commitments, totaling SDR130 million, against had to be both phased and gradual, and, at the IDA reflows. same time, intensified its policy dialogue. Its In addition, SDR200 million was transferred to actions focused on the most immediate prob- IDA from the Bank's fiscal 1990 net income, and lems faced by its member countries, while it Kuwait agreed in principle to increase its IDA-9 built up capacity to respond effectively to the contribution to $50 million. IDA was thus pro- needs of its member countries. For fiscal 1991, vided with sufficient additional commitment au- therefore, the emphasis was on actions that could be taken to help countries deal with the specific effects of the crisis that were either Originafy, the Mu countries were Bangladesh, Egypt, most severe in magnitude or that came on top India, Jordan, Morocco, Pakistan, the Philippines, Sri of already fragile adjustment programs or fi- Lanka, Sudan, and Turkey. The Republic of Yemen was nancing situations. subsequently treated, de facto, as an MII country. The Gulf Crisis and the Bank's Response 41 thority to meet virtually the whole of its opera- quick action by MSA countries in raising do- tional program in those developing countries that mestic energy prices and introducing revenue- were affected by the crisis. enhancing measures helped to limit the fiscal The board also agreed to raise to a limit of 35 impact of the oil shock. Many uncertainties percent-from the previously agreed 30 per- nevertheless remain over the pace of recovery, cent-the share of IDA quick-disbursing lend- especially in Eastern and Central Europe, ing during fiscal year 1991. The objective was where increased petroleum prices have added not to have a higher level of adjustment lending to the financial burden of countries already in each of the three years covered by IDA-9. experiencing serious terms-of-trade and trade- Rather, it was to avoid deciding now that volume losses because of the breakdown of the increases in fiscal 1991 must be offset by arrangements among the members of the decreases in the next two years in order to stay Council for Mutual Economic Assistance, as within the agreed 30 percent limit for the IDA-9 well as difficulties caused by their transition to period, regardless of the circumstances. market economies. During fiscal year 1991, additional IDA lend- The Mll countries, particularly the "front- ing, totaling SDR314 million, was approved by line" states of Egypt, Jordan, and Turkey, the executive board; lending totaling about were most seriously affected by the crisis, SDR310 million is expected to be presented to notwithstanding emergency financial assis- the board early in fiscal 1992. Of the total IDA tance to them from the international commu- program planned in fiscal 1991 in response to nity. Significant losses were also incurred by a the Gulf crisis, some SDR475 million, or about number of countries heavily dependent on mi- 76 percent, is assisting MII countries such as grants' remittances and/or trade (Bangladesh, Bangladesh, India, Pakistan, the Philippines, India, Lebanon, Morocco, Pakistan, the Phil- and Sri Lanka. Emergency operations in Egypt ippines, Sri Lanka, and Yemen, for instance). and Yemen were approved that aimed at set- The adverse effect on tourism was also great in ting up infrastructure, social services, and em- countries such as Egypt, Morocco, and Tur- ployment-creation programs for repatriated key. workers. The rest of the program (about Overall, however, the negative effects of the SDR150 million) is being directed at several Gulf crisis are expected to be somewhat less African and a few Central American low-in- than was originally thought likely late in come MSA countries. 1990-despite the fact that the negatives for On the IBRD side, additional lending of $1 many of the Bank's developing member coun- billion during fiscal 1991 was committed. A tries are still substantial. The basic elements of substantial part of the program was in the form the Bank's original operational response, how- of additions to adjustment operations in East- ever, remain valid, and the Bank intends to ern and Central Europe. Another major ele- press forward with the bulk of the Gulf crisis- ment consisted of investment operations in related lending operations and other support MII countries in the Europe, Middle East, and that was originally laid out. North Africa region, including a small emer- The Bank is also ready to play an active role gency operation in Jordan. That operation fi- in helping to design and administer programs of nanced part of the foreign-exchange and local reconstruction and development, in supplying costs of that country's overall emergency-re- technical assistance and additional financing, sponse program, whose total cost is estimated and in working with other multilateral institu- to be $235 million. tions to develop appropriate mechanisms for On the basis of specific agreements reached coordinating financial resources. Together with several of the Bank's borrowers, addi- with the International Monetary Fund (IMF), tional disbursements from the IBRD and IDA the Bank has been in close consultation with through changes in cost-sharing limits are esti- the members of the Gulf Crisis Financial Co- mated at $500 million in fiscal 1991. ordination Group2 to explore ways in which it Although serious losses were sustained by a might be of assistance. The objective is to number of oil-importing countries of sub-Sa- mobilize assistance for emergency rehabilita- haran Africa and Latin America, the negative tion and economic reconstruction of the coun- effects of the crisis on the MSA countries were tries affected by the Gulf war and to respond to more limited in scope and duration than orig- the longer-term development needs of the inally feared. As a result of a number of factors, notably the increase in oil supplies by Saudi Arabia to make up for lost production 2 Consists of most of the members of the Organisation for elsewhere, stability was restored to the oil Economic Co-operation and Development, as well as the Commission of the European Communities, the Republic markets, and the probability of sustained high of Korea, Kuwait, Qatar, Saudi Arabia, and the United oil prices was much reduced. In addition, Arab Emirates. 42 The World Bank-Fiscal Year 1991

countries in the Middle East.3 In this regard, crease in the international price of oil following the Bank welcomes the opportunity to resume Iraq's invasion of Kuwait, and the changed activities in Lebanon, which has been devas- position of the East German market. tated by fifteen years of civil war, and whose The breakdown in CMEA trade arrange- difficulties were compounded by the effects of ments occurred in two stages. In the first stage, the Gulf crisis. it was decided that prices for goods traded The Bank's response to the crisis in the Gulf would be set equal to world market prices, and was the subject of several discussions with the payment would be made in convertible cur- executive directors during the year. Beyond en- rency starting January 1, 1991. This decision dorsing specific recommendations on easing lim- caused a substantial deterioration in the terms itations on provision of quick-disbursing IDA of trade of the Eastern and Central European finance and on advancement of drawdowns from countries vis-a-vis the Soviet Union, as they the IBRD, wide support was given to the Bank's had previously benefited from low-priced en- general two-phased approach-one that com- ergy imports from the Soviet Union. bined immediate action to support the most In the second stage, the political situation in seriously affected countries with careful moni- the Soviet Union led to a disruption of cen- toring of developments over the near term. trally negotiated bilateral trade arrangements. At its April 1991 meeting in Washington, With bilateral arrangements decentralized to D.C., the Development Committee welcomed the enterprise level, substantial uncertainty the prompt response and ongoing efforts of the emerged regarding both the competitive advan- Bank, as well as the IMF, to assist those tage of many traditional exports of the Eastern countries seriously affected by the Middle East and Central European countries and the ability crisis. The committee also urged the two insti- of Soviet enterprises to secure convertible tutions to continue to analyze the financial currency for payment. requirements of all the developing countries With respect to imports, the disruption of directly affected by the crisis. The Bank and crude-oil production in the Soviet Union and the IMF were called upon to assist in the the diversion of some crude exports to markets mobilization of resources in support of the outside Eastern and Central Europe caused a affected countries. physical supply problem, as well as a price Members of the committee stressed that shock, as countries of this subregion had to financial assistance to these countries should turn to alternative sources of supply. seek to facilitate, rather than substitute for, the The further but temporary increase in the sustained implementation of sound economic price of crude oil, the result of the events in the policies and adjustment programs. The com- Middle East, was a heavy blow to the energy- mittee underscored the importance of an ap- intensive ECE countries. The energy-price propriate and effective coordination arrange- rises in the second half of 1990 resulted in an ment to deal with reconstruction, as well as estimated $1.5 billion increase in the import bill with the adjustment and longer-term develop- of the six major ECE countries. Moreover, mental needs of the countries of the region. several countries have lost export markets, workers' remittances, and/or construction con- Eastern and Central Europe tracts in the Gulf region. Iraqi debt to these In contrast to the euphoria that existed in countries (excluding Yugoslavia) totaled $4.5 Eastern and Central Europe (ECE) a year ago, billion in 1990. These countries' imports from developments during the second half of 1990 Iraq in 1989 exceeded their exports to it by and early 1991 have led to a sobering realiza- some 70 percent, and ECE countries expected tion of the difficulties of transition and the repayment through expanded crude-oil imports, short-term cost of reform. These difficulties which would have offset some of the costs of have been greatly magnified by large, and to an the CMEA dissolution. extent unforeseen, external shocks. German economic and monetary union, fol- Most countries have opted for rapid eco- lowing the unification, also had an adverse nomic transformation towards a market econ- effect on these countries. The former German omy and have experienced difficulties as pro- Democratic Republic was the most important duction declined and unemployment rose. (See Box 3-1 for details of a study that analyzed reform efforts in the Soviet Union.) This has been particularly marked in Poland. In addi- 3 In addition, the members of the Gulf Cooperation Council tion, these countries have been hit by a number (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the of exogenous shocks-including the break- United Arab Emirates) are establishing a program to support development in the Arab countries. This program down in trade arrangements of the Council for will put special emphasis on the promotion of trade and Mutual Economic Assistance (CMEA), the in- private-sector activities, as well as on economic reform. Eastern and Central Europe 43

Box 3-1. The Ecosnonns.or the So ieletnion

During fiscal thcLuCif Bank undertook is lirgt mcn! it incre.'ed d. meviiz ,nd exiern,iI compe | substantial inal. tical "ork on thr econlrrin ofhe th[h.en. and he ;upported bt a clarihieciion iii Soviet lnio-n. In Jul\ 149lk.the leaders of the propcrtN riglh-. the enc,iurjgrrent It privaie seven major industrial countro> 6-->. aftcr con o\ntr.hip. and the commercializdtion of l,reLr sulfine %%ith the Soviet authorities. asked the sgate cnterprises. The de%elopment or the pri%sAte World Bank. the International NlonctarN Fund. sector.couldbe tostered b\ the saleof sniAllcalc the Organi,sttion tot Economic (o-operation and enterprtses and enrcouras.meni ol ne\ pr ivate- Development, and the European Bank tcr Recon- sector ac,tr\tiet. The commn] rciali,zaioni of large striietion and Development to carry, oul a joini slite-tiNwred enterprises \sOUld pros\ide huLdeLI stud\-of the SovxieL economy. The purposes oatthe disciplhnc nd \stid be a step totsard hoth more stud w%ere it) recommend to the So\iet authoiri- tfice;,it managemiet and prixatiz.a,ioti. rhe es- lie- in-st w%hich the miglht accomplifh their tahlihimeni -f .a commercial banking s;tem tS godl of estahlishing marnket-oriented econom- \c- another ess.-rittl chance that is required. and to recommenid to the industri,l nation' ihe Since viluntarsr contracis stould replac: adntin- criteria under \shich jssistance could efleciselv istrative direetites. the lekal frame%\ork and audc- support such economic retorins. ;tal -;'5-ILt nctessar\ [or a market econorom A1report. The LE_t.usI V ,,f fitele U.`)R-Sii,i- wo-uld 1ls has' to be pui in pljcc. mrwn atntd Recomnmnuendanu.os. s as bubmitied Lo These rcfornrL etlorts stould need to b- hut- the C.7 countries nd tc. tile So- elcgoernnent in ircsed h.% ii-hitr tinmncl polices id ;a r,alitic December 1991i.' The full report. in ihrce-soi- ex;chance-rat'. pilij>io as totorontainilaiiinair umes. became available in March. Both reports pressures and pres ent nalor exiern-al inibal- sterv mAde .\a'liable to the publil. anescA. to'e intro,du.tion II! reioIrnns t,uld Bank participants in the llint-srud; mtssions suhsldntiall aftect both employ,ment and the found the Ssliet teconomy in serious ili'rrav cos--t t hln. ineh progrini.i .uld hatc to in,Audc I and the situation deleriorated tarLher during the an ineonmLs poltc. and prsisiion of an effective course o the stud,. s,.ocial safer net iincluding the creaition ot an Diss;atisfed vith the results of cential planning adequate s oiciiior unemplo;[leint' cimpensa.- and admministrat\e manacement otf the countIn. tions. The ruport of ihe oint s.tud; rec.intmnnds. the Soviet authoritte miutated 3 s ortC5of eO- .a j %as of couhionine ihe inmpact or the reforms n'mic-retolm meajsures in 19s5. These inuil.l on ihe poorer segments .o N-ciety. smnic contin- peresur.ika, or restructuring, measures vser. sic- uatiin Af subsides. hows er. the report ca utions niticantly expanded alter 1Y;. sshen ma-lr sv!- that subsidies sh`uld appl\ unts Lk a lnimied temie changes began to be tnt'duced. Altlough iUjanlrtN of lo-d lor each household. the refornis ettecti,ely dismantled ihe old skis- The reporlt irndicik.d that lechircaii -lksiltncc fem. the haste elements needed tor a market frim industrializcd eiiuniries could pUl\ in im- cconomy were nor established. and mneisures to portant role in supporiins the Soi.ieI rch:orm et- rnatnt,ain adequate maeiiiee0Ftmic c-nmril dur- firt. Fi,- iii aidJ d celetleprd,Prcte ;asssianee 'in tng the transition process had not been idopted. particular. m I h environtm'nt. cnerg . and inlra- The recent situati-n- tcne ol increasine eco- siructure setrsi could its- pla; in importint nomic disruptttn. s\ith erowtng shioriascs and role. Balance-ot-pa.,niti; suppo)rt. perhapirs ir declines irn output-has heen caused. in larce eluding assistanec thrn-uch a stabtltzatiion lund. measure, by the bre,kdos a in lthe svsreni fkt w%ould be apprnpriate .nlv ihen the Soviet gox- supplying inputs needed in ihe producion pro- ernniena had ad,pied j m,!aol and e. mprLhnsisve cess. Although it nost sL-ms impossifie for the conomrnie-retorm program. The report to.mncluded covernmenl to revert to- the e,rlii-r s tuni of that. \ilthour -uch a r,Iirni. addition.l financial administrat\e mainagementtr.-at aI,t suithtuL res,urecs o-uld he of Iittlc or no lasting s alue. comnpleteN ahandoning both pc m'sn.i,A,? and \\ ith It. aslissiance COuld provid tmpn-rialit up- gloi1tost-- it IS also prosIngicxccedinels difticult port. during a time ofI a ditficult iran ition. t! tor it to es..Ilthh a market-orrinted economs . iniceriae the econ-im\ lt the liSSR into the To o\ I,renime the current pr:-blemis nd clsahb. Vsorld cconiims. tsith hcnefits for all partners lish a market-oriented economy. boLth tmprivcd macroeconoimic managemntir and a numbiher ot major and systemic reforms are needede. The interrel3tionships among the mainv elcmenti tn a ln!,rnjmarjajl li,:r\tars Iund. I.B,..r i 0[r.. a isa- sslirkable reform proaram mean tha:t man> ditti- ion.n e r .-. 'pIra'on m ri lopres. and Cult issues murt be takickd 3a [he sanTe time. ELari'-pi BanIs .i-r andj iee.rrii. The joint srudy recommend, a signihcant and 7w F.. '7icI .1t/h t %%R--,- '. a.m,;.I RL -hu--h broadly based liberaiAzadton of pttceC sshile tatins i\\a\1.hinicrn Fnc R T.L. tmn - firw - r Li..-uncIpni,eriL. and prices %ouldsurel, rise. vuppI nrttorks;could ii.-n E,noini 1 be recstablished by lttine gooids be alloLated and Fur pCariknki Re. i-:tueii* it and L cenn prices determ_ined hbymarket torces. Price liber- 1 sIAI 1,.)ii I . -.111i1 t_l,fii 1r. in! itio alizatorn wiiuld hat-e to take place in an ens iron- rI.'. p ru i....I,mdLict-sl.irnnrr. tt-I 44 The World Bank-Fiscal Year 1991 supplier of high-technology engineering prod- their reform programs, the governments of ucts and chemicals within the CMEA and was Poland and Hungary prepared brief medium- an important customer for consumer goods term policy documents with the joint support from the Eastern and Central European coun- of Bank and IMF staff. Effective coordination tries, as well. In the short run-until a greater of assistance plans with the Commission of the range of ECE exports becomes more compet- European Communities, the Organisation for itive-German unification means the likely Economic Co-operation and Development, the loss of the eastern part of Germany as a major European Investment Bank, and the European market for such goods. Bank for Reconstruction and Development In addition to these economic shocks, the was developed. spread of democratic processes in Eastern and The Bank's lending strategy for Eastern and Central Europe has inevitably resulted in more Central Europe aims at supporting structural complex decisionmaking. Delays in the design and institutional measures critical for the suc- of reform programs and in policy initiatives cess of reform programs through structural- have occurred in Hungary as a result of strikes; adjustment loans, as well as through technical- in Poland, as a result of presidential elections; assistance loans that provide external expertise in Czechoslovakia, because of differing views in priority areas and support needed institu- on the priorities for reform; and in Bulgaria, tional development. The amount of Bank com- where the political opposition held out for a mitments to the ECE countries during the year coalition government to implement an agreed expanded rapidly, reaching $2.9 billion, an in- agenda of reform. (The greatest disruption of crease of $1,098 million over the previous year. all has occurred in the southern European Some $809 million was disbursed during the country of Yugoslavia, where declarations of course of the year. sovereignty by the two northern republics have been challenged by the most populous and The Special Program of Assistance for militarily strong republic, Serbia, which favors Sub-Saharan Africa a continuation of the federal state.) The second phase of the special program of Political and economic reforms continued assistance (SPA II) was officially launched in throughout the subregion, however, and, in the late October 1990, when eighteen donors past year, Romania and Albania have made pledged $7.4 billion in cofinancing and coordi- important and sustained efforts to improve nated financing to support adjustment pro- their political and economic systems. grams in the low-income, highly indebted The Bank and the International Monetary countries of sub-Saharan Africa.4 Fund (IMF) initiated programs with the Roma- The cofinancing pledges are one of five nian government during the course of the fiscal components that comprise the resources year, and, on January 30, 1991, the group of within the SPA framework. The others are twenty-four industrialized nations agreed to adjustment lending under the ninth replenish- bring Romania into the economic-aid program ment of IDA; supplemental IDA adjustment set up more than a year earlier to help emerg- credits from a share of the investment income ing democracies in Eastern Europe. Albania of, and repayments to, IDA; resources from applied for membership in both the Bank and the International Monetary Fund's structural- the IMF in January 1991, and an initial fact- adjustment facilities (both the regular facility, finding mission was undertaken. the SAF, and the enhanced facility, the The Bank now has an active program of ESAF); and debt relief, including forgiveness lending and economic and sector work in all of concessional loans and rescheduling of non- the Eastern and Central European countries concessional debt on softer terms. with the exception of Albania. The economic The strong donor support for the second and sector work attempted has taken the form phase of the SPA stems from the evidence of comprehensive introductory reports on the amassed during the SPA's first phase, covering Bank's two new borrowers, Bulgaria and calendar years 1988-90, that domestic policy Czechoslovakia. reform, coupled with adequate financial assis- In the other countries, analysis has empha- tance from bilateral donors and international sized the industrial sector, the environment, agencies, substantially improves economic and the social safety net and human resources. Economic dialogue has been strengthened by close collaboration between the Bank and the IMF, with regular joint participation in mis- 4 Pledges were made by Belgium. Canada, Denmark, Fin- sions and exchanges of views on financial and lands,land. France.Nor-way, Germany, Spain, Sweden,Italy, Japan. Switzerland, Kuwait. thethe Nether-United technical-assistance programs. In an effort to Kingdom, the United States, the African Development ensure consistency in the main components of Fund, and the Commission of the European Communities. The Special Program of Assistance for Sub-Saharan Africa 45

Table 3-1. Sub-Saharan Africa's GDP Growth. 198X-90 Lt v.eighied i%eraee %.eighie1 a.-races

Indicator asnd;.,intri gr.our l'I:tL, Ilwg i_x- IL)i;JLI I.--iL>.;;k 1YN5-' !8 t1rs-

rat L'tIL'.sIlllllhJ kit.l 7/I Jlilo ipercentage changei SPA core countre, 1.0 I2 4.11 1.1 1 6 4.3 Non-SPA countre," 3. J.'.. 2 5 2* 1. Other ID.A-onl-' .4 2 9 1.4 2 4 '.' ii 5 IBRI) horro%,ers" 4.1 34 l 1 .1 24 2.1 All sub-Saharan Africa' I. 7 ' I 1 4 .) '4 Nan-SPA. cvunirieK less NigenJ 12 3.6 '.7 I.1 Non-.Atric,n developing colintrie, 3.1 5.0 3..4 Dne.rmnr .f*t' rwiihS r,at. I mnumh.r ot countric,i SPA. ore countrieN 211 2ii 21! O%er 6 percenl ° 3 2 31+ It, 6 percent - 12 i) to 3 percent 9 14 Neg:;ti' e h IJ Nun-SP.A countries '(I(10 2II 0 er 6 percent 4 3 3- to h pcrcent 4 - h 11to 3 percent 9 9 * Negatle .4 3 4 NL- .,PPIr hCk

aIncludeN S.:rmja. Zaire. and Zanibia 7Zrnhj i, n,.%All sP x Crc tLalTlifr i EJlude, Comor.o" DJLbosilI. dnd qlJU1on1I Guinea bc.mo,e o ini.ornpit e J.ij h E%cluide, Ingoli ind MI:aziland h,.liuse f inco.npkipic dala performance. The following figures illustrate were provided as cofinancing or coordinated the SPA performance dividend: financing of IDA adjustment operations, for * growth in gross domestic product (GDP) of which IDA also disbursed $1.8 billion. 4 percent on average during the past three Gross disbursements from the IMF under its years, up from I percent in 1980-84, and regular and enhanced structural-adjustment fa- almost double the recent growth rate in other cilities (established in 1986 and 1987, respec- African countries (see Table 3-1); tively) totaled $1.5 billion during the 1988-90 * growth in export volumes at a pace 50 period. This amount was roughly equivalent to percent above GDP growth (see Table 3-2); and about a tenth of total gross aid flows under the * growth in the volume of investment at a SPA. pace three to four times faster than GDP. During SPA I, Paris Club creditors officially This strong economic performance contrasts rescheduled over $5.6 billion owed by seven- sharply with that registered by African coun- teen SPA countries, almost all on Toronto tries outside the SPA.5 terms. SPA donors also reported canceling During the first phase of the SPA (SPA I) debts on official development assistance eligible countries received total adjustment (ODA) in the amount of about $5.5 billion support amounting to $17.5 billion (of which during the period 1988-90. almost $7.5 billion was in the form of gross Funds for the SPA's second phase are to be disbursements of adjustment assistance from committed over three calendar years, 1991-93. SPA donors, IDA, and the IMF and about $10 If realized, the October 1990 pledges would billion in the form of debt relief on official debt represent an increase of between 15 percent from all creditors, over half of which was and 20 percent (in real terms) over the pledges rescheduling of nonconcessional debt by Paris delivered during the first phase of the SPA. Club creditors on the softer terms of the To- Together with the SPA I cofinancing and coor- ronto menu of options). As of December 31, dinated financing already pledged, disburse- 1990, 81 percent of commitments by SPA do- nors had been disbursed during the first phase of the SPA-some $4.3 billion. These funds For more details, see page ll0. 46 The World Bank-Fiscal Year 1991

Table 3-2. Sub-Saharan Africa: Selected Perlormance Indicators. 1980-19 Idvcragc jinnu.1 pLrc:cnIaL' chIin.2. unl'ess oihtrti5t 'pecliltdi

Gross dLmctILC in' esimeni iCE)l SPA c;re countries - n.3 12.5 8.5 Non-*SPA counlriei 1.9 1.2 3. 5 tEvor, xolulLmc SP A corc counlrics -fIj. 3. 0 5.7 Nun-SPA countries 1.3 2.II 2.4 Impori \oluumi SP A .'rc counitrie -1.3l.n 4.1 Nore-SPX counlrie;s 2.1I -U. .t! ( ,on.umptnon per capiti SPA c cunlrlu -niri -ei.S -11.1 N-ln-SP.A countries t(i. -17 -0. b CDl C.DP rji- ipercenri SPA CoTc, counmrpes 18. 1 bt 19.3 Ntn-SPA counl-;cs 3. I 21.' 19'S GlDS ClDP ra.t iperccnhl SP.\ core counlrc, 2.' 4.il Nn-INSPA couniric: S. L.3 S. .id-iriiE nU.liid.lx 1t'5 .11} SPA corL c'untries 1('5 Ll.03hI111fi4 NonSPl'A aoun1rir; 1.I'S I .(0is ID.'4

I. C.:.,nliC' IlCIudz S.:ro.I,. Z_iiSr-xZ,ir.. :d tmi.. andesciude Ang.I ,,Co no,. Dji-.ul. Eluaorui Cwuinci. .fnd S.:. *IM n l j.i t nc.'r.I-plc d,) i Ziernl , ro.- an SP Xorec ulflrv. I DS = gross drresLc ..'ng. ments of cofinancing and coordinated financ- of the United Kingdom called the Trinidad ing to support eligible SPA countries during the terms.7 Paris Club creditors are currently at- 1991-93 period could total more than $7 billion, tempting to reach a consensus on steps that nearly double the disbursements achieved dur- might be taken to realize the objectives of the ing SPA I. Trinidad terms without jeopardizing future aid Planned IDA commitments during 1991-93 flows. to the twenty-one SPA countries6 could add The external financing provided from all $2.9 billion to the total, while estimates are that sources through the SPA II framework should resources provided by the International Mon- be sufficient to cover the financing gaps of the etary Fund could range between $1 billion and currently active countries, as well as the three $2 billion. additional countries declared eligible in June In addition to pledges of SPA funds, SPA 1991. The task, then, is to commit, manage, creditors are likely to provide substantial debt and disburse the resources of SPA II in a way relief by continued cancellation of ODA debt and that facilitates their efficient use. reschedulings of official, bilateral nonconces- It is estimated that as much as 85 percent of sional debt-service obligations on Toronto SPA assistance will likely be broadly untied. terms. However, the current rescheduling on Toronto terms in the aggregate provides a grant element of only 20 percent and remains less concessional than new aid. In addition, the debt- 6These are Benin, Bumndi, Central African Republic, service payments by these low-income coun- Chad, The Gambia, Ghana, Guinea, Guinea-Bissau, tries, even after rescheduling on Toronto terns, Kenya, Madagascar, Malawi, Mali, Mauritania, Mozam- will continue to absorb a significant amount of bique, Niger, Sao Tome and Principe, Senegal, Tanzania, resources that could otherwise be used for in- Togo, Uganda, and Zambia. Somalia and Zaire became vestments and imports, leading to improved ineligible in 1990 because of weakened reform efforts. On June 30, 1991, three additional countries-Burkina Faso, growth and development. (Debt-service pay- Comoros, and Rwanda-were declared eligible. ments by active SPA countries, after debt relief 7 These call for a cancellation of two thirds of the stock of on current terms, are expected to amount to eligible debt and a rescheduling of the remainder over twen- about 25 percentabout 25of percet export caningsernings during firstty-five five years years with after five reschedulhng years of grace. could Interest be capitalized, due during pro- the 1991-93.) The most far-reaching proposal for viding further cash-flow relief; later payments could be Paris Club creditors to increase debt relief is that graduated and related to the debtor country's ability to pay. Strategies to Reduce Poverty 47

Substantial progress was made during SPA I in and it is the raison d 'etrefor our operational harmonizing and simplifying procurement and emphases. " disbursement procedures, thus putting SPA II Barber Conable, Address to the Board in a stronger position to deliver adjustment of Governors of the World Bank Group, support where and when it is required. September 25, 1990 Evaluation missions, made up of staff from several donor aid agencies and the Bank, vis- The eradication of poverty remains the ited six SPA countries over the the course of World Bank's top priority. World Bank expe- the first phase of the SPA and made several rience helped set the stage for the publication recommendations to improve further the qual- in fiscal 1991 of a major study on poverty, ity of SPA adjustment support. They include: World Development Report 1990, and, subse- * the phasing out by all SPA recipients by quently, for the adoption of assistance strate- the end of 1993 of their import and exchange gies to reduce poverty. controls and, to help reinforce these market- In fiscal 1987, a special task force, composed oriented reforms, the elimination by SPA do- of senior staff of the Bank, was established to nors of their tight administrative control over review the Bank's poverty work and propose their individual import programs; new activities. * fully untying by SPA donors of their im- This task force defined a program of action port-support programs; for the Bank that was designed to help achieve * expansion by recipient governments of the objective of eliminating the worst forms of preshipment inspection to cover virtually all poverty in developing member countries by the imports, and, as appropriate, extension of pre- year 2000. The program was based on the shipment inspection to include assessment of belief that, although cconomic growth, over custom duties to be paid; the long term, was the major factor in the * regular consultations within each recipient reduction of mass poverty, growth alone was country on the use and management of donors' not sufficient for the alleviation of absolute import programs, to be supported by periodic poverty at the desired speed. Growth policies, joint evaluations in SPA countries; and therefore, had to be supplemented by clearly * provision of specific technical-assistance defined poverty-reduction efforts. programs to SPA recipients to strengthen public By fiscal 1989, food security had become a procurement, banking practices, customs ad- part of poverty-reducing initiatives, efforts ministration, and foreign-exchange operations. were stepped up to help borrowers ensure that The special program of assistance has shown the poor were protected during periods of that development efforts can be made more adjustment, and involvement by nongovern- effective through joint action. Indeed, there mental organizations in Bank-supported under- has been a strong demand from donors to takings expanded. broaden the range of SPA activities. Although In fiscal 1990, each region in the Bank de- SPA resources remain focused in support of veloped a set of activities (a "core program") adjustment, SPA meetings are also becoming aimed at directly reducing poverty, and steps fora for discussions of broader issues associ- to monitor their implementation were taken. ated with adjustment such as the linkage be- For maximum effectiveness in reducing pov- tween adjustment support and poverty allevia- erty, World Development Report 1990 recom- tion and the qualityof recipient countries'public- mends that developing countries adopt a two- expenditure programs. In this connection, SPA part strategy. The first part of the approach donors have endorsed guidelines for improving requires the encouragement of broadly based the management of counterpart funds to sup- economic growth. Policies that make produc- port on-budget public-expenditure programs tive use of the poor's most abundant asset- and to reduce earmarking of such funds, as the labor-are consistent with rapid growth and recipient country's public-expenditure planning reduced poverty. The second part requires the and budget implementation improve. provision of social services-especially pri- mary education, basic health care, family plan- Strategies to Reduce Poverty ning, and nutrition-to improve living condi- tions and increase the capacity of the poor to "The objective of a sizable reduction in the respond to whatever income-earing opportu- incidence ofpoverty is the highestpriority for nities arise from economic growth. the international development community." To implement the first part of the strategy, Development Committee communique, World Development Report 1990 argues that September 24, 1990 countries must put in place incentive struc- "Poverty reduction is an integrating theme tures that make the best use of their available for the many facets of the World Bank 's work resources, including those of the poor. By 48 The World Bank-Fiscal Year 1991 maintaining competitive exchange rates and and poverty, however, is not automatic, and avoiding excessive protection in manufactur- the pattern of growth has an important bearing ing, countries such as Indonesia and Thailand on changes in the incidence of poverty. The have encouraged agriculture-the most labor- main modification to existing practice, there- intensive sector in an economy-and achieved fore, will be periodic review and analysis of the a fast-growing and relatively labor-intensive links between growth and poverty. form of manufacturing. Two recent country economic memoranda- This is not enough, however. Public-expen- for India and Malawi-illustrate the required diture programs to support the activities in analysis well. Both begin with a traditional which the poor are engaged are also required. analysis of recent econormic events and a mac- Equally important are measures to ensure that roeconomic assessment. They then investigate the delivery of services, such as roads, irriga- trends in poverty and the characteristics of the tion, and agricultural extension, is not biased poor. The latter involve location, demographic against the poor. characteristics, sources of income, patterns of Even if economic growth generates income- expenditure, access to social services, and so earning opportunities for the poor, many will forth. The "poverty profiles" of the two coun- be unable to take full advantage of them be- tries that emerge provide the key input for cause of ill health, lack of skills, illiteracy, or subsequent analysis of the interaction between malnutrition. Ensuring access for the poor to macroeconomic and sectoral policies on the basic social services, therefore, is doubly es- one hand and the incidence of poverty on the sential: It alleviates the immediate conse- other. quences of poverty and it attacks one of the From this starting point, the analysis will try key causes of poverty. to identify the factors underlying the observed This two-part approach ensures that the outcomes and draw the implications for policy. poor gain from growth and that they contribute The main steps are, first, to juxtapose the to growth. But some, the old and the infirm, analysis of overall economic policy and the will not be able to respond to new opportuni- poverty profile, and second, to trace the links ties. And others, although benefiting, will still between the two. not be able to afford the basic necessities or World Development Report 1990 confirmed will be vulnerable to such income-reducing the critical importance of effective adjustment shocks as a drought or the loss of the family to the long-run reduction of poverty and dem- breadwinner. To help these groups, World onstrated that, in general, adjustment pro- Development Report 1990 calls for the estab- grams move economies in a direction consis- lishment of a system of targeted transfers and tent with the two-part approach. But efforts to safety nets as a essential component of the restructure and stabilize an economy can have basic approach. short-run costs. Although some of these costs Building on the findings in World Develop- may be unavoidable, analysis of likely conse- ment Report 1990, policies were adopted in quences can improve design of adjustment fiscal 1991 for fully integrating into Bank oper- programs and provide a firmer basis for judging ations the two-part approach for reducing pov- the need for compensatory programs. erty. The key ingredients are: Whether the concern is with long-run growth * analysis that assesses the consistency of or short-run economic management, reviews each country's policies, programs, and institu- of public-expenditure programs are critical to tions with the reduction of poverty; and an overall assessment of efforts to reduce * recommendations for country policy and poverty. Again, the Bank already has consid- design of the Bank's program of assistance to erable experience in this area. Few country support and complement country efforts to reviews, however, have examined the distribu- reduce poverty. tion of expenditures between the poor and the The two are linked. Analysis of the appro- nonpoor. Detailed analysis by income group priateness of public policy, especially the ef- will not be possible in most countries, but fectiveness of economic management in secur- analysis by location and type of service will be ing broadly based growth and the adequacy of feasible in all cases. basic social services, will shape both the The adequacy of social services is the sec- Bank's policy dialogue and its program of ond element that needs to be considered in assistance. Bank assistance strategies will re- assessing the consistency of a country's policies flect and be consistent with an analysis of the with the objective of reducing poverty. Here, factors determining poverty. too, the Bank is developing considerable exper- Analyzing country policy. Bank staff are al- tise in analyzing the provision of social services, ready equipped to analyze the policies required especially the link between public provision of to achieve growth. The link between growth services and measures of health and educational Strategies to Reduce Poverty 49

attainment. Such analysis has been done for will continue. In the meantime, simpler ap- many countries and will be extended. proaches may be more cost effective. Several To be effective, country analysis of the kind variables that indicate changes in the well- described must be reviewed regularly. Periodic being of the poor are relatively easy to collect. assessment of each country's policies and their The choice of variables will depend on coun- effect on the poor provides the foundation for try-specific needs and administrative capaci- the Bank's policy dialogue and the design of its ties, but, in line with the two-part strategy, the assistance strategies. Through careful analysis, variables should reflect the incomes of the the Bank is better placed to suggest appropri- poor (income indicators) and their access to ate policies to governments and to design pro- social services (social indicators). grams of assistance that most effectively sup- Implementing the strategy. Implementation port government efforts. of the Bank's strategies to reduce poverty Designing assistance strategies. The objec- starts with carrying out the necessary analysis. tive of this second step is to ensure that the The first round of periodic assessments, for all volume and composition of Bank assistance intents and purposes, will be completed for all support and complement the efforts of individ- countries within three years. By that time, ual countries to reduce poverty. therefore, all Bank assistance strategies will Because Bank assistance strategies depend reflect and be consistent with an analysis of the on circumstances in each country, they must key factors determining poverty. Country as- be country specific. Moreover, many factors- sessments will be made widely available to political, institutional, and economic-influ- facilitate coordination of poverty-reduction ef- ence their design. Nevertheless, a few general forts within the international donor communi- principles do exist. For example: ty-through consultative-group meetings and * The Bank's volume of lending will be through the Development Assistance Commit- linked to, among other things, a country's tee of the Organisation for Economic Co-oper- efforts to reduce poverty. If a country's poli- ation and Development. cies, programs, and institutions are broadly Follow-up work is continuing on two fronts: consistent with the two-part strategy, a prima a handbook on best practices in poverty reduc- facie case for substantial Bank support can be tion for the use of operational staff and an made, for existing evidence indicates that ex- operational directive (OD) summarizing the ternal assistance is most effective in such Bank's guidelines on operational issues. countries. The reverse is also true, and inter- The objective of the handbook will be to mediate cases would warrant intermediate lev- provide Bank staff with ready access to rele- els of assistance.! vant examples of successful approaches to * The composition of Bank lending will sup- poverty reduction. The handbook will focus on port efforts to reduce poverty. If the incomes problems that arise in designing and executing of the poor are increasing rapidly but their projects that reach the poor and on examples access to social services is stagnating, the of innovative and effective solutions to those Bank will work with the government to redress problems. the imbalance by emphasizing the provision of The OD, scheduled to be finalized in fiscal social services. And, within sectors, Bank 1992, will summarize, among other things, the lending can be used to influence the pattern of poverty-relevant results of a review, currently public investment and expenditures by empha- under way, of the methodology for the eco- sizing programs most likely to benefit the poor. nomic analysis of projects. It will also incor- Developing an information base. The anal- porate the findings of task forces on local-cost ysis of poverty in several countries has re- financing in Bank-supported programs and vealed the importance of good data. The ana- projects. This is relevant because local costs lyst, whether from the country concerned or tend to form a larger share of project costs in the Bank, will and must continue to do as much social-sector and poverty-related projects. as possible with existing sources; ultimately, In its discussion of the Bank's strategies to however, the quality of the analysis depends assist countries in reducing poverty, the exec- on the quality of the underlying data. Accord- utive board reaffirmed the Bank's commitment ing to World Development Report 1990, fewer to poverty reduction as the integrating theme than two dozen countries in the developing for all of its activities. world have national household surveys-im- portant sources of information-of reasonable reliability. Both the living standards measure- ment study (LSMS) and the social dimensions World Development Report 1990 also stresses that the seriousness of a country's own commitment to sustainable of adjustment (SDA) project are helping coun- development policies geared to poverty reduction is basic tries to conduct such surveys, and these efforts to the proposed strategy to reduce poverty. 50 The World Bank-Fiscal Year 1991

During the discussion, several important was overwhelmingly in population, health, and points were endorsed. nutrition. * It was confirmed that the Bank should, in The study also found that the largest abso- its own assistance strategies, support the two- lute amount of targeted poverty lending was in part poverty-reduction strategy set out in Asia, followed by Latin America and the Ca- World Development Report 1990. ribbean; Europe, Middle East, and North Af- * There was broad agreement that the Bank rica; and Africa. Comparing each region's should integrate this poverty strategy into its share of targeted poverty lending with the country assistance. region's share of total Bank lending, a some- * There was agreement that the transpar- what different picture emerges. In both Asia ency and consistency with which the Bank and Africa, the share of targeted poverty lend- applies this strategy should be increased. ing in total lending to the region was similar to * On the relationship of the strategy to lend- the Bankwide average of targeted poverty ing, borrowers' efforts to reduce poverty will lending. By contrast, the Latin America and be a key criterion in determining the volume of the Caribbean region's share of targeted pov- lending and will also be reflected in the com- erty lending in total lending to the region was position of lending. roughly twice the Bankwide average. * Concern was widespread about the paucity At the local level, targeted poverty projects of good data on poverty. It was agreed that the are characterized by relatively greater partici- Bank should be prepared to help organize appro- pation by nongovernmental organizations priate financial support and technical assistance, (NGOs) or the beneficiaries themselves (who in cooperation with other donors and agencies of may or may not be organized in formal the United Nations, for implementation of pro- groups). In the five-year period under study, posals to improve data related to poverty. one third of targeted poverty projects included * The board expressed great interest in the NGO or beneficiary involvement, as opposed steps the Bank is taking in pursuit of this to 10 percent of total Bank projects. This approach. It endorsed the Bank's intention to reflects experience that has shown that support these steps through the preparation of projects aimed at meeting the needs of specific a handbook of best practices and an opera- groups are more effective and sustainable tional directive. when beneficiaries are involved and actively It was also agreed that a progress report on cooperate to make the projects work. the implementation of the Bank's poverty- The data on Bank lending for projects whose reduction strategies would be prepared for primary objective is to reduce poverty consid- board consideration late in 1992. erably understate the true impact of the Bank's The Development Committee, in its April lending on poverty, since they take no account 1991 meeting, also welcomed the conclusions of the indirect effects of other lending. These of World Development Report 1990, as well as effects, although difficult to monitor, are often the Bank's intention to implement a plan of more important than targeted programs. action designed to translate those conclusions An increasingly poverty-conscious approach into its operational practices and budgetary is evident across the range of Bank lending. priorities. Members requested that a progress For example: report on the action plan be made available to * Operational activities in the area of hu- them in a year's time. man-resource development aim at efficient and * * * effective delivery of services, with emphasis on vulnerable groups such as women and chil- In fiscal 1991, commitments, totaling $1,885.8 dren, and diverse regional topics: population million, were made for twenty-two projects growth (Africa), female employment and social whose primary objective is to reduce poverty safety nets (Europe, Middle East, and North (see Table 3-3). Another ninety-five projects, Africa), and improved targeting of service- involving $7.9 billion in commitments, con- delivery systems and reallocation of public tained poverty-reduction components. funds (Latin America and the Caribbean). A recent internal study of poverty projects * Lending for environment and forestry fea- supported by the Bank over the five-year pe- tures an emphasis on the linkages among envi- riod fiscal 1985-89 shows that a large percent- ronment, energy, and poverty (particularly in age of targeted poverty lending (more than 90 Africa). percent) was in five sectors-agriculture and * Adjustment operations continue to be a rural development; population, health, and nu- mechanism by which the Bank can support trition; education; urban development; and wa- policy reforms that encourage economic growth ter supply and sewerage. Among these sectors, and poverty reduction, while protecting priority the concentration of targeted poverty lending public expenditures. Strategies to Reduce Poverty 51

lable 3-3. Lentding Operations WNhose Primary ObjectiNe Is to Reduce PoNerty, Fiscal 1990-91 (millions ot US dollars) ReeLion and countrm Project IBRD IDA Al.it a Burklna Faso Public work, and emnplovment proijci (FY91) - 2(1tl C(>nirooii SocijlI dimension' of adjustment project (FY91)) 21.5 - Ccl.tiil Airica-i Republic Social dimensions or adjustment and development p?-Oct. (FY91) - h.5 Chad Social developmcni action project (FY91)) - 134 Milawil Agricultuial sector adLustmrnt project (FY 90) - 70 0

Niger Public works dnd employmcnt prolect (FY911 - 2) 0 S')o 1 ome arld P'rn, lpe Skco',d mrilli-sector rehabilitation project (FY91) - 6 0 Senegal Agricultural services project (FY90) - 17.1 Senegal Pub'ic works dnd employment project (FY' ii) - 20.0 Tanr.sni.m A\eictiltiural .dtii;tmcnt program tFY90) - 2010.0 Tanzania Agricultural adjustment credit (FY91) - 16.1 L .eanda Allevidtion of poverty and the SOci31 COStSof ddjustment projec FtIII I-- 28.0 ZasuI Pilot extension pioject (FY90) - 5 9 Zambia Socil Trecoveryproject F''Ii) - 20t0

A oia B..ngladc.h National mitior irrigation development project (FY91 ) - 54 0 China Ilebeli agricultural developmcnt project (FlY90) - 150.0 China f(fian .ricultural devclopment prolect (FY91) - 110.ii China lirigdted agriculture intensification projcLt IFY91) 147.1 187.9 ( hitidt1id-\ angize agricultural deselopment protect (FYUI1) 64.tJ India Seventh population project (FY90) 10 0 So.7 Iiidia lPnjab irrigation and drainage projeCt J Y90) is 0 ISO O India Seconid 'Famil Nadu nuttition project (FY91)) - 95,S Ind(lia Iiitgiuted watershed desclopment (plainsi project (FY90) 7.0 55.0 I.lad.l Integrdted watershcd Ltvelopmetit (Ilills) project (FY91)) I .) 75.0 I-idia Iitegrated child oevelopment services project tFY91) Il0.0 96.0 I.ldollneId Provincjal irrisated agriLuttural development project (ha 91) 125.0 - Indoncsia Yogy.ikarta iip andared development project (FY91) Ii 5 Ito People's D.incratu Republic UJ:Iand dgricultiur,l developniet project [FY90) - 21 2 Malaysia Rubber Industry Smdllholders Deselopment Authority project tFY90) 71 - Philippines Small coconut farms developmetit protect (FY91)) 1218 Philippines Second municil.A development project (F\ (01 41)II Philippines Second comniunal Irrigation development project (FY911 46.2 Philippines Rital finance project (FY91) 15 00 - Sn Lanka Poverty alleviation project (FY91) - 57.5

Europe, Middle Last. and Vo0711:Afnrca Egypt soc.il fund proJect (FY91) - 140.t) Pakihtaui Stndh plimar' education dlevelopment program (FY9(1) - 112 5 PakStan Rural water supply and sanitation protect i FY91) - 136 7 Turkey National etlucdtion development project (FYVt) 9) 2 - Yemen Health sector deelopment project (IA 90) - 15.0

ILatin, Amenca arnd tie Carabbean Bolts ta Aeritcultural technology developmenit project (IFY91) - 21.0 Colcmibtd Small-scale irrigation project (FY9(1 78 2 Colon bia Rural cevelopmcnt investment program (FY91) 750 -- Haiti Economnic and socidl fund (FY91) _ 11.3 Mlsxico Semonslow-income housing projcct (FY91)) 35(10 - Mexico Decentralization and regional development pimject (FS II) 3510r, Stl)(toti l1.736.5 2 .(0816 T,'t.l lRD and rD 5 3,818 1

- ZvIo. 52 The World Bank-Fiscal Year 1991

* In the area of private-sector development related to pregnancy each year in the develop- and public-sector management, several initia- ing world. tives are aimed at enhancing income-earning As the alleviation of poverty requires not opportunities for the poor-chiefly through only primary health care to safeguard physical elimination of rigidities that drive smaller busi- well-being but also the development of cogni- nesses to the informal sector and through the tive and productive skills through education development of well-functioning financial sys- and training, the launching of the World Con- tems. In regions where industrial restructuring ference on Education for All, in Jomtien, Thai- might involve significant social costs (Eastern land, in March 1990 was a logical and comple- Europe, for example), the Bank is helping to mentary step. This conference, attended by ensure that social safety nets will be in place to 1,500 participants, including delegates from mitigate those costs. 155 governments, reaffirmed not only that ed- * Within basic infrastructure, a significant ucation was a "fundamental right for all peo- effort is under way to address issues of man- ple" but also that it could "help ensure a safer, agement of urban productivity, including the healthier, more prosperous, and environmen- productivity of the urban informal sector (see tally sound world." The conference called for Box 3-2). The provision of social and produc- universal access to basic education by the year tive infrastructure and the support of social 2000. safety nets for the urban poor continue to be These international initiatives for human de- emphasized. velopment were articulated at the highest po- litical level at the World Summit for Children, Human-resource Development held in New York in September 1990. At- Investments in human capital are increas- tended by sixty-five heads of state, the summit ingly recognized as being of central importance reiterated all previous concerns for human to sustainable development. Education, popu- development. By setting the survival, protec- lation, health, nutrition, and women-in-devel- tion, and development of children as the focal opment concerns are becoming an integral part point of international commitment, the summit of virtually all aspects of development and magnified the importance of education, nutri- Bank activities. tion, health, family planning, and empower- The realization that sustainable development ment of women and girls in building the foun- cannot occur without investments being made dation for the future. in people is growing in the developing world Education. At the Jomtien conference, the and in the international aid community. It is president of the Bank pledged to increase translated into political commitment at the education lending by the Bank over the follow- highest level and has been reflected, over the ing three years to more than $1.5 billion a year past thirteen years, in several worldwide (see Box 3-3). Fiscal 1990 marked the first year health and education initiatives. in which Bank lending for education projects The Alma Ata Conference on Primary topped the $1 billion mark. In that year, twen- Health Care (1978) affirmed that health promo- ty-one projects, involving Bank assistance of tion has to be an integral part of the overall $1,487 million, were approved. developmental and political process and aimed In fiscal 1991, Bank commitments for edu- at attainment by all, by the year 2000, of a level cation projects further increased to $2,252 mil- of health that would enable individuals to lead lion for twenty-six projects. Most of the edu- socially and economically productive lives. As cation projects were aimed either at improving a follow-up, a broadly based group of interna- the effectiveness of basic education or at up- tional agencies and health professionals grading the quality of training in the vocations launched the Task Force for Child Survival. or sciences at the secondary and tertiary levels. The goal was to immunize all the children of For example, the Bank is supporting the the world and to promote other effective health Philippine government's goal of expanding ac- measures, ranging from oral rehydration to cess to quality education and training with a family planning. $200 million loan for an elementary education The Safe Motherhood Initiative, begun at a project. The project seeks to increase the lev- conference in Nairobi in 1987, integrated els of participation and achievement in elemen- health care for the mother with that of the child tary education and to reduce drop-out rates. and promoted the role of women, who bear a The government is also emphasizing full imple- disproportionate burden of poverty. By im- mentation of free secondary education and the proving the health, nutrition, and education of provision of functional literacy and livelihood women, and by providing family-planning in- skills through nonformal alternatives. Equity formation and services, the participants sought improvement in the educational system, with to reduce the half million deaths from causes consequent long-term implications for poverty Human-resource Development 53

Box 3-2. A Shift in Urban Poleit

Since the earl l'77. government ettori. partic- Lending for urban development. based on ularl; ihosec supported b% donoirs. have ad- projects in tbe pipeline. is expected to inerease dressed urban-growth and urban-poLerty issucs by 45 perc:nt durine the period tfieal 199I-93. through low-cost invesiment projects in shelter. The issue. therefore. iS ho"%to ensure that the %%tier supply. sanitation, and urban iranspori. impact of Bank lending %sill Lncre3sc wtith tht Sitcs-and-ser'ices and slum-upgrading prk.jecis protected expansion in lerding. were Ltitended to demonstrawc replicable ap- Current and future Banl operations in support proaches that could pro'ide ben.iths to the poor of urban dcselipnernt jrc being deshined in in- %%hile recovering costs jnd reducing the financial elude three principal elements. burdcn orn the public sector. PRite reform. wxhich would inipro-e urban W\hile many of these proLjects were reasonably productivity. i, one element. successful in meetine their phs-steal objeclties. A second is instirutional dceelopmtnt. %Lhich attention necessartly had to be devoted to ph\s- would strengthen t31 the financial and technical ical implementation rather than to. susTaining pol- c3pacitILs ot muniepal inIsituTins. incltiding rein- ie; change- and strenrghening ilstilutions. As a torcemennnot ihb-locl eapacirt tor .p-erat_insn and result. neilther ndtional and local-governmemt p0- maintenance ot CtLtsMide infiratructure aid ser- icics nor the broader issues of managing the sies: binattonalinstiruttonsinsIxedinhetinane- urban economy were greatlyh ffectCd. inc ot housing and irifra-irucrurc. and ici naiional. Building on an intensixe analssis of the fisecal. regzional. tnd municipal insiautions mi'h.ed in the financial. and real sector linkages berxseen urban rnanje-nient ot the urban environment. ncludinr ecenomit activities and macro'conomic pertor- the formulAtion. montuoring. and entorcement ol mance. the Bank has de\c-loped a policy Irame- cn%tronmentjl policies dnd siandards. wvork and straieny that redefines the urban chal- The third iS nvcstmetSit In cityinde-rather lengc in developing countries. The frameci\rl than ncighborhood-intrastructure. -including re- and strategv has four main elements: habilitation wshere nceded. housine and land d,- Improt ir' urban p odNicIltr iry The impor.tanCe velopment throueh itmnanial irinediarics that no urban economic activities in national produc- mobilize pnvate saving- arid prixate-'ector in- tion requires Lhat urban productiit\ increase-. %olventLr. Curj..ise en'ironmental improve- Impro%ed macroeconomic management. along mrmt-. slem upgrading. pro siion ot isocial scr- with the easing of key conbitranis. is essential. vices. urban-iran,p.or1 t&Illittes. Lnd ecit\\ide .4-llcieiaiAg nrlbailpLvewL. Alle ianorn ot urban nceorks cl services such a, markets. povery, caused by thr short-term etfccts ot Bank re'earch into urban-deevlopment proW macroecLnomiC adjustment and longcr-term lems i- scheduled n:, ncrase,. ais "ell. BuL. siructural problems. requires an appropriate because the range o priorint re,carch areas ex- stratepg to btimulate the demand tlar labor w%hite tends beyond the current capacit, ctf the Bank ensurmLg. through pro%ision of adequate social and because urban research capacitN in dec lop- seixices and infrjsirracture. Lhat the poor can 'ng countries 1isw-ak, ihe Bank. ihe Ford Fouin- tak-e advantage ot the opportunities provided. ft daiitin. and other uiernatmonul organizanons are also requires a safery net for the most vulnerable. currently assessing ihe stat ot urhait research in ProYr:rc lingte irbrban i-irounianm. Because developing countries to determine sehether suh- ihe problems assocaitedl ith urban en' ironmen- stintial ,dditional tunding is needed. tal degradation are poorly undersionod in dc\ elop- ing countrteis, a mator research .ftort is needed to identify eftective approaches to their solution. Recognizine ihe need L. irripro' e urban pr-.- lmprovements to theinfu,rmratio,nbase andunidcr- dluctiviry. Allevite urban poverts. and manage standing of the dynamics ol enmironniental dcee- the tirban en\ironment. the executrve direciors riorarion in urban areas art needed. Needed. too. gcnerallx endorsed the mnodifications in Bank are cirv-speedic urbin environmental strategies thinking or, urban-develop-mntn issues. They de- and proerams of curattve action. Ineenits es to voted particular attenlion to thc importance .t preveat further nrvironmental detenoratten are policy r. torm and in,itutional d,velopment. In required. this contixt. stress \%js laid on ihe need to )nSCter1eus:g o'uiet-iintids'it8*9g sIt WhiO'.' . Lhn dentirs and define the resp-ectin roles cf ocail need is great for research on urban issues. Prior- and ceiilrjl goernments in light of growing de- ity areas lor research include the linkages be- centralization, especiall, with respect to tinancial tween ih- urhan economr and macroeconornic conncerns: to achie\ee he right balance of support aggregates. the internal cticiencies ot cities and tor appropriate de'elopmne.nLt,f larger and smjller urban productiv Ity, the urban poor and the infor- cities ind different regioms: to disceurace regula- m3l scetor. the financing Of urhan investments. tion that hinders optmrji urban dc,\lopmcnt the role tit government in the urban-development \bhile tostering thiL %h%i-cL is in line wNith bac process. and the urban env-ronment social %kelfare: and to encour,age privite-sector H-lo might this new urhan-poliec frantework panicipation in pro'iding urban cr\ices %when- affect World Bank actis ties? ner teasible and de;ir-hbll 54 The World Bank-Fiscal Year 1991

Box 3-3. Commitments bs the Presideni of the World Bank

During hi, ierm as president of the 'Aorld Bank. u-erease Bank lending for the deliser) of effec- Barber B Conable made three public ctmmit- rixe famil-planning serxiccs. He promised that ments thai stere both explicit and quantifiatle. the Bank w%ould be increasing its lending to the and n hich could be related to specific operational sector to (800 million ior the next three years. programs These commirmeni, concerned three compared eiith an atcrage of $5fk) million during t%pe, of lending. education: population. health, the pre%ious three Sear. and nutniron and forestry. Population, health, and nuintion lending in Educari.a. In a speech at the World Confer- fiscal 1990) totaled $933 million and increased to ence on Education for All in Jomrien. Thailand $1.h billion in fiscal 1991. MNarch 199Ii. Nlr. Ccnable promised that the Foreh'% In a peech at an environmental Bank kould double it- educainon lending o%er the conference in Toklo in September 1989. the next threc sears to an annual figure of more than president of the Bank announced that the Bank $1.5 billion In connection %%ith the World Sum- %kouldtriple lending to forestrr in the nest fev mit for Children Sieptember 199111Nilr Con;ihle scars and that there wcould be more direct in- prormised that lending for prmars education %olNement of World Bank staff in the Tropical would ncrease substandialls in the future, to Forestry Action Plan iTFAP. become the largest single element in the Banks WorldW Bank lending for forestr- rose from $90 education program million in fiscal 1989 to Silt) million in fiscal 1990 Lending for education has grown from $S464 Lending in fiscal 1991 wtas subsiamially loner. million in fiscal 1989 to 1 5 billion in fiscal 1990 however, as the Bank completed work on a and $2 3 billion in fiscal 1991. Al the same time. lorest-polic% paper The Bank is now collaborat lending for prnmar) educaton accounted fcr 31 ing vkith other agencies in an eftlfrt to make the percent of education lending in fiscal 19%'924 TFAP a more effectise instrument for addressing percent in fiscal 19911. and 36 percent in fiscal the problems surrounding the use and conser%a- 1991 It i, espected to reach nedrls 50 percent in tion of tropical foresis. A series of recommenda- fiscal 1992. titions hda been proposed for approNal b% the Pc;puiaon.S nuth,. mid f",triIi.a. In a speech heads of the four agencies most directl\ intoved. Lo the International Planned Parenthood Federa- If these recommendations are adopted. the Bank tion in (ittata iNo%ember 19.9. Mlr. Conable %vill be significantl, more in%olved in the re- pledged to renewk the Bank's commitment to camped program. issue, of populaLtion growth and substantiall\

alleviation, is being pursued by targeting in- to be able to utilize new technologies to partic- vestment expenditures towards the more dis- ipate fully in the global economic network. advantaged areas. In addition, a system for Creating a technological basis for develop- assessing student achievement will be devel- ment requires, for most countries, an emphasis oped to provide the basis for improved sector- on technology transfer. The effectiveness of wide monitoring and evaluation. technology transfer will be largely dependent The project's design pays close attention to on the national capacity to receive, adapt, and the conclusions of a fiscal 1990 study on pri- apply new technologies. Developing such a mary education-that improvements are es- capacity requires investing in the education sential in three areas: enhancement of the and training of scientific and technical person- learning environment, the preparation and mo- nel, establishing national science and research tivation of teachers, and strengthened institu- and development centers, and attracting for- tional capacity of the education system. eign investments that will transfer technology. Projects that seek to improve the quality of In Brazil, the Bank is helping to finance the basic education were also approved for Brazil, Support Program for Scientific and Technolog- Burkina Faso, the Dominican Republic, Haiti, ical Development (PADCT) through a $150 Morocco, Mozambique, Nigeria, Rwanda, and million loan approved in fiscal 1991. The Zaire. PADCT provides support, through competitive While it is important for countries to extend grants for basic research and graduate training access to basic education to all, it is equally in chemistry and chemical engineering, bio- important for them to provide opportunities for technology, the geosciences, and mineral tech- the acquisition of intermediate and advanced nology. These areas were chosen because of knowledge and skills. Countries must pursue their perceived importance for future eco- the two strategies concurrently in order to ad- nomic development and the relative inade- vance development of their own economies and quacy of their human-resource base. Human-resource Development 55

Other projects approved during the year that School of Education at Stanford University in aim at enhancing vocational or scientific skills the United States. Four workshops in all were included those for Algeria, China, India, Indo- held; each was attended by about twenty-five nesia, Korea, Mexico, Togo, and Trinidad and participants, which means that about 100 Bank Tobago. staff benefited from the eight weeks of training. To enhance its capacity to provide both The main objective of these workshops was to advice and assistance of high quality, the Bank bring Bank staff up to date with the latest has embarked on two related work programs. research on issues normally addressed through The first deals with higher education and ad- the Bank's education lending. vanced training, while the second focuses on Women in development. In fiscal 1991, fur- science and technology. Both programs will ther progress was made in integrating women- study strategies for improving the effective- in-development (WID) activities into Bank op- ness and efficiency of higher education in order erations. About 40 percent of Bank operations to address the crisis many countries face in this approved in fiscal 1991 included specific rec- subsector and to promote the development of ommendations for action to integrate women the human-resource base required to adapt into the development process. In fiscal years new technologies and participate in the global 1988, 1989, and 1990, the comparable percent- economy. ages were 11, 22, and 30, respectively. In developing an adequate training capacity, A detailed review of all economic and sector it is crucial to ensure that the outputs respond reports written during the year shows that 62 as closely as possible to labor-market de- percent contained substantive discussions or mands. Following the recently completed work recommendations on WID issues as compared on vocational and technical education (see Box with 41 percent in fiscal 1990 and 25 percent in 3-4), the Bank launched a study on employ- fiscal 1989. Of all fiscal 1991 country macroec- ment and labor markets. In particular, the onomic reports, 72 percent treated WID as an study is identifying how government policies important topic, compared with only 50 per- impede or support the competitive operation of cent in fiscal 1990. labor markets and how they affect incentives The Bank's main emphasis in its WID activ- for public and private investments in human- ities is to improve women's economic produc- resource development. tivity as a way to address poverty, economic As a follow-up to the call by the World inefficiency, and other developmental prob- Conference on Education for All to improve lems. To improve women's economic produc- and implement systems for assessing learning tivity, the Bank is focusing on five areas: achievement, the Bank embarked on a work education, reproductive health care, agricul- program during the year to develop effective tural services, credit and other support for educational-assessment systems in developing women entrepreneurs, and labor-force partici- countries. It is anticipated that, at the end of pation. As circumstances warrant, the Bank is the three-year program, a handbook of "how also taking a look at the productivity of women to do it" tools for sector assessment based on in forestry, water supply, and other sectors, as student achievement will be published. The well as related legal issues. handbook will enable countries wishing to use Sector trends reflect the Bank's WID prior- achievement testing as a means for planning ities: All projects in the population, health, and future growth and investments to gain a rea- nutrition sector, as well as most of those in the sonable appraisal of the requirements for doing small-scale enterprises sector, addressed wom- so. en's concerns in fiscal 1991. More than half of In recent years, the focus of Bank lending all agriculture and rural-development projects for education has become much more sectoral addressed women's concerns, and structural- and policy-oriented. To ensure that the quality adjustment operations, more often than not, did of its assistance remains high, the Bank has the same. About a third of all education projects developed a multifaceted staff-development approved concerned gender issues. program for its education-sector staff. The As operational activity increases, Bank staff program includes training activities ranging are asking for more guidelines on effective from half-day in-house seminars to disseminate approaches for assisting women. Sector-spe- "best practices" in project design to longer cific guidelines on "what works," with exam- seminars aimed at the development of techni- ples of good practice, were issued for agricul- cal skills. tural extension and primary and secondary The most extensive program of the latter education during the year (see Box 3-5), and type was carried out over the two-year period work is under way on guidelines for other June 1989-91. Each year, two two-week work- sectors, in conjunction with expanded research shops were organized in cooperation with the on ways to improve opportunities for women. 56 The World Bank-Fiscal Year 1991

Box 3-4. Policies for Vocational and Technical Education and Training In ninca-;ses. descloping-)eountrn aovernmenis lurmshini technieal assistance in [he training of cn, best incre3s;e Lhe ieehnical a-nd %ocat'onal traner-;, de-eloping crnterprise-traimnin police,es skills ot their ndticn ss vork force bty impro ving and plans. and reimbur-min firm. tor ihe cosIs of the qualtt, of education at the prTmars and -c. training. ondart, levels Finally, the policy paper points our the need to This waes crc ot the three prineipal conclusions impToVC the effecti%-cn.ncs and efticiency of public of a polLcy study' oin enhancing productivith skills traiiLng. through tocattonal and technical education. The In mans' cases, the record of public training has studs w%asthe second building block in , compre- not been s atisfactorv' ofien because the system hensis e program of polh. an3alsis and research had been expanded to address objectives 1Oher designed to guide naltinal im estment decisions thani compensating ft'r %seakpri-ate trairnn such and Bank support for education and iraining.' av uStLnpre-employmenc tratning to reduce south The heightened rclevance of general education unemployment, to Creale a reserVe of skilled tocincreased productivity in skilled occupations. ssorkers to attract n"s capilal iVo'ctrment, or to thc- studs .rgues. has btcn causud by teernolog- disertNsouth from aspirations for higher education. ical change. sihich ha. expanded the cognuitc In the absence of sustained grosth in %%age and the'retical knoIledge required to masLer employment. Such policies have led to too m3ns needed skills. Workers. hrerore, must havc ihe traincd %sorker,and too f-st job;. Scarce public foUndation of hbasi ctmriptcnce to make their resources have been wa,ted. Moreover, because future traiinin effecrtie. Competencies gained mans countries lind it difficult to provide ade- through academiiic seconddrs education ot good quate tfinacing wor thcs- public instirutions, ihe quality atrect not only ImmLdiate productisirs qualir of training has often been poor and the buL also the abilitv to learn nesw ktlls o)veT the eftect on productitirs minimal The record course ot a career sho%%sshosseser. thai trLiing can be cost eftec- The Stld% reponrs that 'diversitied educaoion tise and can reiult in high placement rate when pronramn-in sihich a part nt the academic pro- it responds ic- market forces. grani s r5placedJ ith a t,-s socational cour,es- The poflic papcr'' recommendations clearly are not the ans%er.The limiled training dc lered have implicantins [or current and tiuurc Bank in these programs; produces equall. limited skills. invetimenit in vocational educition. does hu. to change student aspirations for Vocational educaLion and technical education higher cducation and %bhie-collar emplo>ment. have been the corners-tones of Bank lendine in andt takc the place of more preparation in the the sector, representing 4i) percent of education hasic competencies. lendine in the penod I9h.'-71 and about one third Thic polich studs-'s second principal conclusion since f-77 ..\lore thain %11percent of ihis lending ji that gownrrmenis should seek to expand pri- has supported pre-emplexment public vocational vate-sector training through the creation of a cducation and training for stage employment in fasor.,,ble policy enmorrnment. The existenee ot the modern ector. such an environment demands thaL distortions in The policy paper's trame%%ork and strate;gY incentive-high minimum wages. gudranteed elarifies for developLng-countrs g)ocrnmenis and public employiment, and narrost skill difterentials the Bank the criteria tor decisrions on invetrmenis in publicle adiminitered %iace sstrems. for exam- in skills developmr-n. tnd the Bank stands reads ple-he reduced Arnd if. for polincal or social it support countries that utant tn move their reasons, it proves impossihle to change such training policy in the suegested directions. polciees. rhen adopnon of 'cimpensator-' mea- sures may he the second-best anssuer. Examples The firit budding block-i p-,les srud on prirmar of compensator measures include excimping rdueaio0n-ss3s the suhject o I discust,on bs ihe apprenlice-s from the rinnimum-vw4e scale or exseuu'e biard in hiscal 1t'il The ,udv's conclusons prosiding partiai public subsidies to emploes rs s'erc rcponed in ihC \%orld Ba.nks -inti l RPepwrofor and Aorker, to compen,ate tot aritficially high tiscii sear 1'3'41ilpgi, 54 anLdrOj, 5-lkrk is pltrined c-n training cost. r,;o other ,ubseetors. ireend3rs and hinher education. Governments c-,n alsoI acr po-sitticl irather and on three tfhrnt-JcdueaiorD and emplormenl. ed- to-enhancepolc the u.aucn-stct')r management, and education inancinr. than stop doing ihxngsl enhonce Ihe pol,cy :oReirnbdr,ement progrars. the studs notes. should be enitrinment. Fmployer training can b. encour- sirncl% mnioniored to proicet aC31nil ITiad: they .I1c ajged- for instance, by pros ding employers with should be considered a, trininn.l deices t,fr build- information on exiernal training opportunities. irg up rraininc eapacix

In fiscal 1991, WID coordinating units were responsive economic and sector work and established in all four operational regions of lending operations. the Bank. The units provide conceptual analy- By the end of the fiscal year, the Africa sis, policy guidance, and operational support region had completed fourteen WID country to improve the quality and range of gender- assessments, and, over the course of the next Human-resource Development 57

Box 3-5. Hoo toI Get Girls to Schocol iand Keep Them TIhere'

Educiiion for x'omen helps fami]ie% escape ihe As flr education policv. the txpecricc of the *po%erry cquilibriumn ot low income. high t-r- pa:n tn%decades -ugge i' prinusnc approaches. tils. illness. and ignorance. In am eouritr; . Becau'e poOr t3nille beie IhIL th.y Cainit education raise' male o-r femalL productivitv in af!ord the direct and opportunirs cvtso(f eduLjcar- ihJe workiplace and 3ahome Educated men and ing girlk. is vital to deal %ith tho'e co'ts a- uonien earn more in selt-eniplo;mcnt -r the paritiis ;ee theml and to reducL them The moure labor force and hase creater labor mobilirt. the tfmily depend' on daughters lor w%ork at Educaiton tor w%omen-mr.ore than educaiton home. Lhe hrrder it is t inertasel eirl' enrollment for men-alsos leads to s.mjller. healthier. and and keep girl' [inschool oiten helter-educated families. As educatioin Progress tin be achiexjd h1 deteniine school open' up nL\s opportunities thai compete wih wYierns and curricula. be'ite-suLed to familis chtdhearing. 55 omen tend to opt in hbae fewver present economic circumstances and cultur. 3nd children, slow%ing the population growtih that un b% impros ng the qualirN 01teducation so a1tIL derlie:the ibundance of labor. ThL potenial or sish h.lexer lmitrld demand max alrejdy greater productixirm and economic gross th. is e.cxhst. girls trt.:rstt. shool.lhen.asmre |well as the social benefit,. ustifies tar creater ocialIatttude' may shift nd tip more deciltons investment in female educdtion than has been tossard sendine e!Trl to seh,.ol. Poihcies must be pro ided in the paslt. i ilored to cotnir circumstance-, but the l!. Althouigh the ttl31 returnr fTom] female kducI- loinin mcajures often desene cons,ideration: tfon are 1ieh. many s,cieties invesT less in edu- td'riness campaigns to encourage parcnts to cating vomen than in educAting men. escially.11 educate duehthers. rc:ru'tnivnt ot more femalc it the secondary level, where biolh the private teichers. prtcction otfgirls' prV;x ae in coeduc.a- andi social returns to fcnitale education arc panic tional scttmes,. more flcxible school schedules ularly htgh. This parad1ox1 ought to be rc.ilsed. and hounrs so ihat girls tar. combine ehloling The solution requires 3 deeper understanding wk.ith Lhore,, .md allosns ngirl' who arL mothcrs of how%p3rents. cspecialK poor parents. ties [ite or are pregnant to remain in. orreturn tl. chool. benclits and costs of educatinm daughter-. In Where the enrollm:nt 'at girls is scre loss. scl- most deVelpir,g countries. education is riot com- arships or othcr micentive may he important ind pulsors: parents decide ishether 1t. end childr,n Ceonomically ustifiable 'in th irreunds tha.t soci- to school ',nd for hoss long. TheY t;eghthe net et-, \isould reap the broid gainn fr.m temale ad.'anrage ort kleeping children home aigains the education. Otten a, pA,ka:c approich addre,N- net ad' antagesi of sending them to school. For ine several con-tratt! tlo female schooling is parents. though not tor society. ns' LeduCaUItn more CtftfLILrint than provsion of otie oLr o ireen- may he the better inesimenmLt toeVs. A vICiOUs *%cle ensues: \omen earn less. so A recent 5.3 milliorn1 prolect in supporL ot education floss's mainl, to bos wvhile girls stasN general ediucation in Bjngladesh illustratce an home to htiVp the famils meet immediare surmxa] innovali\x packagc approach. Ni percent of needs,.andthegirlsecannot cnmpete stihbbns .*r n.sslv hired teacher, %sillbe ukomen the Bank earn much sshen thce gross% up. Cultural tradi- %sill he-lp tinance their alrliire i31-10.stef schools tions ma\ develop that reflect and reintorce cee( ! ss ill be set up closer to Chtldren's homes: tex- nomtc reAUties. hooks and teachire methods "isll be improsed to. Remzedies to promote girls' schooling can he remnnoe gender sterectipcs and to cnhance the instituted through educatin pLolicies and through selINmage of girls: :'ndnor erril-ornant other policies that incrcase ssomen s earning ca- zation prgra.ms of rLotitarmal education. sith pabiltty or sase their time. flexible schedulng. suill be supported. three to five years, it will have completed related activities, local full-time program offi- assessments (or more-narrowly focused issues cers are being recruited in Bangladesh, India, papers) for all the countries of the region. A and Indonesia. All projects in the population, $2.2 million stand-alone pilot WID project in health, and nutrition sector, as well as urban- Cote d'Ivoire was also approved. Increased development and rehabilitation projects, ad- attention to WID concerns is evident in the dressed WID issues in fiscal 1991. application of the population/agriculture/envi- In the Europe, Middle East, and North Af- ronment "nexus" in several countries, as well rica region, efforts to integrate women's con- as in the growing number of operations that cerns into the lending program in the popula- explicitly identify WID objectives. tion, health, and nutrition sector, as well as the In Asia, WID issues are brought into the education sector, have been as successful as in mainstream of activities by capitalizing on op- other regions of the Bank. The particular chal- portunities to treat WID cross-sectorally, and a lenge for the region is to integrate these con- few freestanding WID projects are under con- cerns in other sectors. Efforts are under way sideration. For closer monitoring of WID- to integrate WID activities into social-fund 58 The World Bank-Fiscal Year 1991

projects, into emergency-recovery lending, and northern states. Women's groups, once they into agricultural projects. In the $140 million begin to operate efficiently, are being encour- social-fund project in Egypt, for example, in- aged to organize themselves into registered come-generating and micro-credit schemes in- cooperatives so that they can gain access to volving the participation of women are being bank credit. Several WIA programs have sup- given priority, and representation of women on ported women's efforts to develop community the boards of private voluntary organizations woodlots; as a result, the women do not have that are to benefit from the project is being to spend as much time as before gathering fuel. encouraged. The lessons learned from the WIA pro- Understanding of women and the factors gram-in diagnosing women's requirements, affecting their life circumstances in Latin launching pilot efforts to modify the extension America generally suffers from dated and un- services to meet those requirements, and de- reliable data, especially on income, and labor- veloping support from the Nigerian govern- force statistics have only recently been disag- ment through cross-fertilization of ideas and gregated by sex in many countries. As a result, approaches among states-can be useful to the Bank could not obtain reliable information other countries, in Africa and elsewhere. In the on women's labor-force participation, on their next several years, the Bank expects other earnings relative to men, or on female-headed projects to reach similar maturity, as its policy households. As the availability and quality of and research work on WID expands. information have improved, several projects in Population, health, and nutrition. The vol- the region have begun incorporating compo- ume of lending in the population, health, and nents that will benefit women; relatively few nutrition (PHN) sector continued to grow in projects in the current lending portfolio are fiscal 1991. Twenty-eight projects, with com- stand-alone WID projects. During the year, mitments totaling $1,568 million, were ap- women's needs were specifically addressed in proved, reflecting a growth in the number of Colombia (two projects), El Salvador, Hondu- operations of 56 percent and in loan and credit ras, Mexico, and Venezuela. amounts of 68 percent over the previous year. Several Bank operations addressing wom- (In fiscal 1990, growth in the number of en's needs have progressed to the point where projects approved and lending volume over results can be discerned. For instance, as part fiscal 1989 amounts was 64 percent and 70 of its national effort to upgrade extension, the percent, respectively.) In the five years (fiscal Nigerian government, several years ago, asked 1983-87) before the president of the Bank the Bank for help in initiating a program of announced that lending for PHN would be agricultural-extension services for women doubled over a period of several years, com- farmers. Subsequently, a project combining mitments to the sector averaged $205 million. research and operational support-designed by About two-fifths of the projects approved in the Bank and financed by the United Nations fiscal 1991 were in the Africa region, while six Development Programme-was launched to projects were approved for Middle Eastern and develop and test ways, using existing struc- North African countries. tures, to help women farmers. This led to a Of the twenty-eight projects, twenty-three can women-in-agriculture (WIA) program. be categorized as straight population, health, and Findings from the pilot project provided the nutrition projects (valued at $1,332.9 million), basis for expanding the program in three par- while five were social-development projects, ticipating Nigerian states. The Bank provided valued at $234.7 million. Social-development further support by assisting several state-level projects were approved for Egypt, Haiti, Hon- agricultural-development projects and by hav- duras, Yemen, and Zaire. One beneficiary ing one resident-mission staffmember work full group of the $140 million project in Egypt, time on the WIA program. Monitoring indica- which provides funds for training, microenter- tors, which compare interstate performance, prise creation, and labor-intensive public were developed and formed the basis for peri- works, is the mass of workers who were forced odic experience-sharing across states, thus to return to the country during the Gulf crisis. helping to extend the approach to a larger There are a number of reasons for the mo- number of states. mentum of actual and forecasted growth in Nigeria's WIA program has made substan- PHN lending. First, while population issues tial progress. The number of WIA agents has have been accorded high priority by the Bank increased from 425 in 1989 to more than 800. for many years, efforts are currently being Priority has been given to improving their intensified to stimulate a demand for, and a mobility and coverage by providing them with consequent increase in, operations in the sec- mopeds. The number of female contact farm- tor. Second, the demand for family planning ers has more than tripled, especially in the and other population interventions is expected The Environment 59 to continue to grow, as more governments, The Environment particularly those in Africa, come to appreciate fully the negative effect that population growth The Bank's environmental strategies have has on development prospects, as well as the three interconnected dimensions: the relation- health benefits of family-planning services. ship between environmental degradation and Third, human development is accorded high poverty; the effect that today's resource-use priority, in the context of overall economic patterns have on the development options of reform and development objectives, by both future generations; and the interdependence of national policymakers and the Bank. Human environmental problems on a transnational development, in turn, is supported by various scale. types of Bank interventions, including PHN Adverse environmental effects are felt im- operations, as well as PHN components in social- mediately by the poor, urban and rural: development projects and structural-adjustment through health consequences of urban air and and sector-adjustment operations. water pollution; crop losses from increasing Fourth, in keeping with World Development erosion due to deforestation; consumption Report 1990's analysis of poverty issues, the losses as a result of forgone production of Bank is placing the highest priority on activi- minor forest products, caused by the loss of ties to reduce poverty, an important compo- forest cover; increased labor costs of gathering nent of which is the provision of basic social water and fuelwood; and crop losses and dam- services to the poor. Fifth, many countries' age to irrigation systems due to the destabili- health sectors, in particular, are currently zation of hydrological patterns. In turn, the poorly organized and financed, and face both persistence of poverty, combined with rapid rapidly escalating service costs and expanding population expansion, contributes to environ- consumer demand. Finally, the growth in nu- mental pressures by forcing the poor to exert trition activities is accelerating and is expected unsustainable demands on natural resources to continue in terms of its presence in PHN through overgrazing in reduced common lending, as well as its presence in other multi- spaces, deforestation to expand the agricul- sectoral operations and structural-adjustment tural frontier or to obtain fuelwood, and pollu- lending. tion from systems of waste disposal and energy Recent lending by the Bank in the PHN use. sector has been marked by a change in the way Environmental degradation also forces in- the Bank identifies potential investments. tractable choices between the needs of the The increased emphasis at the macroeco- current generation and those of the unborn. nomic level on human-resource development The risks to the planet of current production and social-sector reforms, by the Bank and and consumption patterns are subject to con- national governments alike, has set the stage siderable technical debate. Yet there is little for more prominent and promising Bank inter- doubt that substantial adjustments are needed ventions in the PHN sector. A growing number in technologies, policies, and institutions to of discussions on structural-adjustment opera- achieve environmental sustainability. tions have culminated in the launching of hu- Environmental problems transcend national man-development programs that are supported boundaries, and awareness about them is in- directly by Bank lending. creasing. It is thought that about 100 species Recent Bank investments also reflect an become extinct daily. Concentrations of dis- increasing appreciation of the unequivocal im- charged chlorofluorocarbons in the atmo- portance of strong institutional capacity and sphere, which are believed to be growing at sound management skills and practices in about 5 percent annually, result in the deple- achieving PHN-sector objectives. Virtually all tion of the ozone layer and increase exposure PHN projects approved during both fiscal 1990 to damaging ultraviolet rays. Other forms of and 1991 included some provision for improv- modification of the atmosphere may be con- ing the efficiency of programs and services tributing to global warming. Finally, there is through interventions to strengthen manage- the growing problem of transboundary pollu- ment. tion and hazardous-waste disposal, particu- Bank investments in the PHN sector are larly in marine environments. financing, in general, larger proportions of Responsibility for the generation, as well as recurrent-cost components than they have in the solution, of global environmental problems the past. The focus of Bank work has been on is shared by developing and industrial coun- improving the effectiveness and efficiency of tries; thus, for example, while past accumula- priority activities and services, and expanding tions of "greenhouse" gases have largely come them prudently when their financial sustain- from industrial countries, future growth is ability can be reasonably ensured. likely to come increasingly from the develop- 60 The World Bank-Fiscal Year 1991

ing countries. This common responsibility gic approaches to addressing environmental highlights the necessity of multilateral arrange- problems on a country or regional basis. As far ments for remedial action and burden sharing as the total effort of the operations complex is (see Box 3-6). concerned, this is only the tip of the iceberg. While lack of information and appropriate Increasingly, country-operations departments methodologies still stand in the way of swift and other technical-department divisions are action in some environmental areas, much is taking responsibility for environmental work known today, and research is under way to and for recruiting staff, who are given specific expand knowledge. Five clusters of priority environmental responsibilities. Evaluation of environmental problems in the coming decade environmental aspects of Bank operations is have emerged: destruction of natural habitats, also of growing significance in the work of the including tropical moist forests; land degrada- Operations Evaluation Department and the tion; degradation and depletion of fresh-water Economic Development Institute (see pages 88 resources; urban, industrial, and agricultural and 89, respectively). pollution; and degradation of the global com- Estimates of the amount of staff effort de- mons. voted to environmental work in the Bank are The development of environmental aware- difficult to make, in large part because of the ness, the lowering of population growth rates extent to which environment is now becoming in many developing countries, the identifica- integral to a wide range of Bank activities. tion and solution of country-specific environ- There are currently 106 high-level and thirty-four mental problems, and the coordination and support staff in the Environment Department design of funding channels to address local and the four regional environment divisions. costs of global environmental problems will be These staff include economists, sociologists, important elements of the development agenda engineers, land-use planners, ecologists, forest- for the 1990s. Work on World Development ers, anthropologists, and institutional experts. Report 1992, which focuses on the relationship There are also a number of operational divi- between development and the sustainable use sions that have specific environmental func- of environmental resources, is under way and tions. Overall, based on time recorded by staff, will cover many of the concerns that will be approximately 270 staffyears were devoted to raised at the United Nations Conference on forestry or environment in fiscal 1991, corre- Environment and Development, to be held in sponding to about 10 percent of total Bank staff Brazil in 1992. time. At its September 1990 meeting, the Devel- Of the 229 projects approved in fiscal 1991, opment Committee reiterated the importance eleven were categorized as having diverse and of integrating environmental concerns into the signiftcant environmental effects (category A), Bank's operations. The integration of these while another 102 were characterized as having concerns into Bank operations continued the potential for more limited and specific throughout the past fiscal year. Consequences environmental effects (category B). of this are that the distinction between envi- Project assessments are meant to ensure that ronmental and other work in the Bank- development options are environmentally whether research or lending operations-is be- sound and sustainable (participation of local coming increasingly blurred, and that concern communities is therefore central to the pro- and responsibility for environmental work, as cess) and that any environmental conse- well as the relevant expertise, are now widely quences are recognized early in the project diffused throughout the institution. cycle and are taken account of in project Formal responsibility for environmental design. work in the Bank continues to be shared Continued progress in integrating environ- among several units. The Environment Depart- mental concerns into the Bank's operations is ment is responsible for setting overall strategic illustrated by the number of projects with objectives, carrying out the necessary re- environmental components or objectives ap- search, preparing guidelines, conducting staff proved in fiscal 1991. In all, fourteen of the training, and handling external-relations issues projects approved had primarily environmental relating to the Bank's environmental work. It objectives (projects are deemed to be "primar- has also the newly acquired responsibility of fly" environmental if either environmental administering the Global Environment Facil- costs or benefits exceed 50 percent of total ity. Environmental divisions located in the costs or benefits). The fourteen projects repre- technical departments of each of the regions sent total lending of about $1.5 billion. In have day-to-day responsibility for ensuring the addition, many projects were approved during quality of Bank operations, focusing not only the year which, while not primarily environ- on individual projects but also on more strate- mental, addressed one or more environmental The Environment 61

Box 3-6. The Global Environment F'acility

Responsibilir tor the ameihoration of environ- Proh'tvlli io rle.*a`ioriol it ,1e'rs. The facility menial problems is shared b indusiriulized and w%ill support programs to enh3ncc contine,neC develipine nations Juke. PasL accumulations of planning for marine oil spills: ii., abat irdustrial ' greenhousc- gases. for cxample. have l3rgely 1nd s%aste:sater pollution ihat alfects icirna- come from the forft-r. while tuture arniih in tional marine anJ fresh%%ater re;-ourec-: To L; emis-ions is likeN to conic increasinvi, trom the rrose r-c.ption ftcilities for remosing hallast latter group. Deseloping countries will need as- frIom hips in ports: to. prteent and clean up sistance in taking step' to prc.tect the -vlobal tOXiC-Wasitc pollution alone major r!vers that at- comMons." fect intcrnational wvalerc:urses and Ttoconserve But %%hat is ito be done: "hen a counirs must unintue uater hodies. hear the costi ftor cnmironmental protection. \ll des-elo1pinj!countrielswilh LINDPprograniN uhile a ponion of the hcnefits accrues Ioihe and that had a per cLaila gross national product clobal communiti I Linder certain circtumstnces. 'ft S4-i 1iti or les, in l49 will hb eligibli tor ClEF might not there be a need for eoncnssionar tfunding for insesitnint prulecis and tehnich l hnancing? is,tsstant e. rhe estLablishment cf a separate lacilmr- tI-, do \% hile most projects w%ill he counirn specific. just that wvas proposed by France-and sup- sorme regionAl projcts- bhi.:.dsersii inrdjacent ported by Germany aind other nations-at the areas i tin counines. f')r inst:inrcc ill also Des1 lopment Committee discussions in l4OXi. As qualif- . ProtLcts w-ill he designed so as to ensure a result. rwenty-ttve developed dFnddevelopitig thatl here i; a cIlar distinction between GEEF dnd nations agreed in Nvcember liit31 to esiablish a regular develpipient programs aind projects. Global Enironment Facilit) IGEFt. Lo bh run In addition. to qc,al;f protects murnt he con- jointly by the Bank. the L:nited Nations Desel- sistent with global environmerilnl cinsentions opment Pnrgrammc fWNDPI. adri the LUnited and s%ith country-specific enstrunnienial strte- Nations Environment Programme. glcs or pro,1gra3, and bc both LOstefCtivIe and %%ith total financing available kil ahoul S1.5 ofnhigh pririrm trom a globdl perspective. billion. the GEF "Lid become opcratinal in mid The threL i'Mplmenting agencies s%ill develop 1;I9. w%ork programs of imnc ntmenis. scintitfic and The goal of the three-'ear pilot program is to Technical support. and technical assistance thit provide resources to help finance innovatii e prij. follo%s these gutdeln, . grams and projects a'ffecting the global environ- The GEF tufll he comp.osedl of a core fund. to merit that w%ould not normally be funded. and it kthich contributions o(n ., voluntarn basis and in do so in d manner char explores how developing convertble currcnc; may be- made in the lorm i.f countries can deal pragmilicalfi with these -. grants. and J cofi.nncinz jTeeemenl. tundcd sues. at lons cost, and without impeding des elop through conces,sionjl loanm or grants pros ided an mernt. It is expected that the relevant expcrirnce a bilateral basis, to cotinance activities supportid deriked from its opeiraiions ul dealing wi th global h% the core funj. ensironmenital challenges will be taken into con- The countrics that hJbe pros idcd cLntihLtiOLIns sideration in the World Bank%s regular opera- ire A.usrria. Brazil. China. Denmirk. Eaopt. Fin- liors. lInd. France. Giemnan . IndJi. Indc-nsci;A. Ital. Four areas WVTCreselected tor the operations tit Japan. Mlexico. the Netherlands. Nornsax. Pak-i- the facilit,. sian. Spain. Sw%edcn. S%itzerland. Turke\. and Pn,t-ch'iiel t/ic 0 te' ,it l Dselopine coun- the LUtlited Kingdomn The UTiteJd States has trieswlill he aossisted in making the transition trim pli-1ted tO prrOV-idC paralLlI fund. t ' support GEF the use and production of chlo.rolluoroc.irbons rpes ol insestmenis. Ar the end of the fis;jl and other eases-which contribute to the deteri- xear. contributions to the GEF antounted to oration al the ozone laNer-to available substi- abhout S''7I million. tutes and allern.iti-es.

LmucioglgultLtaEi/ioitst-- L,'a-' Cm/a%nwhiss . .Xreas larh action b\ the lacilit\ include the: adoption nf 'Thc t'tF .t irk In hi. iret will he eC,,iiintTtud :lh cleaner fuel: and terhnoloptes irn the energs OUI Thi up ont uht,i n;r - h-rntul ineaihe .-- onito Lcr. a-neulturt. and industry sectors. as weil .as sonie The Motintiejl Pri.ti.Cl .Ireajds has in Intcrinii Nit iiii retorestation and torest conscrmafiti. crale- und a, pdrt ol .inincine ni-hijn,mrntihli,hrd P,t),IreLe' bihtodiisirt. The nchesL rem.aining % It cotractin prtue, Stt-fie rr'cedJuure, flr ih; sources of ecologc1al syssenis and diversitV ol turnLit,ns I this runidh,\e IrcJ\ hb.n -Lt dn h\ species-is fitch contrubufu to a v.ide r.,nge ol ihe ;-nirctiing parti.-; R;atarees al.:et1ed in the goods and siervices. including harnrsthble mridi- iSirid Bird. Far iiieiict-proi:ei 'inailewiy %Nilfh. cines or industrial pr-ducts. genetic rcsourceso r nnid-:d irder ti- tiE in in t Pi-tttis Tru-r lood production. and the rculation (it climatic Fund hhreb uJuldhe kept irlaic iriri the- nEF" c,r aund.FundinL i,r ozo-ne related pritecti whilt rot- and raintali pautern-are In des eloping coun- ,lrls- hFedr-u a irorni hti, Pnrisr-:t Tru'r Furd. incs. The facilitn sill support efforts To presier', %h]ih 0iluld Pr,I\ .rils oico.uniri,thlu ire 'ign itst speciiTc areas. I., tre Ntit tiera rot aol 62 The World Bank-Fiscal Year 1991

issues. Excluding projects whose environmen- a developing-country context. It is also gather- tal costs or benefits amount to less than 10 ing and summarizing relevant Bank experi- percent of total costs or benefits, almost 40 ence, identifying gaps in knowledge, and tar- percent of projects approved in fiscal 1991 had geting major areas of opportunity. The significant environmental components. information generated by the task force is to be The supervision of several projects ap- used to strengthen a forthcoming Bank policy proved in earlier years, some of which have paper on energy-sector issues. been controversial, continued to command During the past year, it became increasingly considerable staff effort during the past year. evident that the Bank's four operational re- Such projects included the National Land gions are going in different ways in integrating Management and Livestock project in environmental concerns into their work pro- Botswana; the Sardar Sarovar Dam project in grams. This outcome is to be expected, for India; the Singrauli Thermal Power project, environmental concerns vary from region to also in India; the Kedung Ombo project in region. Indonesia; the Carajas Iron Ore project in In Africa, for instance, the large number of Brazil; and the Northwest III Settlement (Polo- developing member countries has dictated that noroeste) project in Brazil. This supervision emphasis be placed on the development of has been concerned with measures to protect national environmental-action plans (NEAPs). the environment and to mitigate the potential NEAPs have been completed or are nearing adverse effects of certain investments on local completion in Burkina Faso, Ghana, Guinea, populations. Lesotho, Madagascar, Mauritius, Rwanda, Fiscal 1991 saw the completion of the Envi- and the Seychelles. Other countries-including ronmental Assessment Sourcebook.9 This 800- Benin, Burundi, The Gambia, Guinea-Bissau, page reference manual, published in three vol- Nigeria, Togo, and Uganda-have begun to umes, codifies all the Bank's environmental take steps in the same direction. policies and guidelines into one source. The The NEAP process provides a framework sourcebook is aimed primarily at borrowers' for integrating environmental considerations environmental-assessment teams that need to into a nation's economic and social develop- know how to implement Bank environmental- ment. The process is "demand driven'-that assessment policies and how the Bank expects is, it is initiated in response to requests from the environmental-assessment process to be countries and starts with a comprehensive re- conducted. All relevant sectors and all types of view of environmental issues to determine projects with potential for major environmen- national priorities. It is a product of local tal effects are addressed, with emphasis on participation within the various parts of the large infrastructure projects. Effects are out- government, as well as with local administra- lined in energy, agriculture, industry, transpor- tions, civic groups, research and academic tation, urban development, and water-supply institutions, nongovernmental organizations, and sewerage projects. and other private-sector actors. Many interna- The Bank also responded to the importance tional partners are also involved. The Bank's attached by the Development Committee to Africa region provided the initial impetus and initiatives to provide greater protection for stimulation to such activities as a service to its tropical forests and to promote energy effi- member countries. But special care has been ciency and conservation in developed and de- taken to avoid the temptation. so often faced in veloping countries. development assistance, to take over the work A draft forest-policy paper, which suggests and "do the job" for the country. ways in which the international community can During fiscal 1991, a "Club of Dublin" was work together to check deforestation and in- formed to provide support for the NEAP pro- crease fuelwood supplies, was prepared in cess and, specifically, to contribute to the full fiscal 1991. The paper also proposes specific incorporation of environment issues into de- actions by the Bank, including a total ban on velopment in Africa. While not directly in- the financing of commercial logging activities volved in fund raising, the club, which is made in primary tropical moist forests. The draft up of African nations and interested donors, is policy study was the subject of an executive- expected to be instrumental in mobilizing dis- board seminar. A revised version of the paper cussion, review, and support for actions and will be presented to the board in fiscal 1992. programs for which it will build a consensus. A Bank task force on energy efficiency and During fiscal 1991, many of the environmen- conservation was set up during fiscal 1991. The tal problems that relate especially to Asia were task force is reviewing the potential options for securing greater energy efficiency, conserva- 9World Bank, Environmental Assessment Sourcebook tion, and accompanying technology transfer in (Washington, D.C., 1991). The Environment 63 addressed. These problems include soil degra- tainability of environmental-policy measures, dation (half of India's arable land is degraded particular emphasis has been placed on the through erosion, compaction, and saliniza- establishment of close dialogue at the regional, tion), disappearing forests (at the rate of 2 national, provincial, and local levels. METAP million hectares a year), and poor air quality is active in ten countries (Algeria, Cyprus, (especially in the region's largest cities). Egypt, Greece, Israel, Malta, Spain, Tunisia, A $155.6 million loan to India was approved Turkey, and Yugoslavia). to control industrial pollution. Although the The Bank's environmental-assistance strat- main focus of the project is on strengthening egy in Eastern Europe has been based on initial the government's monitoring and enforcement economic work that has led to subsequent agencies, the project also helps industry to policy and project-lending programs. A variety mend its polluting ways through the construc- of approaches has been designed to meet dif- tion of waste-treatment plants and the like. In fering country needs and to explore alternative the Philippines, a $224 million sectoral-adjust- assistance mechanisms. However, govern- ment loan was designed to deal with some of ments and the Bank are recognizing the impor- that country's most pressing environmental tance of such policy-reform measures as in- problems in rural areas concerning the sustain- creased energy prices and the need to ability of forests, fisheries, and upland agricul- strengthen environmental institutions. These tural areas. Industrial pollution in the Philip- initiatives are seen as the first step to rehabil- pines is the target of another project still in itating the environment. preparation. Two projects in China, addressing Environmental-assistance strategies in this urban environmental concerns (in Beijing and subregion are being made part of the larger Liaoning), are in advanced stages of prepara- picture of economic reform and are an insepa- tion. rable part of the restructuring process in the Work also began on a report that is looking industrial and energy sectors. Environmental at what lies behind the region's environmental concerns are integral to the reform process problems; the study has been designed to pro- because they relate directly to the quality of vide the basis for a comprehensive strategy to life and the political perception of social prog- deal with them. Work on the $2.5 million ress under reform. Thus, in Poland, the Bank is Metropolitan Environmental Improvement Pro- financing a project that provides technical as- gramme-established in late 1989 by the sistance to help that country to strengthen its United Nations Development Programme and ability to analyze and design a series of policy, the Bank-intensified; the program's focus is regulatory, institutional, and investment ac- on how better management can reverse the tions it plans to undertake to improve environ- process of urban environmental decline in Bei- mental quality. jing, Bombay, Colombo, Jakarta, and Manila. In Latin America and the Caribbean, institu- In the Europe, Middle East, and North Af- tional strengthening has become the dominant rica region, the focus is on environmental theme in environmental-assistance strategies. rehabilitation in Eastern Europe and imple- The Bank has prepared overview papers on the mentation of the Mediterranean Environmen- environmental issues facing all of its borrowing tal Technical Assistance Program (METAP), a countries in the region. The papers pinpoint major component of the Environmental Pro- the main environmental problems, explore gram for the Mediterranean. METAP is funded their underlying causes, and propose possible by the Commission of the European Commu- solutions. A common theme in many of the nities, the European Investment Bank, the studies is the need to strengthen the national United Nations Development Programme, and and provincial authorities responsible for reg- the World Bank. ulating and policing the environment. Until the In accordance with METAP priorities, pro- institutional framework is adequate, it will be gramming of activities is focused on the south- difficult to attain the Bank's broader aim of ern and eastern Mediterranean countries, reducing poverty and restoring growth in a way where financial-resource constraints, particu- that ensures that natural resources are neither larly of foreign exchange, are the tightest and used up nor polluted beyond the environmental where development problems stem from un- point of no return. sustainable levels of resource use. Mediterra- The landmark Bank-supported program in nean countries need to adopt more stringent Brazil, begun in fiscal 1990, assists the coun- pollution-control measures, hazardous-waste try's national environment program by programs, coastal-zone management plans, strengthening the central environment authority and wildlife-conservation programs. and four state-level environment-protection Reflecting the importance of local participa- bodies. Experience gained in Brazil is now tion to the ultimate implementation and sus- being applied in new Bank-supported programs 64 The World Bank-Fiscal Year 1991 to bolster national environment agencies in Ec- developing-country exposure. Nevertheless, uador and Mexico. Similar efforts are under way certain challenges to the program remain. in Bolivia, the Caribbean region, Chile, Colom- Of twenty middle-income countries identi- bia, Paraguay, and Venezuela. The Bank, to- fied as severely indebted," only five have gether with the government of Brazil and the benefited from World Bank support, and the Commission of the European Communities, pre- addition of other countries to the list of bene- pared a proposal for a pilot program to protect ficiaries continues to prove slow and diffi- the tropical rainforests of the Amazon region. cult.12 Realistically, however, protracted nego- This action was requested by the heads of state tiations should be expected. The instruments of the seven major industrialized countries at the are complex, and, in some cases, new. Several 1990 economic summit, held in Houston. A of the outstanding cases also involve starting national forestry policy is being prepared as part positions characterized by large arrears and of this initiative. the absence of a track record of adjustment. The World Bank and the Environment, the The existence of large and widespread ar- Bank's first annual report to the public on its rears makes it harder to reach additional agree- environmental activities, was published in Sep- ments and increases the Bank's need to exer- tember 1990. It covers activities that took cise careful judgment when providing support place in fiscal 1990. The second annual report for DDSR operations. The Bank's role of sup- will be published early in fiscal 1992. porting debtors through its policy dialogue, as well as through its general and structural- Debt and Debt-service Reduction: adjustment lending, is vital to the continued A Review of Progress success of the program, as is the IMF's role of In fiscal 1989, the executive directors ap- encouraging macroeconomic reforms. proved the use of World Bank resources to Despite these difficulties, progress has been support debt-reduction and debt-service-re- made under the debt strategy. Two countries- duction (DDSR) operations for heavily in- Egypt and Poland-have received exceptional debted, middle-income countries. Conditions debt relief from the Paris Club; five countries- for Bank support in the financing of such Argentina, Brazil, Bolivia, Ecuador, and Po- operations, and guidelines for the extent of land-are at various stages of discussions with such participation, were set.' their banks; five are beneficiaries as has been When the program was approved, directors reported earlier; Morocco has an agreement in requested that regular reviews and evaluations principle with the banks; and two countries- be conducted. The first such review was un- Chile and Morocco-have used, or are ex- dertaken by the directors in fiscal 1990; a pected to use, multilateral resources in support second review took place in March 1991. of debt reduction. Since the start of the program, a total of five In their fiscal 1991 review, the executive DDSR operations have been supported-in directors generally agreed that the program was chronological order, for Mexico, the Philip- working according to its objectives and that no pines, Costa Rica, Venezuela, and Uruguay. The objectives of the program are to help debtors resolve problems of excessive debt and restore country creditworthiness. and retrcutycrdtothAnnual'° For details, Report see for pages fiscal 49 year and 1989. 50 of the World Bank's Countries using the program have succeeded Argentina, Bolivia, Brazil, Chile, the Congo, Costa Rica, in obtaining debt relief while also materially Cote d'lvoire, Ecuador, Egypt, Honduras, Hungary, enhancing their prospects for restoring growth, Mexico, Morocco, Nicaragua. Peru, the Philippines, Po- subject to their continued pursuit of appropri- land, Senegal. Uruguay. and Venezuela. subject appropri, Morocco may be the closest. It signed an agreement with ate adjustment policies and avoidance of ad- its Bank Advisory Committee in June 1990 providing for a verse external shocks. Early evidence in the rescheduling of commercial-bank debt. In addition, the cases of Mexico and Venezuela suggests that agreement included waivers that allow Morocco to buy back debt at market prices and implement a debt-equity creditworthiness is also beginning to be re- swap program. The banks have indicated that they would stored. Capital repatriation and foreign direct participate ina debt-reduction and debt-service-reduction investment seem to have increased following operation if the country agrees to an Extended Fund the conclusion of debt-reduction operations Facility program with the Interuational Monetary Fund coupled with successful adjustment programs. (IMF) prior to December 31, 1991. coupledwithsucessfu adjustent prorams ' Outside the framework of the Brady initiative, banks It is too early, however, to determine have responded to Chile's strong economic performance whether voluntary lending will be resumed on by rescheduling $1.87 billion of amortization payments a more general basis. That will depend both on from the 1983-84 and 1985 reschedulings that would have debtors' continued sound policies and on the begun to fall due between 1991 and 1994. Debt-equity swaps continue to be an important vehicle for reducing strategies of lenders. The banking community commercial-bank debt, and there has been a shift toward generally has been able to "quarantine" its use of swaps for privatization. Debt and Debt-service Reduction: A Review of Progress 65 changes in the guidelines were necessary, al- score the critical importance of two elements. though a number of directors noted that contin- One is the need for comprehensive, medium- ued flexibility in implementation of the guide- term adjustment programs, with particular em- lines will be needed in future cases. The more phasis on structural changes to restore investor widespread existence of arrears was viewed confidence and generate the private inflows with particular concern by the directors, who that will be essential for the success of growth- cautioned that the utmost care should be exer- oriented reforms. The other is the need to cised when the Bank considers lending to coun- maintain access to those sources of financing tries in arrears. The appropriateness of the that are willing to support adjustment and case-by-case approach was confirmed. development efforts while rebuilding access to Some directors also noted with concern the other financing sources that can underpin slow pace of debt and debt-service agree- growth in the future. ments, while recognizing the circumstances Some progress has been made with respect causing the pace. Directors emphasized the to these countries, as well. The Paris Club has need for the Bank to continue to monitor begun to offer longer maturities as a follow-up debt-reduction negotiations closely and, at ap- to the 1990 Houston economic summit's admo- propriate times, to communicate to the negoti- nition to consider options to address the offi- ating parties the modalities of the potential cial debt problem. Four lower-middle-income support from its set-aside funds, from its di- countries (the Congo, El Salvador, Honduras, rect-lending arrangements that a borrower can and Morocco) and one low-income, oil-export- use for approved debt-reduction and credit- ing country (Nigeria) have benefited from enhancement programs, from its guarantees of longer maturities and grace periods on re- interest payments, or from waivers of its neg- schedulings.14 ative-pledge clause (see Box 3-7). They reaf- Recent, more far-reaching understandings firmed that sustainable macroeconomic and with Poland and Egypt through the Paris Club financing plans must be an inseparable part of provide for reducing the net present value of any operation aimed at reducing debt and future debt-service payments by 50 percent. debt-service obligations in order to ensure a Over and above this relief, individual creditors viable situation after that operation, and that may convert part of the debt into local-currency all involved parties must be seen as carrying obligations through debt-for-equity, debt-for- their fair share of the burden. environment, or debt-for-development swaps. In fiscal 1992, a further review of the pro- The programs for Poland and Egypt are seen as gram will be presented to the board, which will being unique, however. evaluate the merits and impacts of the program Paris Club discussions have demonstrated in order to recommend its possible extension the potential-given the requisite commitment beyond the initial three years. and determination on the part of both creditors Lower-middle-income countries with high and debtors-of attaining, through a careful levels of official debt. The DDSR program is case-by-case review, substantial debt relief aimed at middle-income countries with large (through options for debt and debt-service re- private debt. Concerns have been raised, as duction or for a package of new money) for well, about the situation of heavily indebted, those lower-middle-income countries that are lower-middle-income countries that are mainly pursuing sound economic reform. indebted to official creditors. The large share In addition, a number of individual bilateral of debt to official creditors means that market- official creditors have made important contri- based reduction of private debt can play only a butions by implementing their own debt-relief limited role in the financial strategy of these and debt-forgiveness measures for countries in countries, even though a substantial reduction this group. Despite these achievements, how- of existing commercial-bank debt and debt ever, many lower-middle-income countries service could help alleviate payments diffi- culties-in some cases, significantly. The experiences of the group of fifteen coun- Cameroon, the Congo, Costa Rica, C6te d'lvoire, the tries that are mainly indebted to official credi- Dominican Republic, Ecuador, Egypt, El Salvador, Hon- tors and that have had Paris Club reschedul- duras, Jamaica, Jordan, Morocco, Peru, the Philippines, ings since 198213 differ widely with respect to and Poland. The Paris Club is the name given to the ad ings ,...hoc meetings of creditor governments that, since 1956, growth, the stance of policies, economic per- have arranged, when necessary, for the renegotiation of formance, and development prospects. In de- intergovernmental debt and of officially guaranteed pri- fining strategies to deal with the problems of vate export credits. their indebtedness, the experiences of those In March 1991, Nigeria also signed an agreement in principle with its commercial-bank advisory committee. countries that have maintained or reestab- The amount of commercial debt affected by the agree- lished normal relations with creditors under- ment is about $4.5 billion. 66 The World Bank-Fiscal Year 1991

Box 3-7. The IBRD %Negallie-pledge Policy and Debt and Debt-%enice Reduction Operations

Nt"ripi pledgee claus'v are concerned %%Ith the a' lcrnporarN. ind the B.mnk decided that a %,ai%er grinting i-t security interests M. a burro%%cr oxer uitas justilitd In this case lust as it u0o,ld ha%e IIS a-tet- I. Its creiutors. B1 th- Lermrs o1 such a lccn had the Bank beelt dir.ctlN supporting the clause. Ihc birr1uTcer .S reith a creditor or operation. And in December [-isl. thr Bank LII.'up 01 crcdiiolrc I) iestrictlions on iIs eraning. irunted a %xati%rot thI ne c-pledge reltric- or other. .s prrmti-ne r.) c,is. sNcurrv inter non in iIs loan agTeement' iith \e ne?uela up to e,ts in l,a'r ot othcr cr-ditors. an amEmunt Lqutilt nu ICC.is ii million for co.llt Neini;%-pli,dee elaia.es are usuall; standJrd eral proiidcd for binds is;uId under that coun- in Bank !oin d,cument. TIhe reiersc is also true: tru s 11441hinanc;ni plan. ULndei that pl3n. N-en- Thc BJnik does non seck. in making loan'. special tzuela:s, commercialhank cred!itor uierced to seiirtIN Irom mi t'orniers. cLchange lI;gible debt for neu instrumcnts in- t-hc Bank h.s iltvias retognized. ho,r1er tolving DDSR and to pro%ide neunmonev. th at gi'cn Iti,I ir-reac'hing scope ot the nc..diiec- As counir;es vseekto obtain Iinanrial-rciict pkdgi lause,. it has1t- hr administred n ith agrcncmcntm %iiththcir commercial creditors un | c f.ntie\it3litih . si .- Elitet nie. %:wiiers oi ihe dcr tli, res 'ed drhb siratei, or to obtain ne%t clause hi;, betn gramntd in only to INpes ol credits alter eompletnt., DDS R operattons. It is .itaai in', when ihe .' aiir 't ai n-t conod-red likt-1; thilrhes Aill reqlulest the Baink uL provide r.- pose in% rIik to the Bank is a creditor and in u i-ers In nituatiorns ih,t arr les.s tfan clear-cut. C JSC 0f I'inn t.red hivcoScrnment-oii ned or Rtquess fI.r wi-t'ers if the neLŽatli-pledge O,L-rnrnent-controllcd entine, on iheir o%%na~- clau'c in respect ol DDSR operato0ns for %ihich 5 'L is md , vecurtIN or ihrir own hi.rrowings. the Bank is not pro%iding financing are likeli- Iic Deelpnaent-. minthc o%etifl debt tralees haL coninue. Sovercion hornossers nmii seek wav!erS lcd b.FrI 1mi!fioni thIm Bank to secek wiaver' In tornm the Bank in L-rd,t-f to obtain srcured new% circun-mance' and trlOisi inn magnliudes that monex borrowings. Coun[ricr i th severe dcbt nll.A hasemni ar inipicatonsl!tl! the B ark. Fri-hlcr-ms ialseL r ddit lean.al In l,r[ [us' ihe R3:ank waJ asked to grarit a frtm increjsingli reluetani interntitonal mar- l,inedJ .ier to Nloco in rclatiOn i.i the issu. ku It is lsklv. in such cse. hat creditors %ill a.e.c h> IIt. C bndsUi .hnetIn a larucr seek sIpLecJI protection lur an% loans as a Ltndt- principal aniount. f co--nmirrcilbhank loin'. tton of lending. ln ihese eircumnsances. meniber I he B ink hid to be concerncd abe-t the p - counir;es nri scek *.ii%ers in order to secure siNC i%dels Le.t.t the %Jia-er SiIL lld ha'e nii ts these borros-s tllg'. sti.tU' .o a preteried credi-r and ihe possible LarkOin fiscil 1491. thie cx-iutis directlors ne,-.aitec cqiscnquec-;is tor ihe Bank\ hITroIwinv ii h nks poheLN otyrjnting isaisersto

pro-cr.im But it An- had ill be cn)n2 riild aiout the Bank.. ncuaiis-e-pledee clatise in respect of h,: etlfets on 1Its reytiUstine tI-:rriustln nieniber DDSR operation-s. It th. wagrr .crc granted. siould iL L,, rca-on- Thcic "a' a Convensus tltat the Bank should able t: r\p.. t thatj, a' reult. ihc countrN cLontinue [, grani %i.iersl.r DDSR operations ,rcdglmsrthtnrf ss s.ould be enpris. id *!i a casc-hi ;case basis 3eccrdinz to Its current In the *. ,se \tetcl tlie Balnlk clnellddd. Ihr pIili!, In addition. direerors endnrsedla recom- I.r. -rrx jns. that thei,s at' I,i rasrtudi.od.menndurir tE permiltL 'A,:rs. also,. o0-rsUch SUibse-quetitis. in \I, 1AIttl . the 13.nk ariecd to irtanstt;ons Aiithin certain linnits in eases in [rd.. , ai1 hlimued sialn erFOt is nclt e!,L -pledlne "%hich Lhe- Bank u ds not pr-os iding financial sup- CIJLause I.r Uslii Rica. cc-n thouch no Bank po,rt in ordcr ito p.ermit etlielent tolloki -on trans li,rncinme "a prl. niled tot the cnuntrs ¾ debt and actions tor DDSR. deN-'..r'v icc rreduLttlln IJD)DSRi operation. The It '"a; aIttled that the Bank should continue to c "a-Isdee.-mernd to be unique in thAt the tiitg lelusc to grant %%ai%ers otirnL-w-monCs transac- of [lit opet aion pr.s ented ihe Batik tronm pr-' id- ion, that %scrr part . concerted-financing pack- in- direct linantial support. -1h,e Lircusltaiices uace.Astfor-ithrner nes mone,s is rsthe direc- 1re clti'nL Bnl, lunndinr %"cre.ho" eti r. s ;ci'Jc n-rs agreed to keep. ihe maiter under re%irs' with substantial amounts of official debt con- has provided reschedulings with concessional tinue to experience severe debt-servicing prob- options. lems. Between October 1988 and July 1991, four- Severely indebted, low-income countries. teen countries obtained Paris Club reschedul- Progress continues to be made in reducing the ings of $5.3 billion in debt on the basis of a burden of debt for this group of countries menu of options (so-called "Toronto terms") through debt-relief measures provided by their that includes reduced interest, very long grace major creditors-the official bilateral lending and repayment periods (at commercial rates), and credit-guarantee agencies. Many of these or partial write-offs of debt-service obligations creditors have converted official development during the consolidation period (with the rest assistance loans to grants, and the Paris Club rescheduled at commercial rates). Private-sector Development 67

Commercial debt of these countries consti- The Trinidad terms, if accepted and imple- tutes a relatively small portion of their total mented, would reduce the stock of outstanding external debt. However, due to the nonconces- debt owed to Paris Club creditors by two sional nature of the terms of this debt compared thirds. 15 This would increase the grant element with the more concessional official debt, the of official bilateral debt and debt-service reduc- contractual-service burden for commercial debt tion from about 20 percent to 67 percent. Mr. is often relatively large. There are, moreover, Pronk's proposal would cancel all bilateral offi- few mechanisms for easing the burden of this cial debt of the poorest developing countries commercial debt, in contrast with Paris Club facing severe debt problems, conditional on arrangements for bilateral official debt. One their implementing sound economic policies. mechanism that came into play for the first time in fiscal 1991 was the Debt Reduction Facility Private-sector Development: for IDA-only Countries, which was established Strengthening the World Bank Group's during the previous year and whose finances are Effort derived from the transfer to it of $100 million of Private initiative and competitive markets fiscal 1989 IBRD net income. play a critical role in fostering dynamic and The first grant from the facility was ap- flexible economies. Support for private-sector proved-to the Banque centrale des 6tats de development (PSD), therefore, is an essential l'Afrique de l'Ouest for Niger's debt-reduction element in efforts to achieve the World Bank program. The grant consisted of two elements: Group's fundamental objective-to raise stan- $10 million from the resources contributed to dards of living and reduce poverty.'6 the facility by the IBRD and $3 million contrib- The World Bank Group's support for pri- uted to the facility by Switzerland In addition, vate-sector development is long-standing. Its France made a parallel grant of $10 million. focus was articulated anew in the action pro- Following approval of the grant by the gram adopted in 1989, which laid out ways in Bank's executive directors, an exchange offer which the Bank could help its member coun- was made to Niger's creditor banks in January tries define proper boundaries between the 1991. The operation was completed two public and private sectors in developing coun- months later, and virtually all of that country's tries and foster private-sector development as commercial-bank debt was eliminated. In May a means of promoting equitable growth.i7 1991, a second grant of $10 million from the The action program identified four key ac- facility was made to Mozambique. That tivities to help promote PSD: amount, together with contributions of up to * creating business environments conducive $12.87 million from France, the Netherlands, to maximizing the private sector's contribution Sweden, and Switzerland, would allow Mo- to development; zambique to repurchase its outstanding debt * restructuring public sectors to improve ef- owed to commercial creditors at a substantial ficiency and to concentrate on services com- discount of the face value of its principal debt plementary to private activity; of $193 million. Fourteen other low-income * improving resource mobilization and allo- countries-the total combined debt under dis- cation through financial-sector development; cussion is about $2 billion-have requested the and use of this facility. The discussions are the * directly fostering private enterprise through furthest along for Bolivia. resource transfers and providing other support These developments are encouraging. Yet, for entrepreneurial efforts. they have not been sufficient to resolve the The business environment. The creation of a debt difficulties of most of the severely in- supportive business environment, including debted, low-income countries. Actual debt ser- the appropriate legal and regulatory framework, vice is less than half the scheduled debt service continues to be a primary objective of recent for this group of countries. Although resched- adjustment operations. Some 73 percent of the ulings on Toronto terms have helped, they adjustment operations approved in the two-year have an implicit grant element of but about 20 period calendar 1989-90 have had PSD compo- percent-low for countries that need highly nents addressing the business environment. concessional assistance. There has also been a large increase during the In this regard, the recent proposals made at the Trinidad meeting of the Commonwealth by John Major, then U.K. Chancellor of the Ex- lS For details, see footnote on page 46. chequer, and by Jan P. Pronk, the Netherlands 16 The World Bank Group includes the World Bank, the Minister for Development Cooperation, would International Finance Corporation, and the Multilateral Investment Guaranitee Agency. represent a deepening of concessionality in the 17 For details, see pages 55-58 of the World Bank's Annual existing debt-relief measures. Report for fiscal year 1989. 68 The World Bank-Fiscal Year 1991 past two years in the proportion of investment At its September 1990 meeting, the Devel- operations that work to enlarge the range of opment Committee welcomed the progress activities open to private agents, including non- made under the Bank Group's action program commercial voluntary organizations. and reiterated the call it had made earlier on Public-sectorrestructuring.Public-sector re- the Group to give a very high priority to structuring components have become increas- private-sector development in its operations ingly important in Bank adjustment operations, and to continue to expand the scope of its as well, as countries move from basic policy activities in this area, including new ap- reforms to institutional reforms. Adjustment proaches and instruments as may be needed. operations are the major vehicle for Bank in- Committee members emphasized the need to volvement in public-sector restructuring: Some keep under review the roles, policies, and 70 percent of the adjustment operations ap- lending programs of the Bank and its affiliates, proved in calendar years 1989 and 1990 included the balance between their advisory and opera- divestiture components. Besides divestiture, tional functions, and the need for systematic the Bank supports a host of government efforts coordination within the Bank Group. At that to increase the role of the private sector, includ- meeting, the president of the Bank noted that ing both commercial (for-profit) and nonprofit the Bank Group's efforts in the private sector organizations (nongovernmental organizations, must be strengthened-through additional re- for example), in the production, delivery, and sources for the International Finance Corpora- financing of public goods and services. The tion (IFC) and through improved collaboration mechanisms employed to expand private partic- between the IFC and the Bank. The president ipation include regulatory reform, as well as a of the Bank told committee members that variety of contractual arrangements in areas as efforts would also include those that sensitized diverse as road maintenance, provision of pri- the Bank at all levels to the potential contribu- mary health care, education, water supply, and tion the private sector offers for growth. energy generation. A subsequent review of the implementation Financial-sectordevelopment. An efficient of the PSD action program concluded that and dynamic financial sector is crucial to a cooperation within the World Bank Group growing market-oriented economy. In the con- could be strengthened on the basis of the text of Bank operations, financial-sector re- shared objectives of promoting efficient mar- structuring and policy reform are often neces- ket-based economies and dynamic private sec- sary to raise the efficiency and effectiveness tors. This required the Bank Group to rein- of resource mobilization from, and allocation force its effort and expand its capacity to to, the private sector. Implementation of the promote PSD, to define more clearly the func- recommendations of the 1989 task force on tions of each member of the Group, and to financial-sector operations has resulted in improve procedures for cooperation. a renewed emphasis on the importance of Accordingly, several actions were taken by financial-sector policies, on the preconditions the management of the Bank in fiscal 1991 to in the macroeconomic, incentive, and institu- clarify management's intentions with regard to tional environment for successful policy re- further implementation of the PSD action pro- form, and on a reassessment of the goals and gram, including strengthened coordination be- design of Bank lending to financial intermedi- tween the Bank and the IFC and an expansion aries. of the IFC's activities. The actions, which Resource transfers and entrepreneurialde- neither set new policies nor modified existing velopment. Operations in this area are increas- policies, included the following: ingly being designed to have a broader effect * The existing Private Sector Development on the efficiency of the financial system as a Committee, whose function is to (a) assist the whole through the development of sound, com- president of the Bank in providing policy guid- petitive, market-based intermediary institu- ance and in coordinating the work of the World tions, support for sector policy and institu- Bank Group and (b) encourage new ap- tional reforms, and the removal of obstacles proaches and the development of more effec- that have prevented creditworthy borrowers tive instruments in support of PSD, was recon- and activities from gaining access to normal stituted and strengthened. Chairmanship of the credit on market terms. A decline in the past committee, composed of top management of few years in the volume of Bank financial- the Bank, the IFC, and MIGA, was assumed intermediary lending to large-scale industries by the president. has been partially counterbalanced (in terms of * Selected divisions throughout the Bank the number of financial-intermediation opera- were restructured, expanded, and staffed to tions) by increased Bank support for small and assume additional responsibility for supporting medium-scale private enterprises. private-sector development. Private-sector Development 69

* Guidelines for cooperation between the sufficient, and the government is willing to Bank and the IFC were issued that set out provide the necessary guarantee, Bank partic- broad principles for the division of responsibil- ipation, either directly or through intermediar- ity between the two institutions and that pin- ies, may be warranted. In such cases, the Bank point opportunities for intensified and system- and the IFC will closely coordinate their in- atized collaboration at all stages of issue volvement. identification and decisionmaking. * As regards lending through financial inter- * PSD strategies, identifying priority areas mediaries, in countries and operations where for Bank Group efforts, are being developed the support of the World Bank Group can jointly by the Bank, the IFC, and MIGA. They appropriately be provided without significant cover, among other things, the policy and government involvement or guarantee of re- institutional environment, financial-sector de- payment, the IFC would normally be expected velopment, privatization, and the promotion of to play the lead role. Conversely, where an both domestic and foreign investment. To en- important element of an operation is concerned sure that Bank operations enhance, whenever with government policy changes (therefore appropriate, the contribution of the private forming a significant element in the Bank's sector to development, management has iden- dialogue with the government), the Bank tified key approaches and criteria to be consid- would normally be expected to take the lead. ered in the design of country strategies and of When preparing financial-intermediary lending relevant operations. Private-sector assess- operations by either the Bank or the IFC, the ments, which detail the opportunities and ob- staff of the initiating institution will consult, stacles faced by the private sector and the role and take account of, comments the other may of the Bank in fostering its development, will make. The Bank and the IFC will price com- be prepared, in consultation with the govern- parable loans to comparable clients on a mar- ments concerned, and will serve as a basis for ket basis wherever possible, and in any case the formulation of the Bank's strategy and will price their loans so as to ensure that Bank work program of private-sector development. and IFC funds are regarded as equally attract- The first twenty assessments are scheduled to ive by financial intermediaries and final bor- be completed by the end of fiscal 1993. rowers. * As part of the overall effort to ensure that * The Bank plans to expand further its capac- the IFC's experience and knowledge are made ity to engage in a policy dialogue and its ca- available to the Bank Group and are reflected pacity to provide advice to governments on in operations supporting PSD, a central coor- privatization policy and strategies. The IFC will dinating unit in the IFC is being established to increase its capacity to advise on, and invest in, enable the IFC to make a more effective con- privatization transactions and will, as appropri- tribution to the work on private-sector assess- ate, provide advice to the Bank as it responds to ments and country-assistance strategies. government requests for assistance. * Detailed principles and procedures have * The Bank's research program will increas- been prepared to ensure that all World Bank ingly address PSD issues. Research is address- Group operations fostering financial-sector re- ing broad issues, as well as sectoral, regional, form or lending to the private sector are carried and country-specific ones. The IFC, mean- out in the context of a coherent strategy and while, has been enhancing its research capabil- take the best advantage of the kinds of exper- ities, with the aim of complementing its financ- tise offered by the Bank and the IFC. ing and advisory activities. A committee, * In the case of private-sector projects that chaired by the Bank's chief economist, has can appropriately be financed on market been created to ensure coordination and cross- terms, or joint ventures that meet the IFC's fertilization in research. ownership guidelines and that can appropri- The executive board reconfirmed its consen- ately be financed without government guaran- sus on the importance of private-sector devel- tees, the IFC will be the vehicle for providing opment as one of the Bank Group's priority and/or mobilizing the necessary resources. The areas of activity and of the need to pursue the IFC will seek investment opportunities in com- PSD action program within the context of the petitive sectors where protection and other Bank's established objectives of poverty re- distortions are relatively low or are being re- duction, human-resource development, and duced significantly, and will generally avoid environmental sustainability. The board reaf- investing in sectors that have high levels of firmed the integrity of this policy orientation protection and other distortions without mean- with the predominant goal of raising the stan- ingful prospects for reduction. Where the scale dard of living and reducing poverty. Adjust- of operations is such that IFC financing, cou- ment, human-resource development, and envi- pled with other mobilized funds, may not be ronmental protection fit into this policy 70 The World Bank-Fiscal Year 1991 framework. Also confirmed was the contribu- action program will be presented to the board. tion of private-sector development to the mu- Directors also emphasized that the IFC-the tual reinforcement of the Bank Group's Bank Group's focal point for its private-sector agenda. The board took note of management's activities-should continue to make every ef- intentions with regard to reinforced implemen- fort to use its capital efficiently and effectively, tation of the PSD action program, for which while at the same time maintaining its commit- there is the necessary support to proceed with ment to achieving its basic developmental its implementation. At the same time, it was mandate. The IFC is strongly committed to agreed that any new policy issues that may strengthen its project selection and contribute arise in the course of implementation of the to the developmental objectives of its clients. 71 Section Four World Bank Finances

Fiscal 1991 saw the IBRD achieve financial targets and undertake programs designed to improve its ability to facilitate the funding of economic development projects and programs Figure 4-1. IBRD Reserves-to- in member countries in the years ahead. Loan Ratio. Fiscal 1987-91 The IBRD's financial achievements include: Ipercent) * Reaching its goal in March 1991 of having I the currency composition of its loan pool in __2 targeted proportions, thereby improving bor- 1 rowers' ability to manage their attendant ex- ! change risks. * Strengthening its reserves-to-loan ratio by reaching 11.2 percent, the upper range of the l 1l current target (see Figure 4-1).' The increase largely resulted from the allocation in fiscal 1990 (effective in fiscal 1991) of $750 million of l that year's net income to the general reserve, I 10 bringing reserves at the end of fiscal 1991 to $10.0 billion. * Diversifying and globalizing the trading and risk-management techniques utilized in I investing the IBRD's liquid-assets portfolio. ; 1 * Borrowing the equivalent of $10.9 billion of medium-term and long-term funding on at- tractive terms in the world's financial markets (see Table 4-1). 8 * Achieving a level of net income-$1.20 l 1987 1988 1989 1990 1991 billion in fiscal 1991-that enabled the IBRD to realize its key financial objectives. Financial Policy Actions During fiscal 1991, the executive directors during the previous semester within thirty days established policy guidelines for the annual of their due dates. This twenty-five basis- allocations of IBRD net income. The guide- points reduction would be in addition to a lines provide that: continuation during fiscal 1992 of the reduction * The first claim against net income will be of the commitment fee on undisbursed loan an allocation to the general reserve sufficient balances to 0.25 percent. to achieve the reserves-to-loan target ratio * Any net income not required to implement (currently 11 percent) at the end of the follow- the twenty-five basis-points waiver of interest ing fiscal year. charges will be transferred to surplus; thereaf- * If net income exceeds the amount needed ter, it could be allocated for specific purposes for allocation to the general reserve, consider- consistent with the IBRD's Articles of Agree- ation will first be given to a waiver, beginning ment. July 1, 1991. of up to twenty-five basis points of the interest-rate spread on the borrower's ' The reserves-to-loan ratio isthe sum of general and special semiannual debt-service payments to the reserves and cumulative currency translation adjustments divided by the sum of total loan principal outstanding and IBRD. To qualify, a borrower must have made the value of callable guarantees less accumulated loan-loss all its loan-service payments owed to the IBRD piovisions. 72 World Bank Finances

Table 4-1. IBRD Borroiiings, Fiscal Y'ear 1991 (amounts in mrltionsl US-dollar Type Is'lre Currency ot issue equis lent 1 Ali'diorn- and A o,-ierm pulblic '.. Germans 9,004 ten-year bonds, due 2'000 DM 750 504 8 8 50.% ten-sear bonds. due 2001 1)M1 200 142 3 Hong Kong 9.50% five-year bonds, due 199< HKS 600 77.4 Japan 7.0% seven-ve,tr bonds, dlue 1997 Y 30 000 192.6 New Zeailand 12 50('%sex en-vear bonds, due 1997 SNZ 250 149 3 Spain 13 75'. fix e-vear bonds, due 199; Pras 1i0.t000 100 9 13 6'5-' five-sear honds due 1996 Puls Ii.000 166 8 Sxxrrzerland 7 25%' ten-sear bonds, due 2000 Si 1- 150 114 9 7 5lY> five-sear honds. due 1995 SW F 20( 102 4 7 0r> ten-year bonds. due 20(01 SW F 600 483 6 Eurobond Market 13 sor, five-sear notes dire 199s S IIt0 84 1 1155(K five-seal bonds. due 1995 CanS 150 131 I 9.125%- fixe-year bonds. dlue 1996 F I 000t 185.5 12 I1'> five-sear no(es. due 1995 t 100 199 0 II 1125, ten-year notes. due 2tl01 t I00 194 3 12 125%c five-year bonds, due 1995 Lit 300.000 261 7 12 125'> seven-year bonds. dtie 1998 Lit 300.000 269 1 i i 65' seven-s ear bonds. due 1998 LIu 600.000 487 0 S 29' five-sear bonds. due 1995 y lt)0,lo 220 5 7 625, five-sear bonds. due 1995 Y )0,((0 406 2 6 75% ren-veair bonds, due 2001 Y 50.(00 358.7 9 25', ten-s ear bonds die 200(0 t. 3001 182 6 11 875'. five-sear notes due 1995 SKr 400 71 1 Gilob.al 8 625% five-seda bonds. due 1995 l5ss 2.IN) 1.99t) S 8 125'- ten-ye.rr bonds. dire 20011 USS I 500 1,487 7 IFotal medium- and long-rem public ofterutos 8,624.4 A1-fdmIm- atidl loi0e-tuln- poj'lic coien! s ntai cc'nimal botlts (and er, 01mcni s Germ.inx 8 71', nore. due 1995 DM 152 93 8 9 02' note, dlue 1996 DM 250 168 2 lnternational" 7 875%ftwo-vear notcs. due 1992 Sw F 300 233 9 7 2S4 tIwo-\car notes. due 1993 Sux F 263 190 9 8 34'% tAo-\aear bonds. due 1992 USS 2(0 200.0 7 71'> two-sear bonds. due 1992 USS 18 138 0 7 36%f twvo-vear bonds. due 1993 US$ 143 143 0 6 971,t0o-vear5 bonds. duc 1993 uSS 146 145.5 Total medium- and Long-term placements with central banks and governments 1,313.3 Meldium- atzl lone-fe mt oh1(1Xfiic moeonts Japan 7 60O,` loan. due 2011 y 10 000 67 4 7 65f, loan. dtie 1995 V I10.00 77 1 6 94%. loan. due 1998' 10.00(Y 75 2 7 10%( loan due 1998 V 1(.0(0 73 6 7 50>1 loan. due 1998 V 10°.000 73.5 Switzerland 7 IV'c sexen-year notes, duc 19)7 Ss F 21tO 145.0 7 5(1% five-s ear notes due 199s Sw F 10( 79.0 7 5(11 seven-year notes, due 1998 Sw IF 100 80.6 United Stales Continuously Oifered Longer-term Securities IC()LFSr Program USS 114 114.4 Intei national 20t0% five-year notes. diue 199s $A 50 48.0 27OS tour-year honds, due 1995 V 115r0rO 111.9 I otal nmediunii- and long-term other placements 945 7 Total medfurn- and long-term borro\mngs. fiscal 1991 10,883.4 Financial Policy Actions 73

S--doII,- T%pc I - r.rI, .1 *qi.. km

C.nitral h.,nki f.'10111 L . '> Co'ntnniioul.I oLttered pd, reni rnehI in i. nl.nC

Sh.iri-termn borruk nias owt,t.ndrne .i tr lune l1l. 1441 R' I'i1

a Aled-m- .ni 1kn0rp rn :,n. i. , h,.3 fl k . rn 'r. '' ph.l c- ,r . !: rln.. r*, ,i,iwz 'r iIhc I iwe .of i,i t b Thc e rift'L eIC pi, ed -,OIenir,T h,nkI.. .o. rnmr,ni .cn,i- ard nlkrr,.lo.n,l .- inr .,irw'n. i l1.iuring .,tnin W:;Ox..

The executive directors also approved a sources to support a sustainable growth-ori- modification of the IBRD's repayment terms ented adjustment program over the medium for middle-income borrowers. The change is term. This IBRD initiative would be compara- applicable to new loans committed during the ble to what is known at the International period fiscal 1992-94. Borrowers will have an Monetary Fund (IMF) as a "rights approach" option of having either an extended grace program. period of five years, with loan amortization During a preclearance "performance peri- based on level repayments of principal, or a od," which may last several years, the bor- grace period of four years for lower-middle- rower will have to meet four conditions. It income countries or three years for upper- must: middle-income countries with an annuity type * implement a structural-adjustment pro- of level-payment arrangement (in which a gen- gram agreed to by the IBRD, with time-phased erally rising proportion of payments is applica- action targets and with monitoring by the ble to the retirement of principal). IBRD during the preclearance performance The IBRD approved a new approach, effec- period; tive July 1, 1991, to encourage borrowers to * begin implementing a stabilization pro- make timely loan payments. If a payment gram, endorsed and monitored, if necessary, becomes thirty days overdue, no new loans to by the IMF; the borrower will be presented to the executive * service its debt to the IBRD falling due board for approval or will be signed, and the during the preclearance performance period borrower will become ineligible for any appli- and give comparable debt-service treatment to cable waivers of the commitment and interest other multilateral development banks and the spread. If a loan payment from a nonsovereign IMF where there is to be parallel clearance borrower becomes forty-five days overdue (unless sequential clearance is mutually agreed (and the country is not itself the delinquent upon); and borrower), no new loans to, or to be guaran- * agree to a financing plan that provides for teed by, that country will be presented to the full clearance of arrears to the IBRD and board for approval, and no previously ap- normalization of relations with the IMF and proved loans to, or guaranteed by, that country creditor multilateral development banks prior will be signed. Further, the borrower and the to the resumption of IBRD disbursements. country will be sent notice that a suspension of The country would establish a track record disbursements on other previously approved on adjustment measures over the preclearance and signed loans will begin fifteen days later. performance period. During the period, the (In the past, the fifteen days' notice of suspen- IBRD would develop and process loans, but sion, which also covered the nonconsideration would not sign them, make them effective, or of new loans and the nonsigning of previously disburse any funds against them. After the approved loans, was sent on the sixtieth day performance period is over, and following the following the due date of the loan payment.) clearance of arrears, the country would receive In May 1991, the IBRD adopted a policy disbursements on loans approved during the regarding additional support for workout pro- performance period, as well as on previous grams in countries with large and protracted loans that had been suspended. The scale of arrears. The objective is to assist a country IBRD lending activity would be commensurate that has a demonstrated record of cooperation with its support for any strong program in with the IBRD in mobilizing sufficient re- countries not in arrears. 74 World Bank Finances

Figure 4-2. IBRD Gross and Net Disbursements to Countries, Fiscal 1987-91 (uSS millionsI

14 000

12.000

10 000

4,000 i:- __

2.000 II_

198 1988 1989 1990 1991

During the performance period. a support Declining interest-rate risk. Interest-rate group of other lenders or donors would be risk from possible increases in the IBRD's essential to provide sufficient funding to sup- refinancing costs of prefiscal 1983 fixed-rate port the needs of the economy and facilitate loans continues to decline because such loans the country's current servicing of debt out- represent a shrinking percentage of the out- standing to the IBRD and the IMF. standing loan portfolio-33 percent at the end of 1991. compared with 41 percent a year Loans earlier. The amount remaining to be disbursed Disbursements. Gross disbursements by the on fixed-rate loans is $374 million, compared IBRD to countries were $11.4 billion, down with $53 billion on variable-rate loans. from fiscal 1990's $13.9 billion. Net disburse- Loans in nonaccrual status. Eight countries ments were $2.1 billion, compared with $5.7 were in nonaccrual status at the end of fiscal billion during the previous year (see Figure 1991. Six were holdovers from the prior fiscal 4-2). year-Liberia. Nicaragua, Panama, Peru, Si- Lending rate. The IBRD's semiannual vari- erra Leone, and the Syrian Arab Republic. The able-lending rate was 7.72 percent and 7.73 seventh, Guatemala, entered nonaccrual status percent, respectively, for the first and second in July 1990, while the eighth, Iraq, entered semesters of fiscal 1991. By comparison, the that status in December 1990. Zambia, which other variable-lending rate-applicable to had been in nonaccrual status since August loans for which invitations to negotiate were 1987, cleared its arrears in March 1991 with a sent before May 18, 1989, and not converted payment of $319 million. Since $147 million of by borrowers to the new system-was 7.70 this amount was interest and commitment percent for both semesters. The difference charges due prior to fiscal 1991, the payment between the rates is due to differences in increased the IBRD's fiscal 1991 net income by allocations of borrowings to lending and/or to that amount. investments and to the weights applied to Provisioning. The IBRD raised its consoli- currency-specific costs. dated provision for possible loan losses to $2.0 Resources 75

Table 4-2. IBRD Borro%inigs. after Svaps. Fiscal Year 1991 ianm,'ni, in L Si miil,n quI' iraI

BL-s1. *kfr 1.,,,,:Crh

.lfem I!"0 ! II -V I m.unri A r , I, I

U..S doli:r, -4.2I I 4 Aw1 e] l MB'l (I 4 SlY 4 42 h - 6 45 Jipane>e %en l .htl, IA 2 l 4i1.25 11 -h '.' D)ejLn,ch m,rk 41iti I h(I S4i l tl 4 I 2SR 6 !s 4h S% i, tranc, I.4141'.3 14 h 4r, i 14 .3 IS h, - I2 COtherh 2.61 I 24 h 4 - 2. - 42 2 11 h,_ 4_ I-

I10t1 111..SN3.4 lIII, h.X III I00 4 DIiII t, - S 16

Sho,r-!-/'Iwl h...1.|- 1l; \.I#;.ZI/bk Cenir.al Ibonk fall. ILI S doiljr, I 43 1 4.,T I.tiI, COPS IS%.Si r.,nri' 4.2 I tl; n DIicount noie, L S. dill.,roI '74'- . I tl 3 4.

I-talu Is of lurih 3:l. IY 1,11&.IA i. lIii' t1 b, 12

\o 1 E. DeiJri.n,1 It. 1,1 t 1,.1 tI,lu he, j.e IT .R.Rer -ni' h.-,rro.r.' n -risuIr,n , Cd.l.,n n.lo,i di I r,n., ir.,r- H i.lLK0r. J..1II.r- l.ulwn h.-I-.Nciherl,n,. puilder,. No .Zeal,.nd d ll..r. puuL d.i c ICII i.L. h ro.n ,ia- rIn ... d ,.h r. n.r t, :.io r- ,lu .,!rsdCi r., tn?-iI I, , sl n I , Ir.l;r IIn,:ILi Lic . r,Cr 1-el.l- 11 I 0ir. i, I k . In,l,I.ro 1r., n .. d. ShI.rlr1rn h,Vr(II.ingi% o),loinilng 'rI JinnL "I 1"411 'l t..l-

billion, which, together with its "special re- tion of exchanges of views with other money serve," equals 2.5 percent of its entire out- managers. standing loan portfolio. This increase repre- The IBRD's fiscal 1991 financial return on sents an evaluation of risks-specific risks investments was 9.23 percent. In fiscal 1990, associated with countries currently in nonac- the financial return on investments was 8.15 crual status and general risks in the entire percent. portfolio. The result is, in effect, an increase of At the end of fiscal 1991, the IBRD's liquid- the provisions to $2.3 billion at June 30, 1991, ity totaled $20.0 billion, equivalent to about 51 from $1.5 billion a year earlier. The prior percent of anticipated net cash requirements provisioning policy was concerned only with for the next three fiscal years, compared with loans in nonaccrual status. $17.2 billion at the end of fiscal 1990. The IBRD's primary objective in holding such li- Liquid-assets Investments quidity is to ensure flexibility in its borrowing Six areas were targeted in the management decisions should borrowing be adversely af- of the IBRD's liquid-assets investments: (1) fected by temporary conditions in the capital development of efficient benchmark portfo- markets. lios, new products, and new trading models; (2) further improvement of its risk-manage- Resources ment systems; (3) creation of a global money- Borr-owings. Borrowings were principally markets group to focus internationally on cash fixed-rate and were diversified by currency, management and credit-risk monitoring; (4) country, source, and maturity. Medium-term expanded diversification of fixed-income trad- and long-term (MLT) funding at the end of ing approaches to include mortgage-backed fiscal 1991 amounted to $84.7 billion equivalent securities, volatility trading, intermarket spread and represented 94 percent of total outstanding trades, long-term positioning, covered forward debt. As of June 30, 1991, the average remain- trading in the money markets, and computer- ing life of total debt was 6.3 years, and its guided trading, as well as resuscitation of bills, average cost, after swaps, was 7.35 percent. In agencies, and strips trading; (5) the tightening fiscal 1991, the IBRD borrowed $10.9 billion, of credit criteria regarding commercial banks excluding refinancings of $5.4 billion of short- and securities-dealer counterparties; and (6) term debt, at an average cost, after swaps, of provision of financial technical assistance to 8.06 percent equivalent and an average life of developing member countries and the promo- 6.7 years (see Table 4-2 and Figure 4-3). 76 World Bank Finances

Figure 4-3. After-swap Cost and Average Life of IBRD Borrowing Program, Fiscal 1987-91 12

10

Lilre ly'earsl

4 ~ ~~~~~I Coast (peterien - 6 _

1987 1988 1989 1990 1991

After swaps, all of the year's borrowings that are responsive to investors' asset prefer- were in the so-called core currencies of the ences. IBRD's loan pool-U.S. dollars, Japanese During the fiscal year, the IBRD sought to yen, and the deutsche mark group (including reduce its cost of funding by offering bench- Swiss francs). This composition enabled the mark issues in U.S. dollars, deutsche mark, IBRD to achieve by March 1991, and thereaf- and Swiss francs in response to investors' ter to maintain, the targeted loan-currency- preferences for enhanced liquidity. These in- pool ratios, approved by the executive direc- cluded two U.S.-dollar issues, aggregating $3.5 tors in January 1990, of 1 U.S. dollar to 125 billion, through its global-bond issues, which Japanese yen to 2 deutsche mark (or their are now the core instrument in the IBRD's equivalent in deutsche mark, Swiss francs, and medium-term to long-term U.S.-dollar funding Netherlands guilders) for at least 90 percent of program (the total volume outstanding of such the loan-currency pool. issues since their inception in September 1989 Other funding objectives achieved were pre- amounts to $6.5 billion); a DM750 million serving the inherent long-term value of diver- issue, providing investors liquidity and an op- sification of funding sources by borrowing in portunity for portfolio diversification; and a fourteen currencies; achieving savings in core Sw F600 million issue, the largest of its kind, currencies by using swap-arbitrage opportuni- designed to overcome the traditional illiquidity ties derived from market borrowings in eleven of Swiss franc bonds through broadened trad- currencies; maintaining core-currency borrow- ing arrangements. In addition, as the first non- ing relationships with official sources; and domestic borrower in the domestic New building on the lesson learned in developing Zealand market, the IBRD launched a $NZ250 and offering, in fiscal years 1989 and 1990, its million issue designed to bring both foreign and U.S.-dollar global-bond issues-that cost sav- domestic interest to bear on a single instru- ings can be realized by offering products ment. This issue can be viewed as a prototype IDA Finances 77 for transactions that could help the IBRD to target currency rates at the time of vehicle- extend its comparative advantage as a bor- currency transactions. rower in smaller vehicle-currency markets and Interest-rate swaps were also used to create thus continue to access swap savings there as fixed-rate MLT funding from borrowings orig- market liberalization proceeds. inally contracted on a floating-rate basis. The At the end of the fiscal year, short-term IBRD also used interest-rate swaps to a mod- borrowings outstanding were $5.4 billion est extent to effect forward-swap strategies, equivalent, an increase of $60 million over the fixing the cost of a borrowing for a shorter term end of fiscal 1990. The short-term borrowings than its original maturity with a view toward consisted of $2.6 billion from official sources resetting it at the then-prevailing cost for the through the central bank facility, $2.7 billion remaining life of the borrowing. from the U.S.-dollar discount-note program Deferred rate setting and anticipatoiy rate and other short-term U.S.-dollar borrowings, setting. Deferred rate setting (DRS) is another and $34 million equivalent in short-term Swiss technique the IBRD used in fiscal 1991 to franc borrowings. Outstanding short-term bor- delink the timing of cost fixings from that of the rowings and floating-rate funding, after swaps, time of issuance of its U.S.-dollar global-bond aggregated $5.5 billion equivalent at the end of issues. Just as in the case of interest-rate fiscal 1991 and represented about 6 percent of swaps, DRS enabled the IBRD to phase rate total debt. fixing over the course of several months. In Capital. On June 30, 1991, total subscribed addition, the executive directors authorized capital was $139.1 billion, or 80 percent of the use of anticipatory rate-setting arrange- authorized capital of $174.7 billion. During ments, which allow for cost fixings to be un- fiscal 1991, subscriptions to the $74.8 billion dertaken in advance of issuance. The IBRD did general capital increase (GCI), approved in not use this technique in fiscal 1991. April 1988, continued smoothly: Twenty-two countries subscribed an aggregate of $12.7 IDA Finances billion. A total of 356,412 GCI shares ($43 bil- Fiscal year 1991 marked the beginning of the lion, or 57 percent of total allocations) have commitment period of the ninth replenishment now been subscribed by fifty members; 266,560 of IDA resources (IDA-9). Donor contribu- shares ($32.2 billion) remain to be subscribed. tions to IDA-9, amounting to SDRI 1.7 billion, At the end of fiscal 1991, the permissible will finance commitments to IDA borrowers in increase of net disbursements, that is, "head- the period fiscal 1991-93. The replenishment room," was $61.7 billion, or 40 percent of the became effective on January 23, 1991, when IBRD's lending limit. Instruments of Commitments-the formal no- Reserves. On June 30, 1991, reserves to- tificationofparticipationinthereplenishment- taled $10.0 billion, and the reserves-to-loan received from donors reached 80 percent of the ratio amounted to 11.2 percent. total contributions to IDA-9 from contributing members. Liability Management Prior to the replenishment's effectiveness, Swaps. The average notional savings the credit approvals were financed through com- IBRD generated from currency swaps on MLT mitment authority provided under the Advance borrowings in fiscal 1991 was fifty basis points. Contribution Scheme. This scheme became Currency swaps totaled $3.0 billion equivalent. operational on July 19, 1990, when the associ- They were linked principally to borrowings in ation received Instruments of Commitments noncore, vehicle currencies so as to provide from ten donors (Canada, Denmark, France, lower costs than direct market borrowings in Japan. Korea, New Zealand, Norway, South deutsche mark, Swiss francs, and, to a lesser Africa, Sweden, and Yugoslavia) whose con- extent, U.S. dollars. tributions aggregated 20 percent of the IDA-9 The IBRD contracted interest-rate swaps total contributions of contributing members. into fixed rates and variable rates. It used During the course of the fiscal year, the interest-rate swaps to separate the timing of association received the Instruments of Com- borrowings in vehicle currencies from the tim- mitments from the following donors: Australia, ing of interest-rate fixing in target currencies. Austria, Brazil, Finland, Germany, Hungary, The IBRD was thereby able to complete vehi- Iceland, Ireland. Kuwait, Luxembourg. Mex- cle-currency borrowings linked to currency ico. Poland, Saudi Arabia, Spain, Turkey, the swaps when arbitrage opportunities arose. It United Kingdom, and the United States. used interest-rate swaps either to lock in more IDA commitment autthority. During the attractive rates or to spread rate fixings within year, IDA approved 103 credits amounting to the fiscal year; in doing so, the IBRD would SDR4.55 billion. The commitment authority to thereby not be bound to the absolute level of finance these credits was derived from three 78 World Bank Finances

sources-donor contributions, reflows, and catalyst for increasing the flow of financial transfers from the IBRD. resources to developing countries from non- * The release of approximately one third of Bank sources. The CFS helps mobilize finan- donors' contributions to IDA-9, amounting to cial resources by providing general coordina- SDR3.28 billion, was made available for lend- tion of official and private-sector cofinancing ing in fiscal 1991. of Bank projects. * Funds available from future reflows dur- The volume of cofinancing anticipated in ing the year amounted to SDR1.07 billion. support of World Bank-assisted operations ap- These supplement resources provided by do- proved in fiscal 1991 was $8,985 million, some nors through the regular replenishment. The $4,495 million off the record-setting pace of SDRI.07 billion amount included (a) advance fiscal 1990 (see Table 4-3). Roughly 55 percent commitments of SDR575 million for general of all Bank-assisted projects and programs IDA credits; (b) "annual allocations," in the attracted some form of cofinancing. By region, amount of SDR122 million, to supplement ad- 27 percent of the cofinancing volume was for justment credits to IDA-only countries with operations in Asia, 25 percent in Africa, 24 outstanding IBRD debt; (c) a special allocation percent in the Europe, Middle East, and North of SDR48 million to supplement operations for Africa region, and 24 percent in Latin America IDA-only countries that are undertaking debt and the Caribbean. In terms of number of workouts; and (d) a carry-over balance of cofinanced operations, the distribution by re- about SDR193 million from the prior fiscal gion indicates that 43 percent was in Africa. 21 year. Additionally, in December 1990, the ex- percent in Asia, 19 percent in the Europe, ecutive directors approved further advance Middle East, and North Africa region, and 17 commitments of SDR130 million to partially percent in Latin America and the Caribbean. meet the incremental financing requirements of The largest source of cofinancing in fiscal IDA countries affected by the Gulf crisis. 1991 continued to be official bilateral and mul- * Some SDR200 million was transferred to tilateral development institutions, which, to- IDA from the IBRD's net income retained as gether, accounted for $7,057 million, down surplus. This transfer was also intended to help from $9,307 million in fiscal 1990. This is finance IDA's efforts to alleviate the effect of attributable primarily to a slowdown in opera- the Gulf crisis on IDA recipients. tions as a result of the Gulf crisis and delay in IDA's incremental requirements for assist- certain large cofinanced operations because of ing countries adversely affected by the Gulf prolonged negotiations on debt issues and crisis amount to about SDR600 million. As other difficult policy matters. Official cofinanc- mentioned previously, this amount will be par- ing from Japan, through the Overseas Eco- tially financed through advance commitments nomic Cooperation Fund and the Export-Im- of reflows of SDR130 million and the transfer port Bank of Japan, continued to account for of IBRD income of SDR200 million. The bal- the largest share of official cofinancing in sup- ance, SDR270 million, will be financed through port of Bank-assisted operations. Cofinancing the carry-over from fiscal 1990 of SDR190 from the two agencies aggregated $1,405 mil- million and reprogramming of IDA-9 resources lion equivalent for twelve projects approved in (SDR80 million). fiscal 1991. IDA commitment fee. Since the current ser- There was also a marked decline in the vice charge of disbursed and outstanding volume of export-credit cofinancing planned amounts was expected to be sufficient to meet for projects approved during the year-from IDA's projected administrative expenses for $3,519 million in fiscal 1990 to $1,495 million. the fiscal year, the fiscal year 1991 commit- The main reason for the decline was that Bank ment fee was set at 0 percent for all outstand- lending for sectors that attract a substantial ing credits financed by IDA, the Special Fund, proportion of export-credit financing (power, and the Special Facility for Sub-Saharan Af- transportation. and telecommunications, for rica. Late in fiscal 1991, the executive direc- example) decreased significantly during the tors approved a recommendation that IDA's year. The volume of private cofinancing re- commitment fee for fiscal 1992 continue to be mained modest, at $434 million, reflecting the set at zero and that, after fiscal 1992, the continued reluctance of private lenders to take commitment fee be set at zero annually until on new exposure in most developing countries. such time as the directors decide to change it. The new export-credit enhanced leverage (EXCEL) program is now being implemented. Corinancing This program was developed in fiscal 1990 in The vice presidency for cofinancing and close collaboration with a working group of the financial advisory services (CFS) was created International Union of Credit and Investment in 1989 to strengthen the Bank's role as a Insurers (the Berne Union). The objective of Cofinancing 79

Table 4-3. `torld Bank Corinancing Operations, hb Region. Fiscal Years 1990-91 iamouni' ir rm oii, rif LIS dIlljr.i

PrTileC I %.orld Barik .'tirr. ced EtoIi E.r.tdil Pr,< T .nrhuti,n T,I PrOleci Rigi-n ind %ear N[ Arnmuill No nr.:-.ir.n No Anio\munr N.,. krrou,i IBRDBA cIIDA AI ric a

19911 64 3 10i h ti; 2 it,s - 31 C2 s43 224 '-99411 1991 '. I4|h.s S '| IJ 4 5 1 4- 1f 'i3 ' S I _2 6,h 11i A sia Iw9l) 29 4.iI 'I S 2.655' I i _4;2 h 2 52'.3 3.1I 144 X . 411 I

1991 2 2.4" 'l 4 'n 1.641 21I' b 11 1 NI'n' 1 ,0I - 51) 4 Europe. Middle Fjsi a:nd Ntnh AtriLa 199t1 F I .4 4J- Ir-6 . I.I IS I I 4i) , 1t 'I Ihl 11 9192 4 19'4I 24 2.Iv6 /1 22 . 11 3.1 14 11 2516 S s Lain .Anneric.. nd [he (C rihht in 19911 IS 4.442 | I- 2,hs.2 3 tl- 4 II t.l t .43611 143.0.i l5.411 5 1 991 21 2 121 4 21 I ; 4 I 1li II I 14- II II 5.., II

Tot,l 194C 12X I ; 4N 1' 21'. I - I4 1 '51. 5 r,4. 8.;2I h 333i 11i 1,1 1141 12 i.'4h4 6 122 -I.,St . S - 1.4944. 4433.6 . 3.IS _ 9.N,. n

N- i L The nurnher ol. -jerilin, vh.*.: n urdI dilkIIieni *-rce' d Ur. le1 I tuILUfiL idIn I h, IOLI nuo,l`er 1.f L;tfl.nLeJ proi!e,i; te:IJu'C J rnunLrer 1, rr ICi-i .er, .;rn frrnl 10,lr rei . . -rie -ur,,c Dei_d- rr.,. rI,- .dlAI . WK,I,i h L j-t t L.f roundlng . rhe Tc . fr .. pied fron ,ih i ir..inr pr'n pre.trnitJ l r1h,iin,,I .o jppr.- ..d .-i lie %.)rid Bank I.on- k fhc -.s.vd .o e:-. w:.l. dire-.w,!l The [00r?l,lill I -f - L -firL_,nc,rg .,r, 1 nno-i , i,>c firmr -nnmrratmeni h, rh..a i..Ve.i e%pr.! 'ie 1.I.nd pr!... ln-ln.-no!ni, in,.IIII1hoc C .ne .nnle .r.cr.> l .n,u.u r.lt. n,rin. ' ,.,finnI, r.r.g,red iftqured o. proiezi mpplemcni.n.un ..rd oI firncd 1,. ,jr or i.. .,Irer board *r n ThE oI,n - .,; pi -t .otinancinc h.---n here lir ir,n ti, ,.w do nrorr *.r,k rclk n.- ,i.rxpl.a,crncnri In ihjl eir h In.>CIC 1 bl, .n0i1mlLhk ofI,ln..r.-ng, ir,,1 ,xinn- I.;-n hom. h, I:r. orl lrmplr, i,I 10^ 'l- the program is to mobilize export-credit sup- quested by some executive directors, of the port for medium-sized private enterprises in pilot program. In January 1991, the executive selected developing countries, where such en- directors approved continuation of the pro- terprises currently have limited access to me- gram on a pilot basis for a further period of dium-term and long-term export credits. The between twelve and eighteen months; a pipe- first EXCEL facility, for approximately $75 line of prospective ECO operations is being million, is being put in place for an industrial- developed. restructuring project in the Philippines. In October 1990, the second phase of the The expanded cofinancing operations (ECO) special program of assistance (SPA), designed program is intended to support eligible World to support adjustment programs in low-in- Bank borrowers seeking to gain access to come, debt-distressed countries of sub-Sa- capital markets (both through public issues and haran Africa, was launched. In fiscal 1991, the private placements) and to improve their ac- fourth year of this multidonor program, $1.8 cess to medium-term credit facilities. In fiscal billion was provided to eligible countries in the 1991, the executive board approved one trans- form of cofinancing of IDA adjustment opera- action under this program. A World Bank tions, as well as coordinated financing. guarantee was used to support a ten-year, In addition to cofinancing, the donor com- fixed-rate Eurodollar bond issue for $200 mil- munity provided substantial support for the lion by the State Development Institute of Bank through trust funds and other arrange- Hungary. The ECO enabled Hungary to gain ments that directly or indirectly benefited re- access to the Eurodollar fixed-rate bond mar- cipient countries. To date, consultant trust ket for the first time and helped reaffirm its funds have been established with twenty-five credit standing in the international capital mar- donors. Under this program, donors have allo- kets. cated about $86 million in grant funds to sup- Development of subsequent ECO transac- port the Bank's operational work. In addition, tions was deferred, pending a review, re- special arrangements have been established 80 World Bank Finances with eight donors in support of environment- years 1990-92 to finance technical assistance, related activities, and discussions are under studies, and training. way with other prospective donors. The Bank has also received support from eight donors for Disbursements by Source of Supply work in member countries of Eastern and Projects financed by the World Bank require Central Europe. procurement from foreign and local sources to On July 30, 1990, a special fund for policy achieve project goals. Disbursements are made and human-resource development (the PHRD primarily to cover specific costs for foreign Fund) was established within the IBRD and procurement, and some local expenditures. IDA, funded by Japan's Ministry of Finance. The procurement rules and procedures to be The PHRD Fund became the umbrella for five followed in the execution of each project de- previously existing funds that the Bank admin- pend on the individual circumstances. Three istered on behalf of Japan. Japan's contribu- considerations generally guide the Bank's re- tion of $300 million equivalent in grants is to be quirements: the need for economy and effi- made over the period covering Japan's fiscal ciency in the execution of the project; the

Table 4-4. IBRD and IDA Foreign and Local Dishursemenis. by Source ol Supp13 ~n.'u.,rt ,n rifl ,.r. .! t S d-ilar WBtD nd ILI)

P1 Žd \m.!.nj ,T-ufli . X1.:ur,d ,rilr t umula tc jurJune3tl. l.t. h4.h'' hl 3553' 3 2.911 2 1112.454 Fic>I,1J~ 17I i9 l *4 356 3f -ILS 5 14.r' Fiwe.tI ILAS 5.562 f6 ei iI. 411 -14 5 Is 353 F!I

E!scJ! 199'' I I 1b4 h3 *411 33 h9- 4 I - '91t F-caIJ 1991 9 1-4 5 h.h4 4' I:h I 1.91)5 IL.JimliI.hIIC 1v June 31' 19941 III 3111 hl h6.5i 36 4.46 3 111*49i1

\-TE IHIRD ri:Urfe, :--1c.t: dl,d'ji, verrin.rn l..n-r I TI ih F. and .J I.-,n. [ix rt ,1%lU,fdrSrt-ial ',,nd and Sr.x-.aI F a'I'i . i.:, SLjL'-S. r,nran.Air,i,a r-iI.i LD,ijil. m. rn..cr ild !. !i.I. N ai,ae .1 ruLJrdinL -\AnIhI,rl'nioue dv.h,ri erercri. I..r dhii rit,a u fnl r \,i .-. an., dJlhL,r,,Cnlni ,r( ,d anILc- maltdcr-d I,l ia I .iLhVh[ l T ' amlinT. ei .-. 'ali. r- l. for . [hkhihe BurL ha, jpplied I i'tn, h! . rer. enurc. To r.' Cr 1 he hluhendIrIu ad. aixnCi

Table 4-5. IBRD and IDA Foreign Disbursements. bi Source of Suppls laTi.urT.t.a. nIilt. ..1 .IT L'% Ih.llar.l IBRD IDA Pari I P.ian11 DR' P,r' I Pa r iI T.-Thai Peri, d AITTihFil, Ii. it lnI : n.ta-Lr I .m.hI-rL L .\ .u.I-m'unr dn i n n

Cumulati'eCto June 31J. I'.sh 43K 92 ' 5.l4I'J 11.1 _ - 4S.SYI34 13.419 8 5 2 62 I; 15.791 F>isal P4157 5.4'1 I .145 21 - - '666. I hiI K 34 IX 1.949 Fiscal 199S 4.5i4 4 1.6 16 2h _ 6.1h62 I 1 '1 549 '2 2.400 Filcal 19bh) 5I hiN 24 - - 67M I 1' '' 535 23 '.2SX Fisal I s%l 5320 5q9 I 49L - 2 hil6 '4 SN9 9 1 586Rh 619 28 2.1i15 Fi%LuIJ 1991 4 96 ; 6 I 22 1i 3 1 5 6.111h I1 X43 7I N17 I 2. hl5

Cumrulu[l C to June 3''. Y,il 6P4mu 52 1. 34 IS 2 .4 3 3 k4.iIII 2'2.'19 si '.'14 19 ' .2'23

- Zer N'I.F iBMD Li,pr- c ,IUdr d.hiur-rmenr% *n l.anr t- IhsIf t- and B I.-.fl Io-\A hlure. inrlrLidC Spel..i F und and Sp-i.di Fa-t l, *. hr iuh *.Ah.ar,n Africa 1redii h,,l .UIL-de dehn rcducih.n dlihLur':nient irirli,m.1 in ficnal InJYI NS .Idl aie 0-lr-mcdh rcr ire rfduded n9t h I IBRDR and IDi. DL)r.niB ri,. n. rT -dd I,- ro'.1.l be-tc- .1 rIuljndinL a Dh,ur -en. ri rIr leN edti i Disbursements by Source of Supply 81

Table 4-6. IBRD and IDA Payments to Selected Supplying Part II Countries for Foreign and Local Procuremiienit in Fiscal 1991 (millins of US dollarsi Percentage Lodl Foreign Total of total Part I co intiv procurci IenM procurement amount disbursements' India 1,241 98 1.339 8.4 Birt,il 648 207 855 s.4 hlexico 697 82 779 4.9 China 541 163 704 4.4 Indonesia 598 23 621 3.9

Moroc"to 314 9 323 2 fl Korca. Republic of 99 149 248 1 6 Turkey 213 30 243 1 5 I'akkietan 294 16 220 1 4 Chile I 20 2(iI 1 3

Malaysia 175 19 194 1.2 Aigentina I 1 51 192 1.2 Pl lippines 177 6 183 1.1 Sirnapore - 161 161 1.0 Bangladesh 149 3 152 1.0

Colonibia 108 18 126 0 8 Yugoslasta 67 51 118 t) Fhailand 75 42 II7 0 7 Nigeria 63 34 97 0 6 Vene,t'el. - 88 88 0.6

Tunisia 78 8 86 0.' Spain 83 83 0.5 1.an. 1'l; mic Republic of - 68 68 0.4 Sri Lar.ka 61 - 61 014 Ecuador 56 1 57 0.4

Hunizau y la 23 57 0 4 Kenva 34 23 57 0 4 C6te dIlvoire 41 14 55 0.3 Saudi Arabia - 46 46 (.3 Senegal 42 3 45 0.3

Jordan 24 20 44 0 3 Urtail-.y 39 5 44 0 3 Porltitg.l 9 B 42 0 3 Cameroon 31 9 to 0 3 Iraq - 37 37 0 2

Po.ltild 34 34 0.2 Malawi 34 - 34 0 2 Algeria 27 3 30 ( 2 N iser '21 8 29 0.2 Paacu.iv 14 14 28 02

Totail 6,222 1 702 7 938 50.0 - /ero NOTE Det als max not al,. to toials hccau,c if rouino nu a. Refers to the Part II countrv s share of all IBRD anld IDA pa) ments for fisbal 1991, which totalcdl 15.9m)amillion 82 World Bank Finances

Table 4-7. I1111 and IDA Paxnents to Part I and Selected Part 1I Countries for Foreign Procurement (amounts in million of US dollars) IBRD cumulative IDA cumulativc to to June 30 1991 IBRD fiscal 1991 June 311,1991 ID)A fiscal 1991 Supplying country Amount Q Amoulit % Amouint '.c Aniount '7 Port I c o(onst/ic Australia 842 1.0 106 1.6 297 1.1 14 0.5 Austria 929 1 1 148 2.3 173 0 6 22 0 8 Belgium 1.198 1.4 115 1.8 752 2.8 80 3.0 Canada 1,920 2.3 139 2 1 527 1.9 34 1.3 Denmarkl 440 0 5 54 (.8 208 0 8 19 0 7 Finland 290 0.3 20 0.3 80 0.3 13 0.5 France 5.655 6.7 508 7 8 2,733 10.0 258 9.7 Germanv 9.433 11.2 765 11.8 2,845 10 4 254 9.6 Iceland 8 2 I - - Ireland 94 0.1 5 01 47 0.2 11 0.4 It.ly 4.771 5.7 356 55 1,260 4.6 106 4.0 Japan 12.329 14 7 637 9.8 3.498 12 8 189 7 1 Kuwait 218 0 3 8 0.1 165 0.6 51 1.9 Luxembourg 59 3 27 0.1 2 0.1 Netherlands 1.491 1.8 lI 2 3 668 2.5 -75 2.8 Newx Zealand 126 3 5s5 0 2 12 04 Norway 230 0 3 24 0.4 83 0.3 17 0.6 South Africa 297 0.4 16 0 2 351 1.3 86 3.2 Sweden 1.355 1 6 78 1.2 339 1 2 19 07 Switzerland 3,405 40 209 3 2 721 26 45 1 7 United Arab Emirates 482 06 45 0 7 305 1.0 5 0.2 United Kingdom' 6.343 7 4 412 6 3 3.997 14.7 (78 14 2 United States 17.272 20 6 1.159 178 2.935 10 8 _156 5 9 Total 69.189 82 3 4.963 763 22.069 80.9 1,'43 69.5 Pati 1/ (oouitrieA Argentina 658 08 43 07 51 0 2 8 03 Brazil 1,096 1 3 180 28 177 06 27 10 China 385 0 5 69 1.1 481 1.8 94 35 Hungai 120 0 1 21 03 18 0.1 2 01 India 367 0.4 38 06 443 1 6 60 23 Indonesia 273 0 3 16 12 33 0 I 7 0 3 Iran, Islamic Republic of 85 ( I 14 0.2 1010 0.4 54 2 0 Iraq 458 0 36 0 6 28 0.1 I I Kenya 31 - I ' 141 (5 22 (8 Korea Republic of 774 09 10X I 7 491 1 8 41 1 5 Mexico 38 0 5 80 1.2 63 0 2 2 01 Nigeria 119 0 1 14 0 2 l(8 04 20 0 8 Panama 326 04 17 03 I5 0 1 4 0.2 Poland 66 0.1 23 0.4 23 (.1 I1 04 Portugal 44 0 1 3 * 141 0.5 30 1 1 Romania 272 0.3 21 0 3 5 0 2 5 0.2 Saudi Arabia 345 0.4 32 0 5 148 0 5 14 0.5 Singapore 664 ( 8 76 1.2 400 1.5 85 3 2 Spain 826 1 ( 67 1.0 169 0 6 15 06 Thailand 114 0.1 8 0 1 214 0 8 34 1.3 Turkev 239 0.3 17 0.3 28 0.1 13 0 5 Venezuela 358 04 37 0.6 58 0.2 51 I 9 rugoslavia 801 1.0 38 0 6 147 0 5 13 0(.5 Other 3,538 4.2 266 4.1 1.682 6.2 _194 7 3 Total 12.348 14 7 1 225 18.8 5,214 19 1 1307 30 5 Disbursements for debt reduction 2.473 3.0 313 4 8 8 8 Total foreign disbursements 84.01) 100.0 6.501 100.0 27.291 100.0 2.0)58 100.0 Less than 0 os percent - 7ero NOTE Table excludes net advance disbursements for the I BRD and IDA Details may not add to totals beca sc ot rounding a United Kingdom includes Hong Kong Disbursements by Source of Supply 83

Table 4-8. IBRD) anid IDA Pa' ments toi Part I and Selected Part 11 Counitries for Foreign Procuiremient, by Descriptioni of Goods, Fiscal 1991 (amoulitN in ni0ion' of (IS dollars) All other Total Equipmnent Civil v%osrks, Convultant. goods disbursements Suipph%irigI cotititriy Awnounn %2 Amouint 4) Amnount §7- Amount §4" Amo tilt . PatIcouttirtes Austr!alia 20 0 7 - - 12 2.1 78 2.3 120 1 3 Atjstria 95 2.2 2 05 I 0 2 73 2.1 171 1.9 BeiŽ'lmim 79 1.8 33 7.8 10 1 8 73 2 1 195 2.1 Canada 68 15i I 02 52i- 9.1 52 1.5 173 1 9 DenaimL k 45 1.0 4 0.9 12 2 I 12 0.3 73 0.8 Finland 20 05 2 05 I 0.2 10 0.3 33 0 4 France 402 9!1 51 12 1 94 lo,s 219 6 3 766 8.4 Germarny 613 14.0 41 9 7 35 62 330 9 6 1.019 11.1 Iceland 1- - - - 1 * 2 Ireland I - - 6 II1 9 031 16 0.2 Italy 265 6. 1 62 14 7 10 IS8 124 3.6 462 5.0 jalani 682 15.5 IS5 3 6 I 3.0 112 3 2 826 9 0 Kuv~,u: ------59 1 7 59 0.6 I ti\'.citbiitig - - - - I 0.2 4 (1.1 5 0 1 NethcrlanJs 9-3 2.1 5 I 2 25 4 4 103 3.0 2:2o 2 5 New Ze~iI;iid I I 0 2 5 0 9 8 0.2 IS 0.2 Norwvay 7 0 2 - - I 0.2 32 0.9 40 0 4 Sounth Afiic:a 39 0 9 I 0.2 I 0 2 61 1 8 102 LI1 Sv ederi 70 1 6 - - 4 0.7 213 0 7 97 II1 sw iti/el iland 142 3 2 II) 2.4 IS5 2 6 87 2 5 254 2.8 Uniited Ar-ab Lnmiiates 2 2 0 5 - - 416 13 Soi 0.5 Uttiiled Kintgdoni' 440 10 0 19 4 5 101 17.81 229 6.6f 789 8.6 Untied States, 625 14.2 2 0 5 lOit1 t7 6 Sa,S 17 0 1,315 14.4 Total 3.721 84 7 25 1 59 5 502 88.4 2.332 67 5 6 806 74 4 Plitt II CiiU ntries .\rgentttttu 26 0 6 5 I 2 - - 201 0.6 1 0.6 Brazil 60 1.4 3 0 7 I 02 143 4 I 207 2.3 China 711 1.6 SI1 12 1 I 0.2 41 1 2 163 181- Hlungar% 17 0.4 I 0.2 - - 5 0 I 23 0.3 India 76 1 7 3 0 7 5 0.9 14 0 4 98 1.1 Indonesia I - - - - 22 0.6 23 0 3 lian, islamic Republic of' ------68 2 0 68 0 7 Iraq ------37 II1 37 0 4 Kenya 9 0 2 - - 1 02I 13 0 4 23 0.3 Ritica. Republc of 92 2.1 21 5 0 3 0 5 33 1.0 149 1.6 Me\ito 22 0.5 12 2.8 - - 48 1.4 82 0.9 \niciia I - - - 33 0 34 0.4 Panamia 7 0.2 - - - - 14 0.4 21 0.2 Potland 16 0 4 5 1 2 - - 13 0 4 34 0 4 Portugal 8 0 2 31 0.7 12 2 1 10 0.3 33 0.4 Rotii,uiia 23 05 I 0 2 - - 2 0.1 26 0 3 SaudiArabia 2- - - - 44 1.3 46 0.5 "'initpote 57 13 3 0 7 4 0 7 97 2.8 161 1 8 Spain 22 0 5 17 4.0 1 0 2 42 1.2 82 0 9 Thailatnd 14 0.3 2 0.5 - - 26 0 8 42 0.5 Ta'rk.ey 5 0.1 I 0 2 - - 24 0 7 30 0.3 Venc/tiela 3 0 1 - - - - 85 2 5 88 1 0 Yug-osia%ia 33 089 II 2.6 - - 7 0 2 5 1 0.6 Other 1f09 2 5 32 7 6 38 6 7 281 8. 1 460 5 0 Total 67 3 15.3 171 40 9 66 II 6 1. 122 32 5 2.032 22.2 1)isbhiueilsemnt for debt redutction ------3211 3.4 Total fhit uagn disbursemenits 4.394 IOt.0 422 I00.0 569 100 0 3,455 l0OU0 9,159 100 0

Les, duin 0 (0 perceni - Zero Noi ii D etails timo ft,it dd to totaOs'c, se of roundi nt a United Kingdom includes Hong Kong. 84 World Bank Finances

Table 4-9. IBRD and IDA Foreign Disbursements bs Description of Goods. Fiscal 1989-91 I49 1 M'I I I191

I I r IJn I Pjn 11 Toiji Pan I Pan 11 ToIal Psn i Part If Toit

.5ti/lili .C.S.- J. 'H'ia

-4#I t,Sti:tf *11 Ic 1tutit' -

Agi ItIlural Inputi _92 124 4R1 220 36 26 Ih.2 61 '23 CI %1l Lrk' 4 ' 6 3 - 3 4 1 5

(A'n,ult.ent' 14 -, I? li l 19 3 Equipmcnt Iity 2U3 MN.' 1.1;.2 22 I .2 5 949 249 1.198 Rast ntaterlll" MC9 i99 1,4'Jl 1.57' 6RI 2.258 1.111 718 2.1D19 Ml other good' 497 314 1SII 36-. 229 i5 6129 224 853 lota 2.3t.4 1.24i 3.t609 31,233 1.170l 4.403 3.116l4 1.'46 4.31ij

fi lti Sll lrt / I/i,; L' -\gncultui,,l lriputs 6 11)3 .8 3' lbt 38 ItU 7 tYisil 'turk'. tlh 21f 524 281 235 516 245 18 413 Con'ult.nut hUl "2 632 499 " 56h 471 h3 534 Equipmnent sAI. 493 3.11 2.Il- S'i9 I.024 2721) 45 3.,145 Ranrrm;,tendl,`' 246 47 N31 7l 20 91 89 54 143 All other ooads -6i 9 tSl 219 292 h4 31 21i T.t.3l 4.;19 92' 5.445 l.hf,' 9J9 4 h!f '3.'47 781 4.5'28

(''fLA Si!i'iiltst it I' il ;gnculrural,1itputv S9 13(i S19 3113 7I 374 2r,il 111 301 C'i!l .orlk 12 218 Sl 2184 23' 519 249 169 418I uov!n,tnllants '54 ' -49 514 7,S 92 49tl h6 556 Equipnient 3.413 6h4h 4.1-9 3.1f '3 4. 29 3.669 6'4 4.343 Ra%% nltrert..l 6 4h 1,,4.'f46 I .h48 7,11 2.349 1.390 -h2 2.152 \JI o.her good, 'S 41, I .2' 8 III n iiY 7 b 3 255 1.(8 TOtal 2 .1'2"'x2'.t4 h.91N,1 2.119 9.019 IF6.811 2.02'7 8.838

Pterr-. ll-

Ajricultural inpult 25 6 SI I4 4 h6 34 3 CiMO! nork 59 41 e. 5 45 6ll 41U

Consullaunt; 12 7S' b' 1 t 1S 6 Equi pmenti3 I- 4h 83 1T 48 .4 lh 49 Ra%% maicriala h4 36 'LI '11 113 26 h 35 24 All othcr coot't "1 29 IS 66 34 9 It, 24 13

Total 24 Irhk 7 23 II(h 7 23 (I

- Arto

N .,T E T'n I. .hle e Cludi. di. h,Ir,n,ennc lor dcbl ediclan o O2 IIf NnmilIo n Ir fi c.ai I1Je a,nd Pa milihon n fi-til I4 1. Ii al:. 'clude, rei .dt.,ncc diLhur,cm eni ,nd IBRD dJihurtr'meni; orn ion- !i, ths IFC and B- klar., DeaiAls ,a' not .3di tI.) io,I r at .. roundinc irer.l.in' ,d'.t hLi:hc..iii IncIdd .ifu-ct Td,, .dJliSTr,iie'att., ecloi-Adiail lrr--rl loafl'. And hi brid loans f-bhrid .-d.l0 ,dpp-ri puIi*. -end n,-.lii.I.'nal rilort'm, In .,ieciti Cl,tr Iinanircg rbth eapoik co)mponenlt di,hursed against impor..and nj.. *n.c-linier onir'n-in i , h.i* e .,mnnurn include' cli rk. jnd con,ull -.nt ai r- ice4 L' k,a maltinals ititudc c rtmic1 .nJ cornmnid,ii- c. \11 of ihc rertenlnc; art be-cd r Ihe doIlljr i.'uril' 'ho.,n iletr rhc Il.'Tl dl'hurMeMenl' ,cction The.e percenlagce- -ho. br. i irt c hread-.-'n 'cer P,rt I ,nd P-en 11 o.'ninne Ilr mndid1JaLI goiodsc.g)rie, and Ihe shat, .1 each gc-ods c-tACCOr', ;O'T:13ttdr .ITit djI'hbjr-mcnii

Bank's interest, as a cooperative institution, in opment of local contractors and manufacturers giving all eligible bidders from developing and in the borrowing country. developed countries an opportunity to com- In most cases, international competitive bid- pete in providing goods and works financed by ding is the most effective method of procure- the Bank; and the Bank's interest, as a devel- ment. The Bank prescribes conditions under opment institution, in encouraging the devel- which preference may be given to domestic or Disbursements by Source of Supply 85 regional manufacturers and, where appropri- suppliers and are therefore shown as a separate ate, to domestic contractors. Through the end category. of fiscal year 1991, 61 percent of IBRD and Table 4-6 shows disbursements made in fis- IDA disbursements covered goods and ser- cal year 1991 by the IBRD and IDA for local vices provided directly by foreign suppliers procurement from selected Part II countries located outside the borrowing country. While and disbursements made for goods, works, and most foreign procurement comes from suppli- services procured from them by other Bank ers in developed member countries and Switz- borrowers for projects funded by the Bank. erland, suppliers from developing countries Table 4-7 shows the amounts disbursed from have become increasingly effective in winning IBRD and IDA separately for foreign procure- contract awards. Through the end of fiscal year ment of goods and services from Part I and 1986, 11 percent of foreign procurement was selected Part II countries in fiscal year 1991 awarded to Part II supplying countries. During and cumulatively through fiscal 1991. Selection fiscal year 1991, Part II suppliers' share was 22 criteria are based on the extent of procurement percent of the total foreign disbursements. from each of the Part II countries in fiscal year Table 4-4 shows consolidated foreign and 1991. local disbursements for IBRD and IDA, Table 4-8 shows the proportion of foreign through the end of fiscal 1986 and for each of disbursements from IBRD and IDA for specific the next five fiscal years to the end of fiscal categories of goods and services provided by 1991. Advance disbursements consist of pay- Part I and selected Part II countries in fiscal ments made into special accounts of borrow- year 1991. ers, from which funds are paid to specific Table 4-9 provides a summary listing of the suppliers as expenditures are incurred. Be- amounts paid to Part I and Part II suppliers in cause balances in these accounts cannot be each fiscal year from 1989 to 1991. Amounts attributed to any specific supplying country disbursed towards adjustment and investment until expenditures have been reported to the projects are compared with respect to the Bank, these are shown as a separate category significant categories of goods procured from in the table. foreign suppliers. The extent to which Part I Table 4-5 provides details of foreign dis- and Part II countries participated in supplying bursements by Part I and Part II countries for these major categories of goods in each of the IBRD and IDA separately. Disbursements for past three fiscal years is also compared. debt reduction are not attributable to specific 86

4}44

Nvi *w I_X- - a

r., rr rS j

Maintenance undertaken at a natural-gas terminal in Bang Pakong, Thailand.Bank lendingfor oil, gas, and coal is nearing the $10 billion mark. 87 Section Five World Bank Activities, IFC, MIGA, and ICSID

Operations Evaluation * produced studies on topics relevant to operations and policy; The basic purpose of operations evaluation * took steps to make its findings more acces- in the World Bank is to assess the efficiency sible to potential users; and and effectiveness of Bank-supported develop- * helped developing countries and other do- ment projects and programs. It provides the nor organizations to build up or strengthen Bank's shareholders with full accountability their evaluation systems. for past operations, while informing opera- Audits. The OED audits all adjustment- tional managers of relevant experience and lending operations and 40 percent of the helping them to sharpen the objectives of cur- Bank's investment operations. For those oper- rent programs. ations that are not audited, the OED reviews Demand for operations evaluation has been the project-completion reports (PCRs), which rising within and outside the Bank, reflecting are prepared by the Bank's operational staff, to the scarcity of resources for development, ensure their quality and facilitate the transfer concern for efficiency in their use, and the of experience to new Bank lending operations; need for accountability and transparency in the it then forwards these PCRs to the executive more open societies of the 1990s. The effects of board. the Bank's decentralization include a renewed The OED received 293 PCRs in fiscal 1991 search for quality in operations that draws on and audited 129 of them, of which 117 were for cross-country experience; for refined analyti- investment projects and 12 for adjustment op- cal tools and empirical data to arrive at more erations. The cumulative total of Bank opera- realistic expectations of future costs and ben- tions subjected to ex post evaluation reached efits; and for evidence on the effect of past 2,000 at the end of the fiscal year. operations on people and the environment. Nearly two thirds of the fiscal 1991 audits The director-general, operations evaluation were undertaken in clusters-for example, on (DGO), has overall responsibility for evalua- a series of agricultural-extension projects tion. He reports directly to the Bank's execu- within one country or on comparable energy- tive board, with an administrative link to the exploration projects across countries. Cluster- president, and is supported by the Operations ing allows more broadly based conclusions to Evaluation Department (OED). The Joint Au- be drawn, with wider applicability for future dit Committee (JAC) of the board oversees the operations. work of the OED. In fiscal 1991, as in the past, Studies. To carry out its mandate, the OED the findings and recommendations of the JAC must evaluate the Bank's policies and their were reviewed by the full board, as was the appropriateness, procedures and their integ- fiscal 1990 annual report of the DGO and the rity, processes and their adherence to estab- department's annual review of evaluation re- lished rules, and effectiveness in promoting sults for 1989. lasting development in borrowing member Most of the OED's work falls into two countries. categories: audits of completed Bank-sup- In designing its studies program, the OED ported operations and studies that address takes into account the analytical work being broader development issues at the country and done elsewhere in the Bank and focuses on sectoral levels. The OED also works to bring topics in which its independence, institutional borrowers more closely into the evaluation memory, or time perspective give it a compar- process and to help them strengthen their own ative advantage. Its most basic criterion is that evaluation capacity. of relevance to the concerns of the Bank's During fiscal year 1991, the OED: board, management, and staff. The OED keeps * enhanced the value of its audits, putting in touch with these evolving concerns through more emphasis on the lessons to be drawn its contacts with the board of executive direc- from experience; tors and by keeping abreast of debates on 88 World Bank Activities, IFC, MIGA, and ICSID

policy, practice, and research results through- year, a broad review of the Bank's methods of out the Bank. project selection, appraisal, and evaluation. The OED's mandate to evaluate only com- The first phase of this review sought to identify pleted operations and their effects sometimes practical ways to improve the analysis of key limits its ability to respond to current con- issues of concern, such as poverty alleviation cerns. But, at the same time, it is also often a and sustainability, and ways to use the lessons source of strength. Development projects have of experience to assess the risks of different a long gestation, and the perspective of time is types of operations better, and thus to improve essential to find out about their effects, partic- their design. ularly on people. Ultimately, the Bank's devel- Application offindings. Guidelines issued in opment effectiveness is measured by outputs 1989 require the Bank's operational staff to after many years, rather than by reassessment seek out evaluation findings and apply them in of inputs and by reestimation of benefits at future operations. In fiscal 1991, operational project closing. Even then, evaluation evi- departments experimented with new proce- dence contributes new questions or answers of dures for systematically identifying relevant its own. It points to trends, or to hypotheses findings early in the project cycle; the OED about what makes development work, that assisted in these ventures. Management re- with further study yield guidance on how to sponses continued to be prepared on all major shape policies, programs, methods of analysis, evaluation reports. or practical choices. And often, because it is The OED took steps to sharpen its messages empirically based, it substantiates what was and to improve access to findings within and already suspected, or argued on the basis of outside the Bank. Within the Bank, for exam- theory, and thus makes it easier to see what ple, it began a series of abstracts summarizing actions need to be taken. the findings of major audits and studies, and In fiscal 1991, the OED sent eight studies to made available a user-friendly, searchable, the board. Topics included the Bank's assis- computerized textbase containing summaries tance for trade-policy reform and for structural of all its reports. Outside the Bank, it began adjustment in a range of borrower countries; distributing its reports more effectively to support for industrialization in semi-industrial- those able to act on the findings. ized countries; sustainability in education Some OED reports were followed up in projects; education lending in Indonesia; les- seminars arranged by borrowers. For example, sons from Bank-supported population pro- a study of the Bank's support of the Colombian grams in different country circumstances; and power sector-undertaken in response to a lending for small and medium-sized industry. request from the government of Colombia- Environmental issues-particularly the im- was reviewed by a panel of senior representa- portance of national forestry strategies in bor- tives from that country. The OED provided the rowing countries, and the need to understand principal speakers, and regional Bank staff the interplay among natural resources, eco- participated as observers. nomic incentives, and traditional cultures- Help to developing countries. The OED's were central to a study, completed in fiscal evaluation-capability development program 1991, of Bank policies and practices in forestry (ECDP), now in its fifth year, helps those development. Three continuing studies assess developing member countries of the Bank that the environmental impact of Bank projects in are committed to strengthening their evalia- Brazil, the use and management of natural tion capacity. Having an evaluation capacity of resources in Nepal and Bolivia, and the envi- one's own enables borrowers to assess the ronmental, economic, and social effects of developmental effectiveness of their invest- involuntary settlement resulting from Bank en- ments and to inform donors on how their aid ergy and agricultural projects. has been used. Activities are arranged in re- Other topics of special concern, particularly sponse to the interests of individual countries poverty alleviation and women in develop- as part of a general concern to strengthen ment, continued to be addressed in various public-sector management. During the past studies across sectors and regions. year, the program was active in Brazil, Colom- Evaluation Results for 1989, which was bia, Morocco, and Zimbabwe; it also assisted published in March 1991, reviewed and synthe- the West African Development Bank. The sized the results of operations that were eval- Bank's regional departments and resident of- uated in that year. fices provided support. Project analysis methodology. Prompted by Other activities. The department partici- the findings reported in the OED's Evaluation pated as an observer in meetings of the Devel- Results for 1988 and 1989, the Bank's manage- opment Assistance Committee's expert group ment and the OED began, during the past fiscal on aid evaluation. (The committee, or DAC, Economic Development Institute 89 was established in 1961 as part of the original In addition, the EDI has begun a three-year structure of the Organisation for Economic program of regional and country workshops on Co-operation and Development. Its mandate is collaboration among governments, nongovern- to secure an expansion of the aggregate volume mental organizations (NGOs), and interna- of resources made available to developing tional agencies. The program, which is being countries and to improve the effectiveness of carried out in partnership with the government those resources.) Staff attended workshops of Japan, is designed as a joint learning pro- and seminars with evaluators from other inter- cess, with EDI organizing workshops and sem- national organizations and donor countries to inars in which participants can review projects compare work programs and discuss possibili- on which NGOs and governments have collab- ties for cooperation. orated successfully, assess roles of NGOs in OED staff continued to participate as "re- participatory planning and policy develop- source persons" in Economic Development ment, review policy and operational aspects of Institute seminars on the monitoring and eval- collaboration, and draft action guidelines and uation of development projects, and in semi- recommendations. nars on project sustainability. The regional and sectoral distribution of fiscal 1991 activities is shown in Table 5-1. Economic Development Institute Within the regional activities, Africa ac- An important source of technical assistance counted for slightly more than one third of the is the Bank's staff college, the Economic De- total. Of the nineteen activities in the Europe, velopment Institute (EDI). The EDI trains Middle East, and North Africa region, eight people from borrowing member countries to were held in Eastern Europe. The rapid pace of create and carry out development programs. In economic liberalization in Eastern Europe has recent years, the Bank has focused on growth created quicker-than-expected demands for that promotes both equity and financial and new EDI courses and seminars. These activi- environmental sustainability. That combina- ties have dealt with the subregion's immediate tion of goals has generated the priority the EDI problems of economic liberalization-inflation now assigns to issues of poverty reduction, and stabilization, financial-sector reform, and human-resource development, concern for the privatization. Other activities have included environment, debt and adjustment, public-sec- courses concerned with concepts of market tor management, and private-sector develop- economics, housing and transport policy, and ment. The fiscal 1991 training program of the management of state-owned enterprises. institute directly reflected these issues. Overall, the largest number of activities was Thus, the EDI has expanded coverage of in the field of development management, while poverty among its offerings. A detailed three- activities in the other sectors were closely year poverty-related training program, which balanced. Well over half of all activities were will involve as many as forty distinct activities, policy-oriented seminars that addressed issues has been prepared for submission to potential of macroeconomic management or sector man- funding sources. The program addresses both agement. About one fifth of the activities were poverty-reduction and gender issues. senior policy seminars, 10 percent were for The EDI is also undertaking a number of training of trainers at EDI partner institutions, training programs that directly address the and about 5 percent were technical or project- issue of recognizing and increasing the contri- analysis activities. bution of women to the development process. In the recent past, special emphasis has been These programs, initially confined to the Af- placed on developing case studies of African rica region, focus on the training needs of policy issues, in particular, on structural ad- women managers in both the formal and infor- justment. While development of materials re- mal sectors. lated to adjustment issues remains important, Environmental issues were the central the EDI has shifted its attention to developing theme of a worldwide seminar on energy policy training materials related to questions of pov- that was held at the EDI in October 1990. A erty and employment. Other training materials follow-up seminar was held in France. These begun during the year included a manual on tax two seminars addressed environmental consid- reform that draws on the results of a recent erations relating to urban and industrial water Bank research project, an updating of existing supply and waste disposal. In addition, a series materials on project analysis and agroindustrial of national workshops on environmental as- development, and a set of teaching cases based sessment, started in fiscal 1990, has been con- on studies by the Operations Evaluation De- tinued in Egypt and Latin America, with sub- partment. regional workshops in the Caribbean and Although the institute continues to produce Central America. mainly printed materials, it has also developed 90 World Bank Activities, IFC, MIGA and ICSID

Fable 5-1. Fiscal 1991 EDI Training Actitities. b% Region and Sector

Fnir'orw Miidd.le ! I in ;merl,., E T amd nd the Secl,:r Nonrtrgior.1 Ifr.,a A,l North.ArVnz,rhbeqn l.oial

Arricullure I l3 I1 De%elopmeni mrndnaement 3 It) S 4 2_ Finance and induitr% 6 4 o 21J Human re4ource- I i 4 I ' 12 Infrartructure I 3 4 s 2 IS llacroe;conomic2 ' 4 ' 4 Total 14 31 2" 19 11 t1l2

interactive computer-based materials that A second institution-building effort launched make use of the Bank's program for achieving recently is directed at training institutions in consistency in making macroeconomic projec- Africa's five Portuguese-speaking countries. In tions. Work has begun on the development of mid 1990, the EDI participated in a needs- computer software and documentation on proj- assessment survey of local training institu- ect management and project analysis. The EDI tions. A networking approach was judged to be has launched a publicity campaign to promote the most promising means of assistance. A the wide use of its training materials; the five-year program has been drawn up identify- campaign has resulted in an increase in re- ing twenty-four activities to be undertaken, ten quests for materials of nearly 60 percent over of which will be priorities for the first two fiscal 1990. years (1991-92). One of EDI's long-standing objectives has The growth of cofinancing in the 1980s has been to strengthen local training institutions made possible the large increase in EDI activ- through technical assistance, including assis- ities. Cofinancing has also generated important tance in mobilizing external funding. In recent secondary benefits by establishing closer con- years, the institute has maintained relation- tacts with a wide range of bilateral and multi- ships with more than 100 training institutions in lateral aid agencies and with training institutes developing countries. Of the seventy-three in- in industrial countries. It has also provided stitutions with which EDI worked in fiscal access to additional sources of teaching mate- 1991, 55 percent were in Africa, 25 percent in rials and speakers, drawn from EDI's financing Asia, 12 percent in the Europe, Middle East, partners. This has proven to be particularly and North Africa region, and 8 percent in Latin true in multiyear cofinancing arrangements America and the Caribbean. that give both parties a greater stake in going The EDI's relationships with partner institu- beyond an ad hoc funding relationship. tions vary widely in terms of resource use. -The institute administers two programs for With certain institutions, the EDI maintains postgraduate study, largely but not exclusively formal multiyear agreements for substantive, limited to the area of economic development: wide-ranging assistance intended to strengthen the McNamara Fellowships Program and the the partner institutions (or networks) to help World Bank Graduate Scholarship Program. them become effective, independent training The McNamara fellowships are for nondegree institutions. Good progress was made in fiscal postgraduate study, which need not be at a 1991 in strengthening some of these networks. university. The World Bank scholarships are One of the most promising is the UNEDIL for postgraduate study leading to an advanced network in sub-Saharan Africa, dedicated to degree. Candidates for both programs must strengthening management-training institu- come from, and must pursue their studies in, a tions. (The acronym stems from the fact that Bank member country. the network is cosponsored by the United Early in 1990, fifteen new fellowships-com- Nations Development Programme, the EDI, pared with ten in the previous year-were and the International Labour Organisation.) awarded for studies to begin in fiscal 1991. This The EDI's assistance to UNEDIL is being was the largest number of awards made to date carefully coordinated with another important under the program, with women outnumbering institution-building program in Africa, launched men for the first time. Of the sixteen individu- with Bank assistance during fiscal 1991-the als covered by the fifteen awards, six were African capacity-building initiative (ACBI). from Asia, three were from Africa, one from Research at the World Bank 91

Latin America, and six were from industrial- search priorities are established by the Re- ized countries. There were 382 candidates in search and Publications Policy Council, and the past year's application cycle, a 6 percent individual projects are funded by departmental increase over the previous year. monies or approved by the Research Commit- The World Bank Graduate Scholarship Pro- tee and funded by the research support budget. gram is funded by the Japanese government. Most research projects are undertaken in the Now in its fourth year, the program has policy, research, and external affairs complex awarded scholarships to 234 scholars from of the Bank; about one fifth are conducted in seventy-one countries. In the 1990-91 aca- the operations and finance complexes. demic year, 157 scholars are being supported; The research program addresses the pro- 90 are receiving first-year grants, while 67 are gram objectives determined by the Bank's sen- in their second or third year of study. Over the ior management and the areas of emphasis set four years of the program, 112 grantees have by the Research and Publications Policy Coun- elected to study economics, 54 have chosen cil. The objective areas are adjustment and finance and administration, and 16 planning debt; financial intermediation; poverty reduc- and policy. Others have studied agricultural tion; human-resource development; private- sciences, environment, public health, demo- sector development and public-sector reform; graphics, energy, and law. Twenty-four per- the environment; natural resources; and infra- cent of the scholarships have gone to women. structure and urban development. Research In fiscal 1991, as a result of a sizable increase emphasis areas are the environment, private- in the Japanese contribution, the program sector development, and the reform of socialist processed between 2,500 and 3,000 applica- economies. tions for 100 new scholarships in the 1991-92 The transformation of socialist economies academic year. In addition, it is expected that has engendered a range of analytical work for between 80 and 100 scholars will receive con- the development community, generally, and tinuing funding. for the research program of the World Bank, in The EDI's five-year strategic plan, covering particular. A World Bank seminar on "Imple- the years 1990-94, calls for a systematic review mentation Problems of Privatization in Eastern of training activities. Fiscal year 1991 has seen Europe" was held in Yugoslavia, and six East- the beginning of a more comprehensive review ern European countries and the Soviet Union of activities than was possible during the re- participated. A review of the experience and cent years of the EDI's rapid expansion. The challenges to date in trade, privatization, agri- review has focused on assessing the accom- culture, finance, fiscal policy, poverty, and plishments of course objectives and on the social safety nets, and of the Bank's activities improvement of training methods. An analysis in socialist Europe, is contained in the paper of participant-evaluation reports for activities "Transformation of Economies of East and conducted in fiscal 1991 indicates a continued Central Europe." Research staff were heavily record of relatively high satisfaction among involved throughout the year in operational participants with regard to relevance, useful- missions to Eastern and Central Europe, ness, and the attainment of objectives. The China, and Ethiopia. EDI has also begun to evaluate its programs of The World Bank, the Organisation for Eco- longer-term institutional-development assis- nomic Co-operation and Development, the In- tance to partner institutions, and its senior temnational Monetary Fund (IMF), and the policy seminars. The first of these reviews was European Bank for Reconstruction and Devel- completed in fiscal 1991; it focused on the opment cooperated in a joint study of the institute's relationship with the Center for In- Soviet economy. The objective of this study tegrated Rural Development for Asia and the was to make recommendations to the Soviet Pacific. Union on economic reforms and to the major industrialized countries on criteria for assis- Research at the World Bank tance. The Bank managed two task forces on The World Bank's project and program-loan systemic and sectoral reform; the first dealt portfolio is supported by its program of eco- with prices, enterprise management and re- nomic and social research. This research is form, privatization, finance, and law, while the intended to broaden understanding of the de- second analyzed the manufacturing, agricul- velopment process, to strengthen the founda- tural, and housing sectors.' tion of Bank policy and advice, to support Closely related to problems in transition Bank lending, and to develop the research from centrally managed economies are issues capacity of the Bank's developing members. The research program is reviewed annually by the executive directors of the Bank. Re- For details, see page 43. 92 World Bank Activities, IFC, MIGA. and ICSID in private-sector development and public-sec- tions for World Food and Agricultural Trade." tor management. Bank research staff worked Another joint conference, 'The European jointly with the Chinese Systems Reform Com- Community and the Caribbean in the 1990s," mission to stage a week-long symposium, "Al- discussed the European Community's Single ternative Forms of Public Sector Ownership." Market Act, the Lome IV Convention negoti- A review of the experience of seven countries ations, the Uruguay Round negotiations, and was incorporated in the paper "Enterprise changes in Eastern European markets, and the Reform and Privatization in Socialist Econo- implications of these events and circumstances mies." Several other papers on public-sector for developing countries. The results of the management were completed, including policy research project, "Industrial Competition, studies on the history of tax systems in devel- Productive Efficiency, and Their Relation to oping countries, tax reform, management of Trade Regimes," were disseminated at confer- urban development, and technology develop- ences at the National Bureau of Economic ment in East Asia. Research, the World Institute for Development The central issues in reform of socialist Economics Research, and Harvard and economies are also similar in many aspects to Georgetown Universities. those addressed for decades by the Bank in A renewed emphasis on poverty reduction advising developing countries on economic re- was reflected in the program and output of the form. Central in these have been policies on research complex during the year. World De- macroeconomic adjustment, trade, and debt. velopment Report 1990 focused on the circum- Staff from the Bank and the IMF worked stances and size of the poor population in jointly on three research studies on the pros- developing countries, and on critical factors in pects for economic.growth in developing coun- poverty alleviation. The lessons of the report tries in the credit-constrained 1990s. These are are being disseminated internationally and im- "The Impact of Industrial Countries' Trade, plemented in Bank policy. Seminars on the Agricultural, and Industrial Policies on Devel- book's analysis were held in the most populous oping Countries," "The Role of Foreign Direct developing member countries of the Bank Investment in Development," and "Imple- (China, India, and Indonesia), and the Eco- mentation of the Debt Strategy and Its Impact nomic Development Institute drafted a poverty on the Development Prospects of All Severely training strategy that will be implemented over Indebted Countries. " the next three years. Research staff are prepar- The Bank completed the 1990 edition of ing a poverty handbook to guide country- World Debt Tables, which is a major reference assistance programs for poverty reduction, and work and an important item on the Bank's two new research reports analyze the cost- ongoing research agenda. A project was also effectiveness of government programs to alle- completed comparing alternative approaches viate poverty-"Reaching the Poor through for stopping high inflation in hyperinflationary Public Employment Schemes: Arguments, Ev- and long-term, high-inflation countries. The idence, and Lessons from South Asia" and results were widely disseminated at confer- "Financial Implications of Development Poli- ences and seminars in Latin America, Europe, cies Aimed at Poverty Reduction." and the United States and will appear in jour- An issue integrally related to poverty allevi- nals and a forthcoming book. ation is human-resource development. During Several international seminars on financial the year, the research program included a wide issues were sponsored by the Bank's research range of work on improving the quality of life departments, including two on industrial and of women, on labor training and employment, financial-sector policy (Paris and Seoul) and and on health. Work specifically oriented to one, "African External Finance in the 1990s," the needs of women included an issues paper, which reported on sixteen papers produced as "Enhancing the Economic Role of Women in a collaborative effort by the research and Af- Development," presented to the Development rican operations sections of the Bank. Committee; the initiation of a "Women's Man- The Bank has been involved in many efforts agement Training Outreach Program" for lead- to advise on reform, negotiations, and interna- ers of women's groups; participation in the Pan tional agreements on trade. A recently com- African Institute for Development, which is pleted project, "Trade Reforms in SALs: A intended to develop local training delivery sys- Positive Analysis of Performance and Sustain- tems for women in the informal sector; and the ability," analyzed the trade-offs between publication of Women's Work, Education, and short-run performance and longer-term distri- Family Welfare in Peru. bution, investment, and revenue effects. The Other work on human-resource develop- Bank and the U.S. Department of Agriculture ment completed during the year included a cosponsored a conference, "EC 1992: Implica- report, "Skills Training for Productivity: Poli- Technical Assistance 93 cies for Vocational Education and Training in the changes in Eastern European agriculture Developing Countries," the management of a and agroindustry in this decade. A seminar seminar in Indonesia on "Health Financing sponsored jointly with the National Bank of and Health Insurance in Asia," training work- Hungary focused more specifically on "Agri- shops for Bank staff on population projects and cultural Reform in Eastern Europe and the on textbook production, and a workshop in USSR." Geneva on vocational education and training The Bank's long-term experience with infra- for donor staff. structure and urban-development projects is Because development projects can disrupt reflected in a range of reports and training the livelihood and culture of indigenous peo- programs under way in fiscal 1991. The major ples, research staff have been involved in an work in this area was "Urban Policy and ongoing attempt to encourage the development Economic Development: An Agenda for the of participant groups of affected peoples and 1990s," which outlined strategies for infra- protection of them. A paper on such strategies structure provision, financial services, and en- formed the basis of a revised operational direc- vironmentally sustainable activities, and sug- tive on indigenous peoples. gested new research and development needs Development projects, specifically, and eco- for urban development. The approach devel- nomic growth, more generally, have been seen oped in the paper on "Impacts of Infrastruc- as a source of environmental degradation. The ture Deficiencies on Nigerian Manufacturing" World Bank has been increasingly involved in may provide a basis for application in other environmental and natural-resource manage- developing countries. Several other ongoing ment and in the development of environmen- projects address issues in housing policy, the tally sustainable economic policy; increased power sector, road pricing, and the relative activity is reflected in the expansion of re- efficiency of utilities that use diesel fuel rather search on these issues. Central in this work has than other types of energy. been the role of the Bank in coordinating The Bank held the third in the series of international efforts at ecological protection. annual conferences on development econom- In this regard, the World Bank's research staff ics, focusing in fiscal 1991 on the transition in are now responsible for the administration of socialist economies, the role of military expen- the Ozone Projects Trust Fund, which is to ditures in development, challenges in urbaniza- fund work by developing countries to honor tion, and the role of governance in develop- their Montreal Protocol commitments to re- ment. In his paper on privatization in Eastern duce production and use of chlorofluorocar- and Central Europe, Professor Jeffrey Sachs bons and other ozone-depleting gases. Bank emphasized the urgent need to maintain mo- research staff are also preparing issues papers mentum in the transition process; Robert S. for the Global Environment Facility's Scien- McNamara argued for reductions in military tific and Technical Advisory Panel on a pro- expenditures worldwide and for redirection of posed "small projects window," on interna- expenditures toward critical human and phys- tional waters, and on three topics pertaining to ical investments in developing countries; Pro- the protection of biodiversity. fessor A. L. Mabogunje outlined a paradigm The importance of the agricultural sector for for dealing with urban growth and productiv- economic growth, poverty reduction, and food ity; and Edgardo Boeninger drew on his expe- security makes it the focus of continued re- rience of governance in Chile to address a search in the Bank. Various studies completed broad range of practices that can enhance or during the year addressed land tenure and debilitate governance. These four papers from agricultural-supply response in sub-Saharan the plenary sessions, together with discussant Africa and price projections for, and risk man- comments, eight additional papers, and a agement of, basic commodities produced in roundtable debate, will be published in the developing countries. A review of the results Proceedings of the World Bank Annual Con- of a comprehensive cross-country comparison ference on Development Economics, a supple- of agricultural pricing was compiled in "The ment to The World Bank Economic Review and Political Economy of Agricultural Pricing Pol- The World Bank Research Observer. icies," published in fiscal 1991, and a more general reassessment of agricultural policy was Technical Assistance reflected in the paper "Redefining the Role of Technical-assistance components in Bank Government in Agriculture for the 1990s." operations are 'used primarily to support in- The Bank's Eleventh Annual Agricultural vestment lending. In calendar year 1990, these Symposium, "Agriculture in the 1990s," was a components totaled $1.4 billion, representing a forward-looking analysis of technical develop- 24 percent increase in value over 1989 amounts. ment, the Uruguay Round negotiations, and Technical-assistance components, as a per- 94 World Bank Activities, IFC, MIGA, and ICSID

centage of investment lending, have also In calendar 1990, twenty-seven advances grown, from 7 percent in 1989 to 9 percent in were made for $3 million. A review of SPPF 1990. activities over the past three years shows that In calendar 1990, nine freestanding techni- more than three quarters of all SPPF grants are cal-assistance loans were approved for a total helping to finance the preparation of projects of $130 million, up slightly from the year involving the environment, debt, financial in- before. During the year, the Bank approved a termediation/adjustment, human-resource de- freestanding technical-assistance loan to Po- velopment, poverty reduction/food security, land. The loan is helping finance an environ- public-sector management, and private-sector ment-management project that is addressing development. key environmental problems through policy, Some 196 projects, which cost $307 million management, and program coordination; in- and are assisted by the United Nations Devel- dustrial efficiency and environmental reviews; opment Programme (UNDP), were being exe- air-quality management; and water-resources cuted by the Bank at the end of the calendar management. The Bank is also supporting the year. In most of these cases, the Bank acts as technical-assistance needs of other Eastern sole executor; in some cases, however, the and Central European countries; freestanding Bank is responsible only for the execution of technical-assistance loans were approved in components of projects that are another enti- late fiscal 1991 for Bulgaria and Romania, and ty's responsibility (either the government or one for Czechoslovakia is being prepared. another agency). The UNDP is shifting its Eighty-three advances under the Project operational approach from the present arrange- Preparation Facility (PPF) were approved dur- ment, which relies heavily on exogenous exe- ing calendar year 1990 for a total of $65.6 cuting agencies, to one that will rely on local million. The PPF was created in 1975 to help entities for project execution. The changes will overcome weaknesses in borrowers' capacity go into effect in January 1992. The implications to complete project preparation and to support for the Bank as executing agency for the the entities responsible for preparing or carry- UNDP are not yet clear. ing out the projects. Under the facility, the The number of projects funded by trust Bank can advance up to $1.5 million per proj- funds continued to grow during the year. At ect either to meet gaps in project preparation the end of 1990, the Bank was administering ($750,000 limit) or to assist in institutional 850 operations (including those of the UNDP) strengthening ($750,000 limit) so that project for a total of $3,197 million equivalent in donor implementation can begin before the loan or commitments. Total disbursements during the credit becomes effective. year were $574 million, 53 percent of which During the year, the Bank's executive direc- were for cofinancing of Bank projects. The tors approved amendments to the facility that remainder of the disbursements was for such address the changing needs of PPF borrowers. activities as preinvestment studies, environ- In recent years, requests for institutional- ment studies, the Consultative Group on Inter- strengthening assistance have become far more national Agricultural Research, the Special common than requests for assistance in project Program for Research and Training in Tropical preparation. Among other things, therefore, Diseases, and the Onchocerciasis Control Pro- the amendments remove the distinction be- gram. tween the two types of PPF activities and allow On July 30, 1990, a special fund for policy the Bank's four operational regions to autho- and human-resource development (the PHRD rize one or more advances up to the limit of Fund) was established within the IBRD and $1.5 million a project. IDA. Funded by Japan's Ministry of Finance, In contrast to PPFs, which are either subse- the PHRD Fund encompasses and extends quently refinanced through Bank loans or are several existing programs of support and col- repaid by the borrower, the Special Project laboration between Japan and the Bank. Preparation Facility (SPPF) is one of the few Japan has pledged approximately $300 mil- technical-assistance grant instruments in the lion equivalent, over the three-year period Bank. (Reimbursement is required only when a covering Japan's fiscal years 1990-92, in sup- Bank-financed project results within five years port of Bank-assisted projects and programs, from the date the SPPF is approved.) The including those for the environment, training SPPF was established in 1985 to help IDA- and training-related activities of the Economic eligible member countries in sub-Saharan Af- Development Institute, and the provision of rica finance preparation activities (including scholarships under the Bank's Graduate Schol- preparation of project proposals for financing arship Program. During the course of Japan's by other donors) that could not be financed 1990 fiscal year (April 1990 to March 1991), from other sources. Japan committed approximately $85 million in Interagency Cooperation 95 grant funding for technical assistance, primar- African training institutions. The program, ily for the preparation of Bank-supported called UNEDIL, is fostering civil-service im- projects and programs. Of this amount, about provements, public-enterprise reform, and pri- $15 million supported environmental technical vate-sector development. UNEDIL works assistance. closely with regional associations and a con- Substantial technical assistance for the alle- sortium of donors. viation of transboundary environmental con- Support for economic transition in Eastern cerns (biodiversity preservation, global warm- and Central Europe has become a major com- ing, pollution of international waters, and mitment of the United Nations (U.N.) system. protection of the ozone layer) will be provided The Bank is collaborating with other interna- through the newly formed Global Environment tional agencies to help Eastern and Central Facility (GEF). Participating governments European countries meet their three funda- have committed about $1.5 billion for GEF mental challenges-economic transformation, activities during its initial three years. The social protection, and environmental clean-up. Bank has been given responsibility for admin- Following up on the request of the seven major istering the GEF, in partnership with the industrialized countries and the president of UNDP and the United Nations Environment the Commission of the European Communities Programme.2 The billion-dollar-plus fund, at the July 1990 Houston economic summit, which was established in November 1990, al- the Bank participated with the International ready has a $273 million portfolio in its tranche Monetary Fund, the Organisation for Eco- of projects for fiscal 1992. Eleven projects, nomic Co-operation and Development, and the valued at $59 million, are primarily for techni- European Bank for Reconstruction and Devel- cal assistance and are to be managed by the opment in a detailed study of the Soviet econ- UNDP. The balance of the tranche is com- omy.4 posed of fifteen investment projects that are to Increased interagency cooperation on the be managed by the Bank. However, substan- environment reflected the heightened interna- tial technical-assistance activities, integral to tional concern with the link between environ- the success of the investments, are contained ment and development. The UNDP, the in this $214 million commitment. United Nations Environment Programme (UNEP), and the Bank have joined forces to Interagency Cooperation manage a Global Environment Facility (GEF) Stepped-up activities by the United Nations to channel technical, scientific, and financial and associated agencies have focused increas- resources to middle-income and lower-income ingly on strengthening the capacity of develop- countries to help finance programs and ing countries to implement and sustain policy projects affecting the global environment. The reform. GEF will be implemented under a tripartite One initiative, sponsored jointly by the Af- arrangement that may well serve as a model for rican Development Bank, the United Nations future interagency collaboration on issues of Development Programme (UNDP), and the major interest to the international community.5 World Bank, has as its objective the expansion Work proceeded during the year on a major of African capacities in the key areas of policy restructuring of the Tropical Forestry Action analysis and development management. The Plan, a five-year, $8 billion program cospon- African capacity-building initiative (ACBI), sored by the Food and Agriculture Organiza- formally launched in February 1991, is de- tion of the U.N. (FAO), the UNDP, the World signed to help develop the kinds of skills and Resources Institute, and the Bank. Several institutional know-how needed to manage eco- recent studies of the plan-by nongovernmen- nomic change. Under the ACBI, national and tal organizations, as well as by an independent regional institutions will be strengthened, gov- panel appointed by the FAO-have identified ernment and private-sector capabilities will be severe shortcomings in the plan's implementa- enhanced, and graduate-level and in-service tion. training will be supported. The ACBI repre- A high-level international commission re- sents a broad partnership between sub-Sa- cently evaluated the role and operations of the haran African countries and the international joint UNDPIWorld Bank Energy Sector Man- donor community.3 agement Assistance Programme (ESMAP) and Complementing the ACBI's focus on policy analysis and economic management is a pro- gram jointly sponsored by the UNDP, the World Bank's Economic Development Insti- For details, see page 61. For details, see page 115. tute, and the International Labour Organisa- ' For details, see page 43. tion that has as its goal the strengthening of 5 For details, see page 61. 96 World Bank Activities, IFC, MIGA, and ICSID recommended a strategic reorientation of the In fiscal 1988, the Bank began a systematic focus and management of the program to re- effort to increase NGO involvement in the flect energy-sector priorities in the 1990s. The operations it supports. Since fiscal 1988, the priorities include energy efficiency, environ- average annual number of Bank-assisted mental linkages, long-term investment plan- projects that involve NGO participation has ning, investment financing, technology trans- tripled. Eighty-two projects approved by the fer, and institutional strengthening. Other Bank's executive directors in fiscal 1991 in- issues identified for special consideration in- volved NGOs. As in previous years, sub-Sa- clude end-use efficiency, least-cost supply in- haran Africa continued to have the largest vestments, gender issues and poverty linkages, share of NGO-associated projects, but the the encouragement of private-sector involve- shares in Asia and Latin America and the ment, and long-term capacity building. Further Caribbean have increased in recent years, as changes to the program include recasting the well. Historically, most of the projects involv- annual donors' meeting into a broader consul- ing NGOs have been in the agriculture and tative group and a strengthening of relations rural-development sector, but, in the past two with regional development banks. years, NGOs have been engaged more fre- Increasingly, Bank initiatives aim at strength- quently in Bank-supported social-dimensions- ening measures to protect future development of-adjustment and education projects (see Ta- projects from potential catastrophes and to ar- ble 5-2). rest environmental degradation that could spark The Bank has sought to involve local NGOs further natural disasters. The Bank and the in its operations largely for their firsthand United Nations Centre for Human Settlements knowledge and capacity to organize low- (Habitat) are collaborating on a program to income people. About 86 percent of the NGO- mitigate the effects of disasters in metropolitan associated projects approved in fiscal 1991 areas and to promote preparedness in disaster- involved either indigenous intermediary NGOs prone developing countries. or grassroots groups. The Bank's senior man- Habitat's collaboration with the Bank has agement has also encouraged staff to engage continued to expand over the years. A main beneficiary groups and local NGOs early in vehicle for collaboration is the joint Habitat/ project planning and design, as experience has UNDP/World Bank Urban Management Pro- shown that successful poverty-focused pro- gramme (UMP), the first major concerted mul- grams have usually involved the poor, both at tilateral effort to support developing countries the design stage and during implementation. A worldwide in improving urban management. list of projects in the pipeline in which Bank The UMP places strong emphasis on the links staff see potential for NGO involvement is now among research, operational activities, and the regularly updated to facilitate interaction with policymaking process and seeks to develop NGOs and implementing agencies in the early and promote appropriate policies and tools for stages of project preparation. land management, provision of infrastructure, The Bank-supported Third Jabotabek Urban operations and maintenance, municipal finance Development Project in Indonesia-approved and administration, and urban environmental in fiscal 1991-illustrates the Bank's stepped-up management. The overriding concern in all efforts to involve local NGOs in project design.6 UMP activities is to help build urban-manage- The project builds on the twenty-five-year-old ment skills. kampung-improvement project (KIP), which, Relations with nongovernmental organiza- as the largest urban community-upgrading pro- tions. The Bank continues to foster cooper- gram in the world, has helped improve the basic ation with nongovernmental organizations living conditions of about 8 million low-income (NGOs) worldwide. The challenge of meeting residents in some 200 cities and towns through- the needs of the world's poor, together with a out the country. heightened sense of urgency about global en- The traditional KIP has been effective in vironmental degradation, has prompted institu- providing basic infrastructure, but its top- tions of many different types to cooperate in down approach has revealed some significant finding ways to protect, conserve, and develop weaknesses. Inadequate investments have the world's human and natural resources. The been made in sanitation and health education; Bank and its borrowers are expanding their communities have not been fully involved in interaction with NGOs of many kinds-for example, community associations, private vol- untary organizations, religious groups, and en- 6 Jabotabek is the Indonesian government's mnemonic for vironmental vironentalorganzatios-toorganizations-to ensurensurethat that andthe urbanthe regionsurrounding consisting local of thegovemnments province of DKIof JakartaBogor, grassroots insights and expertise are taken into Tangerang, and Bekasi. The population of Jabotabek is account at both the project and policy levels. about 15 million. Interagency Cooperation 97

Table 5-2. Patterns in World Bank-NGO Operalional Collaboration. Fiscal 1973-91 ToTi-I.

IIaM N-. N N.. N.. No. BY retinon Inumber of projiect';s Africa 111 -1 2' 5u 22 44 3?j 4e IU4 51 Asia1 24 S I 14 2. 2 > 24 Europe. NIiddle Easit. and North Africa If 4 4 ou 11 3 L:atin America and the Caribbean 411 I1>, 15 li 2 I1 13 rn IS Toial 2li 1J11: -h 1.. 5 1LIII I21in I x4n J1IlCi

By seccior i nurrbcr ot proicctls Ndjustmr n;ra;ed 2 1 4 4 It, 11 2 h. Agriculture.Rural develupment 162 47 1 33 I.S 3t5 21 26 156 39 Education!Traing 21; L 4 q' 5 tli 11 1 .411 11. En%ironmeni 2 I 2 4 . 3 4 11 Industrn Ener2v 22 1'; 4 ' I 4Li 4 Li In frajsi ruL ureULirban developmeni 41 I-' S Irl 14I 1' r. 1j7

Population Hc.lth NuiriL;on 2r 2 - 1I I; 1r 2't *i I; Rebcl 3 1 2 4 1. 11 1 1 n1 Total '15 11i' 41, lIhg- N(1 ,2Jill- Jill) LLint'l

R! nlpe /'NG() I number ot NGOC Grassroolot 5 3; 29 41 311 42 5n 311 h'ili 3? Indigenous in;crmrdiarv 35X. 411 2n 3n 1114 5it '33 4i Inl rnIatonal 1Jll 41' 13 P' lt 22 2 14 155 J7 Total 254 1-1-l ''1 1-1-l '2 liii sI 11111 5Si Jll)

By hrreicuicn Inumb-r of functu;.nsi

Adv%ice 5 ' - IIJ - s 15 I I5 IJ

Colinancinm III 3 5 - : !1' 21 12 44 Desuen 3 12 11 1 I1 22'' 1 2 I1 Implerrcnraimnn 162 -S 4 54 4n 54J 45 I3> 54 Nfonitonng:ind ex aIuajitn I t 7 ' IS IIi 3;; 5 To0.l 21 l1ll ' I Itl '55 1'l 1 72 j5i )LiI'd ll;

j. Preh!rnrirx

planning and deciding on the location of facil- oped and funding negotiated with KIP imple- ities; and operation and maintenance have menting units; water and sanitation users' as- been poor. Demand has been increasing for a sociations will be organized and trained to more flexible, community-based program to manage and operate public sanitation facilities; respond directly to communities' concerns in small-scale credit will be made available to such areas as loans for individual and group individuals and groups for home improvements sanitation facilities, as well as home improve- and small-business support; and implementa- ments, advice to small businesses, and tion of project components and facilities will be strengthening of sanitation and public-health monitored. By the end of project implementa- components. tion (around 1998), it is expected that the new Under the new KIP, which the third Jabota- community-based approach of the KIP will bek project is supporting, NGOs-mainly In- have been firmly established and that NGO donesian developmental NGOs-are working skills in community development will have with kampung committees to inform the com- been developed to the extent that NGOs can be munity of the project and establish community accepted as full partners with the government development-action groups. The problems and in other, similar kinds of operations. needs of the community will be identified, and, Other member governments of the Bank together with the development-action groups, have become interested in the ways in which kampung-improvement plans will be devel- the nonprofit, voluntary sector can assist in 98 World Bank Activities, IFC, MIGA, and ICSID

national development. In some cases, borrow- broad outlines of development policy, and pop- ers have sought advice from the Bank on the ular participation in development decisionmak- most effective ways to promote government- ing. NGO cooperation in their countries. The Bank Increased Bank involvement in recent years has studied the process by which the Indian in aspects of popular participation has helped government provides grants to NGOs in the set the stage for the initiation by the Bank in population sector, and is now analyzing the fiscal 1991 of a program of action and learning Indian government's experience in providing on popular participation. grant funds to NGOs in general. Analysis may The three-year program has several compo- suggest how government funding of NGOs can nents. One involves the continued monitoring best be managed. of the participatory aspects of environmental The expansion of NGO involvement in assessments and the Bank's collaboration with Bank-assisted operations has occurred against NGOs. A second involves a selective review to a backdrop of intensified policy discussion determine how faithfully Bank guidelines that between NGOs and the Bank. The Bank ap- invoke popular participation are being imple- preciates exchanges of information, experi- mented; in addition, aspects of participation in ence, and viewpoints with NGOs on policy new operational directives will be scrutinized. issues related, in particular, to the social and A third component seeks to sensitize opera- environmental aspects of development. Many tional staff on aspects of popular participation NGOs, in both developed and developing through interactive reviews of twenty Bank countries, want to contribute their perspec- projects that involved popular participation. tives to influence Bank thinking. Nongovern- An "expert group" of Bank staff has been mental organizations are becoming better or- formed to guide this part of the program. The ganized into coalitions and networks, and their group will draw on analytical work on partici- collective voice is consequently gaining greater pation that is being carried out in various parts notice in the Bank and among borrowers. of the Bank and elsewhere. One particular Nongovernmental organizations, with the focus will be on ways in which the Bank may authorization of their governments, can be need to modify its operational policies to en- granted visitors' status to attend the annual courage popular participation more widely in meetings of the Bank and the International its projects and economic and sector work. Monetary Fund. In addition, parallel seminars Cooperation with the Organisation for Eco- for NGOs on Bank policies have become a nomic Co-operation and Development. The regular feature of these meetings. The topics of Bank actively pursues a dialogue on policies NGO seminars organized by the Bank during and practices of mutual concern to bilateral the annual meetings in September 1990 in- and multilateral aid donors with the Organisa- cluded environmental assessment, World De- tion for Economic Co-operation and Develop- velopment Report 1990, the GEF, and the ment (OECD) and its Development Assistance Bank's forestry policy. As a follow-up to dis- Committee (DAC). Data are regularly ex- cussions surrounding the last-named topic, the changed between the Bank and the DAC, Bank organized, in April 1991, a consultation especially regarding aid flows, debt, and finan- with NGOs to discuss the Bank's draft forestry cial transfers. The Bank participates in DAC policy paper. Fifty-five representatives of en- working groups concerned with improving aid vironmental groups and development NGOs, coordination, evaluation, and practices, as including more than twenty-five from develop- well as financial and statistical reporting. In ing countries, participated in the meeting, this regard, Bank staff helped write the Princi- which represented the Bank's most significant ples of Program Assistance, Technical Coop- effort to date to involve NGOs in the develop- eration, and Aid Evaluation, which were de- ment of an operational policy document. signed to facilitate aid coordination and The most important Bank-NGO forum-in consistency among donors. terms of longevity, breadth, and depth of the As an official observer on a number of discussion-is the NGO-World Bank Commit- OECD committees, notably the DAC, the tee. Formed in 1982, the committee provides a Bank was active in discussions on issues of formal, international forum for policy discus- current concern, including popular participa- sions between senior Bank managers and NGO tion; aspects of governance (such as account- leaders from around the world. At the commit- ability, openness, and the legal environment); tee's tenth annual meeting (held in Washington the coordination of aid to countries affected by on October 31 and November 1, 1990), the the crisis in the Gulf; environmental issues; main topics discussed were World Develop- creation of an enabling environment for the ment Report 1990, areas of agreement and private sector; and the development of market disagreement between the Bank and NGOs on economies in Eastern Europe. Increased aid Interagency Cooperation 99 effectiveness and sustainability were important capital replenishment. At that time, the gover- goals of all these meetings. nors authorized the management of the IDB to The first high-level meeting of donor govern- initiate programs of sector-adjustment and ments' environment and development minis- structural-adjustment lending and encouraged tries, an initiative aimed at better formulation the institution to seek cofinancing for such of policies affecting developing countries, was programs from the World Bank. In fiscal 1989, convened at the OECD in February 1991. The five Bank-assisted projects were cofinanced by Bank also participated in the development of the IDB for a total of $346 million; in fiscal environmental-policy guidelines that were de- 1991, fourteen operations were cofinanced for signed to create more consistency among do- a total of $1.4 billion. Cooperation has strength- nors and facilitate planning by aid recipients. ened substantially in other areas, as well. Since Research by the OECD on global modeling and 1990, staff of both institutions have participated the issue of taxes on carbon-dioxide emissions in several preparation, preappraisal, appraisal, is providing useful background for the Bank's and economic-sector review missions. Consul- work on the environment, particularly for the tations have also been fostered: Information forthcoming World Development Report 1992, sharing and policy consultations, as well as which focuses on the relationship between formulation of initiatives, are an integral part of development and the sustainable use of envi- the two institutions' working relations. The ronmental resources. senior managements of the institutions meet The annual ministerial-level meeting of the periodically to consult on operational matters, OECD in early June and the twice-yearly meet- as well. ings of the OECD's Economic Policy Commit- To determine the longer-term cooperation tee, which focus on industrial-country con- and cofinancing possibilities between the cerns such as economic recovery, inflation, World Bank and the newly formed European competition, trade, public expenditures, and Bank for Reconstruction and Development unemployment, are important fora in which the (EBRD), officials of the two institutions have Bank can point out how various industrial- met several times in both Washington, D.C., country policies affect developing countries. and Paris; the EBRD has expressed interest in Cooperation with the regional development cofinancing with the Bank in the areas of banks. The World Bank maintains close rela- enterprise restructuring, privatization, and fi- tionships with the three major regional devel- nancial-sector development, as well as projects opment banks-the African Development in the energy, telecommunications, and envi- Bank, the Asian Development Bank, and the ronment sectors. In June 1991, the EBRD Inter-American Development Bank. cofinanced a Bank-assisted heating-supply The Bank's relationship with the African project in Poland designed, among other Development Bank (AfDB) has intensified in things, to encourage energy conservation and recent years. The Bank has been involved in reduce environmental pollution. The two insti- numerous joint initiatives with the AfDB, and tutions have also expressed interest in sharing the AfDB's cofinancing of Bank-assisted country- and project-specific information. Dur- projects has more than tripled since the mid ing fiscal 1991, the EBRD also participated, 1980s, from about $170 million in 1985 to more along with the Bank, the International Mone- than $525 million in 1990. The World Bank also tary Fund (IMF), and the OECD, in a major collaborates closely with the Asian Develop- study of the economy of the Soviet Union. ment Bank (AsDB). During 1990, six projects Cooperation with the International Monetary in five countries were cofinanced; AsDB cofi- Fund. The Bank and the International Mone- nancing amounted to more than $600 million. tary Fund share the broad objectives of pro- Economic and operational information is rou- moting sustained growth and development of tinely shared, and joint missions and sector member countries, and they have been as- work have become common. The AsDB's en- signed differing but complementary roles in try into policy lending underscores the need for pursuing this objective. The two institutions structured coordination on sector policies, as are expected to ensure close collaboration in well as for cooperative efforts in the areas of order to serve members with maximum effec- special operational emphasis that are shared by tiveness. the two institutions. Guidelines for collaboration between the The Bank and the Inter-American Develop- Bank and the IMF have been in place since ment Bank (IDB) have had a close relationship 1966, and they have been periodically re- since the IDB began its operations in 1961. viewed since then, the most recent review Those relations have been strengthened and having taken place in March 1989, when addi- intensified since April 1989, when the board of tional or more formal administrative and pro- governors of the IDB approved a seventh cedural steps were agreed upon. 100 World Bank Activities, IFC, MIGA, and ICSID

A review of recent experience in collabora- Cooperation on agricultural research. The tion concluded that the procedures governing Consultative Group on International Agricul- collaboration were working reasonably well tural Research (CGIAR) is an informal associ- and that recent collaborative practices have ation of forty public and private-sector donors been more uniform and systematic than previ- that supports a network of sixteen interna- ously. Specifically, the review noted that: tional agricultural-research centers. The Bank * extensive staff contacts have been main- is a cosponsor of the CGIAR, together with the tained for both country-related matters and Food and Agriculture Organization of the U.N. general policy aspects of common interest; and the United Nations Development Pro- * regular sessions for planning country strat- gramme. egies and review by the senior staffs and the Programs carried out by CGIAR-supported two managements have helped create a more centers fall into six broad categories: produc- transparent operational framework for the tivity research (technology generation), man- staffs at the working level and have helped agement of natural resources, improvement of maintain a common ground in the approaches the policy environment, institution building of the two institutions; (strengthening national agricultural-research * collaboration in support of members' ad- systems in developing countries), germplasm justment efforts has been extensive; conservation, and facilitating linkages between * in general, divergences of views, when developing-country institutions and other com- they arose, were identified and resolved at an ponents of the global agricultural-research sys- early stage; tem. * financial support to member countries by Research at CGIAR centers covers com- the Bank and the IMF has been coordinated modities that provide 75 percent of food energy even though resource flows in the context of and a similar share of protein requirements in adjustment programs remained difficult to pre- developing countries. Production in develop- dict with precision; ing countries would be poorer by several hun- * through collaboration between the staffs dred million tons of staple food annually with- and practical experience gained by country out CGIAR-supported research. authorities, the process of formulating policy- Some 45,000 agricultural scientists have framework papers has evolved to serve the been trained at CGIAR centers during the past papers' original purpose better;7 nineteen years. The types of training provided * collaboration has been particularly inten- by the centers range from mid-level regional sive in the area of debt, at the country-specific courses to postdoctoral programs. The many level, as well as on general policy matters; and alumni of CGIAR centers form the nucleus of, * collaboration has also continued with re- and provide leadership to, national systems of spect to research and related activities, primar- agricultural research. ily through joint participation in seminars and In 1990, thirty-three donors contributed a projects. total of $234.9 million to the centers' core In their discussion of the report on collabo- programs, an increase from $224.5 million in ration between the two institutions, the exec- 1989. The Bank contributed $34.3 million. Six- utive directors of the Bank emphasized the ty-nine percent of the contributions came from need for, and importance of, continued close donor countries, while international or regional collaboration and noted that in the area of organizations contributed 30 percent. The bal- support of adjustment, early identification and ance was provided by two foundations. The resolution of differences of views had contrib- average contribution amounted to $7.1 million, uted to improved country dialogue on policies compared with $6.2 million in 1989-when and more consistent advice to member coun- there were thirty-six donors-reflecting, in tries. In the areas of debt strategy and arrears, part, the effect of exchange-rate fluctuations. the directors welcomed the close cooperation Reorientationofprograms and expansion of between the two institutions and the positive the system. In 1990, the CGIAR made a num- results achieved so far. Many stressed, how- ber of landmark decisions that stemmed from ever, the need for continuing efforts both to proposals contained in a report from the prevent countries from falling into arrears and to help those that have fallen into arrears to become current with both institutions. Overall, the directors agreed that the March 7 A policy-framework paper is a three-year comprehensive 1989 framework for enhanced collaboration report prepared by the national authorities with the assis- had proven to be useful and that no immediate tance of the staffs of the Bank and the IMF. It identifies the need for revisedneed oradditinal orfr reviedadditional procedurespocedurs had remedies,sources of and a country's provides problems,estimates ofdescribes the associated the proposed financ- emerged. ing requirements and the role of the major aid agencies. Interagency Cooperation 101

t' f; ;,: d .- i ;,] ! F -SlipLS& = w

r~~~~~ . ..s * ~~~~~..

i ~ ~~~ , ,* -

**~~ ~ ~ ~ ~ ~ ~ ~ A

I A~~~~~~~~A =-~~~~rL~~ - - 4w,' A#_

fl~~-asr

v ' ' ~~~~'''V v0

*i ¢ 1; v*

A Colombian farmerpacking peeled cassavafor the market. The CGlAR's firstfacility devoted to biological control-theInternational Institute of TropicalAgriculture's BiologicalControl Center-hashelped reverse the spreadof the cassava mealybug, an insectpest responsiblefor$5.5 billion of damage to Africa's cassava crop. group's Technical Advisory Committee on a sequently expressed the view at the group's possible expansion of the CGIAR system. The 1989 mid-term meeting that the mandate of the report was the result of a two-year deliberative CGIAR should be expanded to include agro- process that began when the group decided at forestry and forestry research. its 1988 mid-term meeting to review the desir- Although the Technical Advisory Commit- ability of admitting into the CGIAR all or some tee had been asked to review whether the ten of the international research centers that were "nonassociated centers" should be included then outside the CGIAR system. Donors sub- within the system, the committee felt that it 102 World Bank Activities, IFC, MIGA, and ICSID

could not approach the task as a simple matter of the work of the system, and it recognized of recommending the inclusion or exclusion of the global contribution that has been made by new institutions. The committee saw the po- the Asian Vegetable Research and Develop- tential expansion of the CGIAR as the starting ment Center, based in Taiwan. At the same point for systemic restructuring. time, however, the group appreciated the need The report consequently contained propos- for political developments to mature before als for integrating agroforestry and forestry any final decision could be made. into the CGIAR system, for a major expansion Award for biological control. The Nigeria- of the system, for a substantial restructuring of based International Institute of Tropical Agri- the system in the medium term, and for the culture (IITA) and the Colombia-based Centro long-term evolution of the system. Internacional de Agricultura Tropical (CIAT) To reorient research carried out at the inter- have achieved much success in controlling, national centers, the CGIAR: through biological means, one damaging Afri- * strongly endorsed the concept of eco- can food pest and are making progress towards regional activity within the CGIAR system as a controlling another. means of merging productivity concerns with Success in controlling the cassava mealybug natural-resource management; has benefited more than 200 million Africans * called for a continuing examination of a for whom cassava is a staple food. The benefit- seriesofnatural-resourcemanagementthemes- cost ratio of the cassava-mealybug program such as the relationship between soil and water, has been calculated at 149 to 1-$149 worth of soil fertility, and plant protection-and of the food saved for every $1 invested in research institutional changes required to ensure that and development. those themes were encompassed in CGIAR- Swift action against, the mango mealybug, supported research; which, three years ago, threatened mango pro- * decided that a number of commodities of duction across much of West and Central Af- particular importance for poor people should rica, was patterned after the successful pro- be included in future research programs within gram against the cassava mealybug. the CGIAR framework; and The mango mealybug-control program in- * emphasized that the full benefits of inter- cluded identification of the rapidly spreading national agricultural research could not be at- pest as an accidental import from Southeast tained unless national agricultural-research Asia, the discovery in India of natural enemies systems were significantly strengthened. of the pest, and the release of two promising The immediate consequence of these deci- parasitic wasps following their quarantine, sions was that two nonassociated centers testing, and mass-rearing. Several affected joined the CGIAR system. The new centers are countries, where natural enemies of the mea- the Colombo, Sri Lanka-based International lybug were released in 1988, enjoyed a good Irrigation Management Institute and the Inter- mango crop in 1989, following an almost total national Network for the Improvement of Ba- loss of production during the previous two nana and Plantain, headquartered in Montpel- years. lier, France. For their work on biological-control pro- To ensure that agroforestry and forestry grams, IITA and CIAT were awarded the research is firmly established within the CGIAR King Baudouin Award in 1990. CGIAR, the International Council for Re- The CGIAR King Baudouin Award is given search in Agroforestry (ICRAF) in Nairobi, every two years to a CGIAR-supported agri- Kenya, was admitted into the system with cultural-research center for a particular tech- responsibility for agroforestry. A new institu- nology or discovery that has improved the tion, to be established shortly, will undertake lives of farmers in developing countries. forestry research. In 1980, the CGIAR itself won the King A working group, consisting of representa- Baudouin Prize for International Develop- tives from Australia, Brazil, the International ment, established in commemoration of the Development Research Centre, the Rocke- first twenty-five years of the Belgian mon- feller Foundation, and Sweden, was formed to arch's reign. The original prize of $50,000 is develop proposals for the second institution. held in trust. The CGIAR King Baudouin The working group reported to the CGIAR Award is made from the earnings accrued. mid-term meeting in May 1991 on the spectrum Winners are selected by members of the of research to be undertaken by the new entity, CGIAR Technical Advisory Committee. options for location and staffing, and the rela- tionship between the new entity and ICRAF. Personnel and Administration The group also broadly agreed that vegeta- The Bank's administrative budget for fiscal bles research should be a constituent element 1991, as approved by the executive directors Personnel and Administration 103

Table 5-3. World Bank Budgel by Expense Calegor. and WVork Program, Fiscal Y-ears 1988-92 mllhon, -t I.S doll,rsi

IL.Mn I-, l"'. p.,l!!-1rrgrini

Ev1penlh. atrcgon SiaIft cS[s 44l.| 44.LOl 5.I n*js.4 71.3 Con.ulitants 5..4 . t . rI Contractcual ;er%ILt 15.4 >8 31) 333cu 4 OpL-rdional tr:' el and

rcprescniation 77''. . '). C1 1u3 C%erh -adad. contingcn c 113.') 11' . 1' 138.2 148.u Direct contrr,hutoni Io Sp,Ccial Grants Proeram II 52.h 52.5 .i) Reorganization implLimcnlauion '1.7 .. ReimbrurSLnitnlts 21'.1 I 31.6I 14 1.II 14a I7. SI 3 1013141 75...i 77.9 I. -h ?. I.lJ IIHk progiaam Opcraiinal '7 . 2,-. R .4 352.4 '34.2 Fuinacial 31.4 3U' 35.5 3s.7 4-13 Polic . r.scjrch. and em, rraI 7 affairs nr.\ 2 S.n 01.3 Operaiion' evaluation 5.2 h , 5 -.I - Administrainc ;upplrt 51.4 ,3.z 5n.' hl.';. Nh Boards. ct'rpnratc mnanagement. and leca31 sr'1csh 35.5r li.3l 45.5 T,--tal regular prgTaTms 4-I.r. 4,'1.C 548.! 50.4 r.3.n ReimbarNehle programs 12.1 15.') kit) 20.0 2c, Special proLr3ams" 5i r nn.' t7.3 73.11 Oxerhead beri;ti 232.3 246.5 2'4t. SIS 3. 1 Prcsidcr.Ls cntLngi-nc ...... 111.2 Reimrburscmrntsv 21'.l 131.n, 41.3, .R 1.3 uS, oi.al 7t.01 I t,lit ' . ,>. I.

A161inorand,i.llllm l Total in millions. of liscal lVY2 0 dolldr u 79. 1 '1.2. 1.341.41i6tir NoL appl.cable. N. * Der.,is rn.. rut -dd I.mi.l. bet..u;- ol rcrunring. a. Escludcs budrel upplerricrit 015144.5 m.io.1n approved b%trhi- board in Nr .X3I. lI., u' tund the Retired SItI Bcin-frt PMn. 1t.IncluIde investment ,pcrrliton;. c Ailocatirni,Irorm the presidents Lonungerjc; hae betn inLlud&d under the "reec'. tork pru,grirn..r I: )l11 I% d. i'15 U rra!lior. for th. IBRRD md $3r..iI rnrl,iun I'r IDA

late in fiscal 1990, totaled $969.1 million, in- The substantive priorities of the fiscal 1992 cluding a supplement of $7.0 million for the budget are to make poverty reduction the May 1991 compensation adjustment. centerpiece of Bank work (continuing the em- Late in fiscal 1991, the executive directors phasis on human-resource development, the approved a budget for fiscal 1992 of $1,069 environment, and private-sector development, million (see Table 5-3), a rise of 2 percent in as well as promoting more efficient use of real terms over the fiscal 1991 administrative resources at the country level); meet the needs budget. Staff salary increases, together with of new member countries and of emerging related increments in benefits, accounted for programs in currently inactive countries; and most of the rise in the administrative budget. improve implementation of development pro- 104 World Bank Activities, IFC, MIGA, and ICSID

grams and projects through more supportive of the overall package of benefits necessary to supervision and through advisory services of attract and retain the highest caliber of staff. high quality. Work progressed on the review of other At the end of fiscal 1991, World Bank regular benefits applicable to staff who are not U.S. and fixed-term staff on board numbered 5,900, citizens, the tax allowance to U.S. staff, and of which 3,776 were higher-level staff of about the introduction of a flexible benefits system. 125 nationalities. This was an increase of 2.4 In fiscal 1990, the executive board approved a percent over the previous year's total. Of the temporary special-assistance program to pro- higher-level staff, 58 percent were from the tect non-U.S. staff and their spouses from industrialized Part I countries, while the re- major changes in the U.S. estate-tax provi- maining 42 percent were from the developing sions. Because efforts to get U.S. authorities Part II countries; women formed 27 percent of to change these adverse provisions have not the total. Efforts continued to diversify the yet been effective, the executive board ap- composition of staff by nationality and gender, proved a one-year extension of the program consistent with securing the highest standards and, to some extent, widened its coverage. The of technical competence and efficiency. How- annual staff-compensation survey was com- ever, compared with fiscal 1990, there were pleted according to the general principles of only modest improvements in the overall dis- the revised compensation system adopted by tribution, by nationality and gender, of staff. the executive board, and appropriate salary Of the 197 higher-level staff who joined the adjustments for 1991 were approved. Bank during the year, 59 percent were from The project to rehabilitate the Bank's main Part I countries. Some 26 percent of the newly complex of buildings began on schedule. This hired higher-level staff were women. Twenty- project, to be undertaken in three phases over six of the new recruits were selected through a period of seven years at a cost of $211 the Young Professionals Program. Fourteen million, will almost entirely replace the Bank's were from Part II countries; eleven were original buildings, which were obsolete and women. inefficient and which posed potential health Programs to maintain and improve the cali- hazards. The project will permit the accommo- ber of management and professional and tech- dation of a larger number of staff on Bank- nical standards of staff were continued. In this owned property and, thus, will achieve consid- regard, redesigned and strengthened training erable savings in leased-space and building- programs have been implemented. Results operating costs. The first phase of the work, from the fourth Bankwide Attitude Survey, consisting of the selection of the building's conducted at the end of fiscal 1990, were design on the basis of international competi- analyzed, and necessary follow-up actions to tion, the demolition of two buildings, and the address areas of concern have been initiated. beginning of foundation and structural works, The survey revealed a high degree of satis- has been completed according to schedule and faction with work and personal accomplish- within the approved budget. ment, with the immediate managers of staff, A major management event was the decision and with physical resources in the workplace by the Bank's seventh president, Barber B. (office technology, for example). However, Conable, not to seek another term of office and considerable dissatisfaction was expressed the election of Lewis T. Preston as president to with career development, communications succeed him. To allow for an orderly transi- from senior management, and, to a lesser ex- tion, Mr. Conable will continue in office tent, with the decentralization of personnel through August 1991. teams. A joint working group with representa- tives of the Staff Association has been estab- Internal Auditing lished to address career-development issues. The Internal Auditing Department (IAD) Following the recommendations of the Support acts as an independent appraiser that reviews Staff Action Steering Group, a number of and evaluates Bank operations and activities. changes in personnel policies were approved to It is headed by an auditor-general who reports organize and manage office work better and functionally to the president of the Bank and improve the career prospects for, and job administratively to the vice president, corpo- satisfaction of, support staff. rate planning and budgeting. Following the quadrennial staff-benefits sur- To achieve its overall objective of assisting vey completed earlier, the structure of benefits management throughout the Bank in the effec- policies, including the medical-insurance plan, tive discharge of its responsibilities, the IAD was reviewed, and certain improvements have has continued to revise its work program in been implemented to rationalize these policies consultation with members of the President's and maintain the international competitiveness Council. This helps to ensure that the most International Finance Corporation 105 critical activities and operations receive prior- nical assistance and advisory services to busi- ity coverage and that audit reviews address nesses and governments. issues that are of the most relevance to con- Fiscal year 1991 was one of continued cerned management. growth for the IFC. The corporation approved In response to requests from Bank manage- financing (loans, guarantees, and equity and ment, the IAD focused more attention in fiscal quasi-equity investments) for its own account 1991 on the procedures relating to the decen- of $1.5 billion for 152 projects, with total costs tralization of accounting. In addition to partic- of $10.7 billion. In addition, the IFC approved ipating in discussions that have been held to a record $1.3 billion in syndicated loans. It also enhance communication between the con- underwrote debt and securities issues totaling cerned departments and to improve the plan- $33 million for four companies. The corpora- ning process, the IAD undertook audits of tion executed three currency-swap intermedi- computerized systems and administrative pro- ations for clients in developing countries that cedures that are being transferred. This work normally do not have access to such services. was closely coordinated with the reviews being Disbursements reached $1.2 billion. undertaken by the Bank's external auditors in The IFC's financial position was also order to avoid a duplication of effort and to strengthened during fiscal 1991. Net income, at maximize the audit coverage of this important $166 million, was the second highest in its process. history. The IFC borrowed a total of $598 The Bank has a wide range of services million in the international markets during the provided to it by external contractors and year. Its largest borrowing in fiscal 1991, and consultants. To ensure that these services are its third large public issue in the Euromarkets, provided and obtained in a cost-effective and was a $300 million Eurobond issue. Since it efficient manner, the IAD performed a number first received triple-A ratings (or its equivalent) of audits of this aspect of Bank activities in the for its debt securities in fiscal 1989, the IFC has past year. established itself as a highly regarded suprana- These included reviews of payments made to tional in the public Eurobond markets. Other one company for compensation-comparator in- market borrowings during the year included formation, and to another for food services, as issues in yen, Spanish pesetas, and Portuguese well as of payments made to contractors in- escudos. volved in the rehabilitation of the Bank's main The number of member countries increased complex of buildings. Where it has been con- by six to 141 during the year. New members of sidered necessary and appropriate, these re- the corporation are Algeria, the Central Afri- views included audits of the contractor's finan- can Republic, Czechoslovakia, Mongolia, cial records and procedures. Namibia, and Romania. In response to growing The Bank has made, and continues to make, demand for its financial and advisory services significant progress in applying information in all regions, the IFC opened up new Regional technology to meet its global objectives, trans- Missions in Cameroon and Zimbabwe and Res- forming its environment from one that was ident Missions in Brazil, Czechoslovakia, and almost exclusively mainframe-based to one Hungary. The IFC also created a new posi- that involves a worldwide network of intercon- tion-a capital-markets regional representative nected computers. Reflecting this increased in Eastern and Central Europe-that is based reliance on information technology, the IAD in Prague. conducted a series of technical audits address- Project finance approved for the IFC's own ing management and control issues pertaining account increased in all regions except Latin to the three principal computing elements America and the Caribbean, with the biggest within the Bank. The IAD also performed a increase registered in Asia. Projects spanned a number of audits addressing efficiency, effec- number of industries and sectors, including tiveness, and control of critical applications tourism, banking, mining, printing and publish- that are about to be implemented or are cur- ing, pulp and paper, petrochemicals, power, oil rently being developed. and gas exploration, telecommunications, and agroindustries. International Finance Corporation In recent years, the IFC's capital-markets The International Finance Corporation program has expanded rapidly. In fiscal 1991, (IFC), a member of the World Bank Group, the IFC helped establish thirty financial insti- promotes private enterprise in its developing tutions, many of which provide products or member countries. It does this by financing services that are new to the host countries. For sound private-sector projects, mobilizing debt example, the IFC helped establish Hungary's and equity financing in the international mar- first investment bank and one of its first private kets for private companies, and providing tech- insurance companies. It also helped finance a 106 World Bank Activities, IFC, MIGA, and ICSID

joint-venture commercial bank in Poland and tors of the corporation agreed to submit a the first private housing-finance institutions in proposal to the board of governors calling for a Botswana and Pakistan. $1 billion capital increase-from $1.3 billion to In fiscal 1991, the mobilization rate-the $2.3 billion. The governors are expected to ratio of the amount of financing provided by adopt the increase in the coming months. The other lenders and investors to financing ap- increase would provide the IFC with the ca- proved for the IFC's own account-increased pacity to meet a reasonable level of the sub- to 5.9:1.0, compared with 5.2:1.0 in the year stantial demand for finance and advisory ser- before. In recent years, the IFC has increased vices in Latin America and Asia; establish and its resource-mobilization activities, in many maintain a strong presence in Eastern and instances raising substantial amounts of debt Central Europe that would enable the corpora- and equity financing for companies with rela- tion to make a significant contribution to these tively small outlays of its own funds. countries' transition to market economies; In addition to raising funds through cofi- substantially expand the IFC's role in the nancing, loan syndications, and underwritings, Middle East; and make an enhanced effort in the IFC also mobilizes funds by sponsoring, sub-Saharan Africa. underwriting, or investing in country and debt- Full details of the IFC's fiscal year can be conversion funds. In fiscal 1991, the corpora- found in its annual report, which is published tion was involved in three new investment separately. funds-one debt-conversion fund (in Egypt); a fund that will invest in convertible-debt and Multilateral Investment Guarantee equity securities in Mexico; and a fund that Agency will invest in equities in developing Common- The mandate of the Multilateral Investment wealth countries. The IFC also approved in- Guarantee Agency (MIGA) is to encourage the vestments in five venture-capital companies. flow of foreign direct investment (FDI) for As many countries around the world move productive purposes to and among developing toward economic liberalization and encourage member countries. private-sector activity, demand for the IFC's Established in 1988, MIGA offers invest- advice and technical assistance is increasing. ment insurance to mitigate political risk In fiscal 1991, the IFC established its Polish through its guarantee program and provides Business Advisory Service, which is based in promotional and advisory services to assist Warsaw and which will provide advice to local member countries in their efforts to attract or entrepreneurs. The South Pacific Project Fa- retain FDI. cility (SPPF), which was approved in fiscal During fiscal 1991, MIGA's executive board, 1990, opened an office in Sydney, Australia, which is separate from the boards of the Inter- during the year. The SPPF, which is modeled national Finance Corporation and the Bank, on the IFC's successful project-development reviewed and approved modifications to the facilities for Africa and for the Caribbean and agency's operational regulations, reviewed and on the Business Advisory Service for the Carib- approved the agency's work program and bud- bean and Central America, will advise entrepre- get, and concurred with the president's deci- neurs in the South Pacific island countries. sions on twenty-four insurance projects con- Within the corporation's Engineering Depart- veyed to it. ment, the IFC established a Technical Advisory The board carefully examined the proposed Service to provide fee-based advice to compa- insurance contracts to ensure that MIGA's nies and governments on a variety of subjects, operations support the environmental and de- including technical restructuring, market and velopmental objectives of the World Bank feasibility studies, and strategic planning. Group. The Corporate Finance Service Department, Guarantee program. MIGA's guarantee which specializes in restructurings and privati- program protects investors against losses aris- zations, provided advice to the governments of ing from the noncommercial risks of currency Morocco, Poland, and Portugal on privatiza- transfer, expropriation, war and civil distur- tion and advised firms in Brazil, Czechoslova- bance, and investment-related breach of con- kia, Greece, the Philippines, and Yugoslavia tract by host governments. In addition to new on restructuring and privatization. The Foreign projects, MIGA can insure the expansion of Investment Advisory Service, a joint operation existing ones, including privatizations and fi- of the IFC and the Multilateral Investment nancial restructurings. Projects must be regis- Guarantee Agency, advised the governments tered with MIGA before the investments are of twenty-six countries on foreign direct in- made or are irrevocably committed. No mini- vestment. mum investment is required to be eligible for Late in the fiscal year, the executive direc- MIGA insurance. Multilateral Investment Guarantee Agency 107

Eligible investments include equity, loans specific commercial opportunities in Hungary made or guaranteed by equity holders, and and Jamaica, PAS organized two successful certain forms of nonequity direct investment. investment-promotion conferences cospon- MIGA may insure a loan made by a financial sored with the governments of the two coun- institution if the agency is also insuring a tries. Foreign investors met with domestic shareholder's investment in the project. The entrepreneurs, discussed issues with senior standard policy of MIGA covers investments government officials, and made visits to local for fifteen years, although, in exceptional enterprises. These conferences resulted in the cases, coverage may be extended to twenty finalization of several joint ventures. Some of years. MIGA also cooperates with national the deals have also involved businesses from investment-insurance agencies and private in- other developing countries, thus achieving an surers to coinsure or reinsure eligible invest- important MIGA objective: to facilitate invest- ments. In the past year, MIGA reinsured ment flows not only from developed to devel- projects with two national agencies, the Export oping countries but also among developing Development Corporation of Canada and the countries. Overseas Private Investment Corporation of PAS's main research activity in fiscal 1991 the United States. resulted in the report "Review of the Policies In fiscal 1991, MIGA more than doubled its of Some Industrialized Countries Affecting the volume of insured projects over 1990 totals. Outflow of Private Investment to Developing MIGA issued eleven guarantees with a maxi- Countries." mum contingent liability of $58.9 million for ten In addition, twenty-one advisory projects projects, representing a total of $922 million in were carried out through the Foreign Invest- direct investment. These projects are expected ment Advisory Service (FIAS). Jointly oper- to generate an estimated 3,681 new jobs in host ated by MIGA and the IFC, FIAS provides countries by the fifth year of operation. The member governments with advice on policy insured investors are Chiyoda and Marubeni of and institutional issues affecting FDI flow. Japan for a large fertilizer facility in Bangladesh; Almost half of the active projects during the Millicom of Luxembourg and Motorola of the year were diagnostic studies. Activities with United States for separate cellular-phone opera- repeat clients included more in-depth work on tions in Chile; McDonald's of the United States specific investment policies and institutional for four joint-venture restaurants in Chile; Hold- development. FIAS provided advice on invest- ing Savana of France for three separate compa- ment-promotion strategies to the governments nies that will operate hotels in Madagascar; of Kenya, Lesotho, Madagascar, Morocco, the Bering Netherlands, a Dutch company, for a Philippines, Uruguay, and Venezuela. FIAS potato and grain-processing operation in Poland; also sponsored two United Nations Develop- Rio Algom Limited of Canada for a copper mine ment Programme-supported regional confer- in Chile; and SAS Service Partner of Denmark ences on investment-policy issues. The first, for an airline-catering and restaurant company in which focused on attracting more investment Turkey. to Central America and the Caribbean, assem- MIGA's efforts to broaden awareness of its bled thirty-five participants from twenty coun- programs and services met with considerable tries. The second examined the future of for- success. At the end of fiscal 1990, preliminary eign investment in Asian developing countries applications for guarantees that were regis- and was attended by twenty-five government tered and eligible for coverage totaled 116; at officials and prominent professionals from the the close of fiscal 1991, the total was 274. business and academic communities, repre- Notable was the rising interest in MIGA shown senting fifteen countries. by European and Japanese investors and the Member relations. In fiscal 1991, sixteen diversity of registered projects across industry additional countries signed the MIGA conven- sectors, including manufacturing, mining, agri- tion, increasing the number of signatories to business, energy, and services. The volume of 101. It is expected that countries that have these applications demonstrates the increasing signed but have not yet completed all the demand for MIGA guarantees. membership requirements will soon do so to Policy and advisory services. Policy and ad- become full members of MIGA. Latin Ameri- visory services (PAS) assists developing mem- can countries were the primary focus of the ber countries to create attractive investment membership drive, which was led by MIGA's environments in several major ways: promo- Legal Department; a majority of Latin Ameri- tion, research, and advisory assistance to gov- can countries have now signed the MIGA ernments. convention. MIGA membership is open to all To alert the international business commu- member countries of the World Bank and nity to the favorable investment climate and Switzerland. 108 World Bank Activities, IFC, MIGA, and ICSID

Details of MIGA's activities in fiscal 1991 golia, and Zimbabwe signed the convention, appear in its annual report, which is published bringing the number of signatory countries to separately. 106. In addition, Australia, Grenada, and Mon- golia ratified the convention, bringing to ninety- International Centre for Settlement of five the number of signatory countries that have Investment Disputes completed the process of joining ICSID. The Intemational Centre for Settlement of There are currently four disputes pending Investment Disputes (ICSID) is a separate before the centre. These include one proceed- international organization established under ing for the annulment of an award and three the Convention on the Settlement of Invest- arbitration cases. During the fiscal year, the ment Disputes between States and Nationals of disputes in two other cases submitted to the Other States (the convention), which was centre were amicably settled. opened for signature in 1965 and entered into ICSID's foreign-investment law publications force on October 14, 1966. include a semiannual law journal, ICSID Re- ICSID seeks to encourage greater flows of view-Foreign Investment Law Joumal, and international investment by providing facilities multivolume collections of Investment Laws of for the conciliation and arbitration of disputes the World and Investment Treaties. Two issues between governments and foreign investors. of the law journal and three releases of the To further its investment-promotion objec- investment laws and treaties collections were tives, ICSID also carries out a range of re- published in fiscal 1991. search and publications activities in the field of Details of ICSID's activities in fiscal 1991 foreign-investment law. appear in its annual report, which is published In the course of the fiscal year, Argentina, separately. Bolivia, Chile, Czechoslovakia, Grenada, Mon- 109 Section Six 1991 Regional Perspectives

Africa

The overall economic situation in sub-Sa- 1989's growth rate of 3.0 percent. External haran Africa (SSA) remains difficult. For many factors such as an increase in oil prices and countries, the external environment continues unfavorable weather for agriculture contrib- to be hostile, as reflected by the adverse ef- uted to the poor growth performance of the fects of debt overhang, capricious weather, region in 1990, a year during which growth sluggish growth in export demand, and steady rates of other developing regions (Asia ex- declines in terms of trade. A few countries are cepted) also slowed. even suffering internal strife and famine condi- Variations in GDP growth during the past tions. year, however, clearly show that adjustment The overall rate of growth of gross domestic measures and donor support are making a product (GDP) in the region was only 1.1 difference. Low-income SSA economies that percent in 1990-significantly lower than are pursuing structural adjustment under the

Table 6-1. Africa: 1989 Population and Per Capita GNP or Countries Thai Borrow-ed during Fiscal \'ears 1989-91 Per p.,,.P Ir., P.';u j c.n- i-N Ppu'.on11 t-pN C.untrt I h,u^.,nds4 I ISt dIli .. Ir C(Lunir i;houoa ndsI I US d..AIi..I

Angnola Th; hilI I I so; h,. I . ill 4"T Benin 4.r.1'Ii 1MI \t.da.iscar 11.311il.1 ",II Boisw-ana 1.21';) I ri l i" I .'.2I! Isil Burkina Fa;o, '2;;1S;; NUId KY;; ') Burundi 5.3;;O 22n \IaurLtnij 1Fit I ;I;II Cameroon 11JNil; 1lhIll taur;i;u1 I.JU;;

Caipe Verde -'I1 NI,1ru;nlh;quc 15.11.;;.; Nil Central Afric.in RLpublic .UI. 3';;I.N NNe r ',4i;; 2'';. Chad -' .>'. 1911 Niee;a 113..s.; 251' Comoro; 4iS -I"r.I R%iiind; 3211 Conto 2 .fl '4i; Sao TOnic nd 'r;nc ipe 12'l 3.4; Cole Ut'\'lic 11.SC.;. S-caI1';i Mi;5lI2;W; Djibou;i 411 Somalin,.lihi' 'U EqustUrial Guinm 41 ' 33ilw; uLmdl, 24.;'.; Ethiopia 4'i,Si II 12n, T.nz;ani.i U..S;;i; I

(Nation I. lull 2.'ieni; *1oL o 335;03-; C;ambia. The 24n U4'.tbandj 2i;_n-.li;I Ghana 14;41;111 N;I Z ;rc 34.i;.. 2 I-' Guin,a N. i I 4311 Z,7mh,.t Ni,n,1 ll Guinca-BSSJaU 'i i Zlmhah; 'mk.1*i5; ;I;l Kcn%a 23. A;11) 3l I

N,;;u. rue "9 ' c';i;.,cIf:; ;lNP N p.cr capna f l;ct'i... attic .mre li 1, t :.rid rk cci-pitn h; ide r i.-el .1 .,i.i tr'k ILp;;i.'u R .* a. EimaJI;C IT.-m mid 199.@

.h, rid BaiJ6. di : fit. Lh.jde.o+L r -'1 b ct ,r;..j t. CNP per cip;;., ctirl,tad I.:, inIIthtl : SS-$2 .4 r,n d GNP per crap;., ei;rminaeJ To K heir.. E4LOun;le retkr I.. -mwil,nd 1aren,;i oni 110 1991 Regional Perspectives

special program of assistance (SPA) achieved a 1980s, especially during the period 1988-90. growth rate of 3.8 percent in 1990. In contrast, Growth of output, of between 3.6 percent and economic output in those countries not imple- 5.3 percent annually, was significantly higher menting reforms or in countries that reversed than in other SPA countries. For example, a policies-countries that are outside the frame- group of recently adjusting countries or aver- work of the SPA-declined by 2.4 percent in age performers among SPA countries (Benin, 1990. Among the non-SPA countries, Sudan, Mali, Mauritania, and Niger) had output Ethiopia, Somalia, and Zaire did particularly growth of 1.2 percent during 1987-89 and 1.4 poorly owing to a combination of internal strife percent in 1990. and poor policies. The combined output of this The SPA program has helped those low- group of countries declined by 3.6 percent in income, debt-distressed sub-Saharan African 1990. countries that have pursued reforms vigor- Although performance varies among SPA- ously and consistently. Reforms have helped eligible countries, the overall growth of adjust- the exports of these countries to grow strongly ing countries confirms that strong policy re- (at about 6 percent a year during 1988-90), and forms, coupled with adequate donor support, this, along with increased foreign assistance, can lead to better economic performance and has allowed imports and investments to grow also help ease some of the social problems (at about 4 percent and 8 percent a year, caused by earlier economic and financial cri- respectively, during 1988-90). ses. Within the SPA group, countries in which While results from SPA-eligible reforming economic management is considered well countries are especially impressive, the overall above average-Ghana, Madagascar, Malawi, progress in expanding the Bank's policy dia- and Togo-show the greatest improvement. logue with countries is no less striking. Out of The average annual GDP growth of these coun- a total of forty-seven countries in sub-Saharan tries, where programs of structural adjustment Africa, thirty are implementing programs of have been sustained over several years, economic adjustment. There is a growing con- steadily accelerated during the last half of the sensus on what the main elements of structural

Table 6-2. Lending to Borro%vers in Africa. bh Sector, Fiscal lears 1982-91 mnl,on1o.1 IS Jul.r

S-; "r I1' '-9', Ml9 19,4i [9iY) I w.(l 1991 Agri.ullure and Rural Declropnien[ 4-0.6 i19 I Sf2.3 54.8 497 4 5tN49 De%elopmenl Fmnanc Companel 1N4 9 18.1.n '1'.5 31 I.e, 12' h 138 8 EduCj1ton YS 3 ll14.9 178.2 sx.2 35i.7 2t.9 Energ! 0il. e.ts. .,nd coal h9 3 3.1.1 - 31.2 - ,11 t p.cmer 1589 O9.3 .88.0 184.1 23(:01 1t55.0 Inducur% -.h hI(.' - 5 4 1l0 I - Nonpr.Iiect 293 I 232.11 525.0 U.I9 1) 271 6 832 6 Populiiion. Health. .,ni Nuntirpon 44 1 31 s 121.4 I 3 232.7 432 8 PuhIpC--CeCI0 Nljndpemen[ 3 - (I 165.01 - 45.6 i. Small-;jIe Enteprri,e 'I 4 1h II - '1! u 1311tl Technimcl .Awi1-tjnce 59.' iu 7 '4. 144 6 56 0 70.9 Tciecornmun L,Oion (1 2 2- - lt)3 I 22 1 12 A Tran,pornatnon 36 - 61 R 6 248 7 543 6 Wig.5; LUrban Dc%elopment 81.S 1311' 146. i 414 oI 3h0.4 08.3 Wuater Suppl. .1nd Se%^.crdge )92I18 4;.0 13.23 "7.2 26.0 TojI 1.9'1 ' .C59' - 2.98.'R 3.924 3.012.9 3.3W4. 2

r uhi,ch: [BRD) I1 L .65. 725 I i.SNI.6 1. 471)Ii 662.9 ID.- l.t106. 12 31.9 2.2.13.h 264.1 2.75.9 2.731 .3 Number of operj3ionCf -9 'iR1 I 86 77

- ze ,. Africa 111

- _ Z! '- - I -A- t

~~~~: Am~~~~~~~~~~-

Irrigating fields in Cape Verde-a necessity in a country whose development is hindered by a poor natural-resourcebase and by long cycles of drought.

adjustment should be-a remarkable change Manufacturing is estimated to have recovered from five years ago, when most governments somewhat from stagnation in 1989 and is grow- resisted structural reforms because of fear of ing at around 2 percent. The overall commit- the political consequences and some doubts ment of the current government to reforms about their justification. The policy dialogue in remains strong. However, weak implementa- recent years has also deepened: In fiscal 1991, tion capacity and pressures from interest most of the Bank's adjustment lending, for groups have caused occasional lapses. For the example, was for sector-adjustment opera- next few years, the challenge facing Nigeria's tions. government is to sustain the reform process The Bank's overall lending program for sub- while adhering to sound fiscal and monetary Saharan Africa has been increasing steadily in policies during the period of transition to civil- recent years, from an average $1.9 billion over ian rule. the period fiscal 1981-85, to nearly $3 billion a The GDP of Gabon grew at a rate of 3.1 year over the period fiscal 1986-90. Total com- percent during the period 1987-90, reflecting mitments reached $3.9 billion in fiscal 1990 and mostly the expansion of the oil sector. By $3.4 billion in fiscal 1991; about 80 percent of contrast, Cameroon's economic crisis contin- this amount was for concessional assistance ued to worsen in 1990-a process that started from IDA. in 1985-86. In real terms, GDP per capita has fallen by 25 percent since 1985-86. The decline Subregional Perspectives was triggered by decreasing oil production West Africa. The oil-exporting countries of and, more important, by falling oil prices dur- West Africa grew by 3.3 percent in 1990, ing the mid 1980s, which was followed by a somewhat slower than in 1989 (3.7 percent). In drop in agricultural-export prices. The govern- Nigeria, the overall GDP growth rate increased ment is implementing an initial structural- from 4.9 percent in 1989 to 5.0 percent, led by adjustment program that is being supported by an expansion of oil production during the Gulf a Bank structural-adjustment loan and an eco- crisis. Nonoil GDP rose by 4.5 percent, result- nomic-management project designed to facili- ing largely from growth in agriculture of tate the implementation of the adjustment pro- around 4 percent and a pickup in services. gram and to build institutional capacity. The 112 1991 Regional Perspectives economic situation in the Congo, the other slowed to about 4 percent, partly reflecting oil-exporting country, remains depressed, as stagnant agricultural output caused by bad the country continues to suffer from large weather and the adverse effect of higher oil financial gaps and a considerable debt over- prices. The commitment of the government hang. Even after the substantial gain realized and the donor community to the country's from higher oil prices during the Gulf crisis, the structural-adjustment program, however, re- 1991 budgetary financing gap remains large, mains strong. Increased financing from con- the result of a substantial increase in the civil- cessional sources helped to reduce Ghana's service wage bill granted in the last quarter of debt-service ratio from 60 percent in 1989 to 36 1990. percent in 1990. The foreign-exchange markets During the past eighteen months, the Sahe- were unified in April 1990; twenty-three state lian countries continued efforts to implement enterprises were either divested or liquidated; economic reforms and to establish a basis for the banking system was restructured; and the higher GDP growth. Six of the eight countries- government took steps to improve the business Burkina Faso, The Gambia, Mali, Mauritania, environment by reducing taxes on corporate Niger, and Senegal-are actively implementing income, capital gains, and dividends. Togo is Bank-supported adjustment programs. In an- another country with a successful adjustment other country, Chad, the reform program has program. Despite adverse weather, gains in slowed because of recent political turmoil and output were about 2 percent during the year, a change of government. Despite adverse ex- down from between 3 percent and 4 percent ternal developments such as the oil-price in- during 1989. During the fiscal year, the Bank crease, economic developments over the past approved a fourth structural-adjustment credit eighteen months have been positive in these that seeks to build up institutional capacity and countries. Overall, GDP growth of 2.7 percent mitigate the social costs of adjustment. in 1990 was significantly higher than in the Guinea is yet another country in the subre- previous year (about 1 percent). Nonetheless, gion that has attained encouraging, if not dra- per capita income growth remains negative. matic, results from its economic-reform pro- Growth rates in 1990 varied considerably gram: In 1990, its GDP grew by 4.7 percent. To among countries-ranging from 4.5 percent in sustain this growth, the Bank is working with The Gambia to only 0.3 percent in Mali and the government to design measures that will Mauritania. increase the domestic savings rate, promote Agricultural output in the countries of the private investment, and improve financial in- Sahel increased by only 1 percent, as rainfall termediation. Benin, which experienced a distribution was poor in a number of countries, GDP decline in 1989, showed a positive growth particularly Burkina Faso and Niger. Aggre- rate of over I percent in 1990. The outlook for gate export volumes increased by over 9 per- the future looks promising because the new cent, rebounding strongly from a decline in government has launched reforms that, if im- 1989. As a result of this strong export perfor- plemented resolutely, could ultimately raise mance, and despite a small deterioration in the revenue and restore conditions for growth. terms of trade, the aggregate current-account C6te d'Ivoire's continued macroeconomic deficit of the eight countries declined slightly, and financial crises-whose root causes lie in a from 13.4 percent of GDP in 1989 to 12.1 large structural deficit, a lack of competitive- percent in 1990. Developments over the past ness in the productive sectors, and adverse year continue to underline the inherent fragility movements of terms of trade-led the govern- of the Sahelian economies and their great sen- ment to prepare a new adjustment program for sitivity to, and dependence on, external fac- support by the Bank and the International tors. In fiscal 1991, the Bank focused its atten- Monetary Fund (IMF), to enable it to move tion on addressing long-term growth issues, towards public-finance equilibrium and reduce particularly human-resource development, domestic-payment arrears. During the past poverty alleviation, natural-resource manage- year, the government had difficulties in imple- ment, and the enabling environment for pri- menting its stabilization program, but under- vate-sector development. Debt issues also con- took structural-reform programs in the agricul- tinued to receive particular attention, and debt- ture, energy, and water-supply sectors. In reduction packages, the first to make use of the addition, key reforms in the financial sector, in Debt Reduction Facility for IDA-only Coun- privatization and the restructuring of public tries, were approved and successfully imple- enterprises, in the regulatory and tax systems, mented in Niger and Mozambique.' and in human-resource development are under Economic performance in the rest of West Africa was mixed. In Ghana, the momentum of growth of recent years of 6 percent a year For details, see page 67. Africa 113

way. Important administrative reforms have fiscal and balance-of-payments imbalances. Its also taken place. growth rate has been over 4.5 percent during Over the past eighteen months, the govern- 1980-89, and its recent slowdown in growth ment of Sierra Leone, in consultation with the (3.3 percent in 1990) is attributable to deterio- IMF and the World Bank, has implemented rating terms of trade and drought-related stag- substantial reforms in its fiscal, monetary, nation in agricultural production. trade, and exchange-rate policies, as well as Elsewhere in the subregion, the picture was structural changes in the mining and agricul- discouraging: The economies of Sudan, Ethio- tural sectors. It has also resumed debt-service pia, and Somalia continued to hemorrhage as a payments to both the IMF and the World Bank result of internal strife and insecurity. It is and cleared its payment arrears to the African estimated that GDP fell by 5.8 percent in 1990 Development Bank. The IMF is negotiating a in Sudan, while in Ethiopia, output dropped by rights-accumulation program, an agreement on about 2.5 percent. In Somalia, the economic which will open the way for the Bank to situation continued to deteriorate. The civil resume lending to Sierra Leone after its arrears war has had devastating effects on the econ- to the Bank are settled. omy, and rehabilitation will be slow and diffi- Eastern and Central Africa. Although the cult. overall growth rate of this subregion was close The central African states of Rwanda and to zero in 1990, some countries did quite well. Zaire also experienced negative growth in Uganda has remained a strong, consistent re- 1990. In Rwanda, the recent civil hostilities former since 1987, and its growth performance resulted in extensive damage to the infrastruc- continues to be impressive. Overall, GDP ture and increased defense expenditures. Fur- growth has been between 6 percent and 7 thermore, the price of coffee (which accounts percent, reflecting a marked recovery in both for around 90 percent of Rwanda's exports) hit agricultural production and manufacturing out- an all-time low in 1990. All these factors con- put. In 1990, however, growth fell below 5 tributed to a further deterioration of the finan- percent, and the terms of trade worsened, the cial and economic situation, and GDP declined result of drought, rising oil prices, and falling by nearly 3 percent. The government recently coffee exports. The government continued to launched a reform program that included an pursue significant fiscal and monetary reforms initial devaluation of the Rwanda franc by 40 to ensure a continued strong performance of percent. The overall goal of the reform pro- the economy. In mid 1990, the parallel market gram-for which the government has received for foreign exchange was legalized-a policy help from the Bank and the IMF-is to rely step that will help export growth. In addition, more on market forces and the private sector fiscal adjustment is being pursued through sev- to attain sustainable economic growth. This eral expenditure measures-such as the elimi- new strategy represents a clear break from nation of "ghost" workers and the reduction of policies pursued in the 1980s. temporary workers-and through a reduction In 1990, Zaire's overall economic situation of unwarranted tax exemptions. deteriorated markedly. Stabilization and ad- The GDP growth rate of Kenya also fell justment efforts were discontinued, the infla- below 5 percent during 1990 as terms of trade tion rate soared to 35 percent a month during worsened, oil prices rose, and receipts from the last quarter of 1990, export earnings de- tourism dried up. The government continues to clined by 9 percent, and GDP fell by nearly 3 pursue a flexible exchange-rate policy and percent. tighter fiscal and monetary measures. Souithern Africa. Economic performance in Madagascar, which has a liberalization pro- the Southern Africa subregion remained strong gram to which the government is fully commit- in response to adjustment efforts in a number ted, grew by about 4 percent in 1990. In March of countries. Aggregate growth in this subre- 1990, the government prepared, in collabora- gion averaged 3.2 percent in 1990, down some- tion with the Bank and the IMF, a new three- what from 1989 (4 percent). The Malawi econ- year policy-framework paper that outlines new omy showed continued strength as the policies to promote private-sector develop- government's program of economic adjust- ment while preserving competitiveness and ment stayed on track. Gross domestic product further improving public-resource manage- grew at 4.8 percent, and inflation slowed con- ment. The government also took corrective siderably. The Malawi government continued steps in exchange-rate management, including to implement a number of economic reforms in a 13 percent devaluation of the Malagasy franc 1990, of which import liberalization was of in early 1991. Burundi, another country that particular significance. Lesotho had another has been pursuing, with success, a long-stand- year of impressive growth, repeating 1989's ing adjustment program, has stabilized both rise of almost 8 percent. Lesotho also took a 114 1991 Regional Perspectives pioneering step towards the long-term conser- women in development-were reported on in vation of its environment by integrating a na- the World Bank's Annual Report for fiscal tional environment-action plan with an ongoing 1990. adjustment program supported by the Bank The expansion and strengthening of these and the IMF. In Zimbabwe, GDP growth fell to programs, and others as well, were cited as 4 percent in 1990 (compared with an average of necessary to Africa's development in the 5.7 percent in the previous two years), and World Bank study Sub-SaharanAfrica: From inflation increased from 10 percent to 16 per- Crisis to Sustained Growth-A Long-Term cent. In response to these troublesome events, Perspective. Long-term development strate- the government initiated a comprehensive eco- gies, the study argued, should be people-cen- nomic-reform program designed to move the tered; human-resource development and meet- economy away from regulation and control ing basic needs were therefore declared as toward greater reliance on market forces. The "top priorities." economic-reform program combines trade lib- The study became a basic document of the eralization, tariff reform, fiscal adjustment, high-level conference held in Maastricht, the public-enterprise reform, a relaxation of do- Netherlands, in July 1990 under the auspices of mestic controls, and the loosening of labor- the Dutch government. Co-chaired by Quett market restrictions with appropriate exchange- Masire, President of Botswana, Jan P. Pronk, rate and monetary policies. the Netherlands' Minister for Development Tanzania and Mozambique continued their Cooperation, and Robert S. McNamara, for- resolute implementation of adjustment pro- mer head of the World Bank, the meeting was grams. The Tanzanians pursued reforms in key attended by virtually all the finance and plan- areas (such as trade liberalization) and sectors ning ministers in sub-Saharan Africa, as well as (agricultural, industrial, and financial). Gross the ministers in charge of aid to Africa from domestic product grew by more than 4 percent donor countries. in 1990, the fifth consecutive year of increased The study's conclusions were couched in per capita income. Inflation, which reached 30 general terms. It noted, "Each country must percent in 1989, declined to about 20 percent. develop the approach that suits its particular Although Mozambique continued to demon- circumstances." One recommendation ema- strate a firm commitment to implementing its nating from the Maastricht conference was that economic-reform program and to moving African countries should begin preparing na- towards a multiparty system, GDP growth was tional long-term perspective studies. only 3.1 percent because of several adverse Some progress toward that end was made external factors (in particular, high oil prices, during the past fiscal year. The United Nations adverse weather, and internal strife). In Zam- Development Programme (UNDP) has made bia, considerable progress was made in imple- funding available to support national efforts to menting the government's year-old economic- carry out country studies. Twenty-six coun- reform program, especially in decontrolling tries have confirmed their decision to under- domestic prices, lowering the budget deficit, take their national perspective studies, and liberalizing international trade, and moving to twelve others have already taken steps to a market-determined exchange rate. Although launch the exercise. In addition, to help design Zambia's GDP growth in 1990 was low (only 1 and carry out these studies, work is under way percent), with continued reforms and favorable at the subregional level; a three-year training weather conditions, the outlook for economic and research program is being prepared at two recovery seems brighter than at any point in national institutions, one in Benin and the the past decade. Good progress in regularizing other in Senegal; and two management teams its position with bilateral and multilateral do- of experts are being set up, one in Abidjan and nors was also made during the year: With the other in Harare. arrears to the Bank cleared in March 1991, an The long-term perspective study also clearly IDA credit, the first since 1987, was approved. identified closer regional integration as a key ingredient for stronger growth over the long Special Programs run. The Bank is now processing an operation A number of special programs complement to provide closer economic integration among and underpin the Bank's lending operations in countries that are members of the Central sub-Saharan Africa. The special program of African Customs and Economic Union assistance (SPA), discussed in detail on pages (Cameroon, Central African Republic, Chad, 44-47, is one such program. Others-in the the Congo, Equatorial Guinea, and Gabon). areas of population planning, environment, ag- The Bank is also working with the Economic ricultural development and food security, so- Community of West African States on a study cial dimensions of adjustment, education, and of barriers to trade and factor movements Africa 115

Table 6-3. Net rransfers to Africa irrll,ons oItUS iollairf. i-li .1 r N'Rerl.i buSd.,n (we Jd l.-re Tolijl rer.nn

llem 1wq~ ~~~~~11 -- 1' I.u-4 1t1w! 1 -41 149'1 1Sq."41 IBRD and ID.A commitmenli bl2I 1i.631 - ' -i4. 344 Ih.i%67 Gro,s disbur'emtnvl 20s 1.94, liii' 466 23 I.l.n'" 2.44 11.149 Repaa meni 245 929 12 '1 141 'Jh 9-4 1 '77 Net dibhursenenis -36 1.0i14 4166 SI 41> 1.. '4 *84 lniere,,i and charge. 'h65 1.114 N 4' 155 h91 9'" 1*411 Net tran4er - 3)1 -ItII.I 8li P4 - -2ILi 895 5.1 I

- Zer Norr Disbur,emen, froiti the IDA SpeIv, Fr,rnd 4nrJ e SreiicI I-P.dc-,la1. r S .ihr- it,*; ri, inirlded Th' :v,ni,le. ,hi. .n in Ih.' t.hle .re rtw-e %,,ihEhc I,re-i .n-'unt. ol prihIr *'r puh!I' i2d.Jr,nkted I, -e,r, debt DLil,I in a,ot dI 10 oaIO1,h11 JUwC 01 filOnding

among its member states (Benin, Burkina The ACBI focuses on the critical need to Faso, Cape Verde, CUte d'Ivoire, The Gambia, strengthen African skills and institutions for Ghana, Guinea, Guinea-Bissau, Liberia, Mali, economic policy analysis and macroeconomic Mauritania, Niger, Nigeria, Senegal, Sierra management. Cosponsored by the World Leone, and Togo). The countries of Southern Bank, the UNDP, and the African Develop- Africa have a strong sense of regional identity ment Bank (AfDB), the ACBI will draw-dur- and common purpose, which was manifested ing its four-year pilot phase-from a fund of in the creation in 1980 of the Southern Afri- about $100 million pledged by international can Development Coordination Conference agencies, donor nations, African governments, (SADCC), whose membership now includes and private sources (the World Bank's contri- ten countries,2 with a seat reserved for a post- bution to the fund will not exceed 15 percent of apartheid South Africa. The World Bank, the expected $100 million). through its investment operations in individual The ACBI will be implemented through an SADCC countries, has given major support to African Capacity Building Foundation, to be the SADCC's goals of greater regional cooper- based in Harare, Zimbabwe. The foundation ation and harmonization. The Bank has also will provide grants to strengthen public-policy provided long-standing technical assistance to analysis and development-management pro- the SADCC's secretariat in Gaborone, and-in grams in institutions of higher education and collaboration with the SADCC-has carried will seek to improve regional institutions pro- out several studies of regional significance. viding instruction in development issues so as Achieving closer economic integration is a to bolster the human and institutional capacity long-term endeavor. While it is vital to have a of African countries to plan and carry out their clear statement of objectives at the outset- development programs. Fellowships will be monetary integration, for example-the pro- made available to outstanding African civil cess itself will consist of many small steps by servants, business leaders, and academics, countries, such as standardizing trade proce- which would permit them not only to under- dures and simplifying financial transactions take additional training but also to pursue (including investment), as well as greater har- independent economic research and analytical monization of domestic economic policies and work. Given the emphasis now attached to the lowering of trade barriers. The process of private sector as an engine of growth, local adjustment currently ongoing in many coun- consulting firms and professional associations tries of the region offers useful opportunities will be strengthened: In addition to providing for such harmonization to take place. funds, the ACBI will work to raise awareness The long-term perspective study also em- of the potential of these firms and associations phasized the need to build up Africa's institu- and will help establish regional consulting net- tional capacity, and its recommendation be- came a reality when, in February 1991, the African capacity-building initiative (ACBI) 2 Angola, Botswana, Lesotho, Malawi, Mozambique, was launched. Namibia, Swaziland, Tanzania, Zambia, and Zimbabwe. 116 1991 Regional Perspectives works. An international executive board, con- ous areas of development and developing new sisting of public-policy and development-man- ideas; and (c) ensuring that global attention agement experts from Africa and elsewhere remains focused on this difficult development (along with representatives from the three challenge. sponsoring agencies) will guide the ACBI's Issues likely to receive attention from the program. coalition include ways to overcome the nexus It is hoped that, by building up local capacity of weak agricultural production, rapid popula- for economic analysis and management, Af- tion growth, and environmental degradation; rica's dependence on technical assistance from international and domestic-resource mobiliza- industrial nations can be reduced, thereby tion; the issues of accountability and transpar- helping the region to manage economic change ency in governing; human-resource develop- better. The goal of the ACBI is to foster the ment; capacity building; regional cooperation creation, within twenty years, of a critical and integration; and poverty reduction. mass of African professional policy analysts A number of industrialized countries and and managers, as well as institutions, to pro- international agencies have made specific pro- vide training and advice in policy analysis and posals to sponsor action in these key areas. development management. The global coalition has been incorporated The Bank's long-term perspective study also as a nonprofit corporation in Washington, called for a "global coalition" to facilitate the D.C., and is headed by an executive secretary dialogue between African governments and from Africa. It will be supported and guided by their foreign partners. The initiative was for- a high-level advisory committee consisting of mally agreed to at the Maastricht conference eight Africans of ministerial rank and a like and was later endorsed by the Organization of number of officials from among donor coun- African Unity (OAU) in July 1990. tries and representatives of international orga- Important objectives of the global coalition nizations, including the executive secretary of include (a) bringing together various political the Economic Commission for Africa, the sec- leaders and experts from Africa and the donor retary-general of the OAU, the president of the community, who will meet on a regular basis to AfDB, the head of the UNDP's African Bu- help build a consensus and better coordinate reau, and the World Bank's regional vice pres- international support for Africa's continued ident for Africa. development; (b) monitoring progress in vari- Asia 117

Asia The developing countries of Asia passed their growth momentum, which is based on through a particularly turbulent and disruptive prudent economic management, continuing period over the past twelve months as a result structural reforms, and sound long-term in- of volatile conditions in the global economy vestments. Their overall prospects are still and domestic developments of an economic comparatively bright. and political character. In particular, a sudden A second group of Asian countries with a rise in oil prices, loss of workers' remittances, more clouded outlook faces several problems, and other Gulf-related shocks in 1990 imposed some of which are recent and others long- serious strains on the external position of sev- standing: the rise of serious macro imbalances, eral Asian countries. Governments responded accentuated by the events in the Middle East; in a uniformly agile and timely way by passing an increasingly ominous interaction between through higher oil costs so as to contain the widespread poverty and population growth; accumulation of internal and external deficits. and accelerating environmental deterioration Despite these difficulties, the rapidly industri- that threatens to undermine the productive alizing middle-income economies sustained base of society. The challenges confronting this Asian subgroup are cause for a tempering of the near-term optimism typically bestowed on the region's developing countries. Table 6-4. Asia: 1989 Population and Per Rapidly Industrializing Economies Capita GNP or Countries Tha Borroed A large part of the success of Asia has been during Fiscal Y-ears 1989-91 - the result of the continued good performance

F'..pul n' Pt;uvy i4 of the rapidly industrializing open economies 19'unltr. rihoi;,'nink 1US d.11Irv, of Asia, which now comprise not only the Republic of Korea but also Thailand, Malay- Bangladesh 31 1 It I sia, and Indonesia. During the 1980s, these Chinj I ;aIl countries registered high growth rates of per Flju -411 l.hi-lI capita income, and the percentage of popula- India C un 4i ~~- . tion below the poverty line declined to less Ind,rnesia I N.c';l iI than 20 percent by 1989. In these countries, an Korea. Republic ot 4'.41k I 4.411 increasingly favorable environment has been L.io P!op'k- DenoIcrarnc created for private-sector development, with Retibl'c I governments playing an active role in building

NtaI;.ly; so 'Itl -ri t'll physical, social, legal, regulatory, and techni- NtaIda'.> All 4.?" cal infrastructure. At the beginning of the Papu:, a Is.4iXiHI NJUt!SI 1990s, these countries were well positioned to Papua Nxt iuff-Ca 3.tliii I '' PI handle shocks and maintain this growth perfor-

Sri lppnka In uitI -IIQ mance, while, at the same time, reducing pov- ThI.+lno-dThSriLnd 55.41-11.1I .4'"I 1.2-Iii1 .1' erty.Korea and Thailand are heavily dependent To.ing USu erll'Ji on foreign sources of petroleum, but, as a \Jnuaiu 1 -ii result of underlying strengths in reserves and %etrerm Sinmoa I nl; 1ll I exports, both countries weathered the sud- NIr. TrI, i'-- c-n,iIlalc- ,t IJ\F pcr :.pd prI.'r.-.1ct den rise in oil prices in late 1990 either by a,n-,%are. r tIn, Wri..LC./ L 1'.dpmIr'.ar,-t 1,r,L passing through the price hikes to consumers

,i iI,q,,j Li..sh.p,ncu &j,,.q iJQ! (Thailand) or by using an ample oil-price sta- h.;inia:t. mid -rna bilization fund to absorb the additional costs b Il.rl.lBa'ik .4:1,LrII.*A.I.... ;~- IttiIJSh3ta'r rJ'~ (Korea). 118 1991 Regional Perspectives

Korea's prospects remain tied to the evolu- remarkable adjustment effort in the early 1980s tion of its competitiveness in terms of labor that cut back public spending and brought costs and access to technology. Despite a about macroeconomic stability, exchange-rate balance-of-payments deficit and an inflation alignment, and economic liberalization. rate that was higher than in the mid 1980s, Indonesia, while benefiting from higher oil growth in 1990 was about 9 percent. Thailand's prices over the past year, continued to imple- economy continued its double-digit growth ment the structural-adjustment program that it performance in 1990. Manufacturing expanded began in 1983. Measures introduced in 1990 rapidly, and, with vigorous promotion, exports involved additional efforts to deregulate the from this sector have grown significantly as a economy and promote the private sector. Ma- share of merchandise trade and gross domestic jor reforms were announced in the financial product (GDP). Exports of manufactures have sector, involving the phasing out of subsidized helped to rectify basic imbalances on both the credit, and in the trade sector, involving fur- fiscal and external accounts and to lower the ther reductions in nontariff barriers, tariffs, debt-service ratio on long-term debt, further and export restrictions. In parallel with trade- enhancing Thailand's creditworthiness. Bottle- policy reform, the government intensified its necks, however, have been felt in the power, efforts to improve domestic incentives and the telecommunications, and transport sectors, regulatory environment by extending deregu- while rapid industrialization has contributed to lation in investment procedures to agriculture growing air and water pollution and related and the pharmaceutical industry. health problems. These actions have contributed to growth in Malaysia, as an oil exporter, reaped a brief private investment, especially in export-ori- but substantial windfall from the Gulf crisis. ented activities: Total private investment grew and the country's economic prospects con- by almost 20 percent in real terms in 1990. The tinue to be favorable. Malaysia's recent eco- strong private-sector response to deregulation nomic success has two salient features: was associated with a surge in imports, mainly achievements in poverty eradication and a of capital goods. Although there was some

Table 6-5. Lending to Borro, ers in Asia. by Sector, Fiscal j ears 1982-91 -mdi,,l.n~ of i S;doila,,s iiinu,1 .,nerlc,. S;cL,or lJ's 11-'1 14'9IJf 1' Agriculiure and Rural De%elopnicnt 1.543 5 1I7. 1.9th.3 l.Ih211 I.211X. 2.(144.1 De%Ltkpment Finance Ctwmpjnies 29b1&u 312 .11 - !.ln'2.S 241l I 5. Education 3'Xl h - 35 ,7 4!S 2.- b99. 1 k nerg\ Oil annd coal -14 1 i5.t7. is 11 1431 1 b16 0 il_ 2 Povtc r 1.21* 3 L.42',.s L.V95.9 I.9)Q S 1.5 x(1. 475.', Indu,urI lh 19'.4 i2. ( ih11).1' 1.(31 *1 Nonpro'ici 357 t, s4u.ii I1i11ii 4i2 S 344.4 257 Ii Populition. Health. and Nutru.in !u! 444 - 5 NO1I2 IY' S il- Puhlic-ecLor lanavernewn - - - - - 12.1 Smnall-xtle lnterprikes 142 6 Ih. S .... II It i I ISSIl lechnical A-i,tnce I'2 S "Il ' - - - 30.11 TelecornItunicaLion, 431 1 ;9 S - 12- 391.' .1) TrjnnporLihIon XS2. 449 1 1.4So 3 1.1 3h 5 114.' 411.1 L rban Deeloprnenrt '474 7.(I I .11S.5I J .41 Y6.'2 543.1 \Wuter SupphI and St%verjge 13.5 2S 4.fl _ - 43x.9 347.' Total 6.22ISI h.'4- - 'I.6 et. .53 h.3f.1 9

01t \hiCh. IBRD 4.4AS S 4.Sli 4 .7il 5.h'7 1 4.I4. 4,31S 1! IDA I h9 1[,. 3 I . 2.-5 i4 2 222 3 2.'407 9

Numher ol orer.1'on% t9 c h h' i f2

- Zer.o N;,TE Derjil. In- n11 JJJ n IT ii.Jls he;i-! r..L-ndirng Asia 119

X V.F-"_

N~~~~~~~~~~~~~-- ha

Fishernenstraightening nets near Manila. A project approved in fiscal 1991 seeks to preserve what remains of the country's biological diversity, including species of fish.

slowdown of nonoil exports, overall growth in reduced from 18 percent in 1988 to 2.1 percent nonoil GDP remained strong in 1990 at nearly 8 - in 1990. Inevitably, income growth, which had percent. approached 11 percent in 1988, slowed to a still respectable 5 percent in 1990. However, unem- China and India Show Mixed Results ployment increased in this period, and several China and India have recently encountered million transient urban workers returned to the serious macro imbalances. The Gulf crisis countryside. Macro policy was eased in the played a significant role in India, whereas second half of 1990, which quickened the China was not as directly affected. To restore tempo of growth, while generating some con- stability and accelerate growth, both countries cern over renewed inflation. will need to act upon their respective agendas Overall, the Chinese economy performed for structural reform, well on the external front during the period During the past two years, China's macro- 1989-90: Partly as a result of the strong auster- economic policies have been primarily devoted ity program, which reduced imports, China to addressing inflationary conditions that enjoyed sizable trade and current-account sur- peaked in 1988. Underlying these imbalances pluses in 1990. Furthermore, levels of debt, as were excessive monetary expansion, rising well as the debt-service ratio, continue to be price and enterprise subsidies, and a declining stable. While evidence of recovery is mount- ratio of government revenue to GDP. The last ing, the large number of loss-making state two combined to raise the fiscal deficit from enterprises, inventory buildup, and sluggish 0.5 percent of gross national product (GNP) in retail sales warrant continuing attention. The 1985 to an estimated 2.5 percent in 1988. The fiscal situation also remains worrisome, since anti-inflationary policies that were introduced central-government revenue is highly inelastic, in late 1988 included administrative guidelines while expenditures may expand under the to cut state investment, as well as a tightening pressure of financing enterprise losses, pro- of credit expansion and interest rates. These curement of a record grain harvest in 1990, and policies proved successful, as inflation was price subsidies. These issues once again bring 120 1991 Regional Perspectives

to the foreground the need for China to ad- need to manage this crisis with skill and dis- dress, through reform, the many distortions patch, while also addressing the many struc- and imbalances in its economic system. tural-reform issues inhibiting growth in the The number of people living in absolute economy. The onset of serious macroeco- poverty in China has been reduced from 196 nomic difficulties, accompanied by continuing million in 1981 (about 20 percent of the popu- political uncertainties, has already exerted a lation) to an estimated 67 million (6 percent of dampening effect on the progress of key eco- the population) by 1989. Continued progress in nomic-policy reforms to deregulate industry, poverty reduction, however, will require atten- liberalize the trade regime, and improve the tion both to measures that can generate suffi- overall environment for private-sector activity. cient productive employment opportunities for the rural poor and to reforms that will increase Slower-growth Economies the flexibility of the labor market, along with For a large group of Asian countries, the policies that ensure the cost-efficient provision 1980s was a decade of low and declining of basic social services to the population at growth rates. These countries-Bangladesh, large. Similarly, economic reforms that ratio- the Lao People's Democratic Republic, Myan- nalize energy prices can help reduce the use of mar, Nepal, the Philippines, Sri Lanka, and energy and other resources that currently are Viet Nam-face uncertain or clouded pros- sources of environmental pollution. pects for the first years of the new decade, as For India, the 1980s was a decade of higher well. Although their development constraints growth performance and improved social indi- vary in intensity and composition from country cators. The eradication of poverty was, and to country, they all share, to some degree, an remains, the basic objective of the govern- ominous convergence of rapid population ment. Economic growth and price stability, growth, ecological vulnerability, large num- combined with effective implementation of anti- bers of absolute poor, and deeply rooted do- poverty programs, led to a significant reduc- mestic and external macroeconomic problems. tion in the incidence of absolute poverty during Exceptional skills will be needed in managing the decade. It is estimated that the proportion economic policy and infrastructure invest- of the population living below the poverty line ments if these problems are to be addressed declined from about 37 percent in 1983-84 to effectively. Resolute redirection of public ex- about 30 percent in 1987-88. Those living in penditure toward family planning, rural social poverty in rural India declined from 40 percent services, and environmental rehabilitation and of the population to about 33 percent, and preservation of forests, soils, and water is also those in urban India from 28 percent to 20 needed. percent. Given the enormity of the problem, Although the economy of the Philippines this was a major achievement. suffered major disruptions and setbacks in The sustained rate of growth and the im- 1990, both natural and man-made, bolder pol- provement in the living conditions of the peo- icy moves by the government at the end of the ple were associated, however, with the emer- year and into 1991 promise improvement in the gence of macroeconomic imbalances. near future. The recent Middle East oil shock precip- During 1990, a series of shocks weakened itated, therefore, an economic crisis with ori- the fragile economic recovery that had begun gins long before 1990. Foreign-exchange re- in 1987. A prolonged drought through the first serves had fallen to seven weeks of imports by half of the year reduced agricultural production the end of July 1990, causing major bond-rating and led to serious power shortages. A devas- agencies to review and subsequently down- tating earthquake in July killed nearly 1,600 grade India's credit rating. The oil shock itself people and resulted in asset losses approaching was not as severe as those of 1973-74 or I percent of GDP. Then, the crisis in the Gulf 1979-80, but it hit the Indian economy when it placed severe pressures on the balance of was already on the verge of a foreign-exchange payments because of lost income from the liquidity crisis. The substantial additional im- 50,000 Philippine workers returning from Ku- port costs of higher oil prices, lost remittances, wait and Iraq, as well as higher oil prices. and other factors through March 31, 1991, Tentative policy responses by the govern- aggravated the country's fiscal 1991 current- ment during 1990 compounded the difficult account deficit. economic situation, and a slowdown in growth Although the economy continued to grow resulted. Gross domestic product grew by only during India's 1991 fiscal year (April 1, 1990 to 2.5 percent in 1990 (which implies stagnant per March 31, 1991), the expectations for the cur- capita income), and inflation accelerated to 14 rent fiscal year are more conservative. Many percent. In the last months of 1990, however, pitfalls await the new government, which will the government began to take corrective policy Asia 121 actions such as raising domestic oil prices and million (equivalent to 1.5 months of imports) in devaluing the exchange rate. In January and March 1990. In response, the government ini- February 1991, the government formulated a tiated a short-term program to stabilize the stabilization program that embodies serious balance of payments and the budget. These efforts to improve the fiscal balance and con- efforts, which included a flexible exchange- trol money supply. This program received sup- rate policy, were successful in restoring finan- port in February 1991 from the International cial stability and improving external competi- Monetary Fund (IMF) in the form of an eigh- tiveness. teen-month standby arrangement. Soon after, Shortly after initiating its reform program at the consultative-group meeting in Hong (supported by funds from the IMF's enhanced Kong, foreign-aid donors pledged to provide structural-adjustment facility), however, the $3.3 billion in 1991 in support of the govern- government was faced with high imported-oil ment's adjustment program and development prices and the need to repatriate workers from projects. These recent developments steer the Iraq and Kuwait in the wake of the Gulf crisis. Philippines towards a path of higher growth The government's policy response to the crisis and improved macroeconomic balances. was prompt, both in terms of increasing do- In the Lao People's Democratic Republic, mestic petroleum prices and taking measures GDP grew at the much lower (but still respect- to restrain current expenditures. At the same able) rate of 5.3 percent in 1990, down from 10 time, it managed the difficult task of resettling percent in the previous year when a dramatic displaced workers. More recently, the balance- recovery in crop output took place. At the of-payments position has improved as a result same time, inflation declined considerably, of a contraction in imports. from 68 percent at the end of 1989 to 22 percent Economic growth in 1991 was expected to be in 1990. Both changes resulted largely from a lower than in the previous year even before the drastic tightening in monetary policy. Al- devastating May cyclone struck. It is estimated though exports to industrialized countries con- that at least 125,000 people were killed, and tinued to grow, imports rose substantially as millions of others were left homeless. Agricul- well, in part reflecting the carryover of exter- tural production and storage facilities in the nal assistance unused in 1989 and higher oil area struck by the cyclone (along the southeast prices in the latter part of the year. Through a coast of the country, starting from north of combination of a leveling off of petroleum Chittagong and running south for about 100 prices and continued improvements in agricul- miles) were devastated. Vital public infrastruc- ture and public infrastructure, it is expected ture was crippled, hampering immediate relief that GDP in 1991 will continue to grow moder- efforts and, later, economic recovery. The port ately. of Chittagong, the country's only major outlet, Growth in Viet Nam has picked up in the was clogged with sunken ships and suffered past two years, following poor macroeconomic extensive damage to shipping facilities. Roads, performance-characterized by weak resource bridges, irrigation works, flood-control struc- mobilization and low efficiency of investment- tures, and other social infrastructure were all throughout most of the 1980s. Despite recent hit hard. The damage to infrastructure and dramatic changes initiated by its far-reaching production will have a negative effect on the economic-reform program, Viet Nam remains country's macroeconomic situation: The storm one of the poorest countries in Asia. Although had a serious impact on the Chittagong export- faced with difficult stabilization and reform processing zone and on the export products requirements, recent policy changes have re- awaiting shipment in port; shrimp farms and sulted in a large and fast-growing (but still fish nurseries, both export industries, were mostly small-scale) private sector. Viet Nam also severely hurt. continues to operate under difficult external Over the past year, a number of external and conditions: Soviet aid is declining rapidly, and domestic developments adversely affected Ne- there is no immediate prospect of official fi- pal's economic performance. Although the nancing from traditional donor countries to trade-and-transit treaty impasse with India was take its place. resolved in June 1990, its effects lingered on; Despite an upturn in the economy of Bangla- the Gulf crisis directly increased import costs desh (foodgrain production increased substan- of oil and slowed receipts from tourism; and in tially following good weather and an improved early 1990, Nepal underwent a major political agricultural-policy environment), short-term transformation from an absolute to a constitu- macroeconomic indicators deteriorated in late tional monarchy. 1989 and into 1990. Expansionary domestic These events contributed to a slowdown in policy led to a surge in imports, and foreign- GDP growth to 2 percent during the period mid exchange reserves fell sharply to about $450 July 1989 to mid July 1990, well below the 122 1991 Regional Perspectives

Table 6-6. Net Transfers to A.,ia mr',ll-r. 1 if J,tiIIr-: I N er4i- Chin, Indii ln.ne la Toni re.gi,

Iirr, l"l 1I i'7-'; I4l i1jI .JJ [ MJj If.. IBRD and IDA co'rnnitlnicnlt 1.;'4 c,635 2.i)4 18 l.n3 '.344 '.-W 36.1281 - Jro-ss di buIscmtn.rt 1.114 1.'A'l I '.ev 1.2Q" h.;49 .S'> 24lQ Rcr.nnnen[% 2'c.n 4j 5% 2.2o2 nlS 2.204 2Jt5 I Ncr Jdi4urs;mvri- 4,nTh 1:I.In .794 ti ;In4r.- In.741 I I i .flnd chart:c "15I.2i. 742 2,Shn 'n 3,1W19 2.0)'3 1I. m N..i irunicr n-C a5 564 4Cr', -13 I '156l 4Th) 4..S53

N.: i. DI'VhUr -cinr, Irnr ilt 1.-ID SpCcijl Fumd are incl-Ic&.. The .',iLtri[tm 'hi% n ,l rhr lahic .,re ih.-4e %ahit. 13reiLC ,n0.0iir. T1 rpulAl. 11 piih.IN LIJranr-LJ3 lL II',rT , dJe. DcliA. mw ni-it .dd 1.. bcli,. ]',e .-. TUliltIing

population growth rate of 2.7 percent. Progress Pacific Island Economies in implementing structural reforms that were and the Maldives begun in 1989 continued, however, and the government has generally maintained macro- Over the past year, the government of Papua economic stability despite increasing fiscal New Guinea made good progress in imple- pressures from recent wage concessions, price menting the financial-stabilization and struc- controls, and higher subsidies. Economic tural-adjustment program that it embarked on growth during Nepal's current fiscal year is in early 1990 in response to the closure of the expected to be around 3.5 percent. Thus, over Bougainville copper mine and a sharp deterio- the past three years, there has been no increase ration of its external terms of trade. Prompt in per capita incomes. Government commit- adjustments in macroeconomic policies al- ment to reducing population growth (which is lowed the domestic and external financial im- at the core of Nepal's development problem), pact of these shocks to be effectively con- fostering human-resource development, and tained. At the same time, measures were strengthening key development-management undertaken to improve public-resource man- institutions will be essential in raising per cap- agement and reform the incentive and regula- ita income and reducing poverty. tory framework to spur the development of the In Sri Lanka, the government is faced with private sector. The central objective of this simultaneous challenges: restoring peace in the program of structural reform is to promote the north and the east, shouldering the additional development of the nonmining economy to costs to the economy resulting from the Gulf underpin sustained and more broadly based crisis, and maintaining economic stability growth of income and employment over the through sound macroeconomic management medium term. As a result of the shocks felt by while moving forward on growth-oriented the economy and the adjustments made in structural reforms supported by the IMF and response to them, GDP fell by about 1.5 per- the Bank. Growth in GDP, which hovered cent in 1990; however, it is expected to re- around 2 percent during 1987-89, reached 6 bound strongly in 1991, supported by the de- percent in 1990. velopment of new mineral operations and In addition to these immediate tasks, the advances in the nonmining economy (growth in government has started to address underlying the nonmining economy is projected to rise to development issues. These include measures 3.5 percent a year during 1992-95). to reduce the level of central-government ex- Performance in the island countries of the penditures; a program to restructure or priva- Pacific was mixed. Propelled by enhanced tize public-sector enterprises; measures to re- competitiveness and a greater outward orien- store the confidence of private investors; and tation, growth in Fiji accelerated to nearly 10 steps to target better the large volume of in- percent in 1990. Double-digit growth rates come transfers and subsidies towards the poor- were recorded in manufacturing and tourism, est of the population, as well as to restructure and advances in agriculture and services were poverty-alleviation programs in the direction steady. Led by tourism that was spurred by of increasing the productivity of the poor. improved air links, growth in Vanuatu was Asia 123 exceptionally strong. In Western Samoa, from other donors in balance-of-payments sup- Tonga, and Kiribati, growth rates were low, port. In addition, two credit operations are partly reflecting the effects of the February supporting expansion of private-sector invest- 1990 cyclone in Western Samoa and the down- ment, and projects in the urban and power turn in copra prices, which affected Tonga and sectors are improving the physical setting for Kiribati. In the Solomon Islands, growth was industry. strong, in part the result of an expansionary In China, rationalization of the state-owned fiscal policy that contributed to continued sector is being addressed by two projects: a pressures on domestic prices and the external rural industrial-technology operation and an position. urban industrial-restructuring project. In Sri Growth in the Maldives remained impres- Lanka, the Bank is supporting an aggressive sive. As a result of continuing strong perfor- public-sector privatization and restructuring mance by the fisheries and tourism sectors, program through recent analytical work and a real national product has increased by nearly $120 million IDA credit that supports the com- one third over the past two years. mercialization and privatization of public man- ufacturing enterprises. In Korea, a health- Bank Operations and Strategy technology project will onlend $60 million to Led by a $989 million increase in lending to private hospitals for expansion of capacity to China, commitments by the IBRD and IDA to treat chronic and degenerative diseases. the region in fiscal 1991 totaled $7,491 million, Bank operations for industrial restructuring up 17 percent from last year's total. of the private sector and development of cot- Bank operations in Asia continued their fo- tage-industry exports, as well as investments cus on the priority development challenges in in highways and irrigation, have underpinned the region: restoring macro balance and sus- the Philippines' strategy for private-sector taining structural reform so as to spur private- growth. In the high-growth economies of East sector-led growth; designing sectoral and tar- Asia, the Bank's analytical work and lending geted operations aimed at reducing levels of are supporting land titling (Thailand) and vo- absolute poverty and limiting rapid population cational education (Korea) to strengthen the growth; building analytical understanding of enabling environment for the private sector. environmental processes and supporting pro- In the areas of poverty reduction and popu- grams to arrest and reverse environmental lation. the region's analytical work has in- losses; and developing the necessary physical cluded a study of access by the poor to India's and institutional infrastructures in support of social services and poverty programs. A re- these objectives. gional comparative study of population pro- Overall, the level of adjustment lending in grams has also been undertaken. A study of Asia continued to be modest, reflecting the poverty in Nepal was completed, and the region's relative freedom from financial crisis. Bank's first analysis of Papua New Guinea's During the year, macroeconomic adjustment health and population sector was discussed operations approved in past years continued to with the government. Lending operations in- be implemented; with the exception of loans to cluded within the region's core poverty pro- Indonesia and the Philippines, no new opera- gram of targeted and sectoral assistance were tions were approved. Two important studies of approved for Bangladesh, China (three opera- macroeconomic management were recently tions), India, Indonesia (two loans), the Philip- completed for China and India, while an anal- pines (two operations), and Sri Lanka. ysis of adjustment and the role of the private In Papua New Guinea, a project supporting sector was discussed with the government of special interventions to alleviate the social Sri Lanka. costs of the ongoing adjustment program was The Bank continued to be active in the area initiated. Project components addressing the of private-sector development and public-sec- constraints faced by women, particularly in tor reform. An Asia-wide study recommended South Asia, have been incorporated in a grow- policy measures and regulatory frameworks to ing number of the region's investment opera- encourage private participation in the power tions. In India, for example, an agricultural and coal sectors. Country economic work on project in Tamil Nadu state will support Indonesia had a special focus on issues of women farmers through involvement of non- private-sector development, while a major governmental organizations in extension, par- study of infrastructure bottlenecks in that ticipatory planning, and common-property country also addressed private-sector con- resource management. A strategy for con- cerns. A second private-sector development solidating and expanding the gains women loan provided support for key structural re- have achieved in Indonesia was the subject of forms and helped mobilize almost $1 billion a study discussed with the government. 124 1991 Regional Perspectives

In the region's core environment program, The need for stronger promotion of the private operational output increased substantially. In sector in these countries was emphasized. The the Philippines, a pioneering project in natural- report's findings were discussed at a Bank- resource management is directly addressing organized seminar attended by high-level gov- the economic issues involved in preserving the ernment and donor representatives. In the fu- country's hardwood forests. An industrial ture, the regional economic report (to be project in India is providing institutional, pol- updated every two years) will play an impor- icy, and investment support for industrial pol- tant role in aid coordination within the frame- lution-control efforts, while the Bank's first work of the United Nations Development Pro- rural water-supply project in India incorpo- gramme roundtables. rates an environmentally sound sanitation In addition to the regional report, a study on component. the incentives framework for private-sector The Bank produced its first regional eco- investment in Fiji was completed. Working nomic report for the Pacific island countries together with the Asian Development Bank during the year. The report reviewed the eco- and bilateral donors, Bank staff are targeting nomic performance of these countries during lending operations to fill key gaps in infrastruc- the 1980s, assessed the factors underlying their ture and social services. An investment credit relatively weak performance (compared with in low-cost housing in Vanuatu was approved growth in the small Indian ocean and Carib- during the year, and work continued on a bean countries), and suggested strategies for fisheries-sector project in the Maldives. accelerated and sustained growth in the 1990s. Europe, Middle East, and North Africa 125

Europe, Middle East, and North Africa

The Europe, Middle East, and North Africa omies of Eastern and Central Europe, but in region is one that is characterized by great Algeria and Egypt, as well); the challenge of cultural, political, and economic diversity. accelerating the pace of social progress (which Notwithstanding differences in levels of in- exists not only in relatively poor countries come and social development, economic orga- such as Pakistan and Yemen but in Egypt and nization, and the role of the state, the countries Morocco, as well); and the heavy burden of of the region share, in varying degrees, three debt, not only in Eastern Europe (notably common, long-term economic challenges: Bulgaria, Hungary, and Poland) but also in the those of the transition to a market economy Maghreb (Algeria and Morocco) and the Mid- (faced not only in the reforming socialist econ- dle East (Egypt and Jordan). The drive towards economic reform further strengthened in the region during the past year. Table 6-7. Europe. 'Middle East. and Unfortunately, the massive adverse external North Africa: 1989 Population and Per economic shocks arising from the Gulf crisis Capita GNP of Countries That Borrored and the collapse of the Council for Mutual during Fiscal Years 1989-91 Economic Assistance (CMEA) trading ar- P r c r,, I rangement between the Soviet Union and East- P.r:.pI,'n (,\P- ern Europe greatly complicated orderly adjust- CnurInt,5 iihuu,.rd%i, ItiIS d, f,riI ment and resulted in sharp declines in MAlgeri 244ili 2.23" economic output in many countries. While Bulgijn 2.32I*(-' Algeria and Iran benefited from higher oil CNyPrus t'a5 - .4 prices in 1990, the cumulative negative impact Czechoslo- akii I 53 4'.'1.1 of the Gulf crisis on Turkey, Egypt, and Jordan Eg pi .I .'.N"' nii is estimated to be in the range of $12 billion to Htunri:rr II nI '.3 'I $15 billion through June 1991. Ir tn. Il'I.mic For the Eastern and Central European econ- Republic ot 53.3I . ' :,I omies, the Gulf crisis exacerbated the disrup- Jorddn 3.L1uI I r4r tion in trade and payments arising from the loss Morocco 24O3'.v of exports to the Soviet Union and a deterio- Paksi.ln lii' .'riH 3 ration in terms of trade resulting from the Poland I1'7 )IIII 1. 7ui elimination of the CMEA. It is estimated that Prriug-i r 44.23 ' the impact of these shocks will be about $20 Roni:,nia 23i.2'jt' -- billion in calendar year 1991. It is not surpris- Tunicia Null i.:'(' ing, therefore, that under the weight of both Turkc% 33.1 101 l. ,- strong stabilization efforts and a large negative Ycnirn. Republc f 1 1.'2i (.51I shock, GDP levels in Eastern and Central )I ueoslauja 23.7ij' i . 2" Europe fell by 10 percent in 1990 and are expected to show a further decline of 5 percent Ms,rt. I h- ,qlfl. r R'I . i-! P.?up.-r Performance in Pakistan and Turkey crpiia cNP .i ¶N.P,i Macroeconomic performance in Pakistan d E4I!,mtrLcr. I.c E3i1 Bank "'nk was uneven, reflecting slow implementation of e(5 NP p,cr ::,rpuirijimc i,u1, F, n-Ihc 52 .: i policy reforms that had started in 1988 as part ra--w of the government's medium-term adjustment 126 1991 Regional Perspectives program that aimed at restoring resource bal- pered by the Gulf crisis, and it is estimated to ance to sustainable levels and at improving the be 4.1 percent of GNP. efficiency of the economy. The changes in The events in the Gulf weakened Pakistan's government that occurred in August and No- resource position and demonstrated the coun- vember 1990 may have contributed to the delay try's vulnerability to external shocks. The neg- in the implementation of the policy-reform ative impact of the crisis on Pakistan's current measures. Real GDP growth was about 5 per- account (estimated at about $600 million cent, and while inflation had decelerated to 6 through the end of June 1991) was mainly percent by the end of June 1990, it started to caused by the increased cost of oil imports and rise towards the end of the year to 8.4 percent. reduced workers' remittances. Delays in pass- This increase was caused partly by further ing through the international oil-price increases acceleration of monetary growth during the to domestic consumers put additional pressure second half of 1990 and partly by the rise in the on the government budget; financing the bud- prices of petroleum products during the Gulf get deficit and energy-price increases acceler- crisis. The government was able to achieve a ated inflation. The crisis accentuated an al- modest reduction in its budget deficit, from 7.3 ready deteriorating economic performance by percent to 6.6 percent of GDP, mainly through putting additional pressure on the govern- a restraint on already low development expen- ment's budget. ditures. In early 1991, the new government took Despite a better-than-expected performance several important steps to resume and broaden of exports during the latter half of 1990, coming the adjustment effort. Energy-related prices mainly from raw cotton and cotton-based man- were adjusted to reflect the movement of inter- ufactures, the combination of an increase in national prices, as were railway tariffs. The world oil prices and the nondisbursement of government also did away with investment and policy-based aid led to a considerable gap in import licensing, liberalized the exchange-con- the balance of payments. Improvement in the trol system, and privatized several public en- current-account deficit in fiscal 1991 was tem- terprises. Agreement was also reached on the

Table 6-8. Lending to Borrouers in Europe. Mliddle East, and North Africa. bv Sector, Fiscal Years 1982-91 I IndI,.ri, Li- L'S Jdli JF- .\nr.u,I .At.ra e. Sc-cu.:.r i¾2-,1 ') ~ S - I~.'.J. 1"1')I tJJ I .\Ariculiure and Ruril Dcvclopmenr -17.- 304 Si,fS 1.411 4 5Qu3 21n.S Dcvelopnicnt Finance Companies; 38- 3l3n2. 58113.1 36.f 4311.11 71i.j. Educalion 19. '' 241.b 251.1' 3.2 4111.4 Enerev Oil. -as. ind coal 194.1i 'I (1 31.1 365.5 __ h41.11 Powcfur 34o4 5 0 41H.iI ll 5S7.5 714.i) Indiuslrv J04 5 10til ;7'.11 385.1 ['J1,5 751.4 Nonprojecl2 24t11 tl fl).i.i I 1i.'i 1.115110 1 31.,

PIopUj;lhin. HLailh. and Nutrition 15.I I 3.3 7q. - l 19.II 'l( II PUblic-ccior MI3nd-gcmenL -13 I 31.i Srnnul-%:tdck Enterprises 54.Ii 32S.11I_.l) - Technical A-sistance - i - 23.1; >11 I.tl ' Ttlccommunicjt[iron.,27.u 51.1)J _ _- 3h.11 TrannpoNar0llon 2>4 545 327.11 i4.., 1.Il 551.4 Urtoan Dt-clopnhirr -6.4 126.6 91.1.11 5i.i 1115.5 '511.11 \ater Suppl\ and SCvaIrkTL'C 2.l 5i5Q. 23S.11 233.I 228." 136.7

r1otal 3.1.0,4.5 ,,,36.tc 3. 53. 4 3. h .5 4.Jll'.1I I ,.5i'3.

I) %xhich. IBRD ' A46.' 7,437.4 3.1;.3 3 511.s 4.I 1. 6hi)79 I II)A 5.>.3 249.2 2.1 55. 7 '75.s 484.o

Nunibcr .Ot Opcr,rlors 47 42 35 3' 4i) 46

N .i )t0i-1.d.,- . F-1. jI r.. i..I, lc '.. a r-u!1dIry; Europe, Middle East, and North Africa 127

.rz . - I~~~~~~~~~~~~~~~~~-- l

Lv i--~~ ------< .

'4 ~~ ~ ~ ~ ~ ~ ~

~~~~14 .y t 1 ''. I S rI -- 1

Carryingwater iz Morocco. The Bank is currently engaged in an environmental assessment of Morocco that aims at finding ways to manage the country's natural resources, particularlyits water resources. sharing of water and of fiscal revenues among sector borrowing requirement increased to the provinces. These measures add up to an about 10 percent of GNP. impressive beginning in policy reform that em- Turkey's external accounts deteriorated in phasizes private-sector development. 1990-even before the negative effects of the The Turkish economy experienced rapid Gulf crisis had started to be felt-in part be- growth in 1990, despite being adversely af- cause of a surge in imports following the liber- fected by the post-August 1990 events in the alization of the import regime. Still, it is esti- Gulf. Gross national product (GNP) grew by an mated that much of the $2.4 billion (2.2 percent estimated 9.2 percent, reflecting a recovery in of GNP) current-account deficit for 1990 was agriculture from the drought-induced slump of due to the incremental effect of the events in 1989, as well as a strong expansion in manu- the Gulf. Financing was adequate, neverthe- facturing output. The stimulus to growth came less; indeed, official reserves at the end of 1990 from the demand side and resulted, in part, had increased by $1.3 billion to $7.4 billion from gains in real wages, including increases in (including gold), or approximately four months wages and salaries in the public and state- of imports. enterprise sectors. While consumption rose causing investment's share in GNP to fall, Growth in the Maghreb Countries fixed investment increased in real terms. A In Algeria, despite another poor harvest, tight monetary program, the continuing appre- GDP grew at the modest rate of 1.1 percent in ciation of the real exchange rate, and recovery 1990. The combination of fiscal restraint and in agricultural output combined to reduce higher revenues -driven by the recovery of oil wholesale-price inflation from 62.3 percent in prices in the second half of the year-gener- 1989 to 48.6 percent in 1990. Less progress was ated an estimated budget surplus of over 3.5 made, however, in reducing consumer-price percent of GDP. Most of this surplus was used inflation. On the fiscal side, growth in public to repay Treasury debts to the central bank. expenditure was faster than gains in revenue in Consequently, the banking system was able spite of the quick pass-through of the price both to retire foreign debt and to replenish effect of the oil shock and a further rise in reserves while slowing money growth. Reflect- value-added tax rates. As a result, the public- ing higher oil prices, the balance of payments 128 1991 Regional Perspectives

showed a current-account surplus of about 3 ers' remittances. However, these losses were percent of GDP. Exchange-rate adjustments somewhat offset by higher official transfers and price liberalization continued throughout from the Gulf states. 1990 and into early 1991, contributing to a The international financial community gave significant rise in consumer-price inflation, to support to Morocco's stabilization and adjust- almost 17 percent (as compared with 9 percent ment efforts in 1990, as agreement was reached in 1989). A full two percentage points of this on the rescheduling of the country's commer- increase occurred in December 1990, when cial and official debts. The agreement with the devaluation accelerated. London Club of commercial creditors con- Algeria also embarked on some key institu- sisted of a block rescheduling of the entire $3.2 tional and political reforms. While the domes- billion owed to commercial banks. In addition, tic political situation continues to evolve, the Morocco obtained a rescheduling agreement government remains committed to holding the from the Paris Club of official creditors in country's first multiparty national legislative September of 1990. The combined effects of elections since independence. Key institu- the two agreements will save Morocco about tional reforms included the adoption of a new $1.9 billion in debt-service payments in 1990 money and credit law, as well as several laws and around $500 million in 1991. pertaining to the labor market. The money and Tunisia's economy performed well in 1990, credit laws granted the central bank full auton- and the implementation of liberalization mea- omy to formulate and implement monetary, sures. which had been slowed in 1988-89, external-debt, and foreign-exchange policies. accelerated. Following a long drought in 1989, It also removed controls on foreign direct good rainfall in 1990 allowed agricultural out- investment in most sectors, allowing, among put to grow by 27 percent, accounting for other things, 100 percent foreign ownership of almost half of the year's 6.5 percent growth new investment projects and unrestricted joint rate (as compared with 3.5 percent in 1989). A ventures between foreign concerns and Alge- strong recovery in exports of manufactures ria's private sector. In preparation for trade and tourism was the driving force behind the liberalization, the central bank devalued the growth of industry and services. Demand pres- dinar by about 100 percent between mid No- sures were kept under control by tight mone- vember 1990 and the end of April 1991. In April tary policy, which succeeded in holding the 1991, Algeria introduced a major liberalization inflation rate to 6.6 percent (as against 7.7 of its external trade that complements the percent in the previous year). The government already far-reaching measures taken to liberal- budget deficit was kept on target (4 percent of ize domestic trade. The new labor legislation GDP), thanks to reductions in consumer sub- lays the groundwork for a more competitive sidies permitted by the good crop. Higher labor market, allowing the creation of autono- demand for imports, mainly for intermediate mous labor unions and specifying procedures and capital goods for export industries, was for the resolution of labor-management dis- mainly responsible for the current-account def- putes. icit that rose to about 4 percent of GDP. The In Morocco. prudent monetary and budget- economy was severely affected by the Gulf ary policies, followed by a 9.25 percent nomi- crisis, however. In net terms, the loss of for- nal devaluation of the exchange rate in May eign-exchange receipts. caused by reduced ex- 1990, resulted in good macroeconomic perfor- ports of goods and services and transfers, is mance for 1990 despite the Gulf crisis. Gross estimated at about $675 million, or some 5 domestic product grew at slightly above 3 percent of projected 1991 GDP. percent in 1990 (compared with 4.1 percent during the period 1985-89). The budget deficit Economic Developments In Four Middle declined from 5.5 percent of GDP in 1989 to Eastern Countries about 2.1 percent. Following the transitory For Jordan, the year began on an optimistic deterioration in 1989 of the current-account note, with the government pressing ahead with deficit (which resulted from a commercial dis- its adjustment program, which was being sup- pute related to sales of phosphoric acid), ex- ported by an International Monetary Fund ports recovered, and, in the first half of 1990. (IMF) standby arrangement, agreements with workers' remittances, manufactured exports, the Paris and London Clubs, and a $150 million and tourism receipts increased significantly. industry and trade-policy adjustment loan from allowing international reserves to rise to a the Bank. Further progress was made in early record $2 billion at the end of 1990. The Gulf 1990 towards reduction of the budget deficit, crisis had a substantial, adverse effect on Mo- when prices for water and electricity were rocco's economy in terms of higher oil prices, selectively increased and a program to reduce as well as losses of tourism income and work- food subsidies was launched. Europe, Middle East. and North Africa 129

The Gulf crisis, however, disrupted the im- of goods and nonfactor services. The budget- plementation of Jordan's adjustment program ary impact was smaller, as the most negative and caused a dramatic deterioration in its econ- effects were felt in the private sector (tourism omy through losses of export markets, work- and workers' remittances); in contrast, some ers' remittances, and income from tourism; the revenue gains actually accrued to the govern- burden of returning workers on the govern- ment from increased receipts from the state ment budget; and loss of income in the transit petroleum company. There was also a signifi- sector. Preliminary estimates indicate that in cant increase in international financial support 1990, Jordan's GDP fell by 8 percent from its to Egypt. Some of this exceptional financial 1989 level; nearly all of the decline was con- support, resulting from deliberations of the centrated during the last four months of the Gulf Crisis Financial Coordination Group, in- year (implying that GDP was falling at an cluded debt forgiveness by a number of Arab annual rate of roughly 25 percent during the countries. as well as by the Paris Club of period September-December 1990). official creditors, which decided to forgive half Balance-of-payments difficulties, serious the $20.2 billion that was owed to them by even before August 1990, were exacerbated by Egypt. the crisis, increasing the size of the current- The Republic of Yemen, formed in May 1990 account deficit by about $700 million for 1990. through unification of the Yemen Arab Repub- There was also a similar deterioration in the lic and the People's Democratic Republic of 1990 budget, despite a number of measures Yemen, inherited all the economic difficulties adopted in the first half of the year to contain of its two constituent parts: an unsustainable expenditures and enhance revenues. Post-Au- budget deficit, a structural balance-of-pay- gust 1990 increases in subsidies and in extra- ments deficit, intense inflationary pressures, budgetary expenditures related to the crisis led and rising unemployment. These difficulties to an additional budget deficit of almost 7 were aggravated by the process of amalgamat- percent of GDP, increasing the overall deficit ing two governmental administrations and the (excluding grants) to almost 25 percent in 1990. additional expenses associated with it, as well The Egyptian economy continued to experi- as by the Gulf crisis. The crisis resulted in the ence a slowdown in growth, with real GDP return home of some 750,000 Yemenis (migrant rising by only about I percent in fiscal 1990, far workers and their children), whose remittances below the rate of population growth (over 2.5 have been the most important source of foreign percent). However, the deficits in the balance exchange for Yemen in the past two decades. of payments and in the government's budget It also significantly reduced external trade in showed some improvement as a result of a goods and services, as well as external assis- robust recovery of nonoil exports and restric- tance to the country. tive budgetary expenditures. Revenue-raising In response to the deteriorating situation, measures were also launched, as the govern- the government has recently taken a number of ment implemented a wide range of fiscal mea- steps to stabilize the economy, the most im- sures, including upward adjustment of petro- portant of which relate to some liberalization leum and electricity prices and increases in of the foreign-trade and exchange regime, taxes. In March 1990, the government began whereby import licensing was relaxed and pri- implementation of its economic-reform and vate-exchange markets were freed from gov- structural-adjustment program (recently sup- ernment controls. The government also dou- ported by an IMF standby arrangement and a bled the price of gasoline and raised by 50 $300 million World Bank structural-adjustment percent the price of diesel fuel. These mea- loan) that focuses on (a) stabilization to restore sures, although significant, have not yet led to macroeconomic balance and reduce inflation, improvements in the economic conditions of (b) structural adjustment to stimulate and sus- the country. Preliminary data indicate that no tain medium-term and long-term growth, and economic growth took place in 1990. The gov- (c) accelerated implementation of current so- ernment has agreed to work with IDA to cial policies to minimize the effect of economic formulate a medium-term economic frame- reforms on the poor. This last-named focus work that would satisfy the requirement for the was supported by a $140 million IDA credit for restoration of viable macroeconomic stability the establishment of an emergency social fund. over the medium term. The effects of the Gulf crisis on Egypt were Since the end of its war with Iraq in 1988, the severe. Losses of export markets and workers' government of Iran has been focusing more remittances, as well as declines in tourism attention on economic policies and the man- receipts and Suez canal fees for 1990 and 1991, agement of its economy. The country's first were estimated by the Bank and the IMF to five-year development plan, which was ap- total more than 35 percent of Egypt's exports proved in January 1990, emphasizes fiscal dis- 130 1991 Regional Perspectives cipline, export promotion, private-sector de- legal frameworks that are necessary for the velopment, and the progressive liberalization development of market economies; and the of pricing policies. Economic performance, development of social safety nets-is proceed- which had began to turn around in 1989, con- ing against the backdrop of large external tinued to improve. For 1990 as a whole, eco- shocks associated with the collapse of the nomic growth was 10.1 percent (compared CMEA, the shrinking of the Soviet market, the with 4 percent in 1989); oil revenues-benefit- Gulf crisis, and, for some countries, a heavy ing from higher volume, as well as prices- burden of external debt. The result was a sharp increased sharply; the budget deficit, reflecting decline in economic output in these countries. additional relief and reconstruction expendi- Bulgaria, which is especially dependent on tures for the devastating earthquake of June CMEA trade, particularly with the Soviet 1990, was 1.8 percent of GDP (4 percent in Union, experienced severe terms-of-trade, ex- 1989); and the external current account had a port-market, and payments-disruption losses surplus of around $1 billion (compared with a that were estimated to be about 18 percent of $3.5 billion deficit in 1989). GDP in 1990. Consequently, the current-ac- count deficit widened substantially, even with Economic Developments in the Gulf a further decline in import volumes, and output Cooperation Council Countries fell by a steep 12 percent. The first half of 1990 witnessed the confir- In February 1991, a new stabilization and mation of the 1989 recovery in the six countries reform program was launched in Bulgaria. that are members of the Gulf Cooperation Many subsidies were eliminated, most restric- Council (GCC). In particular, daily oil output tions on the setting of retail and wholesale rose by more than 10 percent. Economic de- prices were lifted, and the exchange-rate sys- velopments in the second half of 1990, how- tem was freed. Tight wage, fiscal, and mone- ever, were dominated by the events that fol- tary policies (including a sharp rise in interest lowed in the wake of Iraq's invasion of rates) were adopted. An agrarian-reform bill Kuwait. While the economic effect of the crisis was also passed, providing for the return of varied from country to country, all GCC coun- land to its former owners. tries (except Kuwait, of course) saw their In Czechoslovakia, following the country's oil-export receipts increase due to higher out- return to democracy in late 1989 and national put and prices (the combined oil receipts of the elections in mid 1990, the government pre- five countries are estimated to have exceeded pared an economic and social program to $70 billion in 1990, an increase of more than 60 transform the economy into a market econ- percent over 1989). This increase in income omy. To achieve this objective, stabilization was more than offset, however, by additional and structural-reform policies are being imple- military-related costs arising from the crisis mented simultaneously. Retail subsidies on and by provision of substantial financial assis- food were removed in July 1990, and other tance to countries affected by the crisis. Heavy measures such as a substantial currency deval- capital flight occurred in August 1990 but uation and price increases for gasoline, indus- slowed afterwards. While domestic private in- trial energy, and transport were introduced in vestment decreased considerably, major public the second half of 1990. projects such Saudi Arabia's petrochemical- In January 1991, Czechoslovakia's transfor- expansion projects, Qatar's North gas field, mation program was intensified. A balanced and aluminum projects in Bahrain and Dubai budget and a tight monetary policy were pur- continued to be implemented as previously sued to maintain macroeconomic stability and planned. support structural adjustment. Foreign trade and prices were liberalized; a privatization Economic Developments in program, covering thousands of small retail Reforming Europe outlets and service enterprises, was launched, The dramatic social and political changes and one for medium-sized and large enterprises that are occurring in Eastern and Central Eu- was at an advanced stage of preparation; and a rope show that the countries in this subregion social safety net to protect the people most are committed to a thorough transformation of adversely affected by the transition to a market their economic systems. The transformation economy was being put in place. The govern- process-which includes macroeconomic sta- ment's program is being supported by an IMF bilization; reform of incentives and price sys- standby arrangement, as well as by a $450 tems; enterprise reform, privatization, and fi- million structural-adjustment loan from the nancial-sector development; the abolition of Bank. The government's reform program is state monopolies on foreign trade, foreign ex- also being supported by the European Commu- change, and production; the installation of nity and the group of twenty-four industrial- Europe, Middle East, and North Africa 131

Table 6-9. Net Transfers to Europe. Middle East. and Norih Africa tmillins uI LUScllljr,. fiscal vr i

Esxlpi ldrh Po-Ud I;,dl rcgi*r

Irein It°!°o-I 1-91 1 %! - '11d-5s-] J.. !8|I|' IBRD and fDA commitmnnLS 54 b'.7 QIXI 4II1r,i 1.4411i ",, 6.5rI4 '1. 9 Gro.ss disbursement, 1(05 nS3 5i94 3.234 13I IS" 31i'15 13,6h' Repayments 213 774 684 2.4011 - - 2.324 11br,S Net disburSemrnts -% -9i -Q4-1 1Sj3u iMJ n9l L.tIjl) Interest .nd charees 11 7IJI 5> 2.4?'4 3 , l.')3 S,'i' Net irannsfer -24S -7LQ2 -hit - 1.51 l IT 1r1:. -Yu -e-liS

-Zero!. Norn- Dishursemcnts fyom xhc IDA SpTc-l Fund Jri n luJed T-heC*LjUIILS h r in th TjAle .arctho,e .%ihbtic 1,reest amounis in public -.! puhlic, emur.n[e.d lunll-iirm dLcht. Dcatwk ma. noi ,,l, io t..r.ilk bceus' ot ro,unding.

ized countries. Notwithstanding the country's secured an IMF standby arrangement, as well strong domestic adjustment, the country's fi- as a $300 million structural-adjustment loan nancing needs-caused by the severe effect of from the Bank, and was able to negotiate a external shocks-have not diminished. Paris Club rescheduling of foreign debts. Initial In Hungary, measures were taken during the results of the economic-transformation pro- past year to correct the large external and gram are promising: Prices are now freely internal imbalances that had emerged in 1989. determined, and most barriers to international These measures were complemented, in mid trade have been removed. Inflation has 1990, by a wide-ranging program of structural slowed; nonetheless, it remains excessive (be- reforms that were supported by an IMF tween 5 percent and 6 percent a month) and standby arrangement and a $200 million World continues to be the main threat to the program. Bank-financed structural-adjustment loan. Ad- The program also resulted in a large trade herence to macroeconomic stabilization poli- surplus due to strong export expansion and cies, after some mid-year corrections, led to a reserve accumulation, a sharp drop in GDP significant improvement in the country's con- (-12 percent), a budgetary surplus of more vertible-currency current-account balance. than 3 percent of GDP in 1990, and a rise in Despite unfavorable exogenous shocks-in- unemployment to an estimated 6.1 percent. cluding the worst drought experienced by the Poland also launched a number of systemic country in this century and higher oil prices on and structural reforms during the past year. world markets-the current account recorded Privatization legislation was passed, and a new a $127 million surplus. Ministry of Ownership Transformation was Economic growth, however, was weaker established. Over 20,000 small shops and ser- than expected, mainly due to the steeper-than- vice outlets, as well as a number of large projected decline in exports to the Soviet enterprises, have been privatized, and plans Union and the drought. Real GDP fell by 5 are under way to privatize a further 150 to 200 percent in 1990, and consumption dropped by large enterprises. An Antimonopoly Office is almost 6 percent. Inflation accelerated and vetting the privatization process to ensure that reached 30 percent, partly the result of higher public monopolies are not transformed into oil prices. The government's reform program private monopolies. Unemployment and wel- deepened and accelerated in 1991 and was fare systems have been established. Restruc- supported by an extended arrangement from turing options are now being studied for the the IMF and a $250 million structural-adjust- energy sector. In May 1991, the government ment loan from the Bank. devalued the zloty by about 14 percent and In Poland, the government launched its eco- announced a new exchange-rate system that nomic-transformation program in early 1990 would tie the zloty to a basket of currencies with the objective of stabilizing the economy, that is subject to daily change along interna- transforming it according to market-oriented tional parities. principles, and reintegrating it into the world Following the December 1989 revolution, economy. In support of this program, Poland the new government of Romania declared its 132 1991 Regional Perspectives

commitment to economic reform and restruc- comprehensive freeze of wages and public turing on a market-economy basis. Since then, expenditures. The implementation of the pro- many institutional changes have taken place: gram recorded initial success, in spite of some Ministries have been reduced in number, a slippages in the wage-freeze component by a two-tiered banking system has been intro- number of republics. By mid June 1990, infla- duced, farm-procurement prices have been in- tion was reduced to zero, exports were buoy- creased, and private farmers are now permit- ant, and foreign-exchange reserves were at an ted to sell at market-determined prices. all-time high ($9 billion). However, industrial Privatization legislation has been prepared, production dropped by nearly 2.5 percent, and autonomy has been given to enterprises, and the agriculture sector was hit hard by a severe two phases of price liberalization were imple- drought. mented, in November 1990 and April 1991. By the third quarter of 1990, inflation reap- Reform of the tax regime and of external tariffs peared, and trade performance weakened in is also under preparation. the wake of a deterioration in the implementa- In addition, the legal framework to permit tion of stabilization policies. While inflation the country's transition to a market economy decelerated in the fourth quarter following a has been created; a new fiscal system has been tightening of monetary policy, other economic adopted; and budgetary activity now empha- indicators continued to deteriorate. Industrial sizes expenditures for health, education, and output declined steeply as retail sales slumped. other social services rather than industrial in- Meanwhile, the Gulf crisis had a far-reaching vestments. A new foreign-exchange regime has negative effect, not only through higher oil been adopted (with a dual foreign-exchange prices but also through losses of export con- system), and a land law has been approved by tracts and payments, including workers' remit- the parliament under which land is being re- tances. For the year as a whole, industrial turned to its former owners. production declined by 10 percent, and the The government's programs are being sup- gross social product fell by 7.2 percent. The ported through an IMF standby arrangement, rate of inflation soared to 118 percent (against as well as through pledged assistance, totaling a 20-30 percent rate planned under the pro- about $1 billion, from the European Commu- gram). The current account with convertible- nity and the wider group of twenty-four indus- currency countries had a deficit of $1 billion, trialized countries. Late in fiscal 1991, the compared with an initially projected surplus of Bank approved a $180 million loan to finance $1 billion, and foreign-exchange reserves de- the importation of essential spare parts and clined to about $7 billion. In Yugoslavia, any equipment; technical assistance, designed to significant economic recovery is now linked to support the ongoing economic-reform process, the resolution of political difficulties. is also being provided. However, deep-seated structural difficulties, World Bank Operations, Fiscal Year 1991 coupled with the general uncertainty caused by Fueled by a dramatic increase in lending to the dismantling of the command system, a its borrowing member countries in Eastern and shortened work week, and a reduction in en- Central Europe, Bank lending to the region ergy supplies to industries, caused real GDP to reached a record high of $6.6 billion for forty- decline by 10 percent in 1990. Industrial out- six projects in sixteen countries. Commitments put, accounting for over 50 percent of GDP, to Eastern and Central European countries declined nearly 20 percent, while industrial totaled $2.9 billion, up from $1.8 billion in labor productivity fell by 23 percent in the first fiscal 1990. Almost half of the amount-$1.4 half of 1990. Declines in domestic output, the billion-was committed to Poland. In addition, demise of CMEA trading arrangements, and Bulgaria and Czechoslovakia received loans the rise in oil prices led to a large current- for the first time from the Bank ($17 million account deficit in 1990 of about 8 percent of and $450 million, respectively), while lending GDP. resumed to Romania after a hiatus of nine In January 1990, Yugoslavia began to imple- years. ment a strong stabilization program with the Projects designed to mitigate the adverse aim of sharply reducing inflation. This pro- economic effects caused by the flood of work- gram, supported by an IMF standby arrange- ers returning from the Gulf were approved for ment and a structural-adjustment loan from the Egypt, Jordan, and Yemen; in addition, the Bank, was based on a tight monetary and fiscal Bank approved a $250 million loan to Iran to policy, liberalized imports and prices (except assist that country in the aftermath of the June for some basic products), a fixed nominal- 1990 earthquake that killed or injured 100,000 exchange rate for a convertible dinar, and a people and left another half million homeless. Latin America and the Caribbean 133

Latin America and the Caribbean Economic performance in the Latin America a result, per capita income in the region today and the Caribbean region in 1990 continued to is about 10 percent below the level attained in be depressed. There was a small decline in 1980. These aggregate numbers, however, do total output for the region as a whole, and per not reflect the profound political and economic capita output fell for the third year in a row. As changes that are taking place within many countries. These changes could lay the foun- dation for future growth. Table 6-1(. Latin America and the Many governments have recently instituted Caribbean: 1989 Populalion and Per economic-policy reforms that are radically dif- CBapitaGNPCapita GNP Ordor' Countries ounringeFiscal ThearsThat 198recent ferent fromdecades. the Thepatterns movement that were has followedbeen away in Borrowed during Fiscal s ears 1989-91 - from a broad role for government, highly pro- Per eru.,. tected industrial development, extensive regu- C-uni. PihuI0.'nJ tdi lation of the private sector, public ownership ts,un~~~~~~Il .r,oi....ndJl1i it .5 d'lI.,r> . of productive assets, and large budgetary def- Argntina l1.9tiU 2.A61 icits. The new pattern of economic policy Bdhamra;. Ihe 249 11.32"1 emphasizes smaller and more efficient govern- ments, privatization of government enterprises, Brazil 14 314ki') 2.'4 more open foreign-trading regimes, deregula- Chile 13 0t1Jl I.-') tion of financial and commodity markets, and Colornbia 321.,31) I1.20It reductions in public-sector expenditure imbal- Co5tu Rica ' .70u( I ances. There is also a greater awareness of the Dominican relationship between the environment and eco- Republic . 79 nomic development, and increased emphasis on Ecuador 10.,3)41 I .1211. broadening opportunities for the less privileged El Sal. ddiJr ".10'? l .1ou and providing safety nets for the poor during the Guaieniala 8,94)41 911) adjustment process. Guvanai -9 * h 4tj .Regionalaggregates tend to obscure the 6i.,4iJ0 .e,r) wide range of individual country performance. Hondura, ij)10Il)o For instance, the overall numbers combine Jamaicjt 2.1411 l .29'). countries with positive per capita income hIexicci 7 |.4,60i0 2.On14) growth, such as Colombia, Costa Rica, El St. KiMi, and Ne%is 41 Salvador, and Paraguay, with countries having St. Lucia 144 l.6'J declines in total output, such as Argentina, St. Vincent and Brazil, and Peru. ihc Grenadines 113 -. In some cases, growth is low or negative Trinidad and because countries have only very recently be- .34 t 3~.1 I l t)tlgun tox undertake5 major stabilization and ad- LJrLigutd\i 1.l(40 2.620 justment programs; in other cases, it is low \-enezueli I9.:1Ifi NO.{) because restructuring has not yet taken place. N.-,TE The 1 4M viiir-. .11 GNP Fr% c-,rIi, prL entld For example, in Argentina and Peru, negative aicaboe trom ihe "World De:.el.rnmemn IndJ,aiorc .e.. growth is the product of hyperinflation and the lioin.if Wild I /..l.r,rlR.p.rR/. l initial impact of stabilization efforts. Signifi- a Eri,mite, [rnm mid 141' cant structural reforms, including restructuring 14.t., IBd,i. AU.,. meiho,ciro'i'.l hJ' in b.he ne d ... of the public sector and trade liberalization, rGnP er crita c irnaed a bv In ihe .2.3"; - have just begun and have had an initial nega- rdnge tive effect on growth. In Chile rapid growth ii. (j'Pr.er capita e'.ilmakd iinbc fl ihc>iI-> dring.b growth. Ind199Cie racpaiedgrw during both 1988 and 1989 was accompanied by 134 1991 Regional Perspectives

a resurgence of inflation in the range of 30 Patterns of Reform, 1983-91 percent annually. Efforts to tighten monetary policy in 1990 reduced inflation but also tem- While each country is unique, the patterns of porarily reduced growth. The economy is ex- reform being followed by countries in the Latin pected to recover significantly in 1991, how- America and the Caribbean region contain ever. In Brazil, negative growth is a result of many similarities. In order to summarize this intermittent efforts to stabilize fiscal finances experience, it is possible to group countries and to control credit policy. into four broad categories: Performance in the region has also been * those with a record of sustained reform affected by changes in the international envi- during the latter half of the 1980s (Bolivia, ronment, including higher oil prices, and a Chile, and Mexico, for example); slowing of growth in the developed countries, * those that lately have shown increased particularly the United States, which has commitment to policy and institutional change, slowed growth in demand for manufactured in some cases after a series of failed programs exports. The sudden increase in oil prices after of adjustment (Argentina, Brazil, Colombia, August 1990 significantly raised the cost of oil Ecuador, Jamaica, Paraguay, Uruguay, and imports in many Latin American countries, Venezuela, for example); although it also benefited oil exporters such as * those having economies severely eroded Mexico, Trinidad and Tobago, and Venezuela. by economic mismanagement and internal Some of the countries most seriously affected strife, but whose governments have recently by higher oil prices tended to be those smaller initiated major economic reforms (El Salvador, and poorer countries in the region that are Guyana, Honduras, Nicaragua, and Peru); and highly dependent on imported petroleum, such * those in which programs of reform and as Belize, the Dominican Republic, Guyana, restructuring are still being developed (Domin- Jamaica, and Nicaragua. ican Republic, Guatemala, Haiti, and Panama).

Table 6-li. Lending to Borromers in Latin America and the Caribbean. bh Sector. Fiscal Years 1982-91 i nimlion. uf l S doll,^i Annu.d

Seijor l,_sth JQq9 I 9SS litS9 1 9t) 1 .91o Agricultuie .nd Rural DeIclornieni 1. I "'.11 I4.4'14.b 164N. 557 94 1.5 Developmt:nt Finance comn.anic 2h2. I 4. i41 9y'4I. 1.164 3 471 1 #4-t 5 Educa,tion b4,.3 b%44) .S.. 1I-t ll! - 5. Energp t)l1. ga, and c.I If;.q 111.4.4 - 941a - 260.4' Po%%er iQi 6 4'3 S 423 0 7-it) 0 S97 ' indus',r! hl h 16 1.l.hw O4 86411i _ 200.44 Nonpro.ject 2h7 I 1t1411. .11 692 I I 1.3,7 '1 422.3 Popuiaticn. Healih. and Nuintitr 411u i ili Ill9.1J 40I 389 2 3731 Publj -ictctr l..ndgenient - - - 5ull t) 350.l h4.14.t Smai!-scale Enterprile, 2I .,. I.7) _ 10 > .5 -

lechnixal ANs.,ince 21 15. - ,.. 59.41 68 8 Telecommunicu'onm, 14A - - 4*l) - Trrinpori.ahion 4SII 5 524.3 1141.6 14Q l 1.j129.0 114.tl L'rban Delwdopnieni ls).I fl5.U 491 0 67".tl 45'.1') 364.1 \L,t:r Suppl% dnd Se%%erage 16h 4 rt4.i 5 3 3241.4) 77 485.0

ToL.l .5.52.4) 5. 5.264 u1 5 .4 I 5.964.7 5136.7

O'.%hich IBRD 3.i42' 4 994 f 5.151.nI . ii... 5.726 7 5.06-7.' ID-\A5 t IS" 4 12.il 138 4 238. I 4h99 Numher A' operanoni 42 3-1- 43 41 44

NOTr Dela,t m-., nor .dd iti ,.'ji, lIcc.,uM, o1 r.oludninl. Latin America and the Caribbean 135

-a -. _6- . - -S,

I-A . - B - S

I ,,. , t-K_; A - This boy in San Salvador may be among the more than 1 million beneficiariesof a project, approved in fiscal 1991, that willprovide basic health and education services to the poor

In general, reforms in the first group of stabilized at around 15 percent a year. Import countries have covered such areas as reduction tariffs have beeni reduced to about 10 percent, of tariffs and elimination of quantitative re- prices have been liberalized, and a flexible strictions on foreign trade, liberalization of exchange rate is in place. financial-sector regulations (including controls In the second group, the changes under way on interest rates), privatization of public enter- in Argentina, Brazil, Colombia, and Venezuela prises, and appropriate adjustment in taxes, are probably the most substantial. In Venezu- public-sector prices, and expenditures to re- ela, key prices, such as exchange and interest duce public-sector deficits. rates, have been freed, subsidies have been Chile is the most advanced country in this heavily curtailed, trade is being liberalized, a group, having been one of the first to start the reform of public enterprises and the financial process. It has had a steady growth for the past system is in progress, the public-sector deficit six years, and the investment rate is now at an has been virtually eliminated, and an agree- historical peak. In Bolivia and Mexico, the rate ment reducing debt service to commercial of growth attained so far has been more modest banks has been implemented. In Colombia, the than in Chile, although the reforms have been government has decided to open the economy, very impressive. In Mexico, over 900 public deregulate and reform public enterprises, and enterprises have been closed or privatized liberalize the financial system. The first steps since 1982, including the two largest airlines, in each have already been taken. In both the telephone company, and the largest copper Venezuela and Colombia, the combination of a mine. The privatization of commercial banks is rich natural-resource base and recent policy in an early stage of implementation. In Bolivia, reforms makes for very favorable growth pros- after years of economic mismanagement and pects. hyperinflation, major reform has been imple- In Argentina, a highly visible and deter- mented since 1985. Fiscal imbalances have mined effort is being made to change the been kept under control, and inflation has structure of the economy. Privatization of ma- 136 1991 Regional Perspectives jor public enterprises is a key element in the process are somewhat better. Far-reaching reform program. The program of privatization changes to improve macroeconomic manage- and debt-equity conversion has already re- ment, deregulate economies, and liberalize ex- duced Argentina's commercial debt by $7 bil- ternal trade have been initiated, and steps have lion, or about 20 percent of its long-term debt been taken to reduce the burden of adjustment to commercial banks. In addition, a program of on the poor. tax reform is being implemented, and the fiscal Costa Rica has largely avoided the sort of deficit has been reduced sharply. Government crises shared by other Central American coun- expenditures are being cut through administra- tries. It has implemented, albeit with occa- tive reforms and an early-retirement scheme sional slippages, a program of economic re- for government workers. The financial system form and has enjoyed modest but steady is gradually being rehabilitated, and interest growth. Recently it concluded an agreement rates are now set by market forces. In foreign with commercial banks, substantially reducing trade, quantitative restrictions have largely the burden of debt service. Governments in been eliminated, and the maximum tariff has Guatemala and Panama, however, are still been lowered to 24 percent. In Brazil, the attempting to define a viable recovery program government has reduced the fiscal deficit of the and assemble the finance needed. central government, and public employment Economic performance and policy response has been cut. Trade reform has eliminated on the part of the countries of the Caribbean most quantitative trade restrictions and will region, by and large, have been relatively reduce tariffs. Inflation remains high, how- strong. ever, and the government has been unable to In Jamaica, the government has advanced control monetary expansion. the reform agenda in recent years. Trade is Countries in the third group are those that being further liberalized, the role of the public are just beginning reform programs after a sector is being reduced, interest-rate subsidies period of unorthodox policies or long periods are being eliminated, and the exchange-rate of internal strife. system is now market-based. Peru has suffered a significant erosion of In Guyana, the government has introduced a economic institutions, policies, and infrastruc- radical change in economic management- ture during the past several years. Since Au- from a system based on state intervention to a gust 1990, the new government has been market-oriented one, with a much greater role implementing a major stabilization and adjust- for the private sector. The adjustment program ment program designed to deal with inflation is constrained, however, by shortages of man- through more restrictive monetary and fiscal power and external finance. policies, as well as to liberalize foreign trade Overall, the countries of the Eastern Carib- and deregulate the economy. Payments of cur- bean have grown steadily, helped by good rent debt service to multilateral institutions economic management, preferential access of (including the World Bank) have been re- their exports to the European Community sumed, and, as a result, arrears to international (EC), the United States, and Canada, and organizations have been frozen. Although the capital flows under the umbrella of the regional initial effect of the new economic policies has consultative group chaired by the Bank. been positive, Peru still faces daunting prob- Changes in access to the EC after 1992, how- lems, particularly in consolidating its stabiliza- ever, could adversely affect these countries. tion effort, rebuilding the base of infrastruc- Haiti's economy has suffered from a decade of ture, restoring social services, and finding stagnation and disequilibrium, caused in part solutions to deal with arrears owed to foreign by political instability. The recent inauguration creditors. While the new economic program of a new, democratically elected government has balanced the budget and reduced inflation provides an opportunity to begin to address the considerably, inflation remains high (over 300 fundamental development issues of that coun- percent a year). try in a concerted way. In Central America, Nicaragua faces a situ- ation similar to Peru's; it needs to reestablish Lessons Learned economic policies and institutions while it re- Economic change on such a wide scale, and habilitates key infrastructure and facilities in over so short a time period, is unprecedented order to facilitate a recovery of economic in the region. Clearly, the process has not been growth. Nicaragua and external donors are smooth or easy, and setbacks are likely to working together within the framework of a occur in the future. Even so, there are certain consultative group chaired by the Bank. In El lessons to be learned. Salvador and Honduras, the conditions faced First, the restoration of confidence takes by governments at the start of the reform time. In Mexico, it has taken eight years of Latin America and the Caribbean 137 sustained reform to restore public confidence cases, the Bank has directly assisted these and an adequate level of private investment. efforts (see Box 6-1). Today, domestic capital is returning from abroad, and real interest rates are declining. Debt and Trade Restoration of economic growth also takes Progress continues to be made on resolving time. Fundamental restructuring of the rela- the problems of high levels of debt and debt tionships between the public and private sec- service. Agreements were reached between tors inevitably brings about a sharp reduction Venezuela and Uruguay and their commercial- in output in the early years, and revival is slow bank creditors in 1990. Both agreements in- as private-sector confidence returns and public cluded debt buybacks, debt exchanges, and infrastructure is rebuilt. new-money/debt-conversion facilities. Second, the restructuring of the public sec- The Uruguay agreement covers the entire tor and the elimination of large fiscal deficits $1.6 billion of rescheduled commercial-bank are fundamental to a successful reform effort. debt, while the Venezuela agreement covers Many initial attempts at reform failed because about $20 billion of its external commercial of inadequate efforts to eliminate the fiscal debt of $35 billion. Brazil reached an agree- deficit. More important, however, successful ment with its commercial-bank creditors in reform of the public sector requires a funda- April 1991 on the refinancing of $8 billion in mental rethinking of the role and responsibility payment arrears. The settlement of the arrears of the public sector in the economy. Through- problem is the first step toward a possible out Latin America, steps are being taken to debt-financing package. For Chile, the com- improve the efficiency of the public sector, mercial banks agreed to reschedule $1.9 billion shift its activities to the private sector wher- of repayments falling due during 1991-94 and ever possible, and reduce its overall size. Ef- to subscribe to $320 million in new-money ficiency concerns relate not only to the way in bonds over the next two years. Colombia suc- which the public sector spends its resources cessfully negotiated with its commercial cred- but also to the way it raises resources from the itors for the refinancing of debt service falling private sector. These concerns have led to due during 1991-94 in lieu of debt reschedul- major programs of tax reform. The restoration ing. Official debts were also rescheduled dur- of fiscal discipline may also require institu- ing the year through the Paris Club for El tional changes that affect the relationship Salvador, Guyana, Honduras, and Panama. among different parts of the public sector-in- Some progress was also made during the cluding central and regional governments, pub- year in strengthening regional trading arrange- lic enterprises, autonomous agencies, central ments. Argentina, Brazil, Paraguay, and Uru- banks, and so forth. guay agreed in July 1990 to establish a full Third, domestic and external economic man- common market (Mercosur) by the end of agement are both highly interdependent and 1994, two years ahead of the original target. mutually reinforcing. Thus, programs of pub- Although the Mercosur was preceded by sev- lic-sector restructuring have to be combined eral unsuccessful attempts at regional integra- with programs for liberalizing trade and resolv- tion, prospects for success are better now, ing external-debt problems. In Argentina and given the rapid increase in trade among these Brazil, for instance, early efforts at reform countries since 1985 and the strong commit- were undertaken while external-trade restric- ment to liberalization and deregulation in the tions and distorted incentive regimes were region. maintained, both of which added to domestic Mexico began negotiations in 1991 with the inflationary pressures. At the same time, the United States and Canada, its most important absence of an agreement with external credi- trading partners, for the possible establishment tors increased skepticism about the success of of a free-trade agreement among the participat- stabilization programs. In contrast, reform ing countries. Chile is making preparations to programs in Bolivia, Chile, and Mexico have begin similar negotiations. Under the Enter- all been accompanied by workouts with com- prise for the Americas program, the United mercial banks that reduce debt-service bur- States has indicated its willingness to broaden dens. this approach to cover other countries in the Finally, since adjustment is a prolonged pro- region, with the eventual goal of establishing a cess and growth is slow to recover, special comprehensive free-trade agreement for all of measures have to be adopted to protect the Latin America. The enterprise initiative will less-privileged groups, maintain essential so- also provide additional support for privatiza- cial programs, and implement specific basic tion, liberalization of investment regimes, and health and education programs targeted to debt reduction, largely funneled through the reach the poor and the vulnerable. In many Inter-American Development Bank. 138 1991 Regional Perspectives

!'inmh-I. Pinerr .Alleiiation thr(ough Trargeled Programs in the Social Sectors Bink prtoIcLts add-r'-s rgLi)nil pts err' o-ncerns A maior sehicle t-r taretne assis.tancc rtthe irn a %reie it sJ-. iracludin m t roeoorrismic poor has heen Bank sLipport tar social tunds thji aidtusrnmien that, in the medium I%ilon term. pros idc linancine tar smill-scale. enmplovment- fLe r, ., he dl mand t'r I irandv,'4k71i-;cccr creatinf.l proltcC.E oltnn thC socdia sectors. To prolcc!s th.t incrcese the hum.an-capital potentil date. the Bank has -upporied ihe estabhilshment It lie poor. Tlhe itel tL that arise trom such it such funds im Bair a. (Cuaiemral. IT:iiti. H(on- .sdjutmentmind prol,,ect. how%ever. tend to occur duris. Janica. and Venezuela. BLolsIas emCr- is er the rinper tvrm. I he B.ank is al-so supporting ycrnes social tutid iESFi was one o th tirst to be pr qvcs %,Itirani.r,neL iMmedIt arid directLiMpacl esiahlished. The ESF. tbgun r,n1t,4h. 535 ,de- [tht lip prceseti iignitic-nt dchclneb llitlhc 'in- signed to provide itnanre ntr inCrmc-uener3ring dard Of lie1ing 0t thi p,.-r ihrouch urg-cted inter- dnd crrplY.syment-ceneratinig projecis. as w%ell as jcnnt ris in the social seciors. Thu-c inter%en. sicisil-assistinc- activit'es. T'he tain objeclive of tien- aim imrnprm.sc dlrIctl\ the qualit\ of lie sit thi ESF\was to pros ide cniploymeni prm.mmptl\. A lhc p.' 'r K pros ding. i''r instance. improsed similar program. the social inveniment tund. v-as I-nuri'tion. primars hcalth cire. %satcr and sc%ktr- suhsequentl erv:b3htshc. If pr.)' ides . more pcr- aCe NVr\icLs. andtisld to thse hselos, a thrcshold minentr-vehicle tir tundine smalIl-scale projects in cO LIuiJipTion lexel. I'he klc e;,nsidc rations in thh the s.'ci.l Lectcrs. is hbeter mnegrated into the d'ilr.n !t1 provtct' ire rto minimize the counary s eLLrilt public-insl siment program. ILAkae .t taLIr-ted prmsgT:ems to un'intendcd btrn- and 1s more closels ci,ordinated sish line minims- Ici :sri .t-id ro nulinnitsz, adminIsLer.IV,e 4:s. tr,es. Cher ihe past lith years. thc Bank has prok-cp ecIs tAke onA.a s.trie:t ,i h,pec and ;upr.orted thefe tund- %%ith three IDA crcedits. iih,- Fu,r inst,nce i he chl,l-h .rc .fl nih ri- r.ic,-RI pr' era,ins L ;nr alm he deseltmped as orli pmrjcrci In Col-rrt-i I I Jrpr edc inim vt e:il list1 pjan of larger adjustment operaion.n. FrT in- i ijriN-ireneihemnin tihe c1,Lntrx s xis\tiri caM- -tmnce. two agricaliural.sreceir adjustment lo:ans uiui da-e proi amnarid ensurins it, 'us- 1.mlxico rapprmned in iseal 1%-s and fis;cal tail.ti Hits progr.rinl prosnIdC trainine and 1Itilt isupport a numher it retorms in the: aricul- li mu-inc i,nproienenris tar .unimrin s ho providc tural Setor. including ration:ilizatson at public d.si -care -rs Ic in tei.r homes tor mA,jor %sorking insvestmrni and privaLiatisn of para.svttals. Lin- im lilk r. E-inilIed children receis einiprss ed ni- iarge-icd subsidies, n thL torri of comtrols cm taod triii.,ri 1d;inL di take p.ar in precho,ol learr- priccs. are bcm eliminjted. and the prescrn Ing acioitres. The proctrnm is taiicid it the ;sss:rni it targeitd subsitleu is being improned to p.sii,ei rirhall niclihobhi mindsand pe mitts panlic- lmiiii. 1-kagen-its hcsc %shmi are nor poor and ipating mriiOicrhelI.s seAIsnplivnient Mutsid,e o to expand co,s rage in rural areas In addition. hber,me - I li Bank lor- i- in.ncing suppties. the oo\ernminent Is mnreasingls using the healih quipn-ricr. and bouuine trpnprsenherts tmir ihe sN5-em toi idenith eltciible benctnetarte for its pnorijm. aselli, Ja training and iechnie-it a s-i-;t thod jnd nutrition programs. t3n;1c-. In the case mit Venezuela. targeted prmogTams In exic-wo. ihe Bjnik-aj>sitd baste he ,lth-care %%Lr, destloped s ,thin the anrit ot a -iructurnl- pti'lct miniv' istrencihen mdnxtcnd halth-c-.rc adjustmcnt loan approsed lIte in fiscal Is.V4. rs CeS--i 13 miltltn psll r peo-ple in1 Inditnridt food subhidies oiperating through a mul- hL llh 1t1un'diLlMions. Beides prs-siding for eqluip- tiplc exchange-rate siistem "Icre phased ilut and menu. turnitur,. and bsasmcmeJicul supplies. the direct transfer pnigrams. includine one that pro- pr.tect alo suppmsrts insiltutond impr-sements xides direct cash grants to pmi..mr households with ItrLnrlh _icrta.na c apajbilix ri t nhancen childrfn in chosal Ln theNisot. .%.were intridueed thel etiC fit :ind eftetis enes-' ontthe helh-carc or expinded. Thr tean als pri-sided tcchnotat .ienim .,nd -trenmthen the intplementatoin at a-si'tan,e for the estabhlihment of a Pilot prs- ,ci'ntrAte.kritrs Iic ,e rctirnis aim at dcenLtral- gram it hclth and ruiti iimin;al asIiitance ler 17ine buuJeet isr . manan.w enm-. and operational suinerable groups. Fos.l disirlhultion tar ih. responsibiltlies from thc t-Jeral Is-el ioi the state,. nuiTilion coinponLyni Was etteLted through pJi In Ftraa-l. children in psoor urhbn cinmmunitiLs 3ate-sector conitdctors. These programs %erc has-e hhl, itiol-dr-spout and rcpctittin raft. exp.iided a3id exiended through the Banks; icil- tOciuse ot poor t.icililies. pi'e h tealih and nuIri- 1mm.%-upocial-dc'eloprneni protect. approved tio.s nd- 1,et,.lc .upp rpptrisehnit en%ironment -. duringp the past -car. Ihe S.Imi P als sntr atirsns in basic educLitiLn T-he sirultural-adjusinteni loan to El Sdlsador ptoic -l. app ro.c-d in tisc .1 1'r4i. is dei 'lene ni sIssi includes prosranas amed at the most nutri- ,addrcss t[hse prsivlems. Planned reform, include tionallk vulnerable gr-ups. including babies at a ne-s currncular approsach. sehossi cinsTruciion in the weaninm stg - The ginssernmtne plans to poor rneicehhrlii-sisds. t loiter schosl dat1 . teacher introduce three pilot programr during 19$1-t' : training.-. evpanyde:d meal prrgr:ims. a preschicol Provisions in the prmgr:inis include ihe distribu- supp' rt lurid . rethirni .I the schi-ili health pro- lion of nutritionaliv Itrritied cookles toCprimar\ - Eram. in. a duc.aionral teles ishin direc ted to\ward school children, the distribution of weanine toad. p.-r cdldIren aiid Ihe distributioi st to1,d es.suipns. Latin America and the Caribbean 139

Table 6-12. Net Transfers to Latin America and the Caribbean Im,l.lon UitI lS LS 1l,'ir;: Ii,aI I,r-i

Brazil Mc\co' .-\rret1In 1Tiral rcs.ir.

IvCm U,I l-,4I !IJ114\-l t1> J !%lvJ1 1Is.7-111 Ilu"l I | IBRD and IDA commitmenr u!055' 3..s5 . 111.4> r,llI 3Y.IN. s 7.il Grols~ diNbursemrunis .&2 5.2" 1,314 .s.421 457; 4.>s 22.AS Repa%nlin .I. ' ''22 54 , 41,s `4 1.11411 3.l,4, I 21 Net d1shur.icnlcnl - 40t N7 4't1 ti.JI-I l'2 1.4-'4 I 'i. In2 Inrercst dnd clhr!cs '34 3434 Snt 3.113% Ih)I 7sf 2. 11il3' Net lrant.ter -1.2'30 -3.1h -4411 I .'rn -14 -11 .''cri -

N*)rL-: Dt,tbur1mcni trommirue i \ Spcc.i I ur.d Ir mrIlddU,d Ihc C,).i1fiiri . n [nthic i., - r,lh-. %%,rihIh. Ifr:e'i

dmounis ui puhli or pubIwllI gu.iraiilccd 1gig- t', dchi. D tml,iiIn liTo add I- lh_its 'Cc .1 iI.wr .ine

Other initiatives aimed at establishing free- 1990 to $215 million. Disbursements during the trade areas in the region include those of the year were $4.3 billion, and repayments to the Andean Pact (Bolivia, Colombia, Ecuador, Bank were $3.6 billion, yielding net disburse- Peru, and Venezuela), which plans to achieve ments of $641 million, an amount considerably an almost total free-trade area among its mem- lower than in the previous year (see Table bers beginning in January 1992; the Group of 6-12). This is a result of the high level of gross Three (Colombia, Mexico, and Venezuela), disbursements achieved in fiscal 1990 when which is negotiating an agreement on trade and large amounts of adjustment lending (including investment aimed at the liberalization of trade a debt-reduction exercise) were committed to and deregulation among its three members; Mexico. and Chile, Mexico, and Venezuela, which be- Adjustment lending, which amounted to 30 gan negotiations in 1990 on ways to achieve percent of total lending in fiscal 1991, remains free trade in the near term. an important instrument for supporting major reforms being undertaken in the region. In Activities of the Bank, Fiscal 1991 general, adjustment lending has shifted away In the context of the rapid changes taking from broad structural-adjustment lending to place in the region, the Bank has played a one that places greater emphasis on sector multifaceted role, providing economic advice, adjustment, particularly in such areas as pub- in-depth economic and sector analysis, and lic-sector and financial-sector reform. Major financial assistance to support adjustment pro- adjustment loans undertaken during the past grams, as well as debt and debt-service reduc- year included the public-enterprise reform loan tion schemes. In many cases, the level and in Argentina ($300 million), a public-sector extent of the Bank's involvement cannot be reform loan in Colombia ($304 million), and, in measured in terms of loans extended or eco- Mexico, export-sector development ($300 mil- nomic reports produced, as it often consists of lion) and agriculture-sector adjustment loans informal advice and suggestions provided over ($400 million). a long period of time. As adjustment programs Structural-adjustment loans in El Salvador are gradually being carried out, the Bank has and Honduras supported major reforms in been able to shift its resources from adjustment trade liberalization and public-expenditure re- lending to other high-priority tasks, including direction. In El Salvador, the Bank's structur- sector and project lending for environmental al-adjustment loan is supporting a program of protection and human-resource development. economic revival and poverty reduction that is In fiscal 1991, total new loan commitments being put in place despite the problems asso- of $5.2 billion, involving forty-four operations, ciated with a decade-long civil conflict. Lend- were provided to the region. This was a slight ing to Honduras was suspended in 1989, and reduction from the level of $6 billion achieved the country was placed in nonaccrual status. in the previous year. The drop is partly ex- The installation of a new government in 1990, plained by a decline in lending for debt reduc- however, led to the definition of a new pro- tion, which slipped from $1.3 billion in fiscal gram of adjustment, the clearing of arrears to 140 1991 Regional Perspectives

international financial institutions, and the re- clearing process and the external financing of sumption of lending by the Bank. In addition, the program. the Bank continued in fiscal 1991 to support The consultative-group meeting for Hondu- debt-restructuring programs with loans to Ven- ras, which took place in December 1990, fol- ezuela and Uruguay for debt and debt-service lowed a series of donor meetings that had reduction. taken place the previous year. The group fo- Traditional Bank project lending continued cused on Honduras' external-financing needs to constitute the majority of Bank operations in for 1991 and on the government's poverty- the region, totaling more than 65 percent of the alleviation efforts, particularly the establish- year's lending. Mexico and Brazil were the ment of the Honduran Social Investment Fund largest recipients of project loans. In addition and the government's plan to restructure the to traditional project lending for water-supply social sectors. systems, agriculture, and transportation, lend- The first consultative-group meeting for El ing in the region increasingly emphasizes Salvador took place in May 1991. The meeting health and human-resource development, mu- reviewed the government's economic-stabili- nicipal development and decentralization, and zation and adjustment program, with particular the development of science and technology. emphasis on the social sectors. Donors ex- Project loans during the past year for Mex- pressed their satisfaction with the encouraging ico, for example, provided support for water- results of El Salvador's economic and social supply and sanitation improvements, basic program to date and commended the thrust of health services, and decentralization and re- the adjustment efforts. They especially noted gional development. An innovative loan of the enhanced role of nongovernmental organi- $150 million to Brazil is supporting scientific zations and the private sector in the govern- research and training by providing grants, ment's program, and emphasized their hope awarded on a competitive basis, for university for a peaceful resolution to the civil conflict. research in various sciences, as well as the The fifth consultative-group meeting for Bo- development of support services for this re- livia (November 1990) was encouraged by the search. Social-development funds, which pro- continued commitment of the government to vide support for small, employment-creating, economic reform within a democratic frame- investment projects in poverty areas, are being work, the maintenance of macroeconomic sta- supported in Haiti, Honduras, and Venezuela. bility, and Bolivia's efforts to improve social conditions and preserve its environment. The Cooperation and Cofinancing Bolivian delegation presented a new antinar- The Bank continued to act as chairman for cotic development program that explicitly set consultative groups for several countries of the the solutions to the problem of the coca econ- region. Consultative-group meetings were held omy within the broader context of the govern- for Bolivia, the Caribbean Group, El Salvador, ment's growth, poverty-alleviation, and envi- Honduras, and Nicaragua, including subgroup ronmental-protection strategies. meetings for Guyana and Haiti. During the year, the volume of cofinancing The first-ever consultative-group meeting to countries in the region was $2.1 billion for for Nicaragua met in Paris under Bank chair- twenty-one projects, a drop from the unusually manship in December 1990 and included rep- high level of the year before. The IDB was the resentatives from seventeen countries. The region's largest source of cofinancing during initial focus of the group was on the reintegra- the year. Cofinancing arrangements with the tion of Nicaragua into the international fi- IDB included fourteen operations for a total of nancial community. The members reviewed $1.4 billion. Japan remained the largest source Nicaragua's stabilization and adjustment ob- of official bilateral cofinancing through the jectives, its external-debt situation, and its Export-Import Bank of Japan (three operations technical-cooperation requirements, as well as for a total of $275 million) and the Overseas mechanisms for the settlement of arrears to the Economic Cooperation Fund (two operations for World Bank and the Inter-American Develop- $85 million). An export-credit enhanced leverage ment Bank (IDB). Subsequent donor meetings, (EXCEL) program for up to $300 million for the including a second consultative-group meeting export-sector loan to Mexico is being discussed in May 1991, helped to firm up the arrears- with export-credit agencies. 141 Section Seven Summaries of Projects Approved for IBRD and IDA Assistance in Fiscal 1991

Acronyms and Abbreviations Used in This Section ADF-African Development Fund ICOD-Intemational Centre for Ocean AfDB-African Development Bank Development AFESD-Arab Fund for Economic and Social IDB-Inter-American Development Bank Development IFAD-Intemational Fund for Agricultural AGCD-Administration generale de la Development cooperation au developpement (Belgium) IFC-International Finance Corporation AIDAB-Australian Intemational Development IsDB-Islamic Development Bank Assistance Bureau ITU-International Telecommunications Union AsDB-Asian Development Bank KFAED-Kuwait Fund for Arab Economic BADEA-Arab Bank for Economic Development Development in Africa KfW-Kreditanstalt fur Wiederaufbau BITS-Swedish Agency for Intemational MCD-Ministere de la cooperation et du Technical and Economic Cooperation developpement (France) BOAD-West African Development Bank NDF-Nordic Development Fund CCCE-Caisse centrale de cooperation NIO-Netherlands Investment Organization economique NORAD-Norwegian Agency for Intemational CEDEAO-Economic Community of West Development African States ODA-Overseas Development Administration CIDA-Canadian Intemational Development OECD-Organisation for Economic Agency Co-operation and Development DANIDA-Danish Intemational Development OECF-Overseas Economic Cooperation Fund Agency OPEC-Organization of the Petroleum DGIS-Directoraat Generaal voor Exporting Countries Intemationale Samenwerking SCF-Save the Children Fund EBRD-European Bank for Reconstruction and SDC-Swiss Development Corporation Development SIDA-Swedish International Development EC-European Community Authority EDCF-Economic Development Cooperation UNDP-United Nations Development Fund (Republic of Korea) Programme EDF-European Development Fund UNFPA-United Nations Fund for Population EIB-European Investment Bank Activities FAC-Fonds d'aide et de cooperation UNICEF-United Nations Children's Fund FINNIDA-Finnish International Development USAID-United States Agency for International Agency Development GEF-Global Environment Facility WFP-World Food Programme GTZ-German Technical Assistance Corporation WHO-World Health Organization ICEIDA-Icelandic Intemational Development WWF-World Wildlife Fund Agency

Agriculture and Rural Development Total cost: $82.7 million. ARGENTINA: IBRD-$33.5 million. Agricultural BANGLADESH: IDA-$75 million. The average services are to be strengthened through annual per capita income of more than half a investments in physical facilities, institutional million farm families is expected to increase as development, training, and technical assistance, a result of a project that supports increased thus improving the country's ability to produce, certify. and maintain high-quality agricultural products for export. Cofinancing is anticipated Data used in this section have been compiled from documentation from the IDB ($30 million) and Japan ($950,000). provided at the time of project approval. 142 Summaries of Projects Approved

investment by farmers in simple, low-cost minor CHINA: IBRD-$75 million; IDA-$200 million. irrigation equipment sold by private dealers for About 90,000 full-time jobs will be created cash under the government's liberalized policy through a fourth rural-credit project that will and institutional framework for private-sector- provide funds to the Agricultural Bank of China led minor irrigation development. Total cost: and its affiliated rural-credit cooperatives for $126.7 million. onlending to farmers, collectives, state farms, and BANGLADESH: IDA-$54 million. Some enterprises. Technical assistance is included. 314,000 families may see their annual per capita Total cost: $550 million. incomes more than double as a result of a project CHINA: IDA-$ 110 million. Rural incomes could designed to promote growth in agriculture double for some 630,000 poor farm families through increased private-sector investment in through crop diversification, increased yields, and minor irrigation facilities. Cofinancing ($88 livestock, fishery, and agroprocessing activities. million) is expected from the EC. Total cost: In addition, about 8,500 female village farmer $171.1 million. technicians will be recruited and trained to serve BANGLADESH: IDA-$35 million. Through a the special needs of women farmers. Total cost: strengthening of agricultural-support services $196 million. (breeder-seed operations and extension services. CHINA: IDA-$64 million. Per capita incomes for instance), agricultural production will may increase by an average of 180 percent for increase-especially of foodgrains-and a 130,000 poor smallholder farm families in diversification process, aimed at introducing Sichuan and Hubei provinces through increases in high-value export crops, will be initiated. production and marketability of fruit (mostly Cofinancing ($14.7 million) is expected from the citrus) forboth domestic consumption and export. ODA. Total cost: $59.4 million. Institutional support is included. Total cost: BENIN: IDA-$12.3 million. The provision of $136.9 million. agricultural services will be improved by COLOMBIA: IBRD-$75 million. A time slice of restructuring the country's agricultural the country's integrated rural-development institutions. Cofinancing is anticipated from investment program-consisting of small discrete IFAD ($13.5 million), France ($10.8 million), the projects in agricultural production and EDF ($9.8 million), the UNDP ($5.1 million), environmental protection and training and and the GTZ ($3 million). Total cost: $29.6 community organization, as well as projects to million. improve the rural infrastructure-will be BOLIVIA: IDA-$21 million. Some 2 million financed, thus helping to support the country's small and medium-sized farm families are decentralization reforms. Institution-building targeted to benefit from a project that will assistance is included. Cofinancing ($75 million) establish mechanisms to coordinate research and is expected from the IDB. Total cost: $250 extension activities and to develop technology to million. be used in association with key crops important to CONGO: IBRD-$15.8 million. More than half of the majority of small farmers who live in the the country's smallholders may benefit directly highlands. Institution-building assistance to the from a project that supports the government's Bolivian Institute for Agricultural Technology is efforts to increase production efficiency and included. Cofinancing ($3.5 million) is expected smallholder incomes by facilitating the from Switzerland. Total cost: $29.8 million. development and dissemination, particularly to BURKINA FASO: IDA-$16.5 million. women and youths, of relevant agricultural Community land-management plans, using an technology (primarily extension and adaptive innovative participatory and multisectoral research). Cofinancing is anticipated from the approach, will be designed and implemented in an UNDP ($900,000) and the EDF ($500,000). Total effort to stop and reverse the process of natural- cost: $21.7 million. resource degradation in order to meet the COTE D'IVOIRE: IBRD-$2.2 million. The two- conditions essential for sustainable agricultural year pilot phase of a medium-term program to production. Cofinancing is being secured from establish a viable process for strengthening the Norway ($3.4 million), the GTZ ($2 million), and institutional capacity of support services to better the CCCE ($1.5 million). Total cost: $25.2 address women's issues (by increasing farm million. productivity, improving marketable skills, and CHINA: IBRD-$147.1 million: IDA-$187.9 changing the perception of the role of women in million. By improving and expanding irrigation society) will be supported. Total cost: $3.7 schemes to permit greater productivity on low- million. yield and medium-yield areas in the North China ECUADOR: IBRD-$59 million. Almost 200,000 plain, farm incomes will be increased, as will people will benefit from the provision of production of staple foods and cash crops. Total infrastructure necessary for flood control and cost: $593 million. drainage in part of the Lower Guayas basin-as Agriculture and Rural Development 143

part of the long-term plan for the overall diversified farming. Help in improving planning development of the basin-potentially the most and in establishing investment priorities, along productive agricultural region in the country. with institution-building assistance, is included. Measures that aim at building up the institutional Total cost: $133.3 million. capacities of agencies participating in agricultural INDONESIA: IBRD-$125 million. Potential development and environmental initiatives are benefits from irrigated agricultural development included. Cofinancing ($7 million) is anticipated will be achieved by completing and fully from the DGIS. Total cost: $97.5 million. developing ongoing small and medium-scale EQUATORIAL GUINEA: IDA-$6.3 million. The irrigation schemes in thirteen provinces in the entire rural population of the country (35,000 Outer Islands. About 127.000 rural families may families) is expected to benefit from a benefit directly as new areas are brought under strengthened agricultural-extension service, irrigation, while the incomes of another 100,000 while about half of that group will also be families already receiving irrigation service are beneficiaries of private-sector marketing expected to rise. Total cost: $215.4 million. activities. Institution-building assistance is INDONESIA: IBRD-$15.5 million. A follow-up included. Cofinancing has been agreed upon with area-development project in Yogyakarta province IFAD ($5 million), BADEA ($3.9 million), and seeks to help the govemment develop the the OPEC Fund for Intemational Development processes, institutions, and technologies needed ($1.5 million). Total cost: $18 million. to foster sustainable development throughout the GHANA: IDA-$22 million. The long-term country's most critical upland watersheds with process of strengthening the country's the objectives of protecting the environment from agricultural-research system-with emphasis erosion and reducing poverty. Total cost: $25.1 given to the development of processes and million. institutional arrangements to ensure that research KENYA: IDA-$75 million. A second agricultural- priorities are in accord with national development sector adjustment operation seeks to improve priorities, the needs of farmers, and the incentives for smallholder maize producers. sustainable use of the country's natural-resource increase fertilizer availability among small base-will be initiated. Cofinancing ($1.8 farmers, and improve the efficiency of public million) is expected from the ODA. Total cost: expenditures. Targeted programs, based on the $29.5 million. govemment's food-security program, will be GHANA: IDA-$16.5 million. Efficiency will be promoted to protect vulnerable lower-income restored in the long-neglected noncocoa tree- groups, and new initiatives will be developed to crops subsector (coffee, oil palm, and rubber), prepare for droughts. Institution-building and an enabling environment will be created for assistance is included. Cofinancing, totaling $ 100 the development of pineapple and other million, is anticipated from the AfDB, the KfW, horticultural crops. Total cost: $22.4 million. the ODA, the DGIS. and the OECF. INDIA: IBRD-$40 million; IDA-$170 million. KENYA: IDA-$24.9 million. A second national In the wake of the May 1990 cyclone that caused agricultural-extension project focuses on creating an estimated $1,250 million in damage to a strong and dynamic agricultural-extension infrastructure and productivity in Andhra Pradesh system that effectively delivers technical state, assistance will be provided for reconstruc- messages particularly tailored to farmers' needs tion operations and for strengthening institutional and that aims to increase yield levels for both capabilities in cyclone preparedness and mitiga- staple food and export crops. Cofinancing ($6 tion. Total cost: $380 million. million) is expected from IFAD. Total cost: $47.9 INDIA: IBRD-S23 million; IDA-$130 million. million. The institutional framework for ensuring dam KENYA: IDA-$19.9 million. A forestry- safety will be strengthened at the central development project has been designed to govemment level and in the states of Madhya promote, on a pilot basis mainly, tree farming Pradesh, Rajasthan. Orissa. and Tamil Nadu. through intensified extension services: improve In addition, safety features will be upgraded indigenous forest conservation, protection, and -through remedial works and the installation management; improve the physical and financial of flood-forecasting systems and other basic management of existing industrial forest facilities-in and around selected dams. Total plantations: strengthen the capacity of the cost: SI196.8 million. Forestry Department; and upgrade forest research INDIA: IBRD-520 million: IDA-$92.8 million. and technical forestry education. Cofinancing is Improved agricultural technologies-particularly expected from the EC ($15.8 million), the ODA for watershed management. livestock, forestry. (S13.7 million), FINNIDA ($6 million), and the and seed production-will be introduced in Tamil SDC ($5.6 million). Total cost: $83.8 million. Nadu. and agricultural extension will be made MADAGASCAR: IDA-$19.8 million. The more cost effective and relevant to the needs of govemment's reform program for the livestock 144 Summaries of Projects Approved

sector will be supported through institutional commercial agricultural enterprises. In addition, strengthening, as well as through production- local capacity to formulate and implement long- development components that include improved term growth strategies for the irrigation and disease control and dairy development. cashew subsectors will be strengthened. Total Cofinancing is anticipated from the CCCE ($5.4 cost: $17.8 million. million), NORAD ($2.1 million), and the MCD NIGERIA: IDA-$78 million. The first stage of ($1 million). Total cost: $38.6 million. strengthening the country's agricultural-research MALAWI: IDA-$8.8 million. A fisheries- system so that it is able to generate appropriate development project seeks not only to increase technologies and adapt them to meet the fish production but also to (a) generate additional immediate needs of smallholder farmers under off-farm employment and income to help reduce diverse agroecological conditions will be poverty among women and the rural population initiated. Total cost: $104.1 million. and (b) conserve the natural-resource base of the PAKISTAN: IBRD-$36.3 million; IDA-$47.3 country's water bodies and prevent environmen- million. A quarter million farm families are tal degradation. Institution-building assistance is expected to benefit from a project that seeks to included. Cofinancing is anticipated from the increase agricultural production through effective NDF ($3.5 million) and the ICEIDA ($1 million). use of water saved as a result of improved water- Total cost: $15.5 million. management practices. In addition, the MALI: IDA-$24.4 million. As many as 450,000 government's financial obligations will be farm families will benefit from improvements in reduced through increased cost recovery from the country's crop, livestock, and forestry beneficiaries and encouragement of greater extension services, and, through a functional farmer involvement in the operation and literacy and numeracy training program for men maintenance of minor irrigation-distributory and women, most rural villages will be provided canals. Total cost: $155.5 million. with a core group of functional literates who PAKISTAN: IDA-$20 million. Agricultural would be able to manage the affairs of the village. production, primarily in Punjab province, will Total cost: $27.1 million. increase through improved and timely availability MAURITIUS: IBRD-$10 million. The successful of supplemental irrigation on a financially approach to coordination and policy reform in the sustainable basis. More than 1,300 government- sugar sector will be expanded to include the owned and government-operated tubewells, nonsugar sector through a project that seeks to which are expensive to operate and are poorly strengthen sectoral policymaking and maintained, will be replaced by 13,000 small- management capacity. improve research and capacity private tubewells, thus facilitating the extension services, and develop improved transfer of responsibility for future groundwater irrigation services. Technical assistance and development and protection against waterlogging training are included. Total cost: $18.1 million. in the project area to the private sector. A pilot MEXICO: IBRD-$400 million. The government's project will test the viability of the transition from objectives of increasing the rate of growth in the public to the private sector in Sindh province. agriculture, raising productivity and improving Total cost: $48.5 million. the efficiency of the agricultural sector, and PHILIPPINES: IBRD-$158 million; IDA-$66 alleviating the poverty of the most vulnerable million. An environment and natural-resources population groups through targeted food sector-adjustment program-consisting of a programs will be supported. quick-disbursing program based on policy and MEXICO: IBRD-$350 million. A project directed institutional reforms and an investment at poverty alleviation and decentralization of component in support of institutional public services will help finance core strengthening and regional, community-based infrastructure and social projects in the country's resource-management activities-seeks to four poorest provinces (Chiapas, Guerrero, preserve, or, wherever practicable, reestablish Hidalgo, and Oaxaca), thereby decreasing by an what remains of the biological diversity of the estimated 40 percent the gap in the population's Philippines. Cofinancing is anticipated from the access to roads, schools, and other basic social OECF ($100 million), the GEF ($20 million), goods. Components aimed at environmental Japan ($4.6 million), and the NDF ($1 million). preservation, archeological protection, and Total cost: $369 million. institutional development are included. Total PHILIPPINES: IBRD-$150 million. The volume cost: $1,363 million. of credit to finance private investments in fixed MOZAMBIQUE: IDA-$15.4 million. Some assets, incremental working capital, and seasonal 50,000 cashew nut producers may benefit from a production for a broad spectrum of agricultural project that seeks to rehabilitate and develop the and other viable rural investments will be cashew subsector and increase efficiency and expanded. In addition, the rural banking system profitability among medium-scale state and will be strengthened, both institutionally and Development Finance Companies 145

financially, and assistance will be provided in marketing of export crops, improving implementing improved rural financial-sector institutional arrangements for agricultural policies. Total cost: $203.5 million. research and extension, and increasing the PHILIPPINES: IBRD-$46.2 million. Through efficiency of public instruments). Total cost: support for the communal-irrigation program of $101.6 million. the National Irrigation Administration, which UGANDA: IDA-$21 million. As many as half a seeks to increase crop production through reliable million households will benefit from a project irrigation and improved agricultural-support whose objective is to reverse the decline in services, the incomes of about 20,000 low- livestock numbers through support for an income farm families are expected to be enhanced emergency national disease-control program and and stabilized. Total cost: $64.4 million. a tsetse fly-control program. In addition, the POLAND: IBRD-$ 100 million. Private farmers quality and cost-effectiveness of livestock will be supported and other private-sector services will be improved through institutional activities in rural areas will be promoted, reform, retraining, and the privatization of primarily through the restructuring of high- veterinary services. Total cost: $24.7 million. priority rural cooperatives. Technical assistance is YEMEN, REPUBLIC OF: IDA-$ 13.2 million. A included. Cofinancing is anticipated from the EC fisheries project seeks to expand fish production, ($29 million) and others ($6 million). Total cost: improve processing and marketing of fish, $180.2 million. improve the assessment and management of fish SRI LANKA: IDA-$29.6 million. Average resources, and improve the position of women in incomes of about 100,000 farm families are fishing communities. Cofinancing is anticipated expected to increase through a project that will from the EC ($16.3 million) and IFAD ($6.5 support a series of related actions designed to million). Total cost: $39.8 million. upgrade the level of services provided by existing irrigation schemes. Cofinancing ($4 million) is Development Finance Companies expected from the EC. Total cost: $49.8 million. BANGLADESH: IDA-$3.5 million. Funds from ST. KITTS AND NEVIS: IBRD-$1.5 million; IDA reflows will be provided to help supplement IDA-$ 1.5 million. Efficient conditions for the financial-sector adjustment credit approved in agricultural development will be established, in fiscal 1990 in the amount of $175 million. particular by replacing the one-year agricultural- BOLIVIA: IDA-$14.5 million. Funds from IDA lease system with thirty-five-year renewable reflows will be provided to help supplement the leases, thereby removing a major deterrent to the financial-sector adjustment credit approved in development of the agricultural sector. In fiscal 1988 in the amount of $70 million. addition, the financial condition of the sugar BRAZIL: IBRD-$300 million. Efforts by the industry will be stabilized prior to divestiture. National Bank for Social and Economic Cofinancing ($800,000) is anticipated from Development (BNDES) to reorient its focus to the bilateral donors. Total cost: $4.3 million. private sector and reduce its exposure to the TANZANIA: IDA-$ 16.1 million. Funds from IDA public sector, to reduce credit segmentation reflows will be provided to supplement the (whereby credit lines are directed to specific agriculture-adjustment credit, approved in fiscal targets), and to strengthen credit policies and 1990 in the amount of $200 million. procedures will be supported. Total cost: $1,198.5 THAILAND: IBRD-$30 million. The second million. phase of the national cadastral-mapping and land- CENTRAL AFRICAN REPUBLIC: IDA-$11.3 titling program, which aims to extend secure, million. Private-sector development will be documented land tenure to rural landholders, stimulated by a project that will channel credit strengthen property valuation in urban areas, through participating financial intermediaries for and improve revenue generation from land the rehabilitation of existing private firmns and the transactions, will be supported. Cofinancing ($5.2 creation of new enterprises. A microenterprise million) is expected from the AIDAB. Total cost: scheme, consisting of a revolving fund for credit, $73 million. institutional support, training. and studies, is also UGANDA: IDA-$ 100 million. The government's included. Total cost: $15.2 million. adjustment program in the agricultural sector will CHINA: IBRD-$150 million. Organizational and be supported by facilitating financial stabilization technological restructuring, as well as policy (by controlling credit expansion through reforms, will result in greater efficiency and better improved institutional arrangements for financing domestic and international competitiveness in coffee-crop procurement, as well as through four of Shanghai's priority industrial organizational and financial restructuring of subsectors-electronic components, precision market intermediaries) and promoting and scientific instruments, printing machinery, agricultural growth and diversification (by and electrical apparatus. Total cost: $319.6 creating competitive systems for processing and million. 146 Summaries of Projects Approved

COLOMBIA: IBRD-$200 million. Capital and industries. Cofinancing for the investment other support will be provided to assist the private component ($100 million) will be provided sector in renovating existing industrial production through an IFC-led syndicated loan, while capacity, increasing product quality and services, arrangements for cofinancing the adjustment building new capacity, and, where necessary. component are being pursued with multilateral phasing out capacity that is unlikely to produce and bilateral agencies. acceptable long-run returns. Total cost: $500 POLAND: IBRD-$280 million. Poland's efforts to million. develop and implement a broad privatization JAMAICA: IBRD-$30 million. The government's program of state-owned enterprises and to trade-reform measures, which are expected to implement restructuring across a major share of result in cheaper and better consumer goods and a its industry will be supported. Technical more efficient allocation of resources, will be assistance is included. Cofinancing ($69 million) supported, as will a financial-sector reform is expected from the EC and the EIB, as well as program, which should help reduce credit from others. Total cost: $915 million. subsidies, improve the allocation of credit, and POLAND: IBRD-$200 million. An action strengthen capital markets. Cofinancing ($50 program on the policy, regulatory, and million) is anticipated from the IDB and has been institutional fronts needed to support and extend requested from the Export-Import Bank of Japan. ongoing reforms in the financial system, as well KENYA: IDA-$67.3 million. Funds from IDA as to underpin its longer-term deepening and reflows will be provided to supplement the strengthening, will be supported. Institution- financial-sector adjustment credit approved in building assistance is included. fiscal 1989 in the amount of $120 million. LESOTHO: IDA-$21 million. Private foreign and Education indigenous investment in the industrial and ALGERIA: IBRD-$65 million. Interventions at agroindustrial sectors will be promoted through three universities of science and technology promulgation of policy reforms aimed at (together enrolling more than 41 percent of the deregulation of key aspects of the investment students in the science and technology streams. code, removal of distortions, and provision of excluding medicine) are aimed at developing an incentives; increased access to loan and equity institutional and operational framework to finance by indigenous enterprises; investment- improve the quality, relevance, and responsive- promotion activities; more efficient agroindustrial ness of higher education. Total cost: $130 million. parastatals; and institutional support. Total cost: BRAZIL: IBRD-$245 million. As many as $25.3 million. 120,000 preschool children and more than MALAWI: IDA-$32 million. By assisting the 670,000 first and second graders will benefit from government in further improving the investment a project that will finance programs to improve environment and strengthening institutions learning and reduce dropout and repetition rates engaged in term finance and investment among low-income children in primary and promotion, efforts to expand exports and improve preprimary schools in Greater Sao Paulo. Total the policy and institutional framework relevant to cost: $600 million. private-sector investment will be supported. BRAZIL: IBRD-$150 million. A time slice of a Cofinancing has been provided by the EC planned, eight-year program to strengthen ($100,000), and indications of initial support scientific-research capacity and training in key from the UNDP, the EIB, and USAID, as well as scientific and support areas and consolidate further support from the EC, have been received. ongoing institutional reforms will be financed. Total cost: $47.2 million. Total cost: $300 million. MALAWI: IDA-$7.2 million. Funds from IDA BURKINA FASO: IDA-$24 million. A fourth reflows will be provided to supplement the education project will help improve the quality of, industry and trade-adjustment credit approved in and increase access to, primary education; fiscal 1988 in the amount of $70 million. improve the quality of general secondary MEXICO: IBRD-$300 million. Help in education; and provide support to key sectoral implementing trade and customs reforms (aimed institutions. Cofinancing is expected from CIDA at encouraging efficiency and expanding the ($8.7 million), the EC ($7.3 million), and Norway tradables sector) and in assisting the Banco ($3.8 million). Total cost: $46.4 million. Nacional de Comercio Exterior to play a more CHINA: IDA-$131.2 million. Support for efficient role in trade financing will be provided. improved scientific training and research will MOROCCO: IBRD-$235 million. A program of continue through a project designed to increase reforms in the financial sector will be supported, the output of researchers, enhance the quality and and medium-term and long-term financing will be productivity of research in areas relevant to long- provided to eligible firms for investment term economic and social development, subprojects, mainly in private, export-oriented strengthen research management, provide for a Education 147

modem infrastructure, and encourage industrial standards in order to raise the quality of cooperation across institutional and national products. Total cost: $92.2 million. boundaries. Cofinancing ($1.6 million) is KOREA, REPUBLIC OF: IBRD-$30 million. The anticipated from the UNDP. Total cost: $238.6 quality of skill training provided in vocational million. high schools will be upgraded, thus enhancing the DOMINICAN REPUBLIC: IBRD-$15 million. A value of school graduates to prospective primary-education development project has been employers, by increasing graduates' immediate designed to improve the quality of primary usefulness and by improving their ability to adjust education, increase enrollment (by as many as to technological change in the workplace. Total 80,000) of children from low-income families, cost: $43.3 million. and strengthen resource management. Total cost: MEXICO: IBRD-$152 million. The quality, $17 million. efficiency, and relevance of the National System GHANA: IDA-$14.7 million. More than 18,000 for Vocational and Technical Education student places will be created through a project (CONALEP) will be further improved by that is supporting about 140 communities in their upgrading the quality of high-level skills training efforts to construct senior secondary schools in and middle-level technician training; selectively educationally underserved areas. Total cost: expanding the range of training activities in key $19.6 million. sectors; and providing institution-building HAITI: IDA-$12.6 million. A fifth education assistance. Total cost: $204.5 million. project seeks to maintain the gains made in basic MOROCCO: IBRD-$145 million. As many as education to date and to prepare for future 120,000 additional students will be enrolled in progress. Transitional measures to support long- upper basic-education schools in rural areas term improvements in access to, and in the quality through the construction, equipping, and and efficiency of, basic education, with emphasis furnishing of about 250 middle schools, as well as on the first four years of schooling and on the through provision of room and board scholar- rural and poorest schools, will be financed. Total ships. In addition, a national assessment program cost: $14.5 million. will be financed, as well as a comprehensive in- HUNGARY: IBRD-$150 million. The service teacher-training program. Cofinancing government will be assisted in its program to ($45 million) will be provided by the AfDB. Total alleviate the unemployment impact of economic cost: $238 million. restructuring and to invest in human resources so MOZAMBIQUE: IDA-$53.7 million. The quality as to promote economic and technological and efficiency of the primary-education system, competitiveness. Total cost: $339.8 million. as well as of the University Eduardo Mondlane, INDIA: IDA-$307. 1 million. A technician- will be enhanced through a second education education project, to be implemented in eight project. Institution-building assistance to the states and the Union Territory of Delhi, will Ministry of Education is included. Total cost: expand capacity in the polytechnic system and $67.9 million. improve its quality and efficiency, thereby NIGERIA: IDA-$120 million. The country's providing the industrial sector with engineering underfinanced and inefficiently managed technicians of suitable quality in the areas of civil, primary-education system will be improved by mechanical, electrical, computer, and electronics providing books and upgrading curricula, technologies. Emphasis will be placed on ensuring sustainable financing, and increasing increasing the percentage of polytechnic students enrollments. Institution-building assistance is who are female. Total cost: $362.1 million, included. Cofinancing ($4 million) is expected INDONESIA: IBRD-$150 million. A second from Japan. Total cost: $158.4 million. higher-education development project will PAPUA NEW GUINEA: IBRD-$20.8 million. By provide further support for efforts to improve supporting implementation of the government's quality and efficiency, as well as planning and national training policy, in-service training in the management, in both public and private public and private sectors will be strengthened, universities. In addition, the number of students and the supply of specialized high-level personnel with science and engineering skills will be to staff the government's policy and planning expanded, and the quality of natural science and agencies will be increased. Total cost: $23.1 mathematics education upgraded. Total cost: million. $282.4 million. PHILIPPINES: IBRD-$200 million. The KOREA, REPUBLIC OF: IBRD-$60 million. The government's three-year physical-investment government's emphasis on technology-intensive program in elementary education will be industrial development will be reinforced through supported, the groundwork for reducing the a project that seeks to strengthen industrial elementary-school dropout rate among children research and development and basic research of poor families will be laid, and literacy training capacity and to enhance the application of for out-of-school youths and adults who lack 148 Summaries of Projects Approved

functional literacy will be expanded. Total cost: anticipated from the FAC ($4.2 million), $410 million. UNICEF ($600,000), the UNDP ($500,000), and POLAND: IBRD-$100 million. The government the WWF ($300,000). Total cost: $29.7 million. will be assisted in developing improved employment policies. institutions, and programs Energy to mitigate the negative effect of economic BANGLADESH: IDA-$67.2 million. The country adjustment on the labor force and to contribute to will be assisted in pursuing an economic and a resurgence of economic growth. Total cost: least-cost household-energy and commercial- $142.2 million. energy supply strategy through the substitution of RWANDA: IDA-$23.3 million. A first education- liquefied petroleum gas for imported kerosene sector project has been designed to support and commercial fuelwood. Cofinancing ($1.9 government policies whose objectives include the million) is expected from CIDA. Total cost: $94.2 consolidation and expansion of primary million. education, improvement in the quality of primary BENIN: IDA-$15 million. By strengthening all education, and a strengthening of sector facets of the management and operations of management capacity. Cofinancing ($2 million) is Societe beninoise d'electricite et d'eau, as well as expected from the UNDP. Total cost: $26.9 by rehabilitating and expanding its facilities. million. power reliability will be improved, losses TOGO: IDA-$9.2 million. The country's reduced, and additional sales generated. technical-education and vocational-training Cofinancing ($13.2 million) is anticipated from system will become more demand driven. the CCCE. Total cost: $36.5 million. employment oriented, and responsive to the needs BRAZIL: IBRD-$260 million. The substitution of of the productive sectors. Institution-building natural gas for other forms of energy will be assistance to the Ministry of Technical Education enhanced, and the distribution costs of petroleum and Vocational Training is included. Cofinancing products will be reduced by substituting pipelines ($3.7 million) is anticipated from the EC. Total for road and water transport. Total cost: $623.1 cost: $15.7 million. million. TRINIDAD AND TOBAGO: IBRD-$20.7 BURUNDI: IDA-$22.8 million. Rational energy million. The social consequences of adjustment policies will be promoted and the efficient will be moderated by providing opportunities for management of energy resources strengthened as many as 10.000 youths annually over five years through a project focusing on pricing reforms, to acquire remedial education. marketable skills, institutional development, expansion of access to work experience, and practical business training electricity, and reduction of the negative for employment or self-employment. Institution- environmental effects of energy use through building assistance for the government's Youth promotion of improved stoves that burn charcoal Training and Employment Partnership Program is more efficiently. Total cost: $32.2 million. included. Total cost: $31.9 million. CHAD: IDA-$ 11 million. Preparatory studies on TUNISIA: IBRD-$12 million. An estimated ways to ensure the most efficient and least-cost 30,000 people will be placed in productive execution of a proposed petroleum and power employment over an initial three-year period project (involving the construction of a petroleum through a project that will provide more effective pipeline, a refinery, and a power plant) will be training and labor-market intermediation and financed. Cofinancing ($3 million) is anticipated consolidate existing human capital through from the EIB. Total cost: $14.5 million. development of in-company training activities. EGYPT: IBRD-$84 million. Pipeline and related Cofinancing ($4.5 million) is expected from equipment for expanding the existing gas- USAID. Total cost: $34.7 million. distribution system to households and businesses YEMEN. REPUBLIC OF: IDA-$ 19.4 million. A in Cairo will be financed, as will gas compressors, foundation for raising the quality of teaching in gas-treatment facilities, and the platform template secondary schools will be created by upgrading required for the gathering of an extra 70 million the cadre of teachers, putting them to more cubic feet per day of gas for delivery to the effective use in the classroom, and planning for national grid. Institution-building assistance to future improvements. Cofinancing is anticipated the Petroleum Gas Company is included. from the OPEC Fund for International Cofinancing ($33 million) is expected from the Development. Total cost: $35.1 million. EIB. Total cost: $285.5 million. ZAIRE: IDA-$21 million. An education-sector GUINEA-BISSAU: IDA-$15.2 million. The rehabilitation project seeks to stop the medium-term supply of key products in the deterioration of quality in primary education and commercial energy sector-petroleum products to boost it by taking immediate steps to increase and electricity-will be improved through the availability of key educational inputs. the rehabilitation and expansion of existing Technical assistance is included. Cofinancing is electricity-generation facilities and the rehabilita- Energy 149

tion of petroleum storage and handling facilities, corporate-restructuring and system-expansion the expansion of the electricity and petroleum- project. approved in August 1990 in the amount distribution network, and the establishment of a of $130 million (see previous summary). new petroleum facility. Technical assistance and PAKISTAN: IBRD-$28 million. Supplementary training are included. Cofinancing is expected funds for the ongoing investment program under from the EIB ($4.7 million) and the EC ($2 the second energy-sector loan, approved in June million). Total cost: $23.2 million. 1989 in the amount of $250 million, will be made INDIA: IBRD-$450 million. The flaring of 12 available to finance additional investments. million cubic meters of gas a day in the Bombay POLAND: IBRD-$340 million. The implementa- High oil field will be eliminated, thus increasing tion of comprehensive energy-sector restructur- indigenous oil production by about 4 million tons ing will be supported, as will the commercializa- a year. Institution-building assistance is included. tion and privatization of restructured enterprises Cofinancing is anticipated from the Export- and of petroleum exploration and production Import Bank of Japan ($350 million), the AsDB activities. In addition, the life of existing heating ($300 million), and suppliers' credits ($745.6 assets will be extended through rehabilitation and million). Total cost: $3,184.3 million. the introduction of modem technologies and INDIA: IBRD-$200 million. Additional genera- materials, thereby significantly reducing capital tion, transmission, and distribution capacity will expenditures. Cofinancing ($50 million) is be provided to help meet increasing demand for expected from the EBRD. Total cost: $619.3 electricity in Bombay and to maintain good ser- million. vice for consumers. Cofinancing (a $50 million A TANZANIA: IDA-$44 million. The availability of loan and a B loan of up to $18 million) is being petroleum products throughout the country will provided by the IFC. Total cost: $653.3 million. be improved by enhancing-through reduced INDONESIA: IBRD-$275 million. The trans- transport costs, a modernized and rehabilitated mission facilities for the Java-Bali electric-power supply and distribution network, and system will be expanded, strengthened. and strengthened institutions-the efficiency and upgraded so that electricity can be supplied to effectiveness of the petroleum industry. new consumers and the increased demand for Cofinancing is expected from the EIB ($8.9 electricity from existing consumers can be met. million), the OPEC Fund for International Technical assistance is included. Total cost: Development ($6.1 million), the DGIS ($6.1 $415.7 million. million), the EC ($6 million), and DANIDA ($2.5 MOROCCO: IBRD-$114 million. About 462 million). Total cost: $103.6 million. villages in thirty-four provinces will be connected TOGO: IDA-$ 15 million. Detailed engineering to the country's main power grid, and the costs of studies, to be followed by the rehabilitation and connecting about 170,000 customers will be met. extension of the Lome electric-power distribution Institution-building assistance to the Office system, will be provided. Institution-building national de l'lectricite is included. Total cost: assistance to the Compagnie energie electrique du $220 million. Togo is included. Cofinancing ($15.5 million) is NIGERIA: IBRD-$218 million. Nigerian anticipated from the CCCE. Total cost: $38.5 hydrocarbon exports will be increased through million. the development of the Oso condensate field, TURKEY: IBRD-$300 million. The restructuring thereby significantly enhancing the country's of the Turkish Electricity Authority (TEK) will be foreign-exchange earnings. Institution-building supported, and the foreign-exchange costs of a assistance to the Nigerian National Petroleum time slice (1991-94) of TEK's least-cost Corporation is included. Cofinancing is expected investment program will be partially financed. from the IFC ($75 million), the EIB ($65 million), Technical assistance is included. Total cost: the export-import banks of the United States and $5,388 million. Japan ($95 million and $47 million, respectively), UGANDA: IDA-$ 125 million. A third project will and commercial banks ($95 million). Total cost: continue and build on the rehabilitation work of $885 million. the ongoing second power project to prevent PAKISTAN: IBRD-$ 130 million. The government bottlenecks, which would otherwise hinder will be assisted in restructuring Sui Northern Gas economic development, by providing urgently Pipelines Limited with a view to increasing its needed least-cost capacity additions to the autonomy and ability to mobilize resources from country's power generation, transmission, and the financial capital markets and the general distribution facilities. The project will also help public, as well as to expanding the utility's safeguard and strengthen the existing Owen Falls transmission and distribution network at least dam. Cofinancing is expected from the ADF ($45 cost. Total cost: $547 million. million), Norway ($24.6 million), the IsDB ($20 PAKISTAN: IBRD-$60 million. Supplemental million), and the BITS/SIDA ($15 million). Total funds will be provided to help finance a cost: $335.1 million. 150 Summaries of Projects Approved

YUGOSLAVIA: IBRD-$300 million. To meet the and new chemical industries, all based on Dead growth in demand for electricity in Serbia, Sea brine and other local raw materials, will be construction will begin on a 7 million tons-per- developed, thus increasing the country's year lignite mine and a 700-megawatt power industrial production and export capacity. plant (including auxiliary facilities). Technical Technical assistance is included. Cofinancing assistance is included. Suppliers' credits ($181.9 ($16 million) is anticipated from the IsDB. Total million) are anticipated. Total cost: $1,314.3 cost: $121.3 million. million. MEXICO: IBRD-$200 million. To help transform mining into a modem and dynamic sector of the Industry economy, the government's program to ALGERIA: IBRD-$350 million. The govern- deregulate the sector and stimulate private ment's program of reforms in the financial and domestic and foreign investment will be industrial sectors during the transition from a supported; broader financial-market support to centrally planned to a market economy will be the mining industry will be built; and the surge in supported. demand for investment funding, expected to CHINA: IBRD-$50 million; IDA-$64.3 million. result from the improved policy and institutional Implementation in three diverse locations- setting for mining operations, will be financed. Jiangsu province, Jilin province, and Chongming Total cost: $436.5 million. island, a rural county within the municipality of PAKISTAN: IBRD-$56.4 million. Supplemental Shanghai-of an innovative program that has funds will be provided to help finance a cement- made a strong start in upgrading levels of industry modernization project approved in technology and management in rural, nonstate November 1987 in the amount of $96 million. enterprises will be supported. Cofinancing is PHILIPPINES: IBRD-$175 million. Term funds, expected from Japan ($1.7 million). Total cost: both in loans and lease finance, will be provided $222.1 million. to help private-sector enterprises modernize, CYPRUS: IBRD-$30 million. The government restructure, and expand their productive capacity. will be assisted in undertaking a substantial Cofinancing from bilateral sources (the BITS, the adjustment of its industrial sector with a view to NDF, NORAD, and others) is anticipated, as are its gradual integration within the EC. Reforms in export credits, under the export credit enhanced- the financial sector will also support the process. leverage program (EXCEL), in the amount of $75 Technical assistance is included. Total cost: $42.8 million. Total cost: $541 million. million. SRI LANKA: IDA-$120 million. The phased INDIA: IBRD-$245 million. The plastics- implementation of the government's program for production capacity of Indian Petrochemical reform of public manufacturing enterprises-it Corporation Ltd. will be expanded and encompasses policy reforms in the sector's modernized, and the efficiency and quality of regulatory and institutional framework and downstream plastics products will be improved incentive system, as well as measures (such as through provision of technical assistance. Total privatization) designed to enable specific cost: $587 million. enterprises to adjust to a commercial and INDIA: IBRD-$ 124 million; IDA-$31.6 million. increasingly competitive environment-will be A cost-effective program for industrial-pollution supported. monitoring, control, and abatement (to be TURKEY: IBRD-$200 million. Financially and concentrated in the states of Gujarat, Maharash- economically viable private investments, tra, Tamil Nadu, and Uttar Pradesh) will be especially in export-oriented activities, will be identified and implemented. Technical assistance financed so as to increase the country's and institutional strengthening are included. Total productive capacity in areas of comparative cost: $260 million. advantage under a reforming environment. INDONESIA: IBRD-$221.7 million. The Technical assistance is included. Total cost: government's efficiency-oriented objectives in $401 million. the fertilizer industry will be supported through TURKEY: IBRD-$100 million. The first phase construction of a new ammonia and urea facility, of the government's program to encourage indus- modernization of existing fertilizer plants at the trial-technology development-focusing on Gresik complex in East Java, and optimization investment in a national framework for quality investments in four other plants. Marketing and assurance consistent with OECD standards, the environmental studies are included. Total cost: introduction of market forces into the research $444.3 million. and development system, and catalyzing the JORDAN: IBRD-$15 million. The Arab Potash supply of venture-capital finance-will be Company will expand its potash-production supported. Cofinancing is expected from the IFC capacity through the optimization of existing ($5.1 million); the governments of Germany facilities and the introduction of new technology, ($3.3 million), the United States ($500,000), and Nonproject 151

the United Kingdom ($200,000); and the UNDP GUYANA: IDA-$4.3 million. Funds from IDA ($1.5 million). Total cost: $262.2 million. reflows will be provided to supplement the structural-adjustment credit approved in fiscal Nonproject 1990 in the amount of $74.6 million. BENIN: IDA-$55 million. The second phase of HONDURAS: IBRD-$90 million. The the government's structural-adjustment program, government's structural-adjustment program, designed to create the conditions for a sustainable designed to accelerate export growth and increase recovery of economic activity and to improve the domestic savings while creating the preconditions provision of basic social services while protecting for a recovery of economic growth and vulnerable groups, will be supported. employment, will be supported. BURKINA FASO: IDA-$80 million. A first HONDURAS: IDA-$20 million. Supplemental structural-adjustment loan will support the financing, necessitated by the impact of higher oil country's overall adjustment program and will prices and lower-than-expected banana earnings focus on implementation in two key areas- for 1990-91, will be provided to help support the public-resource management and private-sector government's structural-adjustment program (see incentives. Cofinancing is anticipated from the above). EC ($30 million), the AfDB ($20 million), France HUNGARY: IBRD-$250 million. The ($17 million), Canada ($13 million), and government's medium-term economic-reform Germany ($12 million). program, which represents an acceleration and COMOROS: IDA-$8 million. The foundation for deepening of reforms implemented successfully economic growth will be laid by improving the since the beginning of 1990, will be supported by enabling environment for private-sector activity a second structural-adjustment loan. while streamlining the public sector and restoring INDONESIA: IBRD-$250 million. Private-sector financial stability to the country. Cofinancing is expansion will be accelerated through a loan that expected from the ADF ($17 million) and the supports the implementation of reforms UNDP ($1 million). Total cost: $28 million. undertaken by the government during 1989 and CZECHOSLOVAKIA: IBRD-$450 million. The 1990, assists the government in maintaining a first phase of the country's rapid transition to a satisfactory pace of economic growth consistent market economy will be supported. Cofinancing with external and intemal financial stability, and ($200 million) is anticipated from the Export- maintains the policy dialogue on further reforms Import Bank of Japan. to promote the efficiency and longer-term EGYPT: IBRD-$300 million. The government's viability of the economy. economic-reform and structural-adjustment JORDAN: IBRD-$10 million. A set of core program, which focuses on macroeconomic components (education, health, public transport, stabilization, structural adjustment to stimulate water supply and sewerage, and highways and medium-term and long-term growth, and roads) from the government's emergency- acceleration of social policies to minimize the response program--designed to help meet the effects of economic reforms on the poor, will be immediate and incremental needs for essential supported. Cofinancing is expected from the social services and physical infrastructure of as AfDB ($130 million) and the EC (between $79 many as 400,000 workers returning from Iraq, million and $132 million). Kuwait, Saudi Arabia, and other Gulf states-will EL SALVADOR: IBRD-$75 million. The be supported. Cofinancing is being provided by government's structural-adjustment program, Switzerland ($25 million), Sweden ($10 million), which aims to create a more liberalized, private- Canada ($7.3 million), and Luxembourg ($1.3 sector-led economy, and which focuses on million). Total cost: $60 million. reforms in the extemal, fiscal, monetary, KENYA: IDA-$ 100 million. The government's financial, and agricultural sectors, will be strategy to diversify and expand nontraditional supported. exports will be supported through an integrated GHANA: IDA-S 120 million. A fourth adjustment package of policy reforms, investments, studies, credit will support the government's efforts to and technical assistance. Total cost: $109.2 promote private investment and sustained million. development. MALI: IDA-$70 million. The government's GHANA: IDA-$8.3 million. Funds from IDA structural-adjustment program will be supported reflows will be provided to supplement the through a loan that focuses on implementation in second structural-adjustment credit, approved in two key areas-private-sector initiatives and fiscal 1989 in the amount of $120 million. public-resource management. Cofinancing is GUYANA: IDA-$18 million. Funds will be anticipated from the EC ($20 million) and the provided to supplement the structural-adjustment AfDB ($18 million). credit approved in fiscal 1990 in the amount of POLAND: IBRD-$300 million. The govemment's $74.6 million. unprecedented economic-transformation 152 Summaries of Projects Approved

program, which combines stabilization and care delivery system, a pilot program seeks to structural change (including a radical develop the necessary management tools to allow liberalization of the trade regime, as well as of effective implementation of changes in systems pricing policies), will be supported. management and operations that the government RWANDA: IDA-$90 million. The first phase of is gradually introducing at the central and local the government's economic-reform program will levels. Total cost: $26.7 million. be financed. Cofinancing is expected from BANGLADESH: IDA-$180 million. The Switzerland (Sw FIO million) and Belgium government's efforts to reach the qualitative and (BF400 million); coordinated financing is being quantitative population and health targets laid out negotiated with the AfDB, the EC, Austria. in the fourth five-year plan (in terms of fertility, Canada, France. Germany, and the United States. child morbidity and mortality, maternal mortality, SENEGAL: IDA-$7.1 million. Funds from IDA and nutrition levels) will be supported. reflows will be provided to supplement the fourth Cofinancing is anticipated from the EC ($47.8 structural-adjustment credit, approved in fiscal million), CIDA ($40.3 million), the KfW ($38.8 1990 in the amount of $80 million. million), NORAD ($33.2 million), the DGIS SRI LANKA: IDA-$7 million. Funds from IDA ($24.8 million), the ODA ($23.7 million), SIDA reflows will be provided to help supplement the ($13.4 million), the GTZ ($12.8 million), AIDAB economic-restructuring credit approved in fiscal ($9.6 million), the Japanese Economic 1990 in the amount of $90 million. Cooperation Bureau ($9.1 million), and the TOGO: IDA-$55 million. Support will be AGCD ($2.8 million). Total cost: $601.4 million. provided to the government's fourth structural- EGYPT: IDA-$140 million. The first phase of an adjustment program, which aims to increase real overall program aimed at addressing the GDP growth to more than 4 percent by 1992. immediate and pressing needs of those most maintain inflation at around 3 percent a year, vulnerable to the reform process and at reduce the current-account balance relative to facilitating the reintegration of workers returning GDP. and enhance provision of social services. from Kuwait and Iraq will be financed. UGANDA: IDA-$2 million. Funds from IDA Investments will focus on income-generating and reflows will be provided to help supplement the employment-generating activities and the second economic-recovery credit, approved in provision of essential physical infrastructure and fiscal 1990 in the amount of $125 million. public services. Cofinancing is anticipated from URUGUAY: IBRD-$65 million. The debt and the EC ($140 million), USAID ($55 million), the debt-service reduction agreement reached AFESD ($50 million), the KFAED ($50 million), between Uruguay and its commercial-bank Switzerland ($30 million), Germany ($30 creditors will be supported through disbursement million), the Abu Dhabi Fund ($25 million). of funds to reimburse Uruguay for a portion of the Denmark ($10 million), Canada ($10 million), costs of the cash buyback and of the interest France ($10 million). Sweden ($10 million), the collateral of the par bond. Netherlands ($6 million), the UNDP ($4 million), VENEZUELA: IBRD-$150 million. Interest and Norway ($2 million). support, to be utilized to purchase part of the EL SALVADOR: IBRD-$26 million. The collateral for par bonds issued by Venezuela, coverage and delivery of basic social services- together with related measures (set-aside funds primary health care and preprimary and primary from adjustment loans and a waiver of negative- education-targeted to about 1.1 million people pledge restrictions in Bank loan agreements) will in some of the poorest municipalities of the help the country implement its agreement, country will be improved. Institution-building involving debt and debt-service reduction, with assistance is included. Cofinancing is expected commercial-bank creditors. from USAID ($2.1 million) and UNICEF ZAMBIA: IDA-$210 million. Import financing in ($300,000). Total cost: $35.6 million. support of the country's economic-adjustment GHANA: IDA-$27 million. A second health and program will be provided, thus alleviating population project has been designed to improve constraints on Zambia's foreign-exchange cash health-service quality and coverage (especially flow at a time when arrears to the Bank are being for poorer groups), the supply of essential drugs. paid. Cofinancing ($18.8 million) is expected and family-planning services. Total cost: $34.4 from Germany and, possibly, other sources. million. ZAMBIA: IDA-$27.2 million. Funds from IDA HAITI: IDA-$11.3 million. An economic and reflows will be provided to help supplement the social fund has been established to respond economic-recovery credit described above. flexibly and efficiently-through a variety of grassroots organizations-to the basic needs Population, Health, and Nutrition (particularly primary health care and nutrition) of ALGERIA: IBRD-$16 million. To improve the country's poor. The government will also be efficiency and effectiveness in the public health- aided in improving health, nutrition, and Populacion, Health, and Nuidlion 153

education services and providing physical Cofinancing is expected from the EC i 511. I infrastructure, employment opportunities, and million) and W%'HO/the Netherlands (S1.4 other sources of income for the poor. Cofinancing million). Total cost: 574.3 million. ($10.4 million) is expected from the IDB. Total MALI: IDA-$26.6 million. The gosremment will cost: $23.6 million. be a;sj.;ied in ins effton,s o improve the health of HONDURAS: IDA-$20 million. Assistance will the Nlalian people tespeciall) women and be provided to the Honduran Social Investment children i. begii implementing a recently adopied Fund (FHIS) to help protect and improve the population policy. and Improve access to safe standard of living of the poor-through provision water b! ruril communities. Cofinancing is of jobs and improved services (health, nutrition, expected trom the EDF ($12.3 million). LISAID and education)-during the current period of ($10. I million . and German) ($6.2 million). economic adjustment. Cofinancing is anticipated while the FAC may contnbute up to $1.7 million from the KfW ($12 million); USAID ($8 equi valent. Total co%t: $6 1.4 million. million); the DGIS, jointly with the UNDP ($2.1 MEXICO: IBRD-$ 180 million. Health-care million); and the UNDP ($600,000). In addition, sern ices. including targeted nutrition assioiance in other funds, totaling $1.8 million, have been selected areas. v"ill be strengthened and expanded approved by the GTZ, CIDA, UNICEF, Spain, to about 13 million uninsured poor people in the and Japan. Total cost: $68 million. countrV \ four poorest states and in the Federal INDIA: IBRD-$10 million; IDA-$96 million. distnct. Institution-building assistance is An estimated 5 million relatively disadvantaged included. and the implementation of sectoral children under the age of seven and 3 million reforms f in%olk ing decentralization) will be pregnant and nursing women in Andhra Pradesh strengthened. Toial cost: $249.8 million. and Orissa states will directly benefit from a NIGERIA IDA-$78.5 million. This long-range project that seeks to reduce malnutrition among prolect seeks to strengthen the instirutional children, as well as lower infant mortality rates frame%Aork and expand the basis for undertaking and the incidence of low birth weight. Total cost: a large-scale. intersectoral national population $157.5 million. program oser the coming decades in fulfillment INDONESIA: IBRD-$104 million. A fifth of Nigena's ambitious population-policy goals. population project will help the government Total cost: $93.6 million. intensify its efforts to lower fertility (in part, by NIGERIA: IBRD-$70 million. Health sen ices targeting family-planning services to specific will be impros ed for a wkider base of the countn 's groups that would not benefit otherwise) and population through the creation of a whole-saling maternal mortality (by improving the mechanism, the Health Sy stem Fund, to finance effectiveness of existing community midwives health-system improvemenis in a larger number and training an additional 16,000) during the of states than his been possible in the past. 1990s. Total cost: $148.4 million. Cofinancing ($1.3 million) has been received KOREA, REPUBLIC OF: IBRD-$60 million. The from Japan. Total cost: $94.5 million. government's policy of responding to the PAKISTAN: IDA-$45 million. The health ser ices increased demand for medical care resulting from available to some 80 percent of the total national health insurance, rising incomes, population of Sindh and North-West Frontier technological innovations, the changing provinces (including 9 milIIon usomen of population structure, and the shift in the childbearing age) u%ill be improved through a epidemiological profile from communicable to project that will introduce an enhanced package noncommunicable diseases will be assisted. Total of maternal health serv ices (including famnily cost: $81.2 million. planning) and integrate and expand MADAGASCAR: IDA-$31 million. The communicable disease-control activities. government's health-sector program, which aims Comprehensive in-sen ice training and at reducing mortality and morbidity, moderating institutional-development components are fertility levels, and improving the efficiency and included. Cofinancing is anticipated from the sustainability of public expenditures for health, ODA ($2.8 million) and the SCF ($1 million). will be supported. Total cost: $42.5 million. Total cost: $62.9 million. MALAWI: IDA-$55.5 million. The second phase RWANDA: IDA-$19.6 million. A fiTst population of the government's efforts to reform and improve project seeks to help reduce the country's fertility the population, health, and nutrition sector will be rate, decrease child and maternal morbidity and supported through a project that focuses on mortality, and integrate the demographic strengthening basic programs (primary health dimension into the overall socioeconomic care, population programs, disease control, and planning process. The project will complement nutrition interventions) and support services other major donor interventions in the sector-in (staffing issues, pharmaceuticals, and particular from USAID, UNFPA, and the GTZ. information, education, and communications). Total cost: $26.1 million. 154 Summaries of Projecfs Approved

SENEGAL: IDA-$35 million. Government efforts Cofinancing is anticipated from USAID ($15 to control fertility and reduce the rate of million), Germany ($4.5 million), and the UNDP population growth will be supported. as will ($500,000). Total cost: $59.5 million. efforts intended to improve the quality and ZAIRE: IDA-$30.4 million. A social-sector increase the accessibility of basic health services. project seeks to protect the poor from the social Total cost: $37.9 million. effects of a deteriorating economic situation by SRI LANKA: IDA-$57.5 million. Income-earning establishing budgetary allocations targeted to opportunities among the poor will be increased, basic medical care and primary education. And, and the nutritional status of children underthe age with help from other donors, e.senfial public' of three and pregnant and lactating mothers will health, nutrition, and family-planning programs be improved, through a project that will assist a will be strengthened. Project-preparation newly created trust fund in financing credit assistance is included. Connancing ($2.9 million) operations, human-resource and infrastructure is expected from the UNDP. Total cost: $37 development, and nutrition-intervention activities million. of nongovernmental organizations and ZAMBIA: IDA-$20 million. Community government agencies. Cofinancing ($10 million) initiatives to protect the poor during the period of' is expected from the KfW. Total cost: $85 million. structural-adjustment implementation, involving TOGO: IDA-$14.2 million. The implementation rehabilitation and improvement of existing of a comprehensive package of sector policy infrastructure and service delivery, will be reforms in the area of population and health- financed. Cofinancing is anticipated from the EC aimed at ensuring a satisfactory level of primary ($15 million) and Norway ($2.2 million). Total health care and family-planning services to the cost: $46.3 million. population, especially in rural areas-will be ZIMBABWE: IBRD-$25 million. A second supported. family-health project seeks to improve maternal TUNISIA: IBRD-$30 million. The implementa- and child health; reduce the rate of population tion of the government's reform program to growth; ensure that households in target districts address major efficiency and service-quality have access to basic health, population, and issues in its public health-care network-the nutrition services; and increase the output of program's centerpiece is the organizational and trained Zimbabwean health workers. Institution- managerial restructuring of the country's twenty- building assistance is included. Cofinancing is two largest hospital facilities-will be supported. anticipated from NORAD ($14.2 million), Technical assistance and training are included. DANIDA ($8.3 million), the Netherlands ($5.8 Total cost: $49.5 million. million), the ODA ($4.7 million), and the EC TUNISIA: IBRD-$26 million. As many as 30,000 ($3.7 million). Total cost: $116.9 million. new family-planning acceptors will be reached annually, and more than 500,000 women will Public-sector Management continue to be served with family-planning ARGENTINA: IBRD-$300 million. Funds will be services as a result of a project that aims to reduce provided to help the government either privatize both fertility and mortality nationally by targeting or restructure public enterprises in the tele- the provision of basic health services to relatively communications, railways, and hydrocarbon underprivileged groups. Total cost: $63.2 million. sectors. Assistance in privatizing or overseeing VENEZUELA: IBRD-$ 100 million. By additional public enterprises is included. increasing prenatal and postnatal health and COLOMBIA: IBRD-$304 million. The nutrition-service coverage, as well as preventive management of public enterprises will be health care for children under the age of six, and improved with the establishment of a through expanded coverage of formal and performance-planning and evaluation system and informal preschool education, the negative effects efficiency improvements in resource allocation of adjustment on the country's most vulnerable and use as a result of reform in the railway, port, groups (poor women and their children) will be shipping, agricultural-marketing, and housing cushioned. Total cost: $320.9 million. sectors where the public sector has heretofore YEMEN, REPUBLIC OF: IDA-$33 million. The played a dominant role. core components of the government's emergency- MADAGASCAR: IDA-$1.7 million. Funds from recovery program-designed to assist the IDA reflows will be provided to supplement the 750,000 Yemenis who had to return to their public-sector adjustment credit approved in fiscal country during the Gulf crisis-will be supported. 1988 in the amount of $125 million. The project will help expand essential social MAURITANIA: IDA-$4 million. Funds from IDA infrastructure and services and housing sites, reflows will be provided to supplement the support agricultural activities to maintain public-enterprise sector adjustment credit nutritional levels and living standards, and create approved in fiscal 1990 in the amount of $40 employment opportunities for the returnees. million. Technical Assistance 155

THAILAND: IBRD-$32 million. The country's capability to carry out its public-enterprise reform overall tax-collection system will be improved program will be strengthened. In addition, further and its efficiency, effectiveness, and equity privatization programs will be prepared, and the increased through a project that includes all institutional and regulatory framework for sectors hardware and related data-entry processing in which public enterprises operate will be equipment. software, training, and technical strengthened. Total cost: $32.9 million. assistance required by the Revenue Department. BENIN: IDA-$5.4 million. The immediate Total cost: $73.2 million. constraints on investments caused by the lack of properly prepared projects will be relieved, and Small-scale Enterprises the institutional capacity for identifying INDONESIA: IBRD-$ 125 million. Ongoing investment proposals and processing them efforts by Bank Rakyat Indonesia to strengthen through feasibility studies, for obtaining and expand its financially viable Unit Desa financing, and for establishing final project- system-the only nationwide network that meets execution plans will be created. Total cost: $6 the needs of both small borrowers and savers- million. will be supported. Institution-building assistance BOLIVIA: IDA-$11.3 million. The efficiency. is included. Total cost: $2,618 million. effectiveness, and transparency of the country's PAKISTAN: IBRD-$26 million. A project that resource-management system will be improved. will channel funds to microenterprises through Total cost: $22.3 million. private leasing companies and nongovernmental BULGARIA: IBRD-$17 million. The government organizations seeks to demonstrate that financial will be supported in the implementation of its innovations and initiatives in the private sector economic-reform program through the provision can be sustained and that microentrepreneurs of of technical assistance in private-sector both sexes can be creditworthy, even when development, bank restructuring and reform, subjected to market prices and practices. human-resource development and strengthening Cofinancing ($2.8 million) is anticipated from the of the social safety net, energy-sector reforms, Netherlands. Total cost: $36.6 million. and institutional development to support PHILIPPINES: IBRD-$15 million. The activities critical to the overall reform program. investment and working-capital needs of about Cofinancing is anticipated from the EC's Program 4,200 cottage firms will be financed through the of Assistance for Reforming Economies in use by the Development Bank of the Philippines Eastern Europe ($13.2 million) and the Know- of proceeds of the IBRD loan to rediscount How Fund ($1.3 million) of the United Kingdom. subloans made by retail banks to members of Total cost: $33.5 million. approved mutual-guarantee associations. CENTRAL AFRICAN REPUBLIC: IDA-$6.5 Cofinancing ($13.4 million) is anticipated from million. The government will be helped in the KfW. Total cost: $44.7 million. incorporating social dimensions of adjustment SRI LANKA: IDA-$45 million. Credit will be into its economic and sector policies through the made available through eligible financial strengthening of social policy and planning, institutions for the partial funding of term loans to support for the implementation of a national productive enterprises for new investments, policy for the promotion of women, and balancing, modernizing, or rehabilitation, thus implementation of an accelerated teacher-training providing support to a significant number of new program. Total cost: $7.1 million. and growing private-sector operations. GHANA: IDA-$15 million. Improvement in the Institution-building assistance is included. analytical and administrative capacity of the Cofinancing ($30 million) is expected from the country's core economic-management agencies AsDB. Total cost: $145 million. will contribute to stronger implementation capacity in the government, help ensure that Technical Assistance public expenditures effectively support the ANGOLA: IDA-$23 million. The government's country's growth strategy, and help sustain capacity to formulate and implement, over both current structural reforms. Cofinancing ($3.9 the medium and short term. sound economic million) is expected from the ODA. Total cost: policies and investment projects will be $23 million. strengthened. Total cost: $26.1 million. INDONESIA: IBRD-$30 million. Technical ARGENTINA: IBRD-$23 million. Technical assistance will be provided to enhance the assistance will be provided to strengthen the government's project-evaluation capacity, administrative and technical capabilities of the particularly in areas that cut across sectors and national administration to carry out its public- cannot be addressed under existing project sector reform program. Total cost: $31.5 million. activities because they involve, for instance, ARGENTINA: IBRD-$23 million. The private-sector participation. Total cost: $36 government's administrative and technical million. 156 Summaries of Projects Approved

JAMAICA: IBRD-$11.5 million. The efforts of SRI LANKA: IDA-$57 million. Sectoral reform the government to improve the efficiency of will be supported through the establishment of a financial and human-resources management in new, commercially oriented autonomous the central administration will be supported. Total operating entity, Sri Lanka Telecom (SLT), and cost: $15.6 million. through improvements in sector efficiency. In ROMANIA: IBRD-$180 million. Foreign addition, help in financing SLT's initial exchange will be made available for the import of investment program to expand and improve essential spare parts and equipment so as to telecommunications services will be provided. sustain output performance, which is threatened Cofinancing is anticipated from the OECF ($44.1 by serious foreign-exchange constraints and million), the AsDB ($40 million), France ($4.4 dislocations caused by the transition from a million), and the UNDP/ITU ($1 million). Total planned to a market economy. Technical cost: $204.1 million. assistance, designed to support the ongoing economic-reform process in the formulation and Transportation implementation of macroeconomic and sectoral- BANGLADESH: IDA-$45 million. A third policy programs, is included. Cofinancing ($17.4 inland-waterway transport project seeks to million) is expected from the EIB. Total cost: improve waterway safety and environmental $262.4 million. controls, passenger-transport infrastructure, ZAMBIA: IDA-$21 million. The government will capital-asset utilization, and the finances and be helped in implementing an effective operations of inland-water transport agencies. development strategy in the mining sector-in the Provisions to reduce freight transport costs and short run, by making the sector more efficient and for institution-building assistance are included. productive, and, in the longer tcrm, by supporting Cofinancing is anticipated from FINNIDA ($5 the development of new copper mines by private million) and Japan ($700,000). Total cost: $64.2 investors and of noncopper mining-sector million. exports. Institution-building assistance to the BOTSWANA: IBRD-$14.9 million. Road links Zambia Consolidated Copper Mines Ltd. is necessary for the development and integration of included. Total cost: $24 million. the Selebi-Phikwe area and its hinterland will be provided, thereby facilitating the effectiveness of Telecommunications this region as a marketing center. Institution- HUNGARY: IBRD-$ 150 million. A second building measures are included. Cofinancing is telecommunications project consists of a three- expected from BADEA ($6.4 million) and the year time slice of the Hungarian Telecommuni- AfDB ($1.3 million). Total cost: $37.6 million. cations Company's investment program for CHINA: IBRD-$100 million: IDA-$53.6 1991-93, including some preparatory work in million. The most serious constraints posed by 1990, combining physical expansion and Jiangsu province's inadequate transport modernization of the network with institutional infrastructure on its fast-developing economy strengthening through technical assistance and will be mitigated. In addition, the province will be training. Cofinancing ($100 million) is antici- assisted in upgrading the planning, budgeting, pated from the EIB. Total cost: $1,354.7 million. and implementation of transport works and in POLAND: IBRD-$120 million. A first developing more efficient construction entities. telecommunications project seeks to strengthen Technical assistance is included. Total cost: and expand the national trunk network, as well as $312.8 million. carry out selected improvements (primarily to COMOROS: IDA-$6.6 million. A program of help the business sector, in general, and export- road maintenance seeks to stem the deterioration oriented businesses, in particular) in the of the country's paved road network, half of international and local networks. Technical which is in serious need of periodic maintenance. assistance is included. Cofinancing ($90 million) In addition, road safety will be improved and is expected from the EIB. Total cost: $378.7 institutional support provided to the General million. Public Works Directorate. Cofinancing is RWANDA: IDA-$12.8 million. A second anticipated from the FAC ($2 million) and the communications project aims at institutional UNDP ($700,000). Total cost: $11.3 million. reform and training (leading to autonomy in the DOMINICAN REPUBLIC: IBRD-$79 million. postal sector and eventual privatization of The initial three-year slice of the five-year telecommunications operations) and provision of investment program of the Secretariat of Public key maintenance equipment for telecommunica- Works and Communications-major components tions. as well as buildings and equipment to include road rehabilitation, a program of periodic improve postal services. Cofinancing is expected maintenance, rehabilitation of equipment, and from the FAC (S4.7 million). Total cost: $17.2 highway-safety works-will be financed. Total million. cost: $111 million. Transportation 157

GHANA: IDA-$96 million. A second transport- ($54.1 million), Italy ($32.6 million), the CCCE rehabilitation project focuses on both road and ($25.1 million), the AfDB ($23.8 million), railway rehabilitation and the strengthening of the BOAD ($18 million), the IsDB ($11.5 million), country's transport-sector institutions. It also the CEDEAO ($5.4 million), Finland ($5 includes a pilot scheme (featuring involvement by million), the FAC ($3.3 million), CIDA ($3.2 nongovernmental organizations and participation million), and the UNDP ($800,000). Total cost: of women) comprising labor-intensive road $604.5 million. rehabilitation in about fifty villages and support SRI LANKA: IDA-$42.5 million. A third roads for nonmotorized transport, hand-dug wells, and project seeks to reduce transport costs and delays environmental improvements. Cofinancing, of passengers and goods by restoring major trunk totaling $66 million, is being sought from the roads to better operational condition. In addition, CCCE, the ADF, the ODA, BADEA, and the priority road infrastructure damaged during the NIO. Total cost: $230.4 million. floods in May and June of 1989 will be repaired. JAMAICA: IBRD-$35 million. Managerial and Institution-building assistance is included. technical strengthening of the Ministry of Cofinancing ($14.5 million) is expected from the Construction (Works) will be financed, as will EDCF. Total cost: $70.5 million. part of a $302 million, five-year investment TANZANIA: IDA-$76 million. A railways- program designed to upgrade and bring back to a restructuring project will help rehabilitate condition of maintainability, and improve safety infrastructural assets, replace obsolete and on, the nation's road infrastructure. Total cost: uneconomical operational assets, and provide $50.3 million. limited new investments consistent with the LAO PEOPLE'S DEMOCRATIC REPUBLIC: prospects for traffic growth. Institutional IDA-$45 million. A 266-kilometer-long section strengthening of the Tanzania Railways of Route 13 (the country's main north-south road Corporation is included. Cofinancing is artery) from Namkading to Savannakhet will be anticipated from the ADF ($31.2 million), the rehabilitated, thus improving access to the KfW ($18.3 million), the EDF ($18 million), agriculturally rich southern part of the country. In CIDA ($10.3 million), the ODA ($8.5 million), addition, the foundation for the establishment of a and the WFP ($3.3 million). Total cost: $275.2 systems approach to maintenance planning and million. execution will be established. Cofinancing ($5 TURKEY: IBRD-$300 million. Almost 1,000 million) is expected from the NDE Total cost: kilometers of state and provincial roads will be $52.6 million. either strengthened or improved, thus helping to MOROCCO: IBRD-$132 million. Assistance, keep transport costs low. Institution-building provided under the ongoing project to improve assistance will be provided to the General the ports of Casablanca and Mohammedia, will be Directorate of Highways (KGM), and equipment broadened to support better allocation of and materials needed by the KGM for operations, resources and modernization of existing port road safety, and administration will be purchased. facilities. Total cost: $282 million. Total cost: $480 million. PAKISTAN: IBRD-$91.4 million. Assistance will YEMEN, REPUBLIC OF: IDA-$30 million. By be provided to develop an appropriate strategy for providing equipment and materials to improve the the medium-term and long-term development of 157-kilometer road between Harad and Huth, the the port subsector. and port costs at Karachi will important agricultural areas between the be reduced through improved cargo-handling northeastern highlands and the Tihama coastal productivity, accelerated cargo and document region will become more accessible. Institutional- clearance, and improved landside access to the strengthening measures and training are included. port. Institution-building assistance is included. Total cost: $43 million. Total cost: $143.1 million. ZAIRE: IDA-$12.4 million. The rehabilitation and PHILIPPINES: IBRD-$ 125 million. The adverse maintenance of feeder roads will be tackled in an economic effects of the July 1990 earthquake will experimental manner through the use of labor- be minimized through the reconstruction of intensive techniques, reliance on existing local essential infrastructure and other facilities. In private-sector and nongovernmental institutions addition, measures will be introduced to lessen as executing entities, and pilot cost-recovery the effects of future earthquakes. Total cost: methods to improve long-term sustainability. $182.7 million. Technical assistance and training are included. SENEGAL: IDA-$65 million. The country's Cofinancing ($3.3 million) is expected from the transport sector will be restored by modernizing UNDP. Total cost: $17.5 million. the sector's administration, restructuring its ZIMBABWE: IBRD-$38.6 million. Support parastatals, and halting the decay of transport will be provided to the National Railways of infrastructure for road, rail, maritime, and air Zimbabwe to implement a restructuring program services. Cofinancing is anticipated from the EDF to improve its operational and financial 158 Summaries of Projects Approved

performance. Cofinancing is anticipated from Cofinancing is expected from the IDB ($104 USAID ($39.4 million), the KfW ($7.6 million), million) and the GTZ ($4 million). Total cost: FINNIDA ($4.7 million), DANIDA ($3.7 $300 million. million), the SDC ($2.3 million), and Austria INDONESIA: IBRD-$180.3 million. The quality ($1.8 million). Total cost: $263.4 million. of urban infrastructure investments and service delivery on the part of forty-five local Urban Development governments in East Java and Bali will be ARGENTINA: IBRD-$200 million. Financial improved. In addition, strengthening of local support and incentives will be provided to revenue-mobilization and maintenance provinces (meeting strict financial and other capabilities, as well as the preparation of future eligibility criteria) to undertake their own projects, will be supported. Cofinancing ($4.2 adjustment programs. Institution-building million) has been committed by Japan. Total cost: assistance is included. Cofinancing ($200 $373.4 million. million) is expected from the IDB. Total cost: INDONESIA: IBRD-$61 million. Through $575 million. extensive community participation in the BURKINA FASO: IDA-$20 million. A program government's kampung-improvement program, of small municipal works in the area of urban- some 1.5 million people living in predominantly infrastructure upgrading and rehabilitation will be low-income areas in the Jakarta metropolitan financed, thereby creating. at least temporarily, region will benefit from the upgrading of basic substantial new employment opportunities in urban infrastructure and utility services. In urban areas through the private sector. addition, measures will be instituted to strengthen Cofinancing ($7.8 million) is being negotiated. environmental protection and pollution control in Total cost: $30 million. the region. Technical assistance is included. CHINA: IBRD-$79.4 million; IDA-$89 million. Cofinancing ($600,000) is anticipated from This first integrated urban-development project in Japan. Total cost: $97 million. China, which will introduce a wide range of IRAN: IBRD-$250 million. In the wake of the improvements in planning, management, and June 1990 earthquake, which left almost 100,000 design techniques based on conditions relevant to people dead or injured and another half million the country, will directly benefit, through the homeless, finance will be provided for the upgrading of urban services, about 1.8 million medium-term and long-term recovery of the two people living in the cities of Changzhou, sectors most heavily affected-agriculture and Luoyang, and Shashi. Total cost: $277.2 million. housing. In addition, the introduction of a COLOMBIA: IBRD-$60 million. The govern- national program for seismic-risk prevention and ment will be assisted in the implementation of its mitigation will be supported. Total cost: $4,172 municipal-development program, which seeks to million. improve the coverage and quality of municipal KOREA, REPUBLIC OF: IBRD-$ 100 million. services and urban infrastructure, promote more Through support for an ongoing program of effective investment projects, improve the skills targeted lending by the National Housing Fund of sector personnel and local-government perfor- for low-income housing, some 15,000 additional mance, and improve resource mobilization at the housing units will be financed. Technical local level. Cofinancing ($44 million) is expected assistance and training for institutional from the IDB. Total cost: $188.2 million. strengthening in the sector are included. Total DJIBOUTI: IDA-$11.2 million. Through cost: $500 million. continued policy and institutional strengthening MAURITIUS: IBRD-$12.4 million. Policy and and infrastructure investments, the basis for institutional arrangements necessary to have sustained urban development will be con- physical planning, land-use control, infrastructure solidated, job prospects will be expanded, and investments, and environmental protection drainage, sanitation, and other physical environ- managed in a coordinated and rational way will mental conditions will be improved for about be put in place, and remedial measures designed 80,000 people. Cofinancing is anticipated from to reverse the trend toward environmental the EC ($10.5 million), the MCD ($8.1 million), degradation will be undertaken. Cofinancing the CCCE ($6.5 million), and the OPEC Fund for ($400,000) is anticipated from the ICOD. Total International Development ($1.9 million). Total cost: $20.5 million. cost: $45.5 million. NIGER: IDA-$20 million. At least 12,000 man- ECUADOR: IBRD-$104 million. Through a years of temporary employment will be provided combination of institutional development and through a program, to be carried out under labor- training and the provision of infrastructure, the intensive schemes by local contractors, of public fiscal autonomy of municipal governments will facility and infrastructure rehabilitation and be increased and their capacity to deliver services maintenance in urban areas. Cofinancing, totaling efficiently and equitably will be strengthened. $10 million, is expected from the KfW and the Water Supply and Sewerage 159

OPEC Fund for International Development. Total CHILE: IBRD-$50 million. A second water- cost: $33.3 million. supply and sewerage project seeks to optimize the PAPUA NEW GUINEA: IBRD-$30 million. operations of the existing water-supply system About 10,000 man-years of productive jobs over and improve water-supply conditions in the a two-to-three-year period are to be provided Greater Valparaiso area, as well as improve through a program of investments in housing, sanitary conditions in water streams, public industry, and road drainage, thus helping to beaches, and the marine environment. Total cost: alleviate urban and rural poverty and cushion the $141.5 million. effects of the ongoing economic-adjustment CHINA: IDA-$77.8 million. The government of program. Technical assistance for project Liaoning province will be assisted in the initial management and monitoring is included. Total phase of a long-tenn investment program aimed cost: $40.3 million. at addressing the shortages and poor quality of SAO TOME AND PRINCIPE: IDA-$6 million. water supply in the three cities of Shenyang, The social and economic effects of economic Fuxin, and Yingkou, as well as shortcomings in decline and structural adjustment will be urban transport in Shenyang. Technical assistance mitigated through a project that will provide basic and training are included. Total cost: $128.6 infrastructure to facilitate private economic million. activity, generate employment opportunities for INDIA: IDA-$109.9 million. The health and urban and rural households, and raise living productivity of about a million people living in standards. Technical assistance is included. Total 1,100 villages in Maharashtra state will improve cost: $7.6 million. as a result of a project that will expand access to UGANDA: IDA-$28.7 million. A first urban rural water-supply systems, health education, and project seeks to improve living conditions and environmentally sound sanitation facilities. Total alleviate poverty in Kampala by restoring key cost: $140.7 million. infrastructure services and related maintenance INDONESIA: IBRD-$100 million. Urban activities. In addition, the revenue base of the infrastructure will be provided in selected cities in Kampala City Council will be improved, and Sulawesi and Irian Jaya, with emphasis on technical assistance will be provided to the increasing the access of households to water Ministry of Local Government. Cofinancing is supply and solid-waste and sanitation services. expected from the NDF ($4.6 million) and the Institutional assistance is included. Cofinancing GTZ ($600,000). Total cost: $38.5 million. ($700,000) is expected from Japan. Total cost: VANUATU: IDA-$3.4 million. About 400 $188.2 million. middle-income and lower-income households MEXICO: IBRD-$300 million. More than 3 (including squatters) will be provided with million people are expected to benefit from a affordable serviced plots and houses, thus project whose major objective is to support the meeting about 20 percent of the estimated total implementation of a sector-reorganization demand in Port Vila and Luganville. In addition, program designed to improve the quality and the development of policies and standards leading quantity of water-supply and sanitation services, to an improved supply response and enhanced promote sound pricing policies, progressively private-sector involvement will be supported. reduce the need for government funding, and Cofinancing ($180.000) is anticipated from improve environmental conditions throughout the Japan. Total cost: $5 million. country. Total cost: $650.9 million. NEPAL: IDA-$60 million. Urban water-supply Water Supply and Sewerage and sanitation services will be improved through ARGENTINA: IBRD-$100 million. A water- a project involving rehabilitation and extension of supply and sewerage project seeks to promote water-supply facilities and improvements in greater sector efficiency and financial viability, sewerage and sanitation. Institution-building expand service coverage, improve sector services support will also be provided to the Nepal Water while protecting the environment, and encourage Supply Corporation. Cofinancing ($3.4 million) private-sector participation. Cofinancing ($100 is expected from the UNDP. Total cost: $71 million) is anticipated from the IDB. Total cost: million. $250 million. NIGERIA: IBRD-$256 million. Water-supply BOLIVIA: IDA-$35 million. About I million rehabilitation subprojects-each comprising people are expected to benefit from water and rehabilitation of existing facilities, leakage- sewerage subprojects in the country's three major detection and repair programs, and institutional cities, and the government will be assisted in strengthening at the state level-will be financed. introducing sector financial policies and Cofinancing ($4.5 million) is being provided by upgrading its ability to regulate and oversee the Japan. Total cost: $306.7 million. sector. Cofinancing ($8 million) is expected from PAKISTAN: IDA-$ 136.7 million. Rural the KfW. Total cost: $57 million. productivity and health, particularly of women 160 Summaries of Projects Approved

and children, will be improved through a managed rural water-supply and sanitation project-designed to have a significant and infrastructure in Azad Jammu and Kashmir, positive impact on poverty alleviation in both the Balochistan, and Sindh. Institution-building short and long term-that will finance the assistance and training are included. Total cost: rehabilitation or construction of community- $194.2 million. Projects Approved by Region 161

Table 7-1. Projects Approved for IBRD and IDA Assistance in Fiscal Year 1991, by Region (amounts in millions of US dollars) IBRD loans IDA credits Total Region and country Number Amount Number Amount Number Amount Africa Angola ...... - - 1 23.0 1 23.0 Benin ...... - - 4 87.7 4 87.7 Botswana ...... 1 14.9 - - 1 14.9 Burkina Faso ...... - - 4 140.5 4 140.5 Burundi ...... - - 1 22.8 1 22.8 Central African Republic ...... - - 2 17.8 2 17.8 Chad ...... - - I 11.0 I 11.0 Comoros ...... - - 2 14.6 2 14.6 Congo ...... 1 15.8 - - 1 15.8 C6te d'lvoire ...... 1 2.2 - - 1 2.2 Djibouti ...... - - 1 11.2 1 11.2 Equatorial Guinea ...... - - 1 6.3 1 6.3 Ghana ...... - - 7 319.5 7 319.5 Guinea-Bissau ...... - 1 15.2 1 15.2 Kenya ...... - - 4 287.1 4 287.1 Lesotho ...... - - 1 21.0 1 21.0 Madagascar ...... - - 2 52.5 2 52.5 Malawi ...... - - 3 103.5 3 103.5 Mali ...... - - 3 121.0 3 121.0 Mauritania ...... - - - 4.0 - 4.0 Mauritius ...... 2 22.4 - - 2 22.4 Mozambique ...... - - 2 69.1 2 69.1 Niger ...... - - 1 20.0 1 20.0 igeria ...... 3 544.0 3 276.5 6 820.5 C Rwanda ...... - - 4 145.7 4 145.7

Sao Tome and Principe . - - - 1 6.0 1 6.0 Senegal ...... - - 2 107.1 2 107.1 Tanzania ...... - - 2 136.1 2 136.1 Togo ...... - - 4 93.4 4 93.4 Uganda ...... - - 4 276.7 4 276.7

Zaire ...... - - 3 63.8 3 63.8 Zambia ...... - - 3 278.2 3 278.2 Zimbabwe ...... 2 63.6 - - 2 63.6 Total ...... 10 662.9 67 2,731.3 77 3,394.2

Asia Bangladesh ...... - - 6 459.7 6 459.7 7 hina ...... 6 601.5 4 977.8 10 1,579.3 /India ...... 8 1.112.0 2 937.4 10 2,049.4 _:1Andonesia ...... 12 1.637.5 - - 12 1,637.5 ,--Korea, Republic of ...... 4 250.0 - - 4 250.0 Lao People's Democratic Republic ... - - I 45.0 1 45.0 Nepal ...... - - 1 60.0 1 60.0 Papua New Guinea ...... 2 50.8 - - 2 50.8 ,,-Philippines ...... 7 869.2 - 66.0 7 935.2 Sri Lanka ...... - - 6 358.6 6 358.6

(continued) 162 Summaries of Projects Approved

Table 7-1 (continued) IBRD loans IDA credits Total Region and country Number Amount Number Amount Number Amount Asia (continued) Thailand ...... 2 62.0 - - 2 62.0 Vanuatu ...... - - 1 3.4 1 3.4 Total ...... 41 4,583.0 21 2,907.9 62 7,490.9

Europe, Middle East, and North Africa ,Algeria ...... 3 431.0 - - 3 431.0 Bulgaria ...... 1 17.0 - - 1 17.0 Cyprus ...... 1 30.0 - - 1 30.0 --,Czechoslovakia ...... 1 450.0 - - 1 450.0 I Egypt ...... 2 384.0 1 140.0 3 524.0

,-Hungary ...... 3 550.0 - - 3 550.0 ,Iran, Islamic Republic of ...... 1 250.0 - - 1 250.0 Jordan ...... 2 25.0 - - 2 25.0 --"Morocco ...... 4 626.0 - - 4 626.0 Pakistan ...... 4 428.1 3 249.0 7 677.1

Poland ...... 7 1,440.0 - - 7 1,440.0 Romania ...... 1 180.0 - - 1 180.0 Tunisia ...... 3 68.0 - - 3 68.0 Turkey ...... 4 900.0 - - 4 900.0 Yemen, Republic of . - - - 4 95.6 4 95.6 Yugoslavia ...... 1 300.0 - - 1 300.0 "' Total ...... 38 6,079.1 8 484.6 46 6,563.7

Latin America and the Caribbean ,Argentina ...... 6 679.5 - - 6 679.5 Bolivia ...... - - 3 81.8 3 81.8 7Brazil ...... 4 955.0 - - 4 955.0 Chile ...... 1 50.0 - - 1 50.0 7 Colombia ...... 4 639.0 - - 4 639.0 Dominican Republic ...... 2 94.0 - - 2 94.0 Ecuador ...... 2 163.0 - - 2 163.0 El Salvador ...... 2 101.0 - - 2 101.0 Guyana ...... - - - 22.3 - 22.3 Haiti ...... - - 2 23.9 2 23.9 Honduras ...... 1 90.0 2 40.0 3 130.0 Jamaica ...... 3 76.5 - - 3 76.5 / Mexico ...... 7 1,882.0 - - 7 1,882.0 St. Kitts and Nevis ...... 1 1.5 - 1.5 1 3.0 Trinidad and Tobago ...... 1 20.7 - - 1 20.7

Uruguay ...... 1 65.0 - - 1 65.0 Venezuela ...... 2 250.0 - - 2 250.0 Total ...... 37 5,067.2 7 169.5 44 5,236.7

Grand total ...... 126 16,392.2 103 6,293.3 229 22,685.5

-Zero. NOTE: Supplements are included in the amounts, but are not counted as separate lending operations. Joint IBRD/IDA operations are counted only once, as IBRD operations. Projects Approved by Sector 163

Table 7-2. Projects Approved for IBRD and IDA Assistance in Fiscal Year 1991, by Sector (millions of US dollars) Sectora IBRD IDA Total Agriculture and Rural Development Argentina-Agricultural credit ...... 33.5 - 33.5 Bangladesh-Agricultural credit ...... - 35.0 35.0 Bangladesh-Irrigation and drainage ...... - 75.0 75.0 Bangladesh-Irrigation and drainage ...... - 54.0 54.0 Benin-Agriculture sector loan ...... - 12.3 12.3 Bolivia-Research and extension ...... - 21.0 21.0 Burkina Faso-Agricultural credit ...... - 16.5 16.5 China-Agricultural credit ...... 75.0 200.0 275.0 China-Area development ...... - 110.0 110.0 China-Area development ...... - 64.0 64.0 China-Irrigation and drainage ...... 147.1 187.9 335.0 Colombia-Area development ...... 75.0 - 75.0 Congo-Research and extension ...... 15.8 - 15.8 C6te d'lvoire-Agriculture sector loan ...... 2.2 - 2.2 Ecuador-Irrigation and drainage ...... 59.0 - 59.0 Equatorial Guinea-Agriculture sector loan ...... - 6.3 6.3 Ghana-Perennial crops ...... - ...... 16.5 16.5 Ghana-Research and extension ...... - 22.0 22.0 India-Agricultural credit ...... 40.0 170.0 210.0 India-Area development ...... 20.0 92.8 112.8 India-Irrigation and drainage ...... 23.0 130.0 153.0 Indonesia-Agricultural credit ...... 15.5 - 15.5 Indonesia-Irrigation and drainage ...... 125.0 - 125.0 Kenya-Agriculture sector loan ...... - 75.0 75.0 Kenya-Forestry ...... - 19.9 19.9 Kenya-Research and extension ...... - 24.9 24.9 Madagascar-Livestock ...... - 19.8 19.8 Malawi-Fisheries ...... - 8.8 8.8 Mali-Research and extension ...... - 24.4 24.4 Mauritius-Research and extension ...... 10.0 - 10.0

Mexico-Agriculture sector loan ...... 400.0 - 400.0 Mexico-Area development ...... 350.0 - 350.0 Mozambique-Agriculture sector loan ...... - 15.4 15.4 Nigeria-Research and extension ...... - 78.0 78.0 Pakistan-Irrigation and drainage ...... 36.3 47.3 83.6 Pakistan-Irrigation and drainage ...... - 20.0 20.0 Philippines-Agricultural credit ...... 150.0 - 150.0 Philippines-Agriculture sector loan ...... 158.0 66.0 224.0 Philippines-Irrigation and drainage ...... 46.2 - 46.2 Poland-Agricultural credit ...... 100.0 - 100.0 St. Kitts and Nevis-Agroindustry ...... 1.5 1.5 3.0 Sri Lanka-Irrigation and drainage ...... - 29.6 29.6 Tanzania-Agriculture sector loan ...... - 16.1 16. b Thailand-Area development ...... 30.0 - 30.0 Uganda-Agriculture sector loan ...... - 100.0 100.0 Uganda-Livestock ...... - 21.0 21.0 Yemen, Republic of-Fisheries ...... - 13.2 13.2 Total ...... 1,913.1 1,794.2 3,707.3

(continued) 164 Summaries of Projects Approved

Table 7-2 (continued) Sectora IBRD IDA Total Development Finance Companies Bangladesh ...... 3'5 35b Bolivia ...... - 14.5 14.0 Brazil .300.0 - 300.0 Central African Republic ...... - 11.3 11.3 China .150.0 - 150.0

Colombia .200.0 - 200.0 Jamaica .30.0 - 30.0 Kenya ...... - 67.3 67, 3 Lesotho ...... - 21.0 21.0 Malawi ...... - 32.0 32.0

Malawi ...... - 7.2 7 b Mexico .300.0 - 300.0 Morocco .235.0 - 235.0 Poland .280.0 - 280.0 Poland .200.0 - 200.0 Total. 1,695.0 156.8 1,851.8

Education Algeria .65.0 - 65.0 Brazil .245.0 - 245.0 Brazil . 150 .0...... 150.0 - 150.0 Burkina Faso ...... - 24.0 24.0 - China ...... -...... 131.2 131.2 Dominican Republic ...... 15.0 - 15.0 Ghana ...... - 14.7 14.7 Haiti ...... - 12.6 12.6 Hungary .150.0 - 150.0 India -...... - 307.1 307.1 Indonesia .150.0 - 150.0 Korea, Republic of ...... 60.0 - 60.0 Korea, Republic of ...... 30.0 - 30.0 Mexico ...... 152.0 - 152.0 Morocco ...... 145.0 - 145.0 Mozambique ...... - 53.7 53.7 Nigeria ...... - 120.0 120.0 Papua New Guinea ...... 20.8 - 20.8 Philippines ...... 200.0 - 200.0 Poland ...... 100.0 - 100.0 Rwanda ...... - 23.3 23.3 Togo ...... - 9.2 9.2 Trinidad and Tobago ...... 20.7 - 20.7 Tunisia ...... 12.0 - 12.0 Yemen, Republic of ...... - 19.4 19.4 Zaire ...... - 21.0 21.0 Total ...... 1,515.5 736.2 2,251.7 Energy Oil, gas, and coal Bangladesh ...... - 67.2 67.2 Brazil ...... 260.0 - 260.0 Burundi ...... - 22.8 22.8 Projects Approved by Sector 165

Sector' IBRD IDA Total Energy (continued) Chad . . - 11.0 11.0 Egypt ...... 84.0 - 84.0

Guinea-Bissau ...... - 15.2 15.2 India ...... 450.0 - 450.0 Nigeria ...... 218.0 - 218.0 Pakistan ...... 130.0 - 130.0 Pakistan ...... 60.0 - 60.b Pakistan ...... 28.0 - 28.0b Poland ...... 340.0 - 340.0 Tanzania ...... - 44.0 44.0 Total ...... 1,570.0 160.2 1,730.2

Powter Benin ...... - 15.0 15.0 India ...... 200.0 - 200.0 Indonesia ...... 275.0 - 275.0 Morocco ...... 114.0 - 114,0 Togo ...... - 15.0 15.0 Turkey ...... 300.0 - 300.0 Uganda ...... - 125.0 125.0 Yugoslavia ...... 300.0 - 300.0 Total ...... 1,189.0 155.0 1,344.0

Industry Algeria-Industry sector loan ...... 350.0 - 350.0 China-Industry sector loan ...... 50.0 64.3 114.3 Cyprus-Industry sector loan ...... 30.0 - 30.0 India-Fertilizer and other chemicals ...... 245.0 - 245.0 India-Industry sector loan ...... 124.0 31.6 155.6 Indonesia-Fertilizer and other chemicals ...... 221.7 - 221.7 Jordan-Fertilizer and other chemicals ...... 15.0 - 15.0 Mexico-Mining, other extractive ...... 200.0 - 200.0 Pakistan-Industry sector loan ...... 56.4 - 56.4b Philippines-Industry sector loan ...... 175.0 - 175.0 Sri Lanka-Industry sector loan ...... - 120.0 120.0 Turkey-Industry sector loan ...... I ...... 200.0 - 200.0 Turkey-Industry sector loan ...... 100.0 - 100.0 Total ...... 1,767.1 215.9 1,983.0

Nonproject Benin ...... - 55.0 55.0 Burkina Faso ...... 80.0 80.0 Comoros ...... - 8.0 8.0 Czechoslovakia ...... 450.0 - 450.0 Egypt ...... 300.0 - 300.0 El Salvador ...... 75.0 - 75.0 Ghana ...... - 120.0 120.0 Ghana ...... - 8.3 83 Guyana ...... - 18.0 1g.0 Guyana ...... - 4.3 4lb

(continued) 166 Summaries of Projects Approved

Table 7-2 (continued) Sectora IBRD IDA Total Nonproject (continued) Honduras ...... 90.0 - 90.0 Honduras ...... - 20.0 20.0" Hungary ...... 250.0 - 250.0 Indonesia ...... 250.0 - 250.0 Jordan ...... 10.0 - 10.0 Kenya ...... - 100.0 100.0 Mali ...... - 70.0 70.0 Poland ...... 300.0 - 300.0 Rwanda ...... - 90.0 90.0 Senegal ...... - 7.1 7.l Sri Lanka ...... - 7.0 7.0" Togo ...... - 55.0 55.0 Uganda ...... - 2.0 2 0b Uruguay ...... 65.0 - 65.0 Venezuela ...... 150.0 - 150.0 Zambia ...... - 210.0 210.0 Zambia ...... - 27.2 27.2b Total ...... 1,940.0 881.9 2,821.9

Population, Health, and Nutrition Algeria ...... 16.0 - 16.0 Bangladesh ...... - 180.0 180.0 Egypt ...... - 140.0 140.0 El Salvador ...... 26.0 - 26.0 Ghana ...... - 27.0 27.0 Haiti ...... 11.3 11.3 Honduras ...... - 20.0 20.0 India ...... 10.0 96.0 106.0 Indonesia ...... 104.0 - 104.0 Korea, Republic of ...... 60.0 - 60.0 Madagascar ...... - 31.0 31.0 Malawi ...... - 55.5 55.5 Mali ...... - 26.6 26.6 Mexico ...... 180.0 - 180.0 Nigeria ...... - 78.5 78.5 Nigeria ...... 70.0 - 70.0 Pakistan ...... - 45.0 45.0 Rwanda ...... - 19.6 19.6 Senegal ...... - 35.0 35.0 Sri Lanka ...... - 57.5 57.5 Togo ...... - 14.2 14.2 Tunisia ...... 30.0 - 30.0 Tunisia ...... 26.0 - 26.0 Venezuela ...... 100.0 - 100.0 Yemen, Republic of ...... - 33.0 33.0 Zaire ...... -...... 30.4 30.4 Zambia ...... - 20.0 20.0 Zimbabwe ...... 25.0 - 25.0 Total ...... 647.0 920.6 1,567.6 Projects Approved by Sector 167

Sectors IBRD IDA Total Public-sector Management Argentina ...... 300.0 - 300.0 Colombia ...... 304.0 - 304.0 Madagascar ...... - 1.7 1.7b Mauritania ...... - 4.0 4.0 b Thailand ...... 32.0 - 32.0 Total ...... 636.0 5.7 641.7

Small-scale Enterprises Indonesia ...... 125.0 - 125.0 Pakistan ...... 26.0 - 26.0 Philippines ...... 15.0 - 15.0 Sri Lanka ...... - 45.0 45.0 Total ...... 166.0 45.0 211.0

Technical Assistance Angola ...... - 23.0 23.0 Argentina ...... 23.0 - 23.0 Argentina ...... 23.0 - 23.0 Benin ...... - 5.4 5.4 Bolivia ...... - 11.3 11.3 Bulgaria ...... 17.0 - 17.0 Central African Republic ...... - 6.5 6.5 Ghana ...... - 15.0 15.0 Indonesia ...... 30.0 - 30.0 Jamaica ...... 11.5 - 11.5 Romania ...... 180.0 - 180.0 Zambia ...... - 21.0 21.0 Total ...... 284.5 82.2 366.7

Telecommunications Hungary ...... 150.0 - 150.0 Poland ...... 120.0 - 120.0 Rwanda ...... - 12.8 12.8 Sri Lanka ...... - 57.0 57.0 Total ...... 270.0 69.8 339.8 Transportation Bangladesh-Ports and waterways ...... - 45.0 45.0 Botswana-Highways ...... 14.9 - 14.9 China-Highways ...... 100.0 53.6 153.6 Comoros-Highways ...... - 6.6 6.6 Dominican Republic-Highways ...... 79.0 - 79.0 Ghana-Highways ...... - 96.0 96.0 Jamaica-Highways ...... 35.0 - 35.0 Lao People's Democratic Republic-Highways ...... - 45.0 45.0 Morocco-Ports and waterways ...... 132.0 - 132.0 Pakistan-Ports and waterways ...... 91.4 - 91.4 Philippines-Highways ...... 125.0 - 125.0 Senegal-Transportation sector loan ...... - 65.0 65.0 Sri Lanka-Highways ...... - 42.5 42.5 Tanzania-Railways ...... - 76.0 76.0 Turkey-Highways ...... 300.0 - 300.0

(continued) 168 Summaries of Projects Approved

Table 7-2 (continued) Sectora IBRD IDA Total Transportation (continued) Yemen, Republic of-Transportation sector loan ...... 30.0 30.0 Zaire-Highways ...... - 12.4 12.4 Zimbabwe-Railways ...... 38.6 - 38.6 Total ...... 915.9 472.1 1,388.0

Urban Development Argentina ...... 200.0 - 200.0 Burkina Faso ...... - 20.0 20.0 China ...... 79.4 89.0 168.4 Colombia ...... 60.0 - 60.0 Djibouti ...... - 11.2 11.2 Ecuador ...... 104.0 - 104.0 Indonesia ...... 180.3 - 180.3 Indonesia ...... 61.0 - 61.0 Iran, Islamic Republic of ...... 250.0 - 250.0 Korea, Republic of ...... 100.0 - 100.0 Mauritius ...... 12.4 - 12.4 Niger ...... - 20.0 20.0 Papua New Guinea ...... 30.0 - 30.0 Sao Tome and Principe ...... - 6.0 6.0 Uganda ...... - 28.7 28.7 Vanuatu ...... - 3.4 3.4 Total ...... 11,077.1 178.3 1,255.4

Water Supply and Sewerage Argentina ...... 100.0 - 100.0 Bolivia ...... - 35.0 35.0 Chile ...... 50.0 - 50.0 China ...... - 77.8 77.8 India ...... - 109.9 109.9 Indonesia ...... 100.0 - 100.0 Mexico ...... 300.0 - 300.0 Nepal ...... - 60.0 60.0 Nigeria ...... 256.0 - 256.0 Pakistan ...... - 136.7 136.7 Total ...... 806.0 419.4 1,225.4

Grand total ...... 16,392.2 6,293.3 22,685.5

- Zero. NOTE: For additional details, see Tables 7-3 and 7-4. 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. Statement of IBRD Loans 169

Table 7-3. Statement of IBRD Loans Approved during Fiscal Year 1991 Principal amount Borrower or guarantor and purpose Date of approval Maturities (US$ millions) Algeria Science and technology university development project .... Nov. 6, 1990 1996/2008 65.0 Pilot public health management project ...... Mar. 5, 1991 1996/2008 16.0 Enterprise and financial sector adjustment loan ...... June 21. 1991 1997/2008 350.0 Argentina Provincial development project ...... Dec. 18, 1990 1996/2007 200.0 Water supply and sewerage sector project ...... Dec. 18, 1990 1996/2007 100.0 Public enterprise reform adjustment loan ...... Feb. 12, 1991 1996/2008 300.0 Public enterprise reform execution loan ...... Feb. 12. 1991 1996/2008 23.0 Agricultural services and institutional development project . Feb. 28, 1991 1996/2008 33.5 Public sector reform technical assistance loan ...... June 25, 1991 1997/2008 23.0 Botswana Tuli Block roads project ...... July 31, 1990 1996/2007 14.9 Brazil Science research and training project ...... Nov. 29. 1990 1996/2005 150.0 Brazil (Guarantor) Private sector finance project-Banco Nacional de Desenvolvimento Econ6mico e Social ...... Nov. 29, 1990 1996/2005 300.0 Hydrocarbon transport and processing project-Petr6leo Brasileiro S.A ...... June 26, 1991 1997/2006 260.0 Innovations in basic education project-State of Sao Paulo . June 26, 1991 1996/2006 245.0 Bulgaria Technical assistance for economic reform project ...... June 27. 1991 1997/2008 17.0 Chile (Guarantor) Second Valparaiso water supply and sewerage project-Empresa de Obras Sanitarias de Valparaiso S.A ...... May 28, 1991 1996/2008 50.0 China Fourth rural credit project ...... Oct. 30, 1990 1996/2010 75.0 Rural industrial technology project ...... Dec. 4, 1990 1996/2010 50.0 Medium-sized cities development project ...... Jan. 8, 1991 1996/2010 79.4 Shanghai industrial development project ...... Jan. 29, 1991 1996/2011 150.0 Jiangsu provincial transport project ...... Apr. 9, 1991 1996/2011 100.0 Irrigated agriculture intensification project ...... June 4, 1991 1997/2011 147.1 Colombia Rural development investment program ...... July 31. 1990 1996/2007 75.0 Public sector reform loan ...... Dec. 11. 1990 1996/2007 304.0 Municipal development project ...... May 30. 1991 1997/2008 60.0 Colombia (Guarantor) Industrial restructuring and development project-Banco de la Repuiblica ...... May 2, 1991 1996/2008 200.0 Congo National agricultural extension and adaptive research project ...... Sept. 11. 1990 1996/2010 15.8 C6te d'lvoire Women in development pilot support project ...... Aug. 2, 1990 1996/2010 2.2 Cyprus Industrial restructuring project ...... Apr. 25, 1991 1997/2006 30.0 Czechoslovakia Structural adjustment loan ...... June 26, 1991 1997/2006 450.0 (continued) 170 Summaries of Projects Approved

Table 7-3 (continued) Pfincipal amount Borrower or guarantor and purpose Date of approval Maturities (US$ millions) Dominican Republic Fifth road rehabilitation and maintenance project ...... June 20, 1991 1997/2011 79.0 Primary education development project ...... I ... June 20, 1991 1997/2011 15.0 Ecuador Lower Guayas flood control project ...... Dec. 6, 1990 1996/2007 59.0 Municipal development and urban infrastructure project.... Dec. 20, 1990 1996/2010 104.0 Egypt Structural adjustment loan ...... June 21, 1991 1996/2011 300.0 Egypt (Guarantor) Gas investment project-Egyptian General Petroleum Corporation ...... June 21. 1991 1996/2011 84.0 El Salvador Structural adjustment loan ...... Feb. 12, 1991 1996/2011 75.0 Social sector rehabilitation project ...... June 19, 1991 1997/2011 26.0 Honduras Second structural adjustment loan ...... Sept. 13, 1990 1996/2010 90.0 Hungary Human resources project ...... Mar. 28, 1991 1996/2006 150.0 Hungary (Guarantor) Second telecommunications project-Magyar Tavkozlesi Vallalat ...... Oct. 9, 1990 1996/2005 150.0 Second structural adjustment loan-National Bank of Hungary ...... June 19, 1991 1997/2006 250.0 India Integrated child development services project ...... Sept. 4, 1990 1996/2010 10.0 Second petrochemicals development project ...... Sept. 13, 1990 1996/2010 12.0 Andhra Pradesh cyclone emergency reconstruction project . Oct. 4, 1990 1996/2010 40.0 Agricultural development project-Tamil Nadu ...... Mar. 12, 1991 1996/2011 20.0 Dam safety project ...... May 14, 1991 1997/2011 23.0 Industrial pollution control project ...... May 30, 1991 1997/2011 124.0 India (Guarantor) Second petrochemicals development project-Indian Petrochemical Corporation Ltd ...... Sept. 13, 1990 1996/2010 233.0 Private power utilities project-Bombay Suburban Electric Supply Limited ...... June 13, 1991 1997/2011 200.0 Gas flaring reduction project-Oil and Natural Gas Commission ...... June 25, 1991 1997/2011 450.0 Indonesia Third Jabotabek urban development project ...... July 17, 1990 1996/2010 61.0 Second BRI/KUPEDES small credit project ...... July 31, 1990 1996/2010 125.0 Second private sector development loan ...... Nov. 13, 1990 1996/2010 250.0 Fertilizer restructuring project ...... Dec. 20, 1990 1996/2011 221.7 Fifth population project ...... Mar. 5, 1991 1996/2011 104.0 Provincial irrigated agricultural development project ...... Mar. 14, 1991 1996/2011 125.0 East Java-Bali urban development project ...... Mar. 19, 1991 1996/2011 180.3 Yogyakarta upland area development project ...... Mar. 19, 1991 1996/2011 15.5 Second higher education development project ...... Mar. 26, 1991 1996/2011 150.0 Sulawesi-Irian Jaya urban development project ...... June 6, 1991 1997/2011 100.0 Power transmission project ...... June 19, 1991 1997/2011 275.0 Technical assistance project for public and private provision of infrastructure ...... June 27, 1991 1997/2011 30.0 Statement of IBRD Loans 171

Principal amount Borrower or guarantor and purpose Date of approval Maturities (US$ millions) Iran, Islamic Republic of (Guarantor) Earthquake recovery project-Central Bank of the Islamic Republic of Iran ...... Mar. 14, 1991 1996/2006 250.0 Jamaica Road infrastructure planning and maintenance project ...... Dec. 4, 1990 1996/2007 35.0 Second trade and financial sector adjustment loan ...... Mar. 21, 1991 1996/2008 30.0 Financial and program management improvement project ... June 27, 1991 1997/2008 11.5 Jordan Emergency recovery project ...... Mar. 21, 1991 1996/2008 10.0 Jordan (Guarantor) Dead Sea industrial exports project-Arab Potash Company ...... June 21, 1991 1997/2008 15.0 Korea, Republic of Vocational education project ...... Mar. 28, 1991 1996/2006 30.0 Third technology advancement project ...... Apr. 2, 1991 1996/2006 60.0 Housing project ...... May 23, 1991 1996/2006 100.0 Health technology project ...... May 23, 1991 1996/2006 60.0 Mauritius Environmental monitoring and development project ...... Dec. 6, 1990 1996/2008 12.4 Agricultural management and services project ...... May 28. 1991 1997/2008 10.0 Mexico (Guarantor) Water supply and sanitation sector project-Banco Nacional de Obras y Servicios Puiblicos, S.N.C ...... Nov. 29, 1990 1996/2008 300.0 Basic health care project-Nacional Financiera, S.N.C. Nov. 29, 1990 1996/2007 180.0 Decentralization and regional development project for the disadvantaged states-Nacional Financiera, S.N.C ...... Mar. 26. 1991 1996/2008 350.0 Export sector loan-Banco Nacional de Comercio Exterior, S.N.C ...... Mar. 26, 1991 1996/2008 300.0 Agricultural sector adjustment loan 11-Nacional Financiera, S.N.C ...... June 25, 1991 1997/2008 400.0 Mining sector restructuring project-Nacional Financiera, S.N.C ...... June 25, 1991 1997/2008 200.0 Third technical training project-Nacional Financiera. S.N.C ...... June 25, 1991 1997/2008 152.0 Morocco Second rural electrification project ...... Oct. 4, 1990 1996/2010 114.0 Port sector project ...... Dec. 20, 1990 1996/2011 33.0 Rural basic education development project ...... Feb. 26, 1991 1996/2011 145.0 Financial sector development project ...... June 25, 1991 1997/2011 125.0 Morocco (Guarantor) Port sector project-Office d'exploitation des ports ...... Dec. 20, 1990 1996/2011 99.0 Financial sector development project-Banque nationale pour le developpement economique ...... June 25, 1991 1997/2011 29.5 Financial sector development project-Banque marocaine du commerce exterieur ...... June 25, 1991 1997/2011 19.5 Financial sector development project-Banque commerciale du Maroc ...... June 25, 1991 1997/2011 13.5 Financial sector development project-Wafabank ...... June 25. 1991 1997/2011 8.5 Financial sector development project-Banque marocaine pour le commerce et l'industrie ...... June 25, 1991 1997/2011 9.5

(continued) 172 Summaries of Projects Approved

Table 7-3 (continued)

Principal Borrower or guarantor amount and purpose Date of approval Maturities (US$ millions) Morocco (Guarantor) (continued) Financial sector development project-Banque centrale populaire ...... June 25. 1991 1997/2011 9.5 Financial sector development project-Societe generale marocaine de banque ...... June 25. 1991 1997/2011 11.5 Financial sector development project-Credit du Maroc .... June 25, 1991 1997/2011 8.5 Nigeria National water rehabilitation project ...... May 21. 1991 1996/2011 256.0 Health system fund project ...... May 21, 1991 1996/2011 70.0 Nigeria (Guarantor) Oso condensate field development project-Nigerian National Petroleum Corporation ...... Apr. 9. 1991 1996/2010 218.0 Pakistan Microenterprise project ...... Apr. 23, 1991 1996/2011 26.0 Third on-farm water management project ...... May 21. 1991 1996/2011 36.3 Karachi port modernization project ...... May 30, 1991 1996/2011 91.4 Cement industry modernization project (supplemental loan). May 30. 1991 1993/2007 56.4 Second energy sector program (supplemental loan) ...... June 21, 1991 1995/2009 28.0 Pakistan (Guarantor) Corporate restructuring and system expansion project-Sui Northern Gas Pipelines Limited ...... Aug. 7, 1990 1996/2010 130.0 Corporate restructuring and system expansion project-Sui Northern Gas Pipelines Limited (supplemental loan) ..... June 21, 1991 1996/2010 60.0 Papua New Guinea Special interventions project ...... Jan. 29, 1991 1996/2011 30.0 Public sector training project ...... Jan. 29, 1991 1996/2011 20.8 Philippines Second elementary education project ...... July 3. 1990 1996/2010 200.0 Second communal irrigation development project ...... Oct. 4. 1990 1996/2010 46.2 Earthquake reconstruction project ...... Oct. 9, 1990 1996/2010 125.0 Environment and natural resources sector adjustment program ...... June 25, 1991 1997/2011 158.0 Philippines (Guarantor) Industrial restructuring project-Development Bank of the Philippines ...... Jan. 8, 1991 1996/2011 175.0 Cottage enterprise finance project-Development Bank of the Philippines ...... Mar. 26, 1991 1996/2011 15.0 Rural finance project-Land Bank of the Philippines ...... June 21, 1991 1997/2011 150.0 Poland Structural adjustment loan ...... July 31, 1990 1996/2007 300.0 Employment promotion and services project ...... June 4, 1991 1996/2008 100.0 Privatization and restructuring project ...... June 11, 1991 1996/2008 280.0 Financial institutions development loan ...... June 11, 1991 1996/2008 200.0 Agricultural development project ...... June 11. 1991 1996/2008 100.0 Heat supply restructuring and conservation project ...... June 26. 1991 1996/2008 75.0 Poland (Guarantor) First telecommunications project-Polish Post, Telephone and Telegraph Enterprise ...... Apr. 23. 1991 1996/2008 120.0 Heat supply restructuring and conservation project-District Heating Enterprise of Warsaw ...... June 26, 1991 1996/2008 100.0 Heat supply restructuring and conservation project-District Heating Enterprise of Katowice ...... June 26, 1991 1996/2008 55.0 Statement of IBRD Loans 173

Principal amount Borrower or guarantor and purpose Date of approval Maturities (US$ millions) Poland (Guarantor) (continued) Heat supply restructuring and conservation project-District Heating Enterprise of Gdansk ...... June 26, 1991 1996/2008 40.0 Heat supply restructuring and conservation project-District Heating Enterprise of Gdynia ...... June 26, 1991 1996/2008 25.0 Heat supply restructuring and conservation project-District Heating Enterprise of Krakow .June 26, 1991 1996/2008 25.0 Heat supply restructuring and conservation project-Bank of Poznan ...... June 26, 1991 1996/2008 20.0 Romania Technical assistance and critical imports project ...... June 25, 1991 1997/2006 180.0 St. Kitts and Nevis Agricultural development support project ...... May 28, 1991 1997/2008 1.5 Thailand Second land titling project ...... Sept. 4. 1990 1996/2010 30.0 Tax computerization project ...... Feb. 12, 1991 1996/2008 32.0 Trinidad and Tobago Education and training for youth employment project ...... May 21, 1991 1997/2006 20.7 Tunisia Employment and training fund project ...... Sept. 4, 1990 1996/2007 12.0 Hospital restructuring support project ...... Mar. 21, 1991 1996/2008 30.0 Population and family health project ...... Mar. 21, 1991 1996/2008 26.0 Turkey Technology development project ...... Feb. 28, 1991 1996/2008 100.0 State and provincial roads project ...... May 14, 1991 1997/2008 300.0 Private investment credit project ...... June 13. 1991 1996/2008 200.0 Turkey (Guarantor) TEK restructuring project-Turkish Electricity Authority .. June 13, 1991 1996/2008 300.0 Uruguay Debt and debt service reduction program ...... May 14, 1991 1997/2006 65.0 Venezuela Social development project ...... Nov. 29, 1990 1996/2006 100.0 Interest support loan ...... Dec. 13, 1990 1996/2005 150.0 Yugoslavia (Guarantor) Kolubara B thermal power and lignite mine project-Elektroprivreda of Serbia ...... June 25, 1991 1997/2006 300.0 Zimbabwe Second railways project ...... Dec. 4, 1990 1996/2011 38.6 Second family health project ...... June 4, 1991 1996/2011 25.0 Total . .. 16,392.2 International Finance Corporation (total amount for fiscal 1991) ...... a __b 200.0 Grand total .16,592.2

NOTE: All loans approved in fiscal 1991 are at variable interest rates. a. Various loans approved throughout the fiscal year. b. Maturities vary for individual loans. 174 Summaries of Projects Approved

Table 74. Statement of IDA Credits Approved during Fiscal Year 1991 Principal amount (millions) US$ Country and purpose Date of approval Maturities SDR equivalent Angola Economic management capacity building project ...... June 19. 1991 2001/2026 17.1 23.0 Bangladesh Financial sector adjustment credit (supplement) ...... Nov. 6, 1990 2000/2030 2.5 3.5 Third inland water transport project ...... May 2, 1991 2001/2031 31.3 45.0 Agricultural support services project ...... May 2, 1991 2001/2031 24.4 35.0 National minor irrigation development project ...... May 23, 1991 2001/2031 38.1 54.0 Shallow tubewell and low lift pump irrigation project ...... May 30, 1991 2001/2031 52.2 75.0 Fourth population and health project ...... June 6, 1991 2001/2031 133.2 180.0 Liquefied petroleum gas transport and distribution project ...... June 11, 1991 2001/2031 49.8 67.2 Benin Second structural adjustment program ...... June 27. 1991 2001/2031 41.3 55.0 Power rehabilitation and extension project. . June 27, 1991 2001/2031 11.3 15.0 Agricultural services restructuring project . . June 27. 1991 2001/2031 9.3 12.3 Pre-investment project ...... June 27, 1991 2001/2031 4.1 5.4 Bolivia Financial sector adjustment credit (supplement) ...... Nov. 6, 1990 1998/2028 10.4 14.5 Major cities water and sewerage rehabilitation project ...... Dec. 4, 1990 2001/2030 25.2 35.0 Agricultural technology development project ...... Mar. 14, 1991 2001/2031 15.0 21.0 Second public financial management operation ...... June 26, 1991 2001/2031 8.5 11.3 Burkina Faso Environmental management project ...... April 25. 1991 2001/2031 11.5 16.5 Fourth education project ...... May 21. 1991 2001/2031 17.8 24.0 Structural adjustment program ...... June 27, 1991 2001/2031 60.0 80.0 Public works and employment project ...... June 27. 1991 2001/2031 15.0 20.0 Burundi Energy sector rehabilitation project ...... April 25, 1991 2001/2031 16.3 22.8 Central African Republic Enterprise rehabilitation and development project ...... May 30. 1991 2001/2031 9.4 11.3 Social dimensions of adjustment and development project ...... June 20, 1991 2001/2031 5.6 6.5 Chad Petroleum and power engineering project ... Nov. 20, 1990 2001/2030 7.9 11.0 China Mid-Yangtze agricultural development project ...... Aug. 9. 1990 2000/2025 48.6 64.0 Fourth rural credit project ...... Oct. 30, 1990 2000/2025 143.7 200.0 Rural industrial technology project ...... Dec. 4, 1990 2001/2025 45.1 64.3 Medium-sized cities development project ... Jan. 8, 1991 2001/2025 62.2 89.0 Key studies development project ...... Feb. 26. 1991 2001/2025 92.9 131.2 Statement of IDA CredHs 175

Principal amount (millions) US$ Country and purpose Date of approval Maturities SDR equivalent China (continued) Liaoning urban infrastructure project ...... Mar. 21, 1991 2001/2025 54.2 77.8 Jiangsu provincial transport project ...... April 9, 1991 2001/2025 38.5 53.6 Henan agricultural development project .... May 14, 1991 2001/2026 81.4 110.0 Irrigated agriculture intensification project. . June 4, 1991 2001/2026 139.0 187.9 Comoros Highway maintenance project ...... Jan. 22, 1991 2001/2030 4.6 6.6 Macro-economic reform and capacity building credit ...... June 13, 1991 2001/2031 6.0 8.0 Djibouti Second urban development project ...... Jan. 15. 1991 2001/2030 7.8 11.2 Egypt Social fund project ...... _ ...... June 21, 1991 2001/2026 105.0 140.0 Equatorial Guinea Crop diversification and agricultural services project ...... Oct. 30, 1990 2000/2030 4.7 6.3 Ghana Agricultural diversification project ...... Oct. 16, 1990 2000/2030 12.5 16.5 Second structural adjustment credit (supplement) ...... Nov. 6, 1990 1999/2029 6.0 8.3 Second transport rehabilitation project ..... Dec. 13, 1990 2001/2030 69.0 96.0 Second health and population project ...... Dec. 13. 1990 2001/2030 19.5 27.0 Economic management support project ..... Mar. 28, 1991 2001/2030 10.7 15.0 Program to promote private investment and sustained development ...... May 7, 1991 2001/2031 84.6 120.0 National agricultural research project ...... May 23, 1991 2001/2031 16.3 22.0 Community secondary schools construction project ...... June 25, 1991 2001/2031 11.1 14.7 Guinea-Bissau Energy project ...... May 7, 1991 2001/2030 11.3 15.2 Guyana Second structural adjustment credit (supplement) ...... Nov. 6, 1990 2000/2030 3.1 4.3 Second structural adjustment credit (supplement) ...... June 11, 1991 2000/2030 13.2 18.0 Haiti Economic and social fund project ...... Jan. 17, 1991 2001/2030 7.9 11.3 Fifth education project ...... June II, 1991 2001/2031 9.4 12.6 Honduras Structural adjustment credit (supplement) .. Jan. 29, 1991 2001/2025 14.3 20.0 Social investment fund project ...... Feb. 28, 1991 2001/2025 14.3 20.0 India Integrated child development services project ...... Sept. 4, 1990 2000/2025 73.6 96.0 Andhra Pradesh cyclone emergency reconstruction project ...... Oct. 4, 1990 2000/2025 126.1 170.0 Agricultural development project-Tamil Nadu ...... Mar. 12, 1991 2001/2025 64.1 92.8 (continued) 176 Summaries of Projects Approved

Table 74 (continued) Principal amount (millions) USS Country and purpose Date of approval Maturities SDR equivalent India (continued) Second technician education project ...... Mar. 28. 1991 2001/2025 213.5 307.1 Maharashtra rural water supply and environmental sanitation project ...... May 2, 1991 2001/2026 76.4 109.9 Dam safety project ...... May 14. 1991 2001/2026 96.2 130.0 Industrial pollution control project ...... May 30, 1991 2001/2026 23.4 31.6 Kenya Financial sector adjustment credit (supplement) ...... Nov. 6, 1990 1999/2024 48.2 67.3 Export development project ...... Dec. 20, 1990 2001/2030 69.5 100.0 Second national agricultural extension project ...... Dec. 20, 1990 2001/2030 17.4 24.9 Forestry development project ...... Dec. 20, 1990 2001/2030 13.9 19.9 Second agricultural sector adjustment operation ...... Jan. 17, 1991 2001/2030 52.2 75.0 Lao People's Democratic Republic Highway improvement project ...... Mar. 21. 1991 2001/2031 32.1 45.0 Lesotho Industrial and agroindustries development project ...... Dec. 18, 1990 2001/2030 15.1 21.0 Madagascar Public sector adjustment (supplement) ...... Nov. 6. 1990 1998/2028 1.2 1.7 Livestock sector project ...... May 16, 1991 2001/2031 14.0 19.8 Health sector improvement project ...... May 28. 1991 2001/2031 22.9 31.0 Malawi Industrial and trade policy adjustment credit (supplement) ...... Nov. 6, 1990 1998/2028 5.1 7.2 Population, health and nutrition sector credit ...... Mar. 26, 1991 2001/2031 38.6 55.5 Financial sector and enterprise development project ...... Mar. 26, 1991 2001/2031 22.3 32.0 Fisheries development project ...... April 2. 1991 2001/2031 6.2 8.8 Mali Structural adjustment program ...... Dec. 11, 1990 2001/2030 50.3 70.0 Second health, population and rural water supply project ...... Mar. 19, 1991 2001/2030 19.2 26.6 Agricultural services project ...... May 2, 1991 2001/2031 18.3 24.4 Mauritania Public enterprise sector adjustment (supplement) ...... Nov. 6, 1990 2000/2030 2.9 4.0 Mozambique Agricultural rehabilitation and development project ...... Sept. 6, 1990 2000/2030 11.9 15.4 Second education project ...... Dec. 20, 1990 2001/2030 38.7 53.7 Nepal Urban water supply and sanitation rehabilitation project ...... May 7, 1991 2001/2031 45.5 60.0 Niger Public works and employment project ...... Feb. 19, 1991 2001/2031 13.9 20.0 Statement of IDA Credits 177

Principal amount (millions) US$ Country and purpose Date of approval Maturities SDR equivalent Nigeria Primary education project ...... Dec. 13, 1990 2001/2025 90.6 120.0 National population project ...... May 7. 1991 2001/2026 54.2 78.5 National agricultural research project ...... June Il. 1991 2001/2026 58.5 78.0 Pakistan Rural water supply and sanitation project .. April 23, 1991 2001/2026 96.4 136.7 Family health project ...... May 7, 1991 2001/2026 31.8 45.0 Third on-farm water management project .. May 21, 1991 2001/2026 33.4 47.3 Second SCARP transition project ...... June 4, 1991 2001/2026 14.8 20.0 Philippines Environment and natural resources sector adjustment program ...... June 25, 1991 2001/2026 50.0 66.0 Rwanda Second communications project ...... Dec. II, 1990 2001/2030 8.9 12.8 First education sector project ...... April 9, 1991 2001/2031 16.2 23.3 First structural adjustment program ...... June 19, 1991 2001/2031 67.5 90.0 First population project ...... June 19, 1991 2001/2031 14.5 19.6 St. Kitts and Nevis Agricultural development support project ... May 28, 1991 2001/2026 1.1 1.5 Sio Tome and Principe Second mnulti-sector project ...... June 27, 1991 2001/2031 4.5 6.0 Senegal Fourth structural adjustment credit (supplement) ...... Nov. 6, 1990 2000/2029 5.1 7.1 Human resources development project ..... May 30, 1991 2001/2031 25.4 35.0 Transport sector adjustment/investment program ...... June 13, 1991 2001/2031 49.9 65.0 Sri Lanka Third roads project ...... Nov. 6. 1990 2001/2030 30.6 42.5 Economic restructuring credit (supplement). Nov. 6, 1990 2000/2030 5.0 7.0 Public manufacturing enterprises adjustment credit ...... Nov. 27. 1990 2001/2030 90.7 120.0 Poverty alleviation project ...... April 25. 1991 2001/2031 40.6 57.5 Second telecommunications project ...... May 28. 1991 2001/2031 39.7 57.0 Fourth small and medium industries project. May 28, 1991 2001/2031 33.3 45.0 National irrigation rehabilitation project .... June 6, 1991 2001/2031 21.9 29.6 Tanzania Agricultural adjustment credit (supplement). Dec. 13, 1990 2000/2029 11.5 16.1 Petroleum sector rehabilitation project ..... Jan. 15. 1991 2001/2030 33.7 44.0 Railways restructuring project ...... June 13. 1991 2001/2031 56.1 76.0 Togo Power rehabilitation and extension project. . Aug. 2, 1990 2000/2030 11.4 15.0 Technical education and vocational training project ...... Sept. 4, 1990 2001/2030 7.0 9.2 Fourth structural adjustment program ...... Dec. 18, 1990 2001/2030 39.6 55.0 Population and health sector adjustment program ...... Feb. 28, 1991 2001/2030 10.2 14.2

(continued) 178 Summaries of Projects Approved

Table 74 (continued) Principal amount (millions) US$ Country and purpose Date of approval Maturities SDR equivalent Uganda Livestock services project ...... Sept. 11, 1990 2000/2030 16.1 21.0 Second economic recovery credit (supplement) ...... Nov. 6, 1990 2000/2029 1.5 2.0 Agricultural sector adjustment credit ...... Dec. 13, 1990 2001/2030 69.5 100.0 First urban project ...... Jan. 22, 1991 2001/2030 20.7 28.7 Third power project ...... June 13, 1991 2001/2031 86.9 125.0 Vanuatu Housing project ...... June 11, 1991 2001/2031 2.5 3.4 Yemen, Republic of Multi-mode transport project ...... Sept. 11, 1990 2001/2030 22.7 30.0 Secondary teacher training project ...... Mar. 28, 1991 2001/2031 13.5 19.4 Emergency recovery project ...... June 6, 1991 2001/2031 24.8 33.0 Fourth fisheries development project ...... June 13, 1991 2001/2031 9.4 13.2 Zaire Pilot feeder roads project ...... Sept. 11, 1990 2000/2030 9.6 12.4 Social sector project ...... Dec. 18, 1990 2001/2030 21.9 30.4 Education sector rehabilitation project ..... Mar. 5, 1991 2001/2030 15.0 21.0 Zambia . Economic recovery program ...... Mar. 5, 1991 2001/2030 149.6 210.0 Economic recovery program (supplement).. Mar. 5, 1991 2001/2030 19.4 27.2 Mining sector technical assistance project .. June 13, 1991 2001/2031 15.6 21.0 Social recovery project ...... June 19, 1991 2001/2031 14.8 20.0 Total 4,554.4 6,293.3

NOTE: Starting with the sixth replenishment of IDA, credits are expressed 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 1991 have a service charge of 0.75 percent on the disbursed and outstanding balance. Trends in Lending 179

Table 7-5. Trends in Lending, IBRD and IDA, Fiscal Years 1989-91 1989 1990 1991 Sector IBRD IDA Total IBRD IDA Total IBRD IDA Total Millions of U.S. dollars Agriculture and Rural Development 2,066.1 1,423.9 3,490.0 1,994.5 1,661.6 3,656.1 1,913.1 1,794.2 3,707.3 Development Finance Companies 2,500.0 378.7 2,878.7 945.0 326.7 1,271.7 1,695.0 156.8 1,851.8 Education 514.6 449.1 963.7 530.1 956.5 1,486.6 1,515.5 736.2 2,251.7 Energy Oil, gas, and coal 799.5 31.2 830.7 86.0 - 86.0 1,570.0 160.2 1,730.2 Power 2,608.5 424.4 3,032.9 2.998.5 219.8 3,218.3 1,189.0 155.0 1,344.0 Industry 1,858.0 124.5 1,982.5 650.5 145.1 795.6 1,767.1 215.9 1,983.0 Nonproject 1,892.0 471.5 2,363.5 2,600.0 444.0 3,044.0 1,940.0 881.9 2,821.9 Population, Health, and Nutrition 326.5 223.5 550.0 524.6 408.8 933.4 647.0 920.6 1,567.6 Public-sector Management 500.0 - 500.0 480.0 45.6 525.6 636.0 5.7 641.7 Small-scale Enterprises 585.0 - 585.0 50.0 157.5 207.5 166.0 45.0 211.0 Technical Assistance 64.0 154.3 218.3 96.0 45.0 141.0 284.5 82.2 366.7 Telecommunications 53.1 107.9 161.0 592.2 24.5 616.7 270.0 69.8 339.8 Transportation 1,137.7 693.1 1,830.8 2,250.2 535.1 2,785.3 915.9 472.1 1,388.0 Urban Development 959.0 229.5 1,188.5 702.7 299.4 1,002.1 1,077.1 178.3 1,255.4 Water Supply and Sewerage 569.2 222.0 791.2 679.4 252.4 931.8 806.0 419.4 1,225.4 Total 16,433.2 4,933.6 21,366.8 15,179.7 5,522.0 20,701.7 16,392.2 6,293.3 22,685.5

Percentage distribution by sector Agriculture and Rural Development 12.6 28.9 16.3 13.1 30.1 17.7 11.7 28.5 16.3 Development Finance Companies 15.2 7.7 13.5 6.2 5.9 6.1 10.3 2.5 8.2 Education 3.1 9.1 4.5 3.5 17.3 7.2 9.2 11.7 9.9 Energy Oil, gas, and coal 4.9 0.6 3.9 0.6 - 0.4 9.6 2.5 7.6 Power 15.9 8.6 14.2 19.8 4.0 15.5 7.3 2.5 5.9 Industry 11.3 2.5 9.3 4.3 2.6 3.8 10.8 3.4 8.7 Nonproject 11.5 9.6 11.1 17.1 8.0 14.7 11.8 14.0 12.4 Population, Health, and Nutrition 2.0 4.5 2.6 3.5 7.4 4.5 3.9 14.6 6.9 Public-sector Management 3.0 - 2.3 3.2 0.8 2.5 3.9 0.1 2.8 Small-scale Enterprises 3.6 - 2.7 0.3 2.9 1.0 1.0 0.7 0.9 Technical Assistance 0.4 3.1 1.0 0.6 0.8 0.7 1.7 1.3 1.6 Telecommunications 0.3 2.2 0.8 3.9 0.4 3.0 1.6 1.1 1.5 Transportation 6.9 14.0 8.6 14.8 9.7 13.5 5.6 7.5 6.1 Urban Development 5.8 4.7 5.6 4.6 5.4 4.8 6.6 2.8 5.5 Water Supply and Sewerage 3.5 4.5 3.7 4.5 4.6 4.5 4.9 6.7 5.4 Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

- Zero. NOTE: Details may not add to totals because of rounding. 180 Summaries of Projects Approved

Table 7-6. IBRD and IDA Cumulative Lending Operations, by Major Purpose and Region, June 30, 1991 (millions of US dollars) IBRD loans to borrowers, by regiona Europe, Middle Latin East, and America North and the Purposeb Africa Asia Africa Caribbean Total Agriculture and Rural Development Agricultural credit ...... 319.8 1,568.4 2,898.8 2,660.9 7,447.9 Agriculture sector loan ...... 16.8 585.3 1,332.0 2,507.1 4,441.2 Agroindustry ...... 30.0 325.2 1,149.7 1,228.4 2,733.3 Area development ...... 1...... ,628.6 1,756.1 996.5 3,385.4 7,766.6 Fisheries ...... 0.0 106.7 48.0 16.2 170.9 Forestry ...... 349.5 78.0 317.5 116.0 861.0 Irrigation and drainage ...... 110.2 4,110.8 2,713.1 2,274.5 9,208.6 Livestock ...... 170.7 318.0 236.0 1,042.0 1,766.7 Perennial crops ...... 634.5 1,410.8 108.0 123.0 2,276.3 Research and extension ...... 111.7 448.4 207.4 585.0 1,352.5 Total ...... 3,371.8 10,707.7 10,007.0 13,938.5 38,025.0 Development Finance Companies ... 1,059.0 5,377.8 6,843.7 7,311.1 20,591.6 Education ...... 392.1 3,390.2 2,592.5 1,795.4 8,170.2 Energy Oil, gas, and coal ...... 385.2 4,614.8 2,522.8 1,382.2 8,905.0 Power ...... 1,782.1 14,747.7 6,707.2 11,239.7 34,476.7 Total ...... 2,167.3 19,362.5 9,230.0 12,621.9 43,381.7 Industry Engineering ...... 27.7 10.0 11.0 9.5 58.2 Fertilizer and other chemicals ... 0.0 2,167.8 791.4 848.5 3,807.7 Industry sector loan ...... 15.6 2,770.1 2,802.9 1,359.5 6,948.1 Iron and steel ...... 20.0 189.0 512.8 1,067.0 1,788.8 Mining, other extractive ...... 533.5 0.0 237.2 747.5 1,518.2 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 ...... 762.7 5,424.8 5,022.5 4,239.5 15,449.5 Nonproject ...... 1,943.6 3,829.3 6.085.9' 5,215.6 17,074.4 Population, Health, and Nutrition .. 289.4 618.8 335.2 1,105.8 2,349.2 Public-sector Management ...... 0.0 32.0 130.0 1,454.0 1,616.0 Small-scale Enterprises ...... 440.7 1,431.5 834.0 1,985.6 4,691.8 Technical Assistance ...... 138.8 53.0 254.8 286.8 733.4 Telecommunications ...... 510.2 1.348.2 1.091.8 508.3 3,458.5 Transportation Airlines and airports ...... 59.0 14.8 7.0 218.5 299.3 Highways ...... 1,817.8 5,096.7 3,640.3 5,828.3 16,383.1 Pipelines ...... 0.0 0.0 94.5 23.3 117.8 Ports and waterways ...... 2.....85.9 1,722.5 1.716.0 523.7 4,248.1 Railways ...... 733.5 3,013.8 1,483.9 1,938.5 7,169.7 Transportation sector loan ...... 61.6 377.2 556.0 188.6 1,183.4 Total ...... 2,957.8 10,225.0 7,497.7 8,720.9 29,401.4 Urban Development ...... 933.7 3,159.4 981.3 3,853.1 8,927.5 Water Supply and Sewerage ...... 1,059.8 1,685.4 3,064.8 3,373.7 9,183.7 Grand total ...... 16,026.9 66,645.6 53,971.2 66,410.2 203,053.9 a. Except for the total amount shown in footnote d, no account is taken of cancellations subsequent to original commitment. IBRD loans 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 181

IDA credits to borrowers, by region' Europe, Middle Latin East. and America North and the Total IBRD Africa Asia Africa Caribbean Total and IDA

385.6 2,559.3 305.5 23.5 3.273.9 10,721.8 848.3 393.7 40.0 1.4 1.283.4 5,724.6 361.4 676.9 138.0 16.5 1,192.8 3,926.1 1,602.1 1,983.7 200.6 86.1 3,872.5 11,639.1 55.7 192.3 67.3 0.0 315.3 486.2 358.6 1,010.0 1.7 12.8 1,383.1 2,244.1 855.6 5,619.5 1,281.5 18.5 7.775.1 16,983.7 457.2 331.2 49.5 67.5 905.4 2,672.1 488.9 491.5 15.0 3.2 998.6 3,274.9 562.3 735.1 159.2 21.0 1,477.6 2,830.1 5,975.7 13,993.2 2,258.3 250.5 22,477.7 60,502.7 1,281.2 578.6 273.7 144.1 2,277.6 22,869.2 2,045.2 2,393.5 730.5 86.2 5,255.4 13,425.6

427.5 407.4 111.0 33.0 978.9 9,883.9 1,130.1 3,635.3 393.6 189.7 5,348.7 39,825.4 1,557.6 4,042.7 504.6 222.7 6,327.6 49,709.3

16.7 0.0 0.0 0.0 16.7 74.9 35.0 884.0 76.4 0.0 995.4 4,803.1 302.7 335.8 29.5 0.0 668.0 7,616.1 40.0 0.0 0.0 0.0 40.0 1,828.8 13.9 16.0 0.0 49.5 79.4 1,597.6 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 86.7 450.3 496.3 1,360.7 161.4 49.5 2,067.9 17,517.4 3,127.5 3,070.5 395.0 287.4 6,880.4 23,954.8 842.1 1,337.3 313.2 99.5 2,592.1 4,941.3 307.7 0.0 0.0 0.0 307.7 1,923.7 228.7 281.5 88.8 27.5 626.5 5,318.3 737.3 155.2 44.6 38.5 975.6 1,709.0 352.1 869.3 142.7 0.0 1.364.1 4,822.6

14.0 7.5 2.5 0.0 24.0 323.3 2,716.1 1,183.1 282.3 167.3 4,348.8 20,731.9 0.0 0.0 0.0 0.0 0.0 117.8 413.9 372.7 44.7 16.0 847.3 5,095.4 587.6 1,124.2 138.5 45.0 1,895.3 9,065.0 392.2 348.5 30.0 0.0 770.7 1,954.1 4,123.8 3,036.0 498.0 228.3 7,886.1 37,287.5 868.5 1,448.7 251.3 127.0 2,695.5 11,623.0 675.5 1,453.2 573.6 78.8 2,781.1 11,964.8 22,619.2 34,020.4 6.235.7 1,640.0 64,515.3 267,569.2 c. Includes S497 million in European reconstruction loans made before 1952. d. Cancellations amount to S14,080.12 million for the IBRD and $2,191.09 million for IDA, totaling $16,271.21 million. 182 Summaries of Projects Approved

Table 7-7. IBRD and IDA Cumulative Lending Operations, by Borrower or Guarantor, June 30, 1991 (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 ...... 46 3,965.5 - - 46 3,965.5 Angola ...... - - 1 23.0 1 23.0 Argentina ...... 46 5,800.3 - - 46 5,800.3 Australia ...... 7 417.7 - - 7 417.7 Austria ...... 9 106.4 - - 9 106.4 Bahamas, The ...... 5 42.8 - - 5 42.8 Bangladesh ...... 1 46.1 132 5,708.3 133 5,754.4 Barbados ...... 9 74.2 - - 9 74.2 Belgium ...... 4 76.0 - - 4 76.0 Belize ...... 4 26.2 - - 4 26.2 Benin ...... - - 33 450.8 33 450.8 Bhutan ...... - - 5 22.8 5 22.8 Bolivia ...... 14 299.3 33 637.2 47 936.5 Botswana ...... 20 280.7 6 15.8 26 296.5 Brazil ...... 189 18,936.6 - - 189 18,936.6 Bulgaria ...... 1 17.0 - - 1 17.0 Burkina Faso ...... 1 - .9 35 538.1 35 540.0 Burundi ...... 1 4.8 39 564.9 40 569.7 Cameroon ...... 43 1,271.4 15 253.0 58 1,524.4 Cape Verde ...... - - 4 20.1 4 20.1 Caribbean Region ...... 3 63.0 2 32.0 5 95.0 Central African Republic ...... - - 22 361.1 22 361.1 Chad ...... - - 24 331.9 24 331.9 Chile ...... 45 2,718.7 - 19.0 45 2,737.7 China ...... 56 5,881.7 37 4,905.1 93 10,786.8 Colombia ...... 129 7,172.6 - 19.5 129 7,192.1 Comoros ...... - - 10 55.1 10 55.1 Congo ...... 10 216.7 8 74.6 18 291.3 Costa Rica ...... 33 676.9 - 5.5 33 682.4 Cote d'Ivoire ...... 59 2,537.9 1 7.5 60 2,545.4 Cyprus ...... 29 386.8 - - 29 386.8 Czechoslovakia ...... 1 450.0 - - 1 450.0 Denmark ...... 3 85.0 - - 3 85.0 Djibouti ...... - - 8 51.6 8 51.6

Dominica ...... - - 3 11.0 3 11.0 Dominican Republic ...... 21 566.9 3 22.0 24 588.9 East African Community ...... 10 244.8 - - 10 244.8 Eastern and Southern Africa Region ...... - - 1 45.0 1 45.0 Ecuador ...... 47 1,530.9 5 36.9 52 1,567.8 Egypt ...... 52 3,506.8 27 1,121.2 79 4,628.0 El Salvador ...... 21 382.1 2 25.6 23 407.7 Equatorial Guinea ...... - - 7 37.1 7 37.1 Ethiopia ...... 12 108.6 47 1,264.8 59 1,373.4 FUi ...... 12 137.9 - - 12 137.9 Cumulative Lending Operations, by Borrower 183

IBRD loans IDA credits Total Borrower or guarantor Number Amount Number Amount Number Amount Finland ...... 18 316.8 - - 18 316.8 France ...... 1 250.0 - - 1 250.0 Gabon ...... 9 154.3 - - 9 154.3 Gambia, The ...... - - 20 134.3 20 134.3 Ghana ...... 9 207.0 58 1,768.2 67 1,975.2 Greece ...... 17 490.8 - - 17 490.8 Grenada ...... - - 1 5.0 1 5.0 Guatemala ...... 21 585.1 - - 21 585.1 Guinea ...... 3 75.2 36 737.1 39 812.3 Guinea-Bissau ...... - - 16 168.0 16 168.0 Guyana ...... 12 80.0 7 157.6 19 237.6 Haiti ...... 1 2.6 30 426.9 31 429.5 Honduras ...... 33 717.3 7 123.2 40 840.5 Hungary ...... 25 2,892.9 - - 25 2,892.9 Iceland ...... 10 47.1 - - 10 47.1 India ...... 142 19,431.2 180 17,893.1 322 37,324.3 Indonesia ...... 159 16,466.9 46 931.8 205 17,398.7 Iran, Islamic Republic of ...... 34 1,460.7 - - 34 1,460.7 Iraq ...... 6 156.2 - - 6 156.2 Ireland ...... 8 152.5 - - 8 152.5 Israel ...... 1I1 284.5 - - I 1 284.5 Italy ...... 8 399.6 - - 8 399.6 Jamaica ...... 53 1,012.9 - - 53 1,012.9 Japan ...... 31 862.9 - - 31 862.9 Jordan ...... 33 1,043.4 15 85.3 48 1,128.7 Kenya ...... 46 1,200.0 53 1,684.5 99 2,884.5 Korea, Republic of...... 96 7,404.0 6 110.8 102 7,514.8 Lao People's Democratic Republic ...... - - 14 240.2 14 240.2 Lebanon ...... 4 116.6 - - 4 116.6 Lesotho ...... - - 20 178.2 20 178.2 Liberia ...... 21 156.0 14 114.5 35 270.5 Luxembourg ...... 1 12.0 - - 1 12.0 Madagascar ...... 5 32.9 52 1,051.4 57 1,084.3 Malawi ...... 9 124.1 49 962.0 58 1,086.1 Malaysia ...... 77 2,784.6 - - 77 2,784.6 Maldives ...... - - 4 23.9 4 23.9 Mali ...... - 1.9 42 743.6 42 745.5 Malta ...... 1 7.5 - - 1 7.5 Mauritania ...... 3 146.0 26 245.9 29 391.9 Mauritius ...... 23 306.1 4 20.2 27 326.3 Mexico ...... 130 19,245.6 - - 130 19,245.6 Morocco ...... 93 5,803.7 3 50.8 96 5,854.5 Mozambique ...... - - 14 562.1 14 562.1 Myanmar ...... 3 33.4 30 804.0 33 837.4 Nepal ...... - - 57 1,118.3 57 1,118.3

(continued) 184 Summaries of Projects Approved

Table 7-7. (continued) IBRD loans IDA credits Total Borrower or guarantor Number Amount Number Amount Number Amount Netherlands ...... 8 244.0 - - 8 244.0 New Zealand ...... 6 126.8 - - 6 126.8 Nicaragua ...... 27 233.6 4 60.0 31 293.6 Niger ...... - - 33 470.5 33 470.5 Nigeria ...... 82 6,138.2 7 532.9 89 6,671.1 Norway ...... 6 145.0 - - 6 145.0 Oman ...... 11 157.1 - - 11 157.1 Pakistan ...... 75 4,603.2 85 3,486.0 160 8,089.2 Panama ...... 31 696.3 - - 31 696.3 Papua New Guinea ...... 23 462.1 9 113.2 32 575.3 Paraguay ...... 27 458.1 6 45.5 33 503.6 Peru ...... 60 1,711.9 - - 60 1.711.9 Philippines ...... 121 7,620.3 3 188.2 124 7,808.5 Poland ...... 12 2,221.0 - - 12 2,221.0 Portugal ...... 32 1,338.8 - - 32 1,338.8 Romania ...... 34 2,364.3 - - 34 2,364.3 Rwanda ...... - - 40 572.3 40 572.3 St. Kitts and Nevis ...... 1 1.5 - 1.5 1 3.0 St. Lucia ...... 1 2.5 - 5.2 1 7.7 St. Vincent and the Grenadines ...... 1 1.4 1 6.4 2 7.8 Sao Tome and Principe ...... - - 6 37.7 6 37.7 Senegal ...... 19 164.9 51 939.8 70 1,104.7 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 ...... - - 39 492.1 39 492.1 South Africa ...... 11 241.8 - - 11 241.8 Spain ...... 12 478.7 - - 12 478.7 Sri Lanka ...... 12 210.7 56 1,682.4 68 1,893.1 Sudan ...... 8 166.0 47 1,336.9 55 1,502.9 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 71 1,905.3 89 2,223.5 Thailand ...... 95 4,248.6 6 125.1 101 4,373.7 Togo ...... 1 20.0 34 509.5 35 529.5 Tonga ...... - - 2 5.0 2 5.0 Trinidad and Tobago ...... 16 189.5 - - 16 189.5 Tunisia ...... 85 2,598.2 5 74.6 90 2,672.8 Turkey ...... 104 11,065.2 10 178.5 114 11,243.7 Uganda ...... 1 8.4 41 1,367.3 42 1,375.7 Uruguay ...... 34 1,113.1 - - 34 1,113.1 Vanuatu ...... - - 4 15.4 4 15.4 Venezuela ...... 20 2,068.3 - - 20 2,068.3 Viet Nam ...... - - 1 60.0 1 60.0 Cumulative Lending Operations, by Borrower 185

IBRD loans IDA credits Total Borrower or guarantor Number Amount Number Amount Number Amount Western Africa Region ...... 2 21.1 3 92.5 5 113.6 Western Samoa ...... - - 8 40.5 8 40.5 Yemen, Republic of ...... - - 94 961.9 94 961.9 Yugoslavia ...... 90 6,114.7 - - 90 6,114.7 Zaire ...... 7 330.0 57 1,124.9 64 1,454.9 Zambia ...... 28 679.1 22 595.3 50 1,274.4 Zimbabwe ...... 22 768.2 3 53.9 25 822.1 Othera ...... 14 329.4 4 15.3 18 344.7 Total ...... 3,302 203,053.9 2,108 64,515.3 5,410 267,569.2

- Zero. 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. 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).

187 Financial Statements of the International Bank for Reconstruction and Development

Balance Sheets 188 Statements of Income 190 Statements of Changes in Retained Earnings 190 Statements of Changes in Cumulative Translation Adjustment 190 Statements of Cash Flows 191 Summary Statement of Loans 192 Summary Statements of Borrowings 195 Statement of Subscriptions to Capital Stock and Voting Power 197 Notes to Financial Statements 201 Report of Independent Accountants 206 188 IBRD Financial Statements Balance Sheets

June 30, 1991 and June 30, 1990 Expressed inthousands of US dollars 1 141 1990

Assets DUE FROM BANKS Unrestricted currencies...... i '...... 2512, $ 115,747 Currencies subject to restrictions-Note A ...... 609,009 71F 3,'e. 724,756

INVESTMENTS-Note B Obligations of governments and other official entities ...... 11 'I 45,5 8,543,644 Time deposits and other obligations of banks and other financial institutions .... 3.4.. 3rrj 8,302,080 2'-)36, l 16,845,724

CASH COLLATERAL INVESTED-Note B ...... 4 4,522,818 NONNEGOTIABLE, NONINTEREST-BEARING DEMAND OBLIGATIONS ON ACCOUNT OF SUBSCRIBED CAPITAL (subject to restrictions-Note A) ...... 1 6uu '4' 1,595,818 AMOUNTS REQUIRED TO MAINTAIN VALUE OF CURRENCY HOLDINGS-Note A Amounts receivable ...... -G1, 704,546 Amounts deferred ...... , 4 ,'4 268,781 1 1_ 1C14 973,327

OTHER RECEIVABLES Net receivable from currency swaps-Note D .0...... 5 9'iI) 432,150 Receivable from investment securities sold .I. Il,a...... hl 1 1,690,338 Accrued income on loans ...... E.--. 2,155,651 Accrued interest on investments ...... 1:2 186,373 4~11l "i/ 4,464,512

LOANS OUTSTANDING (see Summary Statement of Loans and Note C) Total loans ...... 1'. Wlt..76"| 138,269,781 Less loans approved but not yet effective .. .. .I.,'...... I2 10,202,300 Less undisbursed balance of effective loans ...... 4fl 1 .7v42E,8 39,015,047 941.163vl5 89,052,434

OTHER ASSETS Unamortized issuance costs of borrowings ...... 571 613,356 Miscellaneous ...... 620,480 1 4.24SI4C, 1,233,836

Total assets ...... 1...... rAI _,_' $119,413,225 Balance Sheets 189

1990

Liabilities BORROWINGS (see Summary Statements of Borrowings and Note D) Short-term ...... 5 .8 $ 5,277320 Medium- and ...... J 4. 81,218,793 'i 1' .YI 86,496,113

PAYABLE FOR CASH COLLATERAL RECEIVED ...... 4 %t 6 4,522,818 AMOUNTS REOUIRED TO MAINTAIN VALUE OF CURRENCY HOLDINGS-Note A Amounts payable ...... 4 75,050 Am ounts deferred ...... i 453,038

______528,088 OTHER LIABILITIES Accrued charges on borrowings ...... ,96 2,654,482 Net payable for currency swaps-Note D...... 9;!' il'-JI 1,612,738 Payable for investment securities purchased ...... , 1,407,224 Due to International Development Association and Debt Reduction Facility for IDA-Only Countries-Note G ...... u u 946,502 Accounts payable and other liabilities ...... :.,j 482,085 0r.it2&6 7,103,031 ACCUMULATED PROVISION FOR LOAN LOSSES-Note C...... 1 ij. 1,250,000 Total liabilities...... ,,,....,,....,,,.... 103'38. uI4 99,900,050 Equity CAPITAL STOCK (see Statement of Subscriptions to Capital Stock and Voting Power and Note A) Authorized capital (1,448.500 shares--June 30, 1991: 1,420.500 shares--June 30, 1990) Subscribed capital (1,153,231 shares-June 30, 1991; 1,038,357 shares--une 30, 1990) .. 1.' m C'. 125,262,197 Less uncalled portion of subscriptions ...... , 116,342,274 34.: i 9 8,919,923 PAYMENTS ON ACCOUNT OF PENDING SUBSCRIPTIONS (see Statement ot Subscriptions to Capital Stock and Voting Power) ...... 4 9 59,311 RETAINED EARNINGS (see Statements of Changes in Retained Earnings and Note E) ...... 11 11,032,616 CUMULATIVE TRANSLATION ADJUSTMENT (see Statements of Changes in Cumulative Translation Adjustment) ...... I... I I.. . 1 ` l (498,675) Total equity...... 19,513,175 Total liabilities and equity ...... $119,413,225

See Notes to Financial Statements. 190 IBRD Financial Statements Statements of Income

For the fiscal years ended June 30, 1991 and June 30, 1990 Expressed in thousands of US dollars 1991 1 W Income _ Income from loans-la-,n, Interest ...... l. 1986 ; ,86 1 Commitment chai-i,: 10r4,3 1si0 Income from investrr-ni,:-ilmf. 1 9 re2A i Other income ..... 11 ___5_ Total incom- 9 7 inl 8'?. 8 .I Expenses Borrowing expenses Interest on borrov nrI: -r, [' {ti 4r 2li, Amortization of is:IJ),r,.., ji l :,ir, t,:,ri:,,i r, r :1: 119 264 I IIU Interest on payable f:. .,:r, Iii , li * - U Administrat ve expen .;:-rj,.,: f Jrn H 5.. :O,i,L' ,9) Provision for loan Ic.:t, ,r.-I'.7- , 41v Other expenses .. . , 1J * Total expen5- I-t zr . Ji Operating Income 2 Lit

Contributions to special jm -lir f F'3111'a

Cumulative eftect of ch:3nqr,mI u:.lwrl,,,,;rif, l Illt -_.1i Net Income ily.....Lt97I. 1i2i % Statements of Changes in Retained Earnings

For the fiscal years ended June 30, 1991 and June 30, 1990 Expressed in thousands of US dollars

Retainea . r,,r,a: 31i 0c I r ci:.i i..:i ,wir ;.r TranmieI-, ,n6,-ri r,367 iIi,,zieIT ri; Ol 13i7--. i ' il; ct67l I Tranvr i,:, i ir ,,i,-,n,i r fi u, FuJr,,r-1l,o i'6 2J31 Tran5li 1I111.H I, Hr,ulir,r,l fI , ii ,1i (,1, K ,:-N:oirirl ;i - I 1(11211111111 Net i o,eI ,:, i ri 1 19 '37F. 1 1 36': Retainea ;r rr, ; -r11 :,cii I .. I'll%1 73 1 IA uŽ6 6EEl Statements of Changes in Cumulative Translation Adjustment For the fiscal years ended June 30, 1991 and June 30, 1990 Expressed in thousands of US dollars 1990 9 Cumulative translatio-i iJupj.liT;ri jJI tri i :;i06 i !i- jr $11F4167CI $(1,124,689) Translation adjustrri,,-,: .IwI,.,i ;)20,8d30!*3 626,014 Cumulative translatiorni lli:l rilTri! i-N : liF:':£31 l . il 71 50:15 $ (498,675) See Notes to Financial Statements. Statements of Cash Flows 191 Statements of Cash Flows

For the fiscal years ended June 30, 1991 and June 30, 1990 Expressed in thousands of US dollars

Cash f uvsoIrni,, 'Ir.ridir'.3 ,M':li:iriiTieril 3ol iiwir Loar, :tr I I11 581 1L1, ilf U48P451.1 Loar, l:.,r,n,ia I r, ,,T.jmfr Y9080318 . 9'uI Loari' -i:''r Ii s i ,3.tm ni201 -- 645 t j, Trarri c'!Iri e riI4.rIL'C.rI :LTi-eri ': c. 1iU 3-1' 494)i Trar':li i .i Ci:ib i Frior.jnrfiira Tiiii Fjril--lJi.,r U 29 47,j- Trarn:i-' i,L,[LeLi hRO,jeu:,.,n Fpi:l,i U,I bA.lrd,Ei. 1:- uI-,I, -j i,-,U, 422) -- N,-.1 :3:1-la;eir.ier, v inqeo.r,, -jitiop,Kr-iri, ,I2,ll- 6',,9 2l 1C.ilil1,1

Cash fi,:c: irj,n in iiir e- .iivowiii MeadiTm 3rijv11')l(iTn :r, r:nir,i etJ':;ue- loS,41.411 i .3r .I.I

Net I TI:-ni ics: i: ' ri:,rrr , 1-'ti.801 I Ir i1 1li

Net.:i:r, iA IIT.A. -rr. 14114 ii0 ret

Net ,::nr IIAr: I i :I ii 3l i 33J)7ic3 lr, Mci tici : j:ri Sicii1'O-idLi iniiriij 3 C.1t:.4 3 1 ri1 4%

Cash iuslvc iiL,oi3iiriii 3, !: Net nrr 11999?'3- I 4.r-. iicq |:,.owe K:wmS-l Adj.j:irrn ,i: 1,, 31c.n.2 Tcii-,Ž 5i5 1i1n, r,,-:, t,, -. r

Fri.,':, io ij,miu , . : ,. lit.I

(rirrYHin': rC,' ,i,er,.3i .cjc2v 3: 'UFi,IL,, iTic,U.r~ij 3ir cur: 3.:nI iij5iii 230b,iLl,9I fl I ii 7 41 EI ' i eraIi 1r lrI It : jir I C :T r, r ,:,1:,e :."rl I 2 . I01 1 .11

Lrie- it,j|slJ-l a.counicl 3rl,],: o, urie,,t,il:l- srISe4j

EHfect .:,i r i,rjr ri jnq,-rar:i ,-r ,ri t:i,l, ,:jr jl-,,-] j jlx-,,] hff,,alllfil Iv.E3i26 9, 1, Net in:re3:e J 3cc ,rr,rrein ;lii:ird ,: 1:r iridloud 'lT. -n- 27 8b9482 2116 Unresri:ie,] :acr, r,n,il n'']-rIT:nri:i 1-ri'cp,iriirid ('1:,li:i 31r 1 144 585 0I.1' ,, Unresvr.di ci ri in] d1i Cui.liTitK 31editi .ic ;r ji 20 i)14.087 1'7

Comp:,:ed ci Invlti ,rle £. (1K iOSl j. lr, 45 74 Un e hi ouledCurreni w: 127,5J12 115 4 Ne Lituilci re, 3 1kI. ril-lrvr. iTEri, r:u''i' : cIiiII:rI.3K] (481 658, I 114

t LOI14JOb L 1, 44555

Suppleriul,o di,:-:, urr (Cel rl-.j. 'I Air.F3:' lC: nn)liciri:|lr, *r3r),,I.3iC lI,, iu3in:,; Ll!r l!lJl:ui,ddiriI £ 17,14Obii 1. IC, .':' i,:ifsiIi:. (278001i8 4 I 4 1 iJ j , itLi,:ii i,uiinnit :s.t ,u 5C124 r.3 See Notes to Financial Statements. 192 IBRD Financial Statements Summary Statement of Loans

June 30, 1991 Expressed inthousands of US dollars Loans approved but Percentage of not yet Undisbursed Loans total loans Borrower or guarantora Total loans effectiveO loans' outstanding outstanding Algeria ...... I...... 2,801,927 $ 191,600 $1,460,998 $1,149,329 1.27 Argentinad ...... 3,855,168 356,500 1,028,433 2,470,235 2.73 Australiaa ...... 4,944 - - 4,944 0.01 Bahamas, The ...... 29,580 - 11,456 18,124 0.02 Bahamas, Barbados, Grenada, Guyana, Jamaica, Trinidad and Tobago, and United Kingdome .... 47,235 - 20,000 27,235 0.03 Bangladesh ...... 59,514 - - 59,514 0.07 Barbados ...... 40,100 - 8,668 31,432 0.03 Belize ...... 25,918 - 8,963 16,955 0.02 Boliviad ...... 166,967 - - 166,967 0.18 Botswana ...... 176,989 - 39,013 137,976 0.15 Brazil ...... 12,711,207 1,543,000 3,567,788 7,600,419 8.39 Bulgaria ...... 17,000 17,000 - - - Cameroon ...... 1,020,524 - 373,106 647,418 0.71 Chile ...... 2,221,659 50,000 408,575 1,763,084 1.95 China ...... 5,507,612 397,100 2,211,129 2,899,383 3.20 Colombia ...... 4,824,014 260,000 1,081,972 3,482,042 3.84 Congo ...... 170,088 15,800 5,243 149,045 0.16 Costa Rica ...... 491,769 60,000 80,516 351,253 0.39 CWted'lvoire' ...... 2,048,266 - 239,731 1,808,535 2.00 C6te d'lvoire, Ghana, and Togo' ...... 304 - - 304 Cote d'lvoire and Senegal' ...... 19,552 - 15,566 3,986 Cyprus ...... 151,562 30,000 87,879 33,683 0.04 Czechoslovakia ...... 450,000 450,000 - - - Dominican Republic ...... 409,060 94,000 88,064 226,996 0.25 Ecuador ...... 1,097,721 163,000 176,711 758,010 0.84 Egypt ...... 2.356,658 415,000 643,165 1,298,493 1.43 ElSalvador ...... 277.634 26,000 125,403 126,231 0.14 Ethiopia ...... 22,520 - - 22,520 0.02 Fiji ...... 86,104 - 25,485 60,619 0.07 Gabon ...... 91,571 - 23,068 68,503 0.08 Ghana ...... 97,171 - - 97,171 0.11 Greece ...... 8,593 - - 8.593 0.01 Guatemala ...... 440,723 61,500 122,696 256,527 0.28 Guinea ...... 18,430 - - 18,430 0.02 Guyana ...... 51,757 - 51,757 0.06 Honduras ...... 564,650 - 70,729 493,921 0.54 Hungary ...... 2,696,502 250,000 901,978 1,544,524 1.70 Iceland ...... 5,347 - - 5,347 0.01 India ...... 15,589,466 915,000 7,084,548 7,589,918 8.37 Indonesia ...... 14,086.827 405,000 4,255,165 9,426,662 10.40 Iran, Islamic Republic of ...... 312.166 250,000 - 62,166 0.07 Iraq ...... 42,170 - - 42,170 0.05 Ireland ...... 7,801 - - 7,801 0.01 Jamaica ...... 760,801 11,500 125,207 624,094 0.69 Jordan ...... 757,716 15,000 275,635 467,081 0.52 Kenya' ...... 748,856 - 4,218 744,638 0.82 Kenya, Tanzania. and Uganda' ...... 1,463 - - 1,463 Korea, Republic of ...... 3.369,502 250,000 358,340 2,761,162 3.05 Lebanon ...... 27,375 - - 27,375 0.03 Liberia ...... 129,317 - - 129,317 0.14 Madagascar ...... 22,310 - - 22,310 0.02 Malawi ...... 84,126 - 1.850 82,276 0.09 Malaysia ...... 1,425,589 - 468,835 956,754 1.06 Statement of Loans 193

Loans approved but Percentageof not yet Undisbursed Loans total loans Borrower or guarantort Totaloans effectiveb loans' outstanding outstanding Mauritania ...... $ 44,281 $ - $ - $ 44,281 0.05 Mauritius ...... 215,861 10,000 47,093 158,768 0.18 Mexico...... 14,389,480 1.282,000 2,581,064 $10,526,416 11.61 Morocco ...... 4,500,760 626,000 960,374 2.914,386 3.22 Nicaragua ...... 215,922 - 215,922 0.24 Nigeria ...... 5,300,624 700,000 1,612,942 2.987,682 3.30 Oman ...... 89,829 - 44,521 45,308 0.05 Pakistan ...... 3,737,242 298,100 1,591.095 1,848,047 2.04 Panama ...... 446,839 - 49.722 397,117 0.44 Papua New Guineaa ...... 368,873 50,800 100.539 217,534 0.24 Paraguay ...... 270,975 - 24.924 246,051 0.27 Peru ...... 1,215,246 192,584 1,022,662 1.13 Philippines ...... 5,752,603 323,000 1,791,275 3.638.328 4.01 Poland ...... 2,209,014 1.140,000 918,633 150,381 0.17 Portugal ...... 342,618 - 126,412 216,206 0.24 Romania ...... 180,000 180.000 __ St. Kitts and Nevis ...... 1,500 1,500 - - - St. Lucia ...... 2,500 2,500 - - St. Vincent and the Grenadines ...... 1,400 - 1,400 - - Senegal ...... 73.580 - 73,580 0.08 Seychelles ...... 5.350 - 5,350 0.01 Sierra Leone ...... 9.354 - 9,354 0.01 Singapore ...... 4,249 - 4,249 Sri Lanka ...... 72,363 - 72,363 0.08 Sudan ...... 16.390 - 16,390 0.02 Swaziland ...... 30,973 - 30,973 0.03 Syrian Arab Repub ic ...... 423,248 - - 423,248 0.47 Tanzania' ...... 203,524 - - 203,524 0.22 Thailand ...... 2,441.467 32,000 278,306 2,131,161 2.35 Trinidad and Tobago ...... 76.978 20,700 23,433 32,845 0.04 Tunisia ...... 1,778.459 56,000 394,751 1,327,708 1.46 Turkey ...... 8,821.133 900,000 2,195,588 5,725,545 6.32 Uganda ...... 29.300 - 29,300 0.03 Uruguay ...... 740,411 65,000 334,460 340,951 0.38 Venezuela ...... 1,640.674 100,000 530.978 1,009,696 1.11 Yugoslavia ...... 3,281.334 714,200 487,213 2,079,921 2.29 Zaire ...... 91.265 - 34,882 56,383 0.06 Zambia ...... 341.252 - 341,252 0.38 Zimbabwe ...... 633,258 63,600 206,141 363,517 0.40 Subtotal members- ...... 142,431,949 12.789,900 39.930,961 89,711,088 International Finance Corporation ...... 1,174.814 - 248,307 926,507 1.02

Total-June 30, 1990 ...... $138,269,781 $10.202.300 $39,015,047 $89,052,434

Less than 0.005 percent - May differ from thesum of the individual figures shown because of rounding. a. Insome instances loans weremade, with the guarantee of a member, interritories which atthe time wereincluded n thatmember's membership but which subsequently becameindependent andmembers of theIBRD. Liabilities for these loans areshown under thename of theoriginal member (whose guarantee continues unaffected). Loans with outstanding balances equivalent to$4,944,000 ($7,405,000-uune 30, 1990)are shown under Australia the guarantor, but represent obligations of PapuaNew Guinea b. Loan agreements totaling $4,361,600,000 ($4,145,700,000--June 30. 1990) havebeen signed, but the oans donot become effective and disbursements thereunder do not start until theborrowers and guarantors, ifany, takecertain actions andfurnish certain documents to theIBRD Loans totaling $8,428,300,000 ($6,056,600,000-June 30,1990) havebeen approved by the IBRDbut therelated agreements havenot beensigned. (continued) 194 IBRD Financial Statements

Summary Statement of Loans (continued)

June 30, 1991 Expressed in thousands of US dollars c. Ofthe undisbursed balance, the IBRDhas entered into irrevocable commitments to disburse $1,456,262,000 ($1,054,214,000-June 30, 1990). d. Oneloan with anoutstanding balance equivalent to l ni) i i'lil'l-June 30,1990) is shown under Bolivia (Guarantor) but isalso guaranteed by Argentina. e. Loans made to the Caribbean Development Bankfor the benefit of the territories of the members listed (inthe case of the United Kingdom, the territories arethose of its Associated States and Dependencies inthe Caribbean region). The members will beseverally liable as guarantors to the extent of subloans made in their territories. f. Oneloan with anoutstanding balance equivalent to $7,590,000 ($10,438,000-June 30, 1990) is shown under Cotedilvoire (Guarantor) but is also partially guaranteed by Burkina Faso. g. Members arejointly and severally libe. h. Loan made to theWest African Development Bankfor thebenefit of theterritories of the members listed. Themembers will beseverally liable as guarantors to the extent of subloans made in their territories. i. Includes portions of loans madeto corporations of the EastAfrican Community.

Summary of Currencies Repayable on Loans Outstanding Currency 1991 i UO0 Currency 1991 n Australian dollars i 93 -,, 7 1 11i12,944Malaysian ringgit ...... $ 3.5.498 411 Austrian schillings 99.95 1-1,559 Mexican pesos .2...... 215 3 Belgian francs .1. 2l29S' 0.759 Myanmar kyats. 1437, 141 Canadian dollars . 713?112I 3 8,518 Netherlands guilders . 10, 98f J.;4 0,:41 Danish kroner. .. 64 183 64,587 Norwegian kroner.64 ., F 4 49.66....49 , , 4.tix Deutsche mark. .. 19.05990616 j 2,796 Portuguese escudos. 17698 141 European currency ui,ai- 44L !j94 24.209 Pounds sterling . .280 57I'l 0 Finnish markkaa . 54 8.28 5 3,925 Rials Omani .f63d h , French francs . .. 433 450 .34,181Saudi Arabian riyals .9249 .0ru Greek drachmas. . C97 743 Singapore dollars.4..Oi 52? Hungarian forint. . 1 97 - South African rand.. .. 39,6t9 '*q 1 Icelandic kr6nur. . 1.112 Spanish pesetas.1I3.0121,169 li..' Indian rupees .. . _7 167 '4,581 Swedish kronor. 89 114 9. Iranian rials ..... 1,1.91 15,751 Swiss francs. 13 92u19 1s,4#4 ' Iraqi dinars . .... 2,609 Tunisian dinars .116 1

Irish pounds .... ?3 5,.7 '4,126 United Arab Emirates dirhams. t!66F7 Italian lire ...... 1763 93 ; .5,796 United States dollars .. 415,032 21,O.lIc Japanese yen ..... '5 t49.243 3. l . 0,309 V enezuelanbolivares.. 384 1lU4b. Kuwaiti dinars .. . 173'-6 1J4,186 Other currencies . . . *4 Libyan dinars ... 5,6Ju 1i1,722 Luxembourg franca 87 92 r9,108 Loans outstanding .$YO.637.595 i93'.

Maturity Structure of Loans* Period July 1,1991 through June 30, 1992 ...... i 9,04W3.t18U July 1, 1992 through June 30, 1993 .8,604 343 July 1, 1993 through June 30, 1994 .9,252 109 July 1, 1994 through June 30, 1995. 9 899 449 July 1, 1995 through June 30, 1996 .10.611 004 July 1, 1996 through June 30, 2001. 46 886 417 July 1, 2001 through June 30, 2006 .27 541 894 July 1, 2006 through June 30, 2011 ...... 8.91 7 196 Undetermined*' ...... 61,211 Total ...... 1 30,816 863

Total loans less loans approved but not yet effective. * Represents cancellations and other adjustments that havenot beenallocated to specific maturities. See Notes to Financial Statements. Statements of Borrowings 195 Summary Statements of Borrowings

June 30, 1991 and June 30, 1990 Expressed in thousands of US dollars Medium- and Long-term Borrowings and Currency Swaps

Medium-and long-term borrowings Swapagreements' Weighted Weighted average Currencyswap averagecost Principaloutstanding 0 cost(%) payable(receivable) (return)% Netcurrency obligations 1144 ,,,,v . ri4r n'4. Hi 0 ''D,

Asoraliandollars. S 8:v :3 I '4 1-;-n' I ', I ii it 1'r'*'9l $ (15,943) Austrianschillings i4721 :- in .; Sti i ' ii'. At "I) 221,335 Belgianfrancs. -. fF4n II . :g' ,Icr 1 , .5 60.068 Canadiandollars 15t ,.1; 4r Y-?r 2. 277,106 Danishkroner. Prhf ,41.1? I'' I :- . , ii'':; 2 2.431 Deutschemark . . r Sir 334 I r. ..4 . Hv;4 - 1 Ilh4|St ,4k'44,,,444. 41 ''i4;8: 18,111,299

4 1. .; Y' ¼! 489,243 Europeancurrency"I Ii m 7274 .t . Finnishmarkkaa -4 I j- I: '' 4,157 Frenchtrancs 5tiu4 ,f - d l4 I I '' ad''54 540,146 HongKong dollars X'flI 6 .:. J, rS 1 31 Italianlire ... Ifi, 12'4, 3 9 I r t 47,484 Japaneseyen . .. 25 l r 1 3K 'ad? I IIe4 inI "'1;liin I.'4WtbIr ''4in 22,014,434 Kuwaitidinars. . tr - _.? ' 120,947 Libyandinars .. .- 102,936 Luxembourgfrsncr 1" rt ! '' .I,L' .'I1 94,800 Netherlandsguilde;: 4, ' - ' . 1 j;l; - * 1 It s1I1 '' , --r ih. 4,617,897 NewZealand dolla 8- N;4 I.,,. 15U' 20 Norwegiankroner, I - r t:r 78,101 Poundssterling. . 2fr411 r 5'> 1,604,582 Spanishpesetas. . 9, 4' .: ' l41- 13_654 Swedishkronor. . yt' l_iiiliil I., ¼ 7,976 Swissfrancs . .. - :t , r .r . lrI 13,677,955 UnitedStales dollr, 'I2304. -7 I4 :I 1 l t4| 41an , 1, 1 *4 1 44,1 l 243' b '4 20,242,186

Principalat face vLii- 34 '"1-iF F I 4 Plusnet unamonrrin r1 -t andpremiums. ?9 2

Total . . . . .5.4 .d...... : r, t' I II .

a SeeNotes to Financial Statements-Note D. b. Includes zero coupon borrowings which have been recorded at their discounted values. The aggregate face amounts and discounted values of these borrowings (in US-dollar equivalents) are:

Aggregate faceamount Discounted value

Curs'r' 2': f 14'J I 1441 1 1'i' 1'4i i

Cet 31,j- fLyt4,:, : 4l'i)It IJtC I I 1 Y i'.1'i i I i--I 'I45l 1 tn(

[vri Ilr,,-,r, ti I 17Nt91e,)i l 14!3I _ , I ;I.II 11' E'3utn,r,,:T3i1 b.itt 14 renlt)Jo I II t I.YIt.1-,I Ij911 - .l LEIitva];1I jr: dolt11 .U ;i '1a) tco 41O3i. I II[II .c,c, /f2'J ill iO, lii'!I c. Includes income and expense from interest rateswaps. The IBRDhas entered into interest rate swapagreements with respect to notional principal amounts as follows (see Notes to Financial Statements-Note D):

Notional principal amounts Currency amount US-dollar equivalent

Currency l 3il ' l Oj t .491

Canadiandollars .1.1. .3.8. Ii f 1OOu ; - f 120619 C1' i - 5 Deutsche mark 4 tt i 1.'5'ifl i Ir - s''l 'I ''I > f1 'l,l I, I" ,* c* Japanese yen.Ž... . : .5 uCqjOil e) (lI,1j I i 1 l's 0 'I' l lt -141 Pounds sterling .t.. . I 0 'O. '- _1ft1'i. rl.'l'l 'I Swedish kronor .. e-I(CeI OilI ntn. 204li') 4; 31,- Swiss francs 422 tJItU0)10 - tI t1C, -l)) United States dollars. .. 671)oiDOO I -0413o' Iil"I 24 tCi. I:1r 14 1111111 Ninety-two percent of these interest rateswap agreements arefrom floating ratesinto fixed rates. (continu6d) 196 IBRD Financial Statements

Summary Statements of Borrowings (continued]

June 30, 1991 and June 30, 1990 Expressed in thousands of US dollars d. Includes Italian lire 200,000,000,000 (USequivalent $149,423,000-,iune30, 1991; $162,679,000-June 30, 1990)of variable interest rateborrowings. e. Includes $98,800,000 ($288,720,000-June 30,1990) of variab e rateborrowings and $172,844,000 ($174,652.000-June 30, 1990) borrowed from the Interest Subsidy FundThe Interest Subsidy Fund, which obtained its resources from voluntary contributions from member governments, wasestablished to subsidize theinterest payments to theiBRD on selected soansmade to poorer developing countries t. Theweighted averagecost of medium- andlong-term borrowings outstanding atJune 30, 1991,after adjustment for swap activities, was 7.43 percent.

Maturity Structure of Medium- and Long-term Borrowings Period July 1,1991 through June 30, 1992 ...... 29.7 4r July 1, 1992 through June 30, 1993 ...... 2.6...._'n9 July 1,1993 through June 30, 1994 . . ...5, 1ii. July 1, 1994 through June 30, 1995 ...... 14' July 1, 1995 through June 30. 1996 ...... 9 492109

July 1. 1996 through June 30, 2001 ...... 6...... 0 4 c, r July 1, 2001 through June 30, 2006 ...... l9Lt July 1, 2006 through June 30, 2011 ...... i 4 17 . July 1, 2011 through June 30, 2016 ...... 394 243 Thereafter ...... , ,,,,,,,,,.2, ?'5 52I6

Total ...... , i l , . . . Short-term Borrowings Weighted average Principal outstanding cost (%)

Short-term Notes (US-dollar obligations) Principa I l 'iu iFoifli)'i 'Z-3 - 4'-I Net unarn -itl r :ITu'11r, J I JtlI9 Cl I4

Subtotc,l , . I;dl.' A _ ',h Central Bank Facility (US-dollar obligations) ...... 2 47Po '; 44'4. F.2 Continuously Offered Payment Rights (Swiss-franc obligationsl A4242 § '•i Total ....'. . iSi Et 1 7 .:K: t 1' See Notes to Financiat Statements. Subscriptions to Capital Stock and Voting Power 197 Statement of Subscriptions to Capital Stock and Voting Power

June 30, 1991 Expressed in thousands of US dollars Subscnptions Voting power Percentage Amounts Number Percentage of Total paid in Amounts subaect of of Member Shares total amounts (NoteA) to call (NoteA) votes total Afghanistan ...... 300 0.03 S 36,191 $ 3,619 $ 32,572 550 0.05 Algeria .5,192 0.45 626,337 52,390 573.947 5,442 0.46 Angola .2,676 0.23 322,819 17,464 305,355 2,926 0.25 Antigua and Barbudaa .292 0.03 35,225 445 34,780 542 0.05 Argentina .10,052 0.87 1,212,623 103,803 1,108,820 10,302 0.86 Australia 21,610 1.87 2,606,922 171,430 2,435,492 21,860 1.83 Austria .11,063 0.96 1,334,585 80,728 1,253.857 11,313 0.95 Bahamas, The .1,071 0.09 129,200 5,432 123,768 1,321 0.11 Bahrain .619 0.05 74,673 3,910 70,763 869 0.07 Bangladesha.2,724 0.24 328,610 26,234 302,376 2,974 0.25 Barbados .948 0.08 114,362 4,496 109,866 1,198 0.10 Belgium .24,986 2,17 3,014,186 201,317 2,812,869 25,236 2.12 Belize .329 0,03 39,689 837 38,852 579 0.05 Benin .487 0.04 58,749 2,514 56,235 737 0.06 Bhutan .269 0.02 32,451 202 32,249 519 0.04 Bolivia .1,002 0.09 120,876 7,968 112,908 1,252 0.11 Botswana .615 0.05 74,191 1,987 72,204 865 0.07 Brazil .14,000 1.21 1,688,890 145,528 1,543,362 14,250 1.20 Bulgaria .2,927 0,25 353,099 28,257 324,842 3,177 0.27 Burkina Faso .487 0.04 58,749 2,514 56,235 737 0.06 Burundi .402 0.03 48,495 1,831 46,564 652 0.05 Cameroon . 857 0.07 103,384 6.575 96,B09 1,107 0.09 Canada .35,892 3.11 4,329,831 302,713 4,027,118 36.142 3.03 Cape Verde .285 0.02 34,381 371 34.010 535 0.04 Central African Republica 484 0.04 58,387 2,482 55,905 734 0.06

Chad . h... 484 0.04 58,387 2,482 55,905 734 0.06 Chile .6,931 0.60 836,121 49,568 786,553 7,181 0.60 China .34,971 3.03 4,218,727 299,479 3,919,248 35,221 2.95 Colombia .6,352 0.55 766,274 45,202 721,072 6,602 0.55 Comoros .282 0.02 34,019 339 33,680 532 0.04 Congo .520 0.05 62,730 2,868 59,862 770 0.06 Costa Ricaa .233 0.02 28,108 1,949 26,159 483 0.04 CWted'lvoire. 1,412 0.12 170,337 12,425 157,912 1,662 0.14 Cyprus .820 0.07 98,921 6,044 92,877 1,070 0.09 Czechoslovakia .5,345 0.46 644,794 53,781 591,013 5,595 0.47 Denmark .10,251 0.89 1,236,629 74,610 1,162,019 10,501 0.88 DjiboUtia .314 0.03 37,879 679 37,200 564 0.05 Dominio .283 0.02 34,140 350 33,790 533 0.04 Dominican Repubic .1,174 0,10 141,625 9,793 131,832 1,424 0.12 Ecuador .1,555 0.13 187,587 13,822 173,765 1,805 0.15 Egypta .3,989 0.35 481,213 39,627 441,586 4,239 0.36 El Salvador .141 0.01 17,010 1,701 15,309 391 0.03 Equatorial Guinea .401 0.03 48,375 1,601 46,774 651 0.05 Ethiopia .978 0.08 117,981 4,722 113,259 1,228 0.10 Fiji .728 0.06 87,822 3,852 83,970 978 0.08

(continued) 198 IBRD Financial Statements Statement of Subscriptions to Capital Stock and Voting Power (continued)

June 30, 1991 Expressed in thousands of US dollars Subscriptions Voting power Percentage Amounts Number Percentage of Tota paid in Amounts subject of of Member Shares total amounts (NoteA) to call(Note A) votes total Finland ...... 7,057 0.61 $ 851,321 $ 56,430 $ 794,891 7,307 0.61 France .69,397 6.02 8,371,707 520,364 7,851,343 69,647 5.84 Gabon .554 0.05 66,832 3,556 63,276 804 0.07 Gambia, The .305 0.03 36,794 660 36,134 555 0.05 Germany .72,399 6.28 8,733,853 542,921 8,190,932 72,649 6.09 Ghana .856 0.07 103,264 10,326 92,938 1,106 0.09 Greece .945 0.08 114,000 11,400 102,600 1,195 0.10 Grenada .531 0.05 64,057 1.353 62,704 781 0.07 Guatemala. 1,123 0.10 135,473 9,251 126,222 1,373 0.12 Guinea .725 0.06 87,460 5,037 82,423 975 0.08 Guinea-Bissau .303 0.03 36,552 562 35,990 553 0.05 Guyana .1,058 0.09 127,632 5,330 122,302 1,308 0.11 Haiti .599 0.05 72,260 3,697 68,563 849 0.07 Honduras .360 0.03 43,429 1,324 42,105 610 0.05 Hungary .8,050 0.70 971,112 58,031 913,081 8,300 0.70 Iceland .1,258 0.11 151,759 6,832 144,927 1,508 0.13 India .38,244 3.32 4,613,565 310,022 4,303,543 38,494 3.23 Indonesia .12,351 1.07 1,489.963 100,758 1,389,205 12,601 1.06 Iran. Islamic Republic of .13,293 1.15 1,603,601 138,221 1,465,380 13,543 1.14 Iraq .2,808 0.24 338,743 27,093 311,650 3,058 0.26 Ireland .5,271 0.46 635,867 37,077 598,790 5,521 0.46 Israel .2,666 0.23 321,613 25,664 295,949 2,916 0.24 Italy .44,795 3.88 5,403,845 334,838 5,069.007 45,045 3.78 Jamaica .1,824 0.16 220,038 14,057 205,981 2,074 0.17 Japan .93,770 8.13 11,311,944 703,452 10,608,492 94,020 7.89 Jordan .1,388 0.12 167,441 7,811 159,630 1,638 0.14 Kampuchea, Democratic .214 0.02 25,816 2,582 23,234 464 0.04 Kenya .2,461 0.21 296,883 15,900 280,983 2,711 0.23 Kiribati .261 0.02 31,486 133 31,353 511 0.04 Korea, Republic of .9,372 0.81 1,130,591 67,899 1,062,692 9,622 0.81 Kuwait .7,453 0.65 899,093 76,341 822,752 7,703 0.65 Lao People's Democratic Republic. . 100 0.01 12,064 1,206 10,858 350 0.03 Lebanon .340 0.03 41,016 1.086 39,930 590 0.05 Lesotho .372 0.03 44,876 1,294 43,582 622 0.05 Liberia .463 0.04 55,854 2,570 53,284 713 0.06 Libya .7,840 0.68 945,778 56,958 888,820 8,090 0.68 Luxembourg .1,362 0.12 164,305 8,749 155,556 1,612 0.14 Madagascar .798 0.07 96,267 5,812 90,455 1,048 0.09 Malawi .614 0.05 74,070 3,860 70,210 864 0.07 Malaysia .8,244 0.71 994,515 59.491 935,024 8,494 0.71 Maldives .263 0.02 31,727 137 31,590 513 0.04 Malia .652 0.06 78,654 4,263 74,391 902 0.08 Malta .778 0.07 93,854 4,375 89,479 1,028 0.09 Mauritania .505 0.04 60,921 2,704 58,217 755 0.06 Mauritius .697 0.06 84,083 4,739 79,344 947 0.08 Subscriptions to Capital Stock and Voting Power 199

Subscriptions Voting power Percentage Amounts Number Percentage of Total paid in Amounts subject of of Member Shares tota amounts (NoteA) to call (NoneA) votes total Mexico ...... 10,553 0.92 $1,273,061 $109,120 $1,163,941 10,803 0.91 Mongolia ...... 466 0.04 56.216 2,280 53,936 716 0.06 Morocco ...... 2,791 0.24 336,692 26,939 309,753 3,041 0.26 Mozambique ...... 522 0.05 62,971 3,281 59,690 772 0.06 Myanmar ...... 1,938 0.17 233,791 14,102 219,689 2,188 0.18 Namibia ...... 855 0.07 103,143 6.386 96.757 1,105 0.09 Nepal ...... 543 0.05 65,505 3,106 62,399 793 0.07 Netherlands ...... 35,503 3.08 4,282,904 264,799 4.018,105 35,753 3.00 New Zealand ...... 4,696 0.41 566,502 42,708 523,794 4,946 0.41 Nicaragua ...... 341 0.03 41.137 1,098 40,039 591 0.05 Nigera ...... 478 0.04 57,664 2,419 55,245 728 0.06 Nigeriaa ...... 7,102 0.62 856,750 72,610 784,140 7,352 0.62 Norway ...... 9,982 0.87 1,204,179 72,577 1,131.602 10,232 0.86 Oman ...... 876 0.08 105,676 6,626 99,050 1,126 0.09 Pakistana ...... 6,881 0.60 830,089 58,861 771,228 7,131 0.60 Panama ...... 216 0.02 26,057 2,606 23,451 466 0.04 Papua New Guinea ...... 726 0.06 87,581 5,049 82,532 976 0.08 Paraguay ...... 690 0.06 83,238 4,661 78,577 940 0.08 Peru ...... 2,992 0.26 360,940 29,050 331,890 3,242 0.27 Philippines ...... 3,841 0.33 463,359 38,029 425,330 4,091 0.34 Poland ...... 6,122 0.53 738,527 62,275 676,252 6,372 0.53 Portugal ...... 5,460 0.47 658,667 38.503 620,164 5,710 0.48 Qatar ...... 1,096 0.10 132,216 8,965 123,251 1,346 0.11 Romania ...... 2,251 0.20 271,549 24,139 247,410 2,501 0.21 Rwanda ...... 587 0.05 70,813 3,574 67,239 837 0.07 St. Kitts and Nevis ...... 275 0.02 33,175 302 32,873 525 0.04 St. Lucia ...... 552 0.05 66.591 1,512 65,079 802 0.07 St. Vincent and the Grenadines ... 278 0.02 33,537 297 33,240 528 0.04 Sao Tome and Principe ...... 278 0.02 33,537 297 33,240 528 0.04 Saudi Arabia ...... 25,140 2.18 3,032,764 263,830 2,768,934 25.390 2.13 Senegala ...... 1,163 0.10 140,299 9.681 130,618 1,413 0.12 Seychelles ...... 263 0.02 31,727 154 31,573 513 0.04 Sierra Leone ...... 403 0.03 48,616 1,841 46,775 653 0.05 Singapore ...... 320 0.03 38,603 3,860 34,743 570 0.05 Solomon Islands ...... 288 0.02 34.743 403 34,340 538 0.05 Somalia ...... 552 0.05 66,591 3,322 63.269 802 0.07 South Africa ...... 13,462 1.17 1,623,988 98,821 1,525,167 13,712 1.15 Spain ...... 20,222 1.75 2,439,481 163,080 2,276,401 20,472 1.72 Sri Lanka ...... 3,147 0.27 379,638 23,702 355,936 3,397 0.28 Sudan ...... 850 0.07 102,540 7,238 95,302 1,100 0.09 Suriname ...... 412 0.04 49,702 1,954 47,748 662 0.06 Swaziland ...... 440 0.04 53,079 2,015 51,064 690 0.06 Sweden ...... 14,974 1.30 1,806,388 110,202 1,696,186 15,224 1.28 Syrian Arab Republic ...... 1,236 0.11 149,105 10,458 138,647 1,486 0.12 Tanzaniaa ...... 727 0.06 87,702 7,942 79,760 977 0.08

(continued) 200 IBRD Financial Statements Statement of Subscriptions to Capital Stock and Voting Power (continued)

June 30, 1991 Expressed inthousands of US dollars Subscriptions Voting power Percentage Amounts Number Percentage of Total paid in Amounts subject of of Member Shares total amounts (Note A) to call (Note A) votes total Thailand ... 4.260 0.37 $ 513,905 $ 37,636 $ 476,269 4,510 0.38 Togo ...... 620 0.05 74,794 3,924 70,870 870 0.07 Tonga ...... 277 0.02 33,416 287 33,129 527 0.04 Trinidad and Tobago ...... 1,495 0.13 180,349 13,406 166,943 1,745 0.15 Tunisia ...... 719 0.06 86,737 5,658 81,079 969 0.08 Turkey ...... 7,379 0.64 890,166 52,947 837,219 7,629 0.64 Uganda ...... 617 0.05 74,432 4,376 70,056 867 0.07 United Arab Em rates ...... 2,385 0.21 287.714 22,643 265.071 2,635 0.22 United Kingdom ...... 69.397 6.02 8,371,707 539,526 7,832,181 69,647 5.84 United States ...... 206,257 17.89 24,881,813 1,785,899 23,095,914 206,507 17.32 Uruguay ...... 1,578 0.14 190,362 14,084 176,278 1,828 0.15 Vanuatu' ...... 329 0.03 39,689 838 38,851 579 0.05 Venezuela ...... 11,427 0.99 1,378,496 118,452 1.260,044 11,677 0.98 Viet Nam ...... 543 0.05 65,505 6,550 58,955 793 0.07 Western Samoa ...... 298 0.03 35,949 510 35,439 548 0.05 Yemen, Republic of ...... 1.241 0.11 149,708 10,504 139,204 1,491 0.13 Yugoslaviaa ...... 4,381 0.38 528,502 46,463 482,039 4,631 0.39 Zairea...... 2,643 0.23 318,838 25,379 293,459 2,893 0.24 Zambiaa...... 1,577 0.14 190,241 15,556 174,685 1,827 0.15 Zimbabwe ...... 1,866 0.16 225,105 17,136 207,969 2,116 0.18

Tula -J 30Ar 1 31 1 1tt 2:; irJ' 021,,uO ,f 1 1t90 P}12 ilM `t 41 1.11.981 I3 JO Total-June 30, 1990 ...... 1,038,357 $125,262,197 $8,919,923 $116,342,274 1,076,357

*May differ from sum of individual figures shown because oFrounding. a. Amounts aggregating theequivalent of $49,359,400 havebeen received Frommembers on account of increases insubscriptions which arein process of completion: Antigua andBarbuda $57,000, Bangladesh $308,000, Cameroon $2,000. Central African Republic $1,239,000, China $28,242,000, Costa Rica $163,000, Djibouti $4,000, Egypt$7,637,000, Ghana$47,000, Mali $400, Mauritania $31,000, Niger $181,000, Nigeria $936,000, Pakistan $5,850,000, Senegal$225,000 Tanzania $143,000, Vanuatu $93,000, Yugoslavia $3,174,000, Zaire $15,000, and Zambia $1,012,000. See Notes to Financial Statements. Notes to Financial Statements 201 Notes to Financial Statements

Summary of Significant Accounting alocation of such commissions to the Special Reservewas discontinued in and Related Policies 1964 with respect to subsequent loans, andno further additions arebeing madeto it. The IBRD's principal financial statements are prepared inconformity with the TheGeneral Reserveconsists of earnings from prior fiscal years which, in accounting principles generally accepted m the United Statesand with thejudgment of theExecutive Directors, should be retained inthe IBRD's International Accounting Standards. business Translation of Currencies Surplus consists of earnings from prior fiscal yearswhich areretained by theIBRD until a further decision is madeon their disposition. The IBRD'sprincipal financial statements areexpressed in terms of US dollars solely for the purpose of summarizing the IBRD's financial position Unallocated NetIncome consists of earnings in thecurrent fiscal year. and the results of its operations Forthe convenience of its members and Commencing in 1950, a portion or all of theUnallocated Net Income has other interested parties beenallocated to theGeneral Reserve. From fiscal years 1964 to 1987, and in 1989,the IBRD's Boardof Governors madetransfers out of the The IBRDis aninternational organization which conducts its operations in Unallocated Net Income for those yearsto theInternational Development the currencies of all ofits members and Switzerland. The IBRD'sresources Association (or faci ities administered by the International Development are derived from its capital, borrowings, andaccumulated earnings in those Association). TheIBRD's Boardof Governors madea transfer out of fiscal various currencies. TheIBRD has a number of general policies aimed at year1990 Unallocated Net Income to Surplus, andsubsequently to the minimizing exchange-rate risk in a muticurrency envronment The IBRD International Development Association and the Global Environment Trust matches its borrowing obligations in any onecurrency (aoferswap activities) Fund. with assets inthe samecurrency, as prescribed by its Articles of Agreement, primarily by holding or lending the proceeds of its borrowings inthe same currencies in which they areborrowed. Inaddition, the IBRDperiodically Loans undertakes currency conversions to moreclosely match thecurrencies All of rheo 8R's loansame made to orguaranteed oy membero,with the underlying its resurveswith these ofthe outstanding loans Withrespect to of loans to theInternafiona Finance Corporation. Theprincipal exptsifs other fot rresources,resources, atoe IBReidosIBRD nthedoes not tomtconvert cnv ertaineone currecurrency intontion another another amountsexception of loans are repayable inthe currencies lent. For loans negotiated eocept for small amounts required to meetcertan obligaions and since July 1980 (andtor portions of certain earlier loans), therepayment operational needs. obligations of borrowers invarious currencies aredetermined on thebasis Assets and liabilities are translated atmarket rates of exchange at the end of a currency pooling system, which is designed to equalize exchange-rate of the period. Income and expenses are translated at the market rateat the risks among borrowers. Interest on loans is accrued in the currencies lent. dates on which they arerecognized or an average of the marketrates of Incremental direct costs associated with originating loans areexpensed as exchange in effect dudng eachmonth. Translation adjustments, with the incurred, assuch amounts areconsidered immaterial. exception of those relating to capital subscriptions described inNote A, are charged or credited to Equity. The18RD does not reschedule Interest or principal payments on its loans or participate in debt rescheduling agreements with respect to its loans In Valuation of Capital Stock exceptional cases,however, such aswhen implementation of a financed project has beendelayed, the loan amortization schedule may be modified In the Aricles of Agreement,thecapital stock of thetBRD is expressed in to avoid substantial repayments prior to project completion. It is tnepolicy terms of "US dollars of the weight andfineness ineffect on July 1, 1944' of theIBRD to place in nonaccrual status all loans madeto or guaranteed (1944 dollars). Following the abolition of gold as a common denominator by a member of the IBRDif principal, interest, or other charges with respect of the monetary system andthe repealof theprovision of the USlaw to any such loanare overdue by morethan six months, unless IBRD defining the par value of the USdollar in terms of gold, the pre-existing management determines thatthe overdue amount will be collected in the basis for translating 1944 dollars into current dollars or into any other immediate future. Onthe date a member's loans areplaced in nonaccrual currency disappeared. OnOctober 14,1986, the Executive Directors of the status, interest andother charges that had been accrued on loans IBRDdecided, effective June 30, 1987 until such time as the relevant outstanding to themember which remained unpaid arededucted from the provisions of the Articles of Agreement areamended, to interpret thewords income of the current period. Interestand other charges on nonaccruing "US dollars of the weight and fineness in effect on July 1, 1944" inArticle loans are included inincome only to the extent that payments haveactually 11,Section 2(a) of the Articles of Agreement of the IBRDto meanthe Special beenreceived by the IBRD. Drawing Right (SDR)introduced by theInternational Monetary Fundas the SDRwas valued interms of USdollars immediately before theintroduction TheIBRD determines the Accumu atedProvision for Loan Losses basedon of the basket method of valuing the SDR on July 1,1974, such value being anassessment of col ectibility risk ofthe total loan portfolio, including loans $1.20635 for oneSDR. in nonaccrual status.The Accumulated Provision is periodically adjusted basedon a review ofthe prevailing circumstances and will beused to meet Retained Earnings actual losses on loans. Should such losses occur inamounts inexcess of the Accumulated Provision (andof theamount of the Special Reserve),the Retained Earnings consists of allocated amounts (Special Reserve,General excess would be included in the determination of net income. Annual Reserve,and Surplus) and Unallocated Net Income.The IBRDhas not adjustments to the Accumulated Provision arerecorded as a charge or credit declared or paid any dividends to its members. to income. The Special Reseuveconsists of loancommissions set aside pursuant to Article IV,Section 6 of the Articles of Agreement which areto beheld in Investments liquld assets These assets maybe used only for the porpose of meeting In prior years,the IBRDrecorded its investment securities at cost or liabilities of the IBRDon its borrowings and guarantees in theevent of amortized cost Asof July 1,1990, theIBRD changedits policy and began defaults on leans made,participated in, orguaranteed bythe 1BRD. The Special Reseuveassets comprise obligations of theUnited StatesGovern- carrying its Investment securities atmarket value, since this was considered ment and its instrumentalities and areincluded under Investments. The (continued) 202 IBRD Financial Statements

Notes to Financial Statements (continued)

a more appropriate reflection of thevalue ofthe portfolio. Thecumulative Executive Directors decided to adopt a policy of reimbursing members effectof this change of $17,380,000 was reflected as a reduction of whose currencies appreciate significantly in terms of thestandard of value. investment income in thefirst quarter of fiscal year 1991.Both realized and unrealized gains and losses areincluded in income from investments From With respect to restricted currencies out on loan, maintenance-of-value time to tine, the IBRDenters into forward contracts for the sale or purchase oblgations become effective only as such currencies arerecovered by the of investment securities; these transactions are recorded at the time of IBRDThe maintenance-of-value amounts relating to restricted currencies commitment out onloan are included inAmounts Required to Maintain Value of Currency Holdings-Amounts Deferred. Dueto the natureof the investments held by the IBRDand its policies governing the leveland use of such investments, the IBRDclassifies the investment portfolio as an element of liquidity in the Statements of Cash Note B-Investments and Cash Collateral Invested At June 30, 1991,the market value of investment securities and invested Reclassiications cash collateral received on loaned securities was $24,936,856,000

Certain reclassitications of the prior year's information havebeen made to of $249483945, 000( 3 -Junet42 compared0, with a costor amortized cos conform Withthe current year's presentation. currency composition of Investments and CashCollateral Invested follows:

Note A-Capital Stock, Restricted Currencies, Currer t !nOui, tORI and Maintenance of Value Deuto, cr,l I 1 r,3ij.57S dl

Capital Stock: At June 30, 1991, the IBRD's capital comprised Japar,- ,-r : 53,7 t)ir 1,448,500 (1,420,500-June 30, 1990) authorized shares, of which PounJ: 143I'o 371.000 1,153,231 (1,038,357-June 30, 1990)shares hadbeen subscribed. Each Unitel :i,: 1o.ln: 1,5 04 ,292.0j0(J share has a par value of 100,0001974 SDRs, va ued at the rateof $1.20635 Other j,,-c.'-: L OGBi ,0iJi pert 974SDR. Of the subscribed capital,$9,392,549,000 ($8,919,923,000- To'' 4-6 -- June 30. 1990) has beenpaid in, and the remaining $129,727,473,000 °1-). _i_J _____ ($116,342,274,000--June 30, 1990) is subject to call only when required to meetthe obligations of the IBRDcreated by borrowing or guaranteeing As partof its overall portolio management strategy, the IBRDis party to loans. As to $111,296,017,000 ($100,209,757,000-June 30, 1990), the financial instruments with off-balance-sheet risk, including futures, forward restriction on calls is imposed by the Aricles of Agreement, andas to contracts, covered forward contracts, options, and short sales. Futures and $18,431,456,000 l$16,132,517,000-June 30, 1990), by resolutions of the forward contracts arecontracts for deiayed delivery of securities or money Board of Governoms market instruments in which the seller agrees to makedelivery at a specified future dateof a specified instrument, at a specified price or yield. At June Restricted Currencies: Theportion ofcapital subscriptions paid in 30,1991, thetotal contract value oftutures contracts was $8,445,147,000 to the BRDis divided into two pars: (1) $939,255,000 ($891,992,000-p ($3 403,220,000-June 30, 19901.The IR8D hasminimal exposure to June 30, 1990) Intally paidin gold or USdollars and(2) $8,453,294,000 credit loss on futures contracts due to potential nonpertormance of ($8,027,931 ,000-June 30, 1990)paid in cash or noninterest bearing counterparties since changes in the market value of tutures contracts on any demand obligations denominated either in thecurrencies of the respective given business day aresettled in cashon thefollowing business day.The members or in US dollars. The amounts mentioned in (1) above, total contract value of forward contracts at June 30, 1991was $448,500,000 $506,365,000 ($506,033,000-June 30. 19901repurchased by members ($761,000,000-June 30, 1990) and the IBRDs exposure to credit loss with USdollars, and$95,661,000 i$45,112,000-June 30, 19901.which in Ih evento1 nonperformance by counterparties was$333,000 werethe proceeds from encashments of US-dollar-denominated notes, are m$405.000-June 30. 1990n. freely usable by the IBRDin any of its operations. The porion of the amounts paid in US-dollar-denominated notes areencashed bythe BRD in Covered forwards are agreements in which cash in one currency is accordance with theschedules agreedwith the members and the IBRD.The converted into a different currency and,simultaneously, a forward exchange remaining amounts paid in the currencies of the members, referredto as agreement is executed with either the same or a different counterparty restricted currencies, areusable by the IBRDin its lending operations only providing lor a future exchange of the two currencies in order to recover the with the consent of the respective members, and for administrative currency converted. At June 30, 1991,the BRD hadgross receivables from expenses. Theeqjivalent of $4,875,690,000 ($4,759,714,000-June 30, covered forward agreements of $91,739,000 and gross payables from 1990) has beenused for lending purposes, with such consent. covered forward agreements of $86,374,000. The IBRD's exposure to credit 9oss in the event of nonperformance by counterparties was $5,365,000 Maintenance of Value: Aricle 11, Section 9 of the Articles of Therewere no outstanding covered forward agreements at June 30, 1990 Agreement provides tonmaintenance ofvalue, asof the lime ofsubscription, of such restricted currencies, requiring (1) the member to make additional Options arecontracts that allow the holder of the option to purchase or sell payments to the IBRDin the eventthat the par value of its currency is a financial instrument at a specified price and within a specified period of reduced or the foreign exchange value of its currency has,in the opinion of time from the seller of the option. As a seller of options, the IBRDreceives the IBRD,depreciated to a significant extent in its territories and (2) the IBRD a premium at the outset and then beats the risk of an unfavorable change to reimburse the nember in the event that the par value of its currency is in the price of the financial instrument underlying the option. The total increased, contract value of options sold at June 30, 1991was $406,980,000. There Since currencies no longer havepar values, maintenance-of-value amounts wereno outstanding options sold at June 30, 1990 are determined by measuring the foreign exchange value of a member's Short sales aresales of securities not held in the IBRDOsportfolio at the time currency against thestandard of value of IBRDcapital basedon the 1974 of the sale.The IBRD must purchase the security at a later date and bears SDR.Members arerequired to make payments to theIBRD if their currencies the risk that themarket value of the security will move adversely between the depreciate significantly relative to the standard of value.Furthermore, the time of the sale and the time the security must be delivered The total Notes to Financial Statements 203

contract amount of short sales at June 30, 1991was $210,200,000 ($146,592,000-June 30, 1990). This amount is included in Payable for US$thousands Investment Securities Purchased. . .:,i l I.,- . 1

For both on- and ott-balance-sheet securities, theIBRD imits trading to a Balance , I,., !-.,, .- ii. list of authorized dealers and counterparties. Strict credit limits havebeen Provisio' I,, I, I, - .' established for eachcounterparty by type of instrument andmaturity Translat r xU'- .xi 4 category. Balance-, I ,1 > .1 4r iniI Il; As of July 1, 1990, the IBRDbegan carrying its investment portfolio at market value rather than cost or amortized cost, Ifthe new policy had been applied retroactively, netincome would have been$1,217,356,000 and Cofinancing and Guarantees: TheIBtD hasentered ytoagree- $991,118 000 for the fiscal years 1991and 1990, respectively ments tor loans syndicated by other financia institutions either by a direct participation in,or a partial guarantee of, loans for the benefit ot member The annualized rateof return onaverage investments, net of cash collateral countries or a parial guarantee of securities issued by anentity eligible for received, held during theofiscal year ended June 30, 1991,including both IBRDloans. TheIBRD's direct participations in syndicated loans are realized andunrealized gains and losses, was 9.23 percent. included in reported loan balances. Guarantees of $1,133,949,000 at June 30,1991 ($934,741,000-June 30, Note C-Loans, Cofinancing and Guarantees 1990) werenot included in reportedloan balances. None of these guarantees weresu ject to call at June 30, 1991. Loans: At June 30, 1991,principal installments of $2,751,000 and interest and other charges of $2,525,000 payable to theIBRD on loans other TheIBRD has partially guaranteed thetrmely payment of interest amounts on thanthose referredto in the following paragraph were overdue by more than certain loans that havebeen sold At June 30, 1991, these guarantees, three months The aggregate principal amountroutstanding onthese loans approximating $10,312,000 ($13.478.00tt-June 30, 1990), were subject to was $137,560,000. Theaggregate principal amount outstanding onal loans call. to any borrowers, other than those referredto in the following paragraph with any one loan overdue by more than three months was$149,045,000. Statutory Lending Limit: Underthe Articles of Agreement, the total amount outstanding of guarantees,participations 0 loans, anddirect loans At June 30, 1991, theloans madeto or guaranteed by certain mem- madeby theIBRD may nor be increased to an amount exceeding 100 ber countries with an aggregate principal balance outstanding of percent of thesum of subscribed capital, reserves,and surplus Osthe $2,496,317,000 ($2,871,500.000-June 30, 1990), of which $949,749,000 IBRD's BalanceSheets, reserves and surplus correspond to items labeled ($932,165,000-June 30,1990) was overdue, werein nonaccrual status RetainedEarnings, Cumulative Translation Adjustment, and Accumulated As of such date,overdue interest andother charges in respect of these Provision for LoanLosses. TheIBRD's Executive Directors haveissued loans totaled $832,915,000 ($824,835,000-June 30, 1990).Ifthese loans guidelines pursuant to which all guarantees issued by the18RD will be hadnot beenin nonaccrual status, income from loans for the fiscal year counted towards this limit atthe time they first become callable, irrespective ended June 30, 1991would havebeen higher by $148,758,000 of thelikelihood oean actual call. OnMarch 26, 1991, the IBRD'sExecutive ($248,406,000-June 30,1990), which isnet of interest received from such Directors decided that discussions onan additional capital increase would members during the fiscal year.A summary of borrowers in nonaccrual be initiated if the total amount outstanding of callable guarantees. status follows: participations in loans, and ditect loans wereto exceed80 percent ot the sumof subscribed capital, reserves, and surplus As ofJune 30, 1991,such total amount was$90,647,907,000 or 60 percent )65 percent-June 30, 1990) of such sum June 30, 1991 Principal Pincipal andcharges Nonaccrua Note D-Borrowings and Swaps Borrower outstanding overdue s nce Guatemala. $ 256,527,000 $- 68.569,000 July 1990 TheIBRD has entered into currency swapsinwhich proceeds of a borrowing areconverted into a difterent currency anid,simnultaneously, a forward Iraq. 42.170,000 14,380,000 December1990 exchange agreement :s executedproviding fot a schedule of future ex- Liberia. . . 129,317.000 109,226,000 June1987 changes of the two currencies in order to recover the currency converted Nicaragua.. 215,922,000 220,108,000 December1984 Thecombination ofa borrowing and a currency swap produces the financial Panama. . 397,117,000 201,426,000 May1988 equivalent ofsubstituting a borrowing inthe currency obtained inthe initial Peru. . 1,022,662,000 855,969,000 August1987 conversion for the original borrowing. TheIBRD also undertakes interest rate SierraLeone. 9,354,000 6,994,000 August1967 swaps, which transform a fixed-rate payment obligation in a particular SyrianArab currency into a floating-rate obligation inthat currency and vice-versa. The Republic. . 423.248,000 305,992,000 February1987 average cost of borrowings outstanding, including short-term borrowings, during the fiscal year ended June 30, 1991was 7.41percent (7.37 Total. $2,496,317,000 $1,782,664,000 percent--aune 30,1990), reflecting a reduction in interest expense of $402,953,000 ($337,770,000-June 30,1990) as a result of swaps. At June 30, 1991,the IBRD had gross receivables from currency swaps at Infiscal year 1991, Zambia paid off all of its arrears and therefore came out a book value of$14,615,302,000 ($13,060,831,000-June 30. 1990) and of nonaccrual status. Asa result, income from loans for fiscal year 1991was gross payables from currency swaps ata book value of $15,067,892,000 increased by $147,034,000 for income that would havebeen accrued in ($14,241,419,000-June 30, 1990). Inadditon, the 19RDhad interest rate previous fiscal years. swap contracts covering a notional principal amount of $7,340,562,000 on An analysis of thechanges to the accumulated provision for losses onloans June 30, 1991($4,513,518,000 June 30, 1990) follows: (continued) 204 IBRD Financial Statements

Notes to Financial Statements (continued)

TheIBRD is exposed to credit loss in the eventof nonperformance by Income for the fiscal years ended June 30, 1964 through June 30,1987, and its counterparties in an aggregate amount of $1,027,191,000 June 30, 1989 and 1990.Of tnesetransfers, $778,481,000 remained ($636,390,000-June 30, 1990) for outstanding currency swaps, and payable at June 30, 1991($846,502,000-June 30, 1990). The 1990 $25,818 000 ($28,445,000-June 30,1990) for outstanding interest rate amount washeld in Surplus duoag fiscal year 1991 swaps, representing theestimated cost of replacing, atcurrent market rates, all those outstanding swaps for which theIBRD would incur a loss in Environment TrestFund ot 29 a2930an0sferbyRwaetfarant tnheiGloba replacing the cortracts amount washeld inSurplus during fiscal year 1991.These funds were paid TheIBRO follows stfrtcguidelines regarding the counterparties with whom to the Global Environment Trust Fund in the fiscal year ended June 30, itwill enter into swap agreements and establishes strict credit limits for each 1991. of those counterpartes. TheBRD does not antcipate nonpertormance by InSeptember 1989, the IBRDauthorized a transfer by way ofa grant to the any of itscounterparthes. DebtReduction Facility for IDA-Only Countries of $100,000,000 from net TheIBRD also entersinto deferred ratesetting agreements in conjunction income for the fiscal year ended June 30, 1989.Of these funds, $91,578,000 with some of its bond issues. Theseagreements allow theIBRD, through the remained payable atJune 30, 1991. use ofa financial intermediary, to fix the effective interest cost on the issues in several tranches over a specified period of time afterthe issue dateof fhe respective bond. Thepotential credit loss to the IBRDfrom nonperformance Note H-Staff Retirement Plan of thefinancial intermediary is limited to any accrued, but unsettled profits. Periodic mark-to-market settlements onthese agreements limit this risk. TheIBRD has a defined benefit retirement plan covering substantially all of however. AtJune 30, 1991(and June 30,19Y0), the eftective interest rate its staff. The Plan also covers the staft of the International Finance hadbeen fixed onall franches of thedeferred ratesetting agreements and Corporation (IFC)and the Multilateral Investment GuaranteeAgency the IBRDhad no exposure to credit loss on theagreements. (MIGA). Under thePlan, benefits arebased on the years of contributory service and the highest three-year average of pensionable remuneration as Note E-Retained Earnings defined in the Plan,with the statfcontributing a fixed percentage of pensionable rernuneration and theIBRD contributng the remainder of the Retained Earnings comprises the following elements asof June 30, 1991: actuarially determined cost of future Plan benefits. TheIBRD uses the Special Reserve$292,538,000 ($292,538,000--June 30. 1990), General aggregate method for determining its contribution to the Plan. Theamount Reserve$10,444 218,000 ($9 694,218,000-June 30 1990), and Unallo- of that contribution approximates thenet periodic pension cost as detailed catedNet Income $1,199,976,000 ($1,045,860,000G-June 30 1990). There below All contributions to the Planand all other assets and income held for was no balance in Surplus of June 30, 1991Ot 1990. the purposes of the Planare held by the IBRDseparately from the other OnMay 13,1991. the Board of Governors approved thetransfer of the assets andincome of the IBRD,IDA, the IFO,and MIGA and can beused eqaisalent of S0R200,000,000 ($266,567,000) to theIntereational Desel- only for thebenefit of theparticipants in thnePan andtheir beneficiaries, opment Association and $29293,000o the Global EnvironmentTrest Fund, until alt iabilities to themhave been paid or provided for.Plan assets such amounts hadbeen nod in Surplus. consist primnarlyof equity and fixed income securities, with smaller hodings ofcash, real estate and other investments. Note F-Expenses Netperiodic pension cost forIBRD participants for the fiscal years ended June 30, 1991and June 30,1990 consisted of the following components: Administrative expenses arenet of themanagement feeof $328,004,000 )$354,380,000--June 30, 1990) charged to the Intfernational Development Association and $65,198,000 ($48,340,000-June 30, 1990) charged to US$thousands reimbursable programs. Service and suppon fees of $7,479,000 , 41 I T41 ($7,186,000-iuie 30, 1990) charged to the lnternational Finance Corpo- ration and$483,000 ($450,000_June 30, 19901charged to the Multi ateral Service cosl-! - 1i Investment GuaranteeAgency areincluded in reimbursable programs. during tl.- r.-,Ž1 1 I t i It Interestcosi ,, y .I -|1 L- Contributions to special programs represent grants for agricultural research, obligatic f 0. the control of onchocerciasis, andother developmental activities. Actua retur. .1,- t n I -

Note G-Transters to the International Notamortizl 1i1-ii Development Association, the Debt Reduction Netperiodi ... I r.I t ' Facility for IDA-Only Countries, and the Global Environment Trust Fund Theportion of this cost that relatesto the IBRDand is included in Administrative Expensesfor the fiscal year ended June 30, 1991 is TheIBRD has authorized transfers byway of grants to theinternational $44,447,000 ($36,004,000u-Jne 30, 1990). The balance hasbeen charged Development Association totaling $3,045,056,000 from Unallocated Net to theInternational Development Association. Notes to Financial Statements 205

The following table sets forth the Planosfunded status atJune 30,1991 and decreasing to 7.6 percent atage 64 Theexpected long-term rateof return June 30, 1990: onassets was 9 percent (9percent--une 30, 1990).

US$thousands Note I-Non-Pension Retirement Benefits J., TheIBRD provides certain health care and life insurance benefits to retirees. Actuarial present value ofbenefit All staff who areenrolled inthe insurance programs while in active service obligations and who meetcertain requirements areeligible for benefits when they reach Accumulated benefit obligatisn early or normal retirement agewhi e working for the IBRD

Vested . . . t,, 1 lI -r)1 Prior tofisca year 1990, the cost of retireehealth careand life insurance Nonveeted.ed 4 .l '' l) benefits, netof retireecontributions, wasrecognized in expense on a cash Nonvested4.-Ibasis...... EtfectiveJune 30,1990, theIBRD changed to anaccrual method of Subtotal ... .s... 4.....):, I accounting for thesecosts TheIBRD believes theaccrual method is Effectof projected compensation preferable to themethod usedpreviously since it is consistent with the levels ...... l. 4 l ) accrual basis usedin accounting foronher liabilities Projected benefit obligation . * S . . . - ) Underthe new method, theestimated cost for post-retirement health care Planassets at fair value . . .n. ;- t andlife insurance is accrued onan actuaria ly determined basis. Increases Planinexcess assets of protected incosts resulting from planamendments aredeferred and amortized over 20

benefit obligation.n.eof ...... , years, gains and losses due to the deviation of actua experience from Remainingunrecognizednetobligas.. . ] actuarialXI, assumptions are simi arly deferredand amortized. Costs are Remaining unrecognized net asset. .. slK' ! I.'111l fundedtl as accrued through contr butons to a RetiredStaff Benefits Plan Unrecognized prior service cost ... I. i - 6 (RSBP),which also covers thestaff of the IFCand MIGA. All contributions Unrecognized netgain . .r.. ... l iI .: to theRSBP and all other assets and income held for the purposes of the Prepaid pension cost . . . . RSBPare held by theIBRD separately from theother assets and income of P______* P _---_ theIBRD. IDA, the IFC,and MIGAand can be used only for the benefit of the participants in theRSBP and their beneficiaries, until all Iabilities to themhave been paid or provided for. The weighted-average discount rateused in determining the acluaral The initial contribution to theRSBP on behalf of IBRDstaff amounted to present value of theprojected benefit obligation was825 percent (7.81 $158,880,000 Ofthis amount, $105,500,000 was charged to the IBRDand percent-Jaune 30, 1990). Theeffect of projected compensation levels was the remaining $53,380,000 wascharged lo IDAduring fiscal year 1990. The calculated based on a scale that provides for a decreasing rateof saary expenseallocated to theIBRD for the fiscal year endedJune 30, 1991was increase depending on age.beginning with 13 percent at age20 and $9,130,000 206 IBRD Financial Statements Report of Independent Accountants

Price Waterhouse The Hague Tokyo (International Firm) London Washington New York

Price Waterhouse to

July 29, 1991

President and Board of Governors International Bank for Reconstruction and Development

In our opinion, the financial statements appearing on pages 188 through 205 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, 1991 and 1990. 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 with 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, including International Auditing Guidelines, 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.

C2~W W 207 Financial Statements of the International Development Association, the Special Fund Administered by IDA, and the Debt Reduction Facility for IDA-Only Countries Administered by IDA

Statements of Development Resources 208 Statements of Changes in Accumulated Surplus and Grants 209 Statements of Cash Flows 209 Summary Statement of Development Credits 210 Statement of Voting Power, and Subscriptions and Contributions 213 Notes to Financial Statements 216 Report of Independent Accountants 219 208 IDAw Special Fund, and Debt Reduction Facility Financial Statements Statements of Development Resources

June 30, 1991 and June 30, 1990 Expressed in thousands of US dollars

IDA Special Fund DebtReduction Facility 1991 1990 1991 1990 1991 1990 Development Resources NETASSETS AVAILABLE FORDEVELOPMENT ACTIVITIES Cashand investments immediately available for disbursement Duefrom banks ...... $...$ 53,774 $ 37,779 $ 1,130 $ 1,536 Obligations of governments and other official entities-Note A...... 756,379 425,554 8,736 13,975 Obligations of banks and other financial institutions-Note A ...... 1,245,840 1,360,766 183,095 84,530 Netpayable on investment security transactions ...... (19,850) (29,794)

2,036,143 1,794,305 192,961 100,041 - - Cash and investments not immediately available for disbursement-Note B Duefrom banks ...... 6,810 7,867 Obligations of governments and other official entities-Note A ...... 102,485 145,869

109,295 153,736 - - - Receivables on account of subscriptions andcontributions Nonnegotiable, noninterest-bearing demand obligations . 16,326,308 15,452,413 137,986 264,797 Subscriptions andcontributions-Note E Amounts due...... 387,784 42,289 Amounts notyet due ...... 8,848,780 829,393 Restricted assets...... 280,006 270,840 25,842,878 16,594,935 137,986 264,797 - - Receivables from the International Bank for Reconstruction and Development-Note G ...... 778,481 846,502 $ 91,578 $100,000 Other assets,net 105,729 89,194 (597) 56 Grantspayable-Note C ._...... _... _ _...... (11,578) Total netassets available for development activities. 28,872,526 19,478,672 330,350 364,894 80,000 100,000 DEVELOPMENTCREDITS OUTSTANDING (seeSummary Statement of Development Credits and Note D) Total development credits ...... 66,096,491 60,723,122 92,293 149,973 Less undisbursed balance ...... 20,618,471 19,176,899 92,293 149,973 Total development credits disbursed and outstanding 45,478,020 41,546,223 0 0 Total development resources ...... $74,350,546 $61,024,895 $330,350 $364,894 $ 80,000 $100,000 Funding of Development Resources Member subscriptions and contributions (seeStatement ot Voting Power,and Subscriptions andContributions and Note E) Unrestricted ...... $68,903,911 $55,666,155 $274,970 $315,906 Restricted ...... 280,006 270,840 69,183,917 55,936,995 274,970 315,906 Other contributions-Notes F and G ...... 3,016,325 2,761,850 $100,000 $100,000 Cumulative translation adjustment on development credits 1,607,240 1,947,674 Accumulated surplus (seeStatements of Changes in Accumulated Surplus and Grants)...... 543,064 378,376 55,380 48,988 Accumulated grants (seeStatements of Changes in Accumulated Surplus and Grants and NoteC)...... _ (20,000) Total funding of development resources ...... $74,350,546 $61,024,895 $330,350 $364,894 $ 80,000 $100,000 See Notes to Financial Statements. Statements of Cash Flows 209 Statements of Changes in Accumulated Surplus and Grants

For the fiscal years ended June 30, 1991 and June 30, 1990 Expressed inthousands of US dollars

Debt Reduction IDA Special Fund Facility 1991 1990 1991 1990 1991 1990 Income from development credits-Notes D and H $346,881 $286,470 Income from investments-Note H.307,769 241,333 $20,719 $ 9,265 Management fee charged by the International Bank for Reconstruction and Development-Note H.(328,004) (354,380) Amortization of discount on subscription advances . (6,453) (5,567) Grants-Note C...._...... $(20,000) _ Changes from operafions and grants .320,193 167,856 20,719 9,265 (20,000) Effect of exchange rate changes on accumulated surplus .(155,505) 171,768 (14,327) 6,781 Net changes .164,688 339,624 6,392 16,046 (20,000) Balance at beginning of fiscal year 378,376 38,752 48,988 32,942 Balance at end of fiscal year $543,064 $378,376 $55,380 $48,988 $(20,000) Statements of Cash Flows

For the fiscal years ended June 30, 1991 and June 30, 1990 Expressed in thousands of US dollars

Debt Reduction IDA Special Fund Facility 1991 1990 1991 1990 1991 1990 Cash flows from development activities Development credit disbursements .$(4,511,430) $(3,899,249) $(37,147) $(31,358) Development credit principal repayments .274,271 217,247 Debt reduction grant disbursements...... _$ (8,422) Net cash used in development activities (4,231159) (3,682,002) (3714) (31,358) (8,422) Cash flows provided by member subscriptions and contributions. 3,933,596 3,647,604 123,024 54,302 Cash flows provided by other contributions .322,495 63 - - 8,422 Cash flows from operating activities Changes from operations and grants .320,193 167,856 20,719 9,265 (20,000) Adjustments to reconcile changes from operations and grants to net cash provided by operating activities Amortization of discount on subscription advances. 6,453 5,567 Net changes in other assets and h I...tla... (4,137) (30,682) 668 267 11,578 Decrease in receivables from the International Bank for Reconstruction and Development .... 8,422 Net cash provided by operating activities 322,509 142,741 21,387 9,532 0 Effect of exchange rate changes on cash and investments immediately available for disbursement. (99,603) 165,992 (14,344) 7,715 Net increase in cash and investments immediately available for disbursement .241,838 274,398 92,920 40,191 0 Cash and investments immediately available for disbursement at beginning of fiscal year. 1,794,305 1,519,907 100,041 59,850 0 Cash and investments immediately available for disbursement at end of fiscal year. $2,036,143 $1,794,305 $192,961 $100,041 $ 0 See Notes to Financial Statements. 210 IDA Special Fund, and Debt Reducfion Facitity Financial Statements Summary Statement of Development Credits

June 30, 1991 Expressed inthousands of US dollars IDA Special Fund' Total Percentage of Total Development Total Development Total Development development development credits development credits development credits credits Borrower or guarantor credits outstanding credits outstanding credits' outstanding outstanding Afghanistan ...... $ 76,566 $ 76,566 $ - $ - $ 76,566 $ 76,566 0.17 Angola ...... 22,531 - - 22,531 - Bangladesh ...... 5.697,006 4,035,710 5,722 5,722 5,702,728 4,041,432 8.89 Benin ...... 461,159 306,774 10,932 10,931 472,091 317,705 0.70 Bhutan ...... 27,974 15,968 - - 27,974 15,968 0.04 Bolivia ...... 630,965 386,366 - - 630,965 386,366 0.85 Botswana ...... 13,432 13,432 - - 13,432 13,432 0.03 Burkina Faso ...... 523,489 275,441 - - 523,489 275,441 0.61 Burundi ...... 613,496 399,999 - - 613.496 399,999 0.88 Cameroon ...... 234,139 234,139 - - 234,139 234,139 0.51 Cape Verde ...... 20,545 13,871 - - 20,545 13,871 0.03 Central Atrican Republic ...... 394,425 262,951 - - 394,425 262,951 0.58 Chad ...... 331,383 202,069 - - 331,383 202,069 0.44 Chile ...... 13,765 13,765 - - 13,765 13,765 0.03 China ...... 5,168,948 2,957,656 74,839 74,839 5,243,787 3,032,495 6.67 Colombia ...... 14,127 14,127 - - 14,127 14,127 0.03 Comoros ...... 59,145 36,092 - - 59,145 36,092 0.08 Congo ...... 73,250 73,250 - - 73,250 73,250 0.16 Costa Rica ...... 3,296 3,296 - - 3,296 3,296 0.01 CWted'lvoire ...... 6,900 6,900 - - 6,900 6,900 0.02 Djibouti ...... 56,135 30,311 - - 56,135 30,311 0.07 Dominica ...... 11,964 10,047 - - 11,964 10,047 0.02 Dominican -. p1,ql: ...... 19,932 19,932 - - 19,932 19,932 0.04 Ecuador ...... 31,298 31,298 - - 31,298 31,298 0.07 Egypt ...... 1,053,808 902,791 - - 1,053,808 902,791 1.99 El Salvador ...... 23,037 23,037 - - 23,037 23,037 0.05 Equatorial Guinea ...... 45,984 35,620 - - 45,984 35,620 0.08, Ethiopia ...... 1,316,631 824,148 - - 1,316,631 824,148 1.81 Gambia, The ...... 156,874 99,260 - - 156,874 99,260 0.22 Ghana ...... 1,982,824 1,264,663 44,650 44,650 2,027,474 1,309,313 2.88 Grenada ...... 6,588 6,094 - - 6,588 6,094 0.01 Guinea ...... 776,111 417,827 - - 776,111 417,827 0.92 ijIe. IpJ ...... 188,744 139,804 5,139 5,135 193,883 144,939 0.32 Guyana ...... 151,343 106,837 - - 151,343 106,837 0.23 Haiti ...... 420,085 307,662 15,811 11,387 435,896 319,049 0.70 Honduras ...... 114,020 95,179 - - 114,020 95,179 0.21 India ...... 18,055,763 13,328,746 85.526 24,453 18,141,289 13,353,199 29.36 Indonesia ...... 836,059 836,059 - - 836,059 836,059 1.84 Jordan ...... 76,617 76,617 - - 76,617 76,617 0.17 Kenya ...... 1,614,073 1,176,411 49,805 26,735 1,663.878 1,203,146 2.65 Korea, Republic of ...... 96,621 96,621 - - 96,621 96,621 0.21 Lao People's Democratic Republic ...... 243,724 129,775 - - 243,724 129,775 0.29 Lesotho ...... 176,696 111,705 - - 176,696 111,705 0.25 Liberia ...... 103,577 100,714 - - 103,577 100,714 0.22 Madagascar ...... 1,162,102 786,091 36,761 36,727 1,198,863 822,818 1.81 Statement of Development Credits 211

IDA Special Funda Total Percentage of Total Development Total Development Total Development development development credits development credits development credits credits Borrower or guarantor credits outstanding credits outstanding creditsb outstanding outstanding Malawi ...... $ 1,030,522 $ 730,686 $ 17,254 $ 17,254 $ 1,047,776 $ 747,940 1.64 Maldives ...... 24,435 11,678 - - 24,435 11,678 0.03 Mali ...... 780,419 487,672 14,004 12,744 794,423 500,416 1.10 Mauritania ...... 286,364 204,984 - - 286,364 204,984 0.45 Mauritius ...... 18,677 18,677 - - 18,677 18,677 0.04 Morocco ...... 38,672 38,672 - - 38,672 38,672 0.09 Mozambique ...... 599,899 283,814 - - 599,899 283,814 0.62 Myanmar ...... 839,845 717,978 - - 839,845 717,978 1.58 Nepal ...... 1,153,539 653,241 - - 1,153,539 653,241 1.44 Nicaragua ...... 59,818 59,818 - - 59,818 59,818 0.13 Niger ...... 551,839 442,334 - - 551,839 442,334 0.97 Nigeria ...... 517,975 41,584 - - 517,975 41,584 0.09 Pakistan ...... 3,470,335 2,127,974 - - 3,470,335 2,127,974 4.68 Papua New Guinea ...... 111,232 111,232 - - 111,232 111,232 0.24 Paraguay ...... 40,726 40,726 - - 40,726 40,726 0.09 Philippines ...... 166,627 100,747 - - 166,627 100,747 0.22 Rwanda ...... 639,370 329,242 - - 639,370 329,242 0.72 St. Kitts and Nevis ...... 1,449 - - - 1,449 - St. Lucia ...... 5,270 577 - - 5,270 577 St. Vincent and the Grenadines ...... 2,372 1,412 5,270 5,246 7,642 6,658 0.01 Sao Tome and Principe ...... 43,085 23,649 - - 43,085 23,649 0.05 Senegal ...... 1,036,455 701,645 23,321 23,321 1,059,776 724,966 1.59 Sierra Leone ...... 120,803 77,670 - - 120,803 77,670 0.17 Solomon Islands ...... 19,286 16,103 - - 19,286 16,103 0.04 Somalia ...... 517,259 398,449 - - 517,259 398,449 0.88 Sri Lanka ...... 1,601,955 917,469 - - 1,601,955 917,469 2.02 Sudan ...... 1,302,950 1,010,918 12,638 12,638 1,315,588 1,023,556 2.25 Swaziland ...... 6,722 6,722 - - 6,722 6,722 0.01 Syrian Arab Republic ...... 43,908 43,908 - - 43,908 43,908 0.10 Tanzania ...... 1,953,229 1,276,784 - - 1,953,229 1,276,784 2.81 Thailand ...... 108,060 108,060 - - 108,060 108,060 0.24 Togo ...... 545,586 381,139 24,310 24,310 569,896 405,449 0.89 Tonga ...... 5,243 2,477 - - 5,243 2,477 0.01 Tunisia ...... 58,529 58,529 - - 58,529 58,529 0.13 Turkey ...... 155,256 155,256 - - 155,256 155,256 0.34 .I,qrid, ...... 1,467,163 957,054 - - 1,467,163 957,054 2.10 Vanuatu ...... 15,618 4,641 - - 15,618 4,641 0.01 Viet Nam ...... 58,205 58,205 - - 58,205 58,205 0.13 Western Samoa ...... 39,410 19,533 - - 39,410 19,533 0.04 Yemen, Republic of ... 945,323 586,368 13,044 11,312 958,367 597,680 1.31 Zaire ...... 1,414,578 1,083,238 - - 1,414,578 1,083,238 2.38 Zambia ...... 669,876 442,634 7,379 6,707 677,255 449,341 0.99 Zimbabwe ...... 62,299 62.299 - - 62,299 62,299 0.14 Subtotal members** ...... 65,637,334 45,081,420 446,406 354,113 66,083,740 45,435,533

(continued) 212 IDA. Special Fund, and Debt Reduction Facilily Financial Statements Summary Statement of Development Credits (continued)

June30, 1991 Expressed inthousands of US dollars IDA Special Fund' Total Percentage of Total Development Total Development Total Development development development credits development credits development credits credits Borrower or guarantor credits outstanding credits outstanding credits' outstanding outstanding Regional development banks West Atrican Development Bank' ...... $ 62,052 $ 16,495 $ - $ - $ 62,052 $ 16,495 0.04 Caribbean Development Bank' ...... 33,262 16,262 - - 33,262 16,262 0.04 Subtotal regional development banks ...... 95,314 32,757 - - 95,314 32,757 Other' ...... 9,730 9,730 - - 9,730 9,730 0.02 Total-June 30, 1991*...... S65,742.378 $45,123.907 $446,406 $354,113 $66,188,784 $45,478,020 100.00 Total-June 30, 1990 ...... $..60,402,870 $41,225,971 $470,225 $320,252 $60,873,095 $41,546,223

*Less than 0.005 percent. **May difter from thesum of theindividual figures shown becauseof rounding. a.At June 30,1991, development credits outstanding ot $354,113,000 ($320,252,000-June 30, 1990) which wereoriginated under the Special Fundare shown under IDAin the Statements of Development Resources (seeNotes to Financial Statements-Note D),since such amounts arerepayable to IDA. b. Ofthe undisbursed balance at June 30,1991, IDAhas entered into irrevocable commitments to disburse $249,327,000 ($296,095,000-.June 30, 1990). c.These development credits arefor thebenefit of Benin, Burkina Faso,Cote dIlvoire, Niger, Senegal,and Togo. d.These development credits are tor the benefit of Grenadaandterritories ofthe United Kingdom (Associated Statesand Dependencies) inthe Caribbean region. e. Represents development credits madeat a time when theauthorities onTaiwan represented China in IDA(prior to May 15,1980).

Maturity Structure of Development Credits* Period IDA Special Funda Total July 1,1991 through June 30, 1992 ...... $ 335.537 $ - $ 335,537 July 1, 1992 through June 30, 1993 ...... 372.913 79 372,992 July 1, 1993 through June 30, 1994 ...... 438.403 1,734 440,137 July 1,1994 through June 30, 1995 ...... 501.719 4.608 506,327 July 1,1995 through June 30, 1996 ...... 580.972 4.608 585.580 July 1,1996 through June 30, 2001 ...... 4.552.994 23.038 4,576.032 July 1, 2001 through June 30, 2006 ...... 7.738.307 43.909 7,782.216 July 1, 2006 through June 30, 2011 ...... 9.941.809 66.743 10,008.552 July 1, 2011 through June 30, 2016 ...... 11.434.416 66.743 11,501.159 July 1, 2016 through June 30, 2021 ...... 11.192.310 66,743 11,259,053 July 1, 2021 r, :,juri June 30, 2026 ...... 9,880,898 66,744 9.947,642 July 1, 2026 through June 30, 2031 ...... 6,405,876 66.744 6,472.620 July 1, 2031 through June 30, 2036 ...... 2,267.926 34.713 2,302.639 July 1, 2036 through June 30, 2038 ...... 98,298 98,298 Total ...... $65,742,378 $446,406 $66,188,784

Includes undisbursed balance a. At June 30, 1991, development credits outstanding of $354,113,000 ($320,252,000-June 30.1990) which wereoriginated under theSpecial Fund are shown under IDAin the Statements of Development Resources (seeNotes to Financial Statements-Note D).since such amounts arerepayable to IDA. See Notes to Financial Statements. Voting Power, and Subscriptions and Confributions 213 Statement of Voting Power, and Subscriptions and Contributions

June 30, 1991 Expressed in thousands of US dollars IDA Number Percentage Subscriptions Special of of and Fund Member' votes total contributions contributions' Part I Members Australia .. .. .106,645 140 $ 1,302,705 $ - Austria.... .50,307 066 554,467 Belgium 81,027 106 867,960 48,091 Canada...... 241,554 3 16 31376,165 163,474 Denmark 73,145 096 851,286 33,141

Finland .48,317 063 552,219 - France. .. 299,850 393 4,557,550 147,783 Germany . 525.122 687 8,117,216 - Iceland .. 19.538 026 12,086- Ireland ... 23,682 0.31 82,096 -

Italy...... 193,939 2 54 2,282,780 89,890 Japan. . . 746,192 9 77 14,049,157 - Kuwait . 66,968 088 624,067 - Luxembourg . .20,528 0.27 35,753 - Netherlands, 146,491 192 2,095,785 - NewZealand ... 23,657 031 76,922 - Norway .. . 72,613 0.5 831.929 40,011 Sooth Atrica ...24,592 032 68.530 - Sweden. 156,897 2.05 1,911,329 75,592 United ArabEmirates .1,367 002 5,582 -

United Kingdom . 420,870 5.51 5,607,344- United States. 1,269,436 16 62 18,081,487 - Subtotal ...... 4,612,737 60.40 65,944,415 597,982

Part 11Members Afghanistan .. 13,557 018 1,341 - Algeria. . . . .18,481 024 5,099 - Angola., . 45,662 0.60 8,245 - Argentina ...... 81,053 106 49,092 - Bangladesh ...... 47,175 062 7,153 -

Belize. .1,788 0.02 243 - Benin.... 4.800 0.06 623 - Bhutan...... 3,559 0 05 61 - Bolivia ...... 13,748 018 1,328 - Botswana ... 19.163 025 214 - Brazil...... 129,916 170 76,598 - Burkina Faso...... 9,720 013 647 - Burundi . .. . ,17,143 0.22 998 - Camernon ...... 13,854 0.18 1,329 - CapeVerde ...... 516 0.01 97 - Central African Republic .... 10,920 0.14 653 - Chad..... 11,172 015 661 - Chile.....31,782 042 4,489 - China . .154,320 2.02 39.605 - Colombia. 34,350 0.45 22,479 - Comorns . ... 13,083 0.17 107 - Congo ...... 6,685 0.09 639 - CostaRica . . .. .I .I .. 7,844 0.10 254 - COtedIlvoire ...... 7,771 0.10 1,291 - Cyprus . 22,373 0 29 1,042 - Czechoslovakia.41,462 0.54 7,317 - Djibouti ...... 532 0.01 193 - (continuied) 214 IDA~ Special Fund, and Debt Reduction Facility Financial Statements Statement of Voting Power, and Subscriptions and Contributions (continued)

June 30, 1991 Expressed inthousands of US dollars IDA Number Percentage Subscriptions Special ot of anld Fund Member' Votes total contributions contributions' Part ttMembers (continued) Dominica .. 10.468 0.14 $102 $ - Dominican Republic 16,129 0 21 575 Ecuador. . 18,145 0.24 827

Egypt .. 34,710 0 45 6,541 ElSalvador .6,244 008 403 Equatorial Guinea...... 6,284 008 410 Ettiopia 20,989 027 718 Flj..u. . .. . 2,130 0 03 701 Gabon.2,093 0 03 627 Gambia, The 10,644 014 338 Ghana . ,20,418 027 3,009 Greece. 28,503 037 12,153 Grenada. . . . .14,496 0 19 123 Guatemala ...... 12,713 017 508 Guinea ...... 21,785 029 1,327 Guinea-Bissau. 528 0.01 169 Guyana .18,160 0.24 1,017 Haiti . . . . . 14,143 0.19 1,016 Honduras 16,598 0.22 389 Hungary ...... 59,746 078 26,616 India ...... 241,413 3.16 54,552 Indonesia . 77,885 102 14,600 Irani,Islamic Republic of . 15,455 020 5.853

Iraq . 9,407 0 12 992 Israel. . 9,386 0.12 2.401 Jordan ...... 19,893 0 26 398 Kampucbea, Democratic .7,826 0.10 1,284 Kenya...... 20,688 027 2,161 Kiribati ...... 4,734 006 74 Korea,Republic of .. .29,233 0.38 69,140 LaoPeople's Democratic Republic .. 11,723 0.15 627 Lebanon .8 562 011 564 Lesotho .10,487 014 204 Liberia. . 13,867 018 1.016 Libya 7,771 010 1,303 Madagascar . . . . .702 001 1,218 Malawi...... 22.373 0.29 1,004 Malaysia . ,31,808 042 3,456 Maldives ...... 18,459 0.24 40 Mali ...... 22,638 030 1,207 Mauritania . . .. 11,067 0.14 649 Mauritius .22,942 0.30 1,181 Mexico ...... 49,849 0.65 72,981 Mongolia . . . .. 546 0.01 277 Morocco . 37,266 0 49 4,741 Mozambique . 774 0.01 1,653 Myanmar .29,166 038 2,802 Nepal .. 20,802 0.27 659 Nicaragua ...... 19,893 026 405 Niger ...... 16,541 0.22 672 Nigeria .. .9,477 012 4,263 Oman ...... 19,896 0.26 438 Pakistan ...... 71,936 094 13,590 Voting Power, and Subscriptions and Contributions 215

IDA Number Percentage Subscriptions Special of of and Fund Member' votes total contributions contributionSb Panama 5,657 007 $ 26 $ - PapuaNew Guinea .13,050 0.17 1,125 - Paraguay 11,419 015 382 Peru. .5,699 0.07 2,135 - Philippines ... 16.583 022 6,461 -

Poland. 184,598 2.42 45,261 - Rwanda..... 12,667 017 993 - St Kiffs andNevis 526 001 158 St. Lucia .. .. .17,847 023 207 St.Vincent andthe Grenadines . ... 514 0.01 84 -

S5oTome andPrincipe .4.739 006 86 - Saudi Arabia .. 254,722 3.33 1,883,213 - Senegal . 22.640 0.30 2,262 SiernaLeone 12,667 017 953 - Solomon Islands . 518 0.01 109 -

Somalia . 10.506 0.14 953 - Spain .102,437 134 316,712 - SriLanka . .. 34,546 0.45 3,996 Sudan 13,884 0.18 1,288 - Swaziland 11,073 014 407 - Syrian ArabRepublic .. 7,651 0.10 1,202 - Tanzania. 16.021 0.21 2.110 - Thailand ...... 34,546 045 4,157 Togo .. .. 17,143 0.22 1.023 Tonga. . 11,380 015 94 -

Trinidad andTobago 770 0.01 1,629 - Tunisia ... 2,793 004 1.893 Turkey . .... 50,917 067 37.922 - Uganda . 16,021 0.21 2,106 - Vanuatu .. 9,263 0.12 240 -

Viet Nam...... 8,889 012 1,893 - Western Samoa. .12,999 017 117 - Yemen,Republic of. 20,458 027 2,112 - Yugoslavia .... 50,815 067 25,261 - Zaire . ,12,164 0.16 3,785 -

Zambia ... 24,909 0 33 3,393 - Zimbabwe... .1,324 0.02 4,970 - Subtotal . .. 3,026,175 39 62 2,916,490 - Tota-June 30 1991* 7638,912 100 00 $68,860,905 $597 982

Total-tune 30, 1990.6,905,454 $55,651,130 $601,771

Totalmay diffen from sumof individual figures shown because of rounding. a SeeNotes to Financial Statements-Note Efor an explanation of thetwo categories of membership. b AtJune 30,1991, Special Fundcontributions of $323,012,000 l$285.865,000-June 30,1990) areshownl under IDAin theStatements ofDevelopment Resources (see Notes to Financial Statements-Note D),since thedevelopment credits thatwere funded usinlgthese resources arerepayable to IDA. See Notes to Financial Statements. 216 IDA, Special Fund, and Debt Reduction Facility Financiatl Statements Notes to Financial Statements

Summary of Significant Accounting tional Monetary Fund as the SDRwas valued in terms of USdollars and Related Policies immediately before the introduction of the basket method of valuing the SDR onJuly 1,1974, such value being equal to $120635 for one SDR(the 1974 Organization and Operations SDR),and also decided to apply the same standard ot value to amounts expressed in 1960 dollars in therelevant resolutions of the Board ot IDA: IDAwas established onSeptember 24, 1960.to promote economic Governors development, increase productivity, and raise thestandard ot living of its Thesubscriptions and contributions provided through the third replenish- developing country members. Following a decision of the Executive ment areexpressed onthe basis of the 1974 SDR.Prior to the decision of Directors to terminate theSpecial Facility for Sub-Saharan Africa as at the Executive Directors, IDAhad valued these subscriptions and contribu- June 30, 1990, all assets and liabilities of the Special Facility for boos on thebasis ot theSOR at thecurrent marketvalue otthe SOR Sub-Saharan Africa havebeen transferred to IDA.IDA's financial position at June 30,1990 was restated accordingly Thesubscriptions and contributions provided under the fourth replenish- ment and thereatter areexpressed inmembers' currencies or SDRsand are Special Fund: OnOctober 26,1982, IDAestablished theSpecial Fund, payable in members'currencies Beginning July 1,1986, subscriptions and constituted by funds tobe contributed by members of IDAand administered contributions madeavailable br disbursement incash to IDAare translated by IDA,to supplement the regular resources available for lending by IDA. atmarket rates oa exchalge onthe datesthey weremade available Prior to Thearrangements governing the Special Fund maybe amended or that date,subscriptions and contributions which had beendisbursed or terminated by IDA's Executive Directors sublect to the agreement of a converted into other currencies weretranslated at market ratesof exchange qualified majority of the contributors to theSpecal Fund Theresources ot on dates o1disbursement or conversion. Subscriptions and contributions the Special Fund arekept separatefrom theresources of IDA not yet available for disbursements are translated at market ratesof Debt Reduction Facility: DnSeptember 28,1989, IDAestablished the exchange atthe end of the accounting period DebtReduction Facility for IDA-Only Countries (the DebtReduction Speciat Fund: Beginning April 1, 1989, subscriptions andcontributions -o,, , constituted by contributions ot theIBRD to facilitate commercial received but not yet disbursed, aswell as subscriptions and contributions debt reduction for IDA-only countries TheDebt Reduction Facility is disbursed orconvered into other currencies, aretranslated at marketrates administered by IDAThe resources of theDebt Reduction Facility arekept of exchange onthe dates they wern made available fr disbursement incash separatefrom the resources of IDA to the Special FundPrior to thatdate, subscriptions and contributions which had beendisbursed or converted into other currencies weretranslated Translation of Currencies at market ratesof exchange on dates of disbursement or conversion. Subscriptions and contributions receivable aretranslated at market ratesot IDA's principal financial statements areexpressed in terms of USdollars exhneateedofhecouigpro. solely for thepurpose of summarizing IDA's iflancial position and the exchange at theend at theaccountng perod. results of its operations for the convenience of its members and other interested parties. Development Credits IDA: IDAis aninternational organization which conducts its operations in All development credits are madeto membergovernments or to the the currencies of all of its members and Switzerland Assets and liabilities government ota tedritory ofa member (except for development credits which aretranslated at market ratesof exchange at theend of theaccounting havebeen made to regional development banksfor the benefit of members period. Subscriptions and contributions aretranslated in the manner or territories of members of IDA)It is IDA's policy to place in nonaccrual described below. Translation adjustments relating to the revaluation of status all development credits madeto a member government or to the development credits denominated in Special Drawing Rights (SDRs)are government of a territory of a member if principal or charges with respect charged orcredited to Cumulative Translation Adjustment onlDevelopment to anysuch credit areoverdue by morethanl six months, unless IDA Credits. Other translation adiustments are charged or credited to the management determines thatthe overdue amount will be collected in the Accumulated Surplus, immediate future Onthe date a member is placed in nonaccrual status, Special Fund: Assets of theSpecial Fund aretranslated at market rates interest and other charges that had beenaccrued onloans outstanding tothe of exchange at the endof the period. Contributions aretranslated in the member which remained unpaid arededucted from the income of the current manner described below Income is generally translated at market ratesof period Inaddition. it loans by theIBRD to a member government areplaced exchange on dates of recognition ot income in nonaccrual status all credits to that member government will also be placed in nonaccrual status by IDACharges on nonaccruing credits are Debt Reduction Facility: Theresources andgrants of the Debt included in income only to the extent that payments have actually been Reduction Facility are denominated in USdollars. received by IDA Valuation of Subscriptions and Contributions IDAhas not suffered any losses ondevelopment credit receivables and has established no provision for credit losses because no losses areanticipated IDA: Thesubscriptions andcontributions provided through thethird IDA: Therepayment r,.',' , i credits funded from replenishment areexpressed in terms of "US dollars of theweight and resources through thefthh replenishmaentareexpressed inth development fineness in effect on January 1, 1960" (1960 dollars) Following the credit agreementsinterms of 1960 dollars OnJane 30, 1987, theExecutive abolition of gold as a common denominator of themonetary system and the Directors decided to value those credits at the rateot $120635 per1960 repealof the provision of the USlaw defining the par value of the USdollar dollar ona permanent basis Development credits funded from resources in terms of gold, the pre-existing basis for translating 1960 dollars into provided under the sixth replenishment and thereaher aredenominated in current dollars or any other currency disappeared. OnJune 30,1987. the SoPs: theprincipal amounts disbursed under such credits areto berepaid Executive Directors of IDAdecided, with effect onthat date and until such in currency amounts currently equivalent to theSOPs disbursed. time as the relevant provisions of the Articles of Agreement areamended, to interpret the words "US dollars of the weight andfineness in effect on Special Fund: Special Fund credits aredenominated in SORs.The January 1, 1960" inArticle II, Section 2(b) of theArticles of Agreement of principal amounts disbursed under such credits areto berepaid incurrency IDA to mean the Special Drawing Right (SDR)introduced by the Interna- amounts currently equivalent to the SDRsdisbursed. Notes to Financial Statements 217

Special Fund credits aremade on the sameterms as regular IDAcredits to credit loss on futures contracts due to potential nonperformance ot except that the proceeds of Special Fund credits maybe used only to finance counterparties snce changes inthe market value of futures contracts on any expenditures for goods or services trom (a) Part11 members ofIDA, (b) Part given business dayare settled incash on the following business day I members contributing to the Special Fund, and(c) PartI members contributing to theregular resources of IDAthrough IDA's FY84Account Coveredforwards areagreements in which cash in one currency is who havenotitied IDA that such contributions areto be treated inthe same converted into adifferent currency and, simultaneously, a forward exchange manner as contributions to theSpecial Fund for purposes of any future agreement is executed with either thesame or a different counterparty adjustment of the voting rights of the members of IDA. providing for afuture exchange of the two currencies in order to recover the currency converted. At June 30, 1991.IDA had gross receivables from covered forward agreements of $23,546,000 and gross payables from Debt Reduction Facility Grants covered torward agreements of $23,187,000 IDA's exposure to credit loss All Debt Reduction Facility grants aremade to member governments for the inthe event of nonperformance by counterparies was $359,000 Therewere purpose of assisting in clearly identified debt reduction operations. All no outstanding covered forward agreements at June 30, 1990. IDA-only countries (countries below the operationaothreshold for which no IBRDlending is projected over the next fewyears) with aheavy debt burden areeligible to receive grants. Debt Reduction Facility grants aredecided on Note B-Cash and Investments Not Immediately a case-by-case basis, taking into account theexistence of a medium-term Available for Disbursement adjustment program anda strategy fordebt - m x'v.- .. . 1" Debt Reduction Facility resources areavailable until September 28. 1992, Under the Articles of Agreement and the arrangements governing replen- unless this period is extended Any funds not disbursed within that period ishments. IDAmust take appropriate steps toensure that, over areasonable will revert to IDAand beavailable for use in its generaloperations. period of time, the resources provided by donors for lending by IDAare usedon an approximately pro ratabasis Donors sometimes contribute Investments resources substantially aheadof their pro ratashare. Unless otherwise agreed.IDA does not disburse these funds aheadof donors' pro ratashares In prior years, IDArecorded its investment securities at cost or amortized Cashand Investments Not Immediately Available for Disbursement repre- cost. As of July 1, 1990, IDAchanged its policy and begancarrying its sents the difference between the amount contributed and the amount investment securities at market value, since this wasconsidered a more available for disbursements on a pro ratabasis appropriate reflection of the value of theportfolio. Thecumulative effect of this change was not material to the financial statements Both realized and unrealized gains and losses areincluded in income from investments Note C-Debt Reduction Facility Grants

Reclassifications During thefiscal year ended June 30. 1991,the Executive Directors have approved debt reduction grants of $10,000,000 for Niger and$10,000,000 Certain reclassifications of theprior year's information havebeen made to forMozambique Asof June 30, 1991,$8,422,000 of these amounts has conform with thecurrent year's presentation beendisbursed tor Niger Theremainder is reflected as Grants Payable

Note A-Investments Following is a summary of thecurrency composition of theinvestment Note D-Development Credits portfolio at June 30,1991: Special Fund development credits disbursed and outstanding of $354.113,000 at June 30, 1991($320,252,000-une 30,1990) arein- June 30, 1991 cluded in theStatements ot Development Resources of IDAsince principal repayments onthese credits shall become pan of the general resources of Currency IDA Speca Fund IDA.unless otherwise provided ina decision ofIDA's Executive Directors to Australian dollars ...... $ 323441 000 $ - terminate administration of theSpecial Fund byIDA. Canadian dollars . . 9887 000 45 787 000 AtJune 30. 1991, principal instaflments of$177,000 andinterest andother Danish kroner .. 10,819 000 2030.000 charges of$152,000 payable to IDAon development credits other thanthose Deutsche mark . . . .. 326,805 000 _ referredto in the following paragraph wereoverdue by more thanthree French francs .116 909 000 66 402,000 months. Theaggregate principal amount outstanding on these credits was Italian lire. . 125610.000 53 042 000 $40,450,000 Theaggregate principal amount outstanding onall credits to Netherlands guilders . .. 117,220.000 - any borrowers, other than those referredto in the following paragraph. with Pounds sterling. . 1,03533 000 2 any onecredit overdue by more than three months was $73,250,000. Swedish kronor. ... 41 455 000 24 502 000 Other currencies. 2025.000 68000 AtJune 30,1991, the development credits madetoor guaranteed by certain Total ...... $2_104_704_000$191,831,000 member countries with an aggregate principal balance outstanding of $282,110,000 ($539,416,000-June30 1990), of which $7,556,000 ($7,435,000-June 30, 1990) was overdue. werein nonaccrual status. As of such date, overdue charges in respect of these credits totaled As part of its overall portfolio management strategy,IDA enters into futures $10,652,000 ($16,606,000-June 30, 1990).If these credits had not been contracts, which aresubject to some off-balance-sheet risk. Futures are innonaccrual status, income from credits for the fiscal year ended June 30, contracts for delayed delivery of securities or money market instruments in 1991would havebeen higher by $1,515,000 ($5,747,000-June 30, 1990), which the seller agrees to make delivery at a specified future dateof a which is net of charges received from such members during the fiscal year specified instrument, ata specitied price or yield. AtJune 30, 1991,the total A summary of borrowers in nonaccrual status follows: contract value of futures contracts was $148,775,000. Therewere no outstanding futures contracts at June 30, 1990. IDAhas minimal exposure (contintued) 218 IDA, Special Fund, and Debt Reduction Facility Financial Statements

Notes to Financial Statements (continu)ed

30 1991 the replenishment, including supplementary contributions provided by Jne, 1991 certain members and resources from Switzerland, is equivalent to Principal SDR1l,679,000.000 (at the exchange ratesdetermined pursuant to a and tormula agreedby IDA and contributing donors) equivalent to Principal charges Nonaccrual $15,388,000,000 at June 30, 1991exchange rates.The ninth replenishment Borrower outstanding overdue since becameeffective on January 23.1991

Liberia . $100,714,000 $ 5117,000 April 1988 Nicaragua 59.818,000 5,634,000 April 1988 Subscriptions and Contributions Not Yet Due: AtJune 30,1991, Sierra Leone.g.. 77,670,000 4.434,000 April 1988 unrestricted subscriptions and contributions not yetdue will become due as Syrian ArabRepublic . 43,908,000 3,023,000 April 1988 follows: Total . . . . $282,110,000 $18,208,000 Fiscal year June30 1991 1992 $4450.952,000 Intiscal year1991, Zambia paid off ail ofits arrears and therefore cameout 1993 ' . .. .' 4356.820,000 of nonaccrual status. As a result, income from credits for the year was 1994 .. . 5.117.000 increased by $7,965,000 tor income that would have beenaccrued in 1995 . . 16338000 previous fiscal years Undetermined 19553000

OnJuly 2, 1991.development credits madeto or guaranteed bySomalia Total . ... $8848 780.000 wereplaced innonaccrual status Theaggregate principal balance outstand- ing on thedevelopment credits madeto or guaranteed bySomalia was ContributionsutoethetSpecialrFund:a Membertcontributionsmtoethe $398,449,000, of which $920,000 wasoverdue. As of1June 30, 1991, Cnrbtost h pca ud ebrcnrbtost h overdue interest andother charges is respectof thesecredits totaled Special Fundtotaling $597,982,000 asof June 30,1991 are reflected as dbutnot yet received aso June 30, Member Subscriptions andContributions is theStatements of Development $1,491,0.a noemo$ rvountn 6,0wsla xccruded frmicm rmlasfr Resources.Asof1June 30, 1991,the Special Fuindtotal is reflected net o1 1991,sca yamountingto$213,00, n wa exldd9 rminoefrmlan o $323,012,000 ($285,865.000-June 30,19901, which represents develop- theJune fiscal30, 1991. year ended ~ment credit disbursements that arerepayable to andincluded in Member Note E-MemberNote E-Member Subscriptions and ~ ~~~SubscriptionsandContributions of IDA. Contributions Note F-Contribution by Switzerland Restricted Assets and Subscriptions: Forthe purposes of its IDAhas received cumulative contributions in the amount of Swiss francs financial resources, themembership of IDAis divided into two categories: 181,480,000 (historical US-dollar equivalent of $51,173,000) from the (1)Part I members, which make payments of subscriptions andcontribu- Swiss Confederation, which is not a member ot IDA.The agreements tions provided to IDAin convertible currencies which may be freely used or between theSwiss Contederation and IDAprovide for converting these grant exchanged by IDAin its operations: (2) PartII members, which make contributions into subscriptions or contributions if Switzerland should payments of 10 percent of their initial subscriptions in freely convertible become a member of IDA currencies, and theremaining 90 percent of their initial subscriptions and all additional subscriptions and contributions in their own currencies or in Note G-Transters from the International Bank freely convertible currencies IDA's Articles of Agreement andsubsequent ior Reconstruction and Development (IBRD replenishment agreements provide that the currency of any PartIf member paid in by it may not be used by IDAfor projects financed by tDAand tDA: The IBRDhas authorized transfers by wayot grants to IDAtotaling located outside the territories of themember eKceptby agreement between $3,045,056,000 trom net income of the IBRDtor the fiscal years ended the member and IDA. June 30, 1964 through June 30, 1987, and June 30, 1989 and 1990. Ofthe Maintenance of Value: Article IV. Sections 2(a) and (b) of IDA's total amount, $79,905,000 hasbeen disbursed for grants for agricultural Articles of Agreement provides for maintenance-of-value payments on research,the control of onchocerciasis, and other developmental activities. account of thelocal currency portion of theinitial subscription whenever the O1 the balance of $2,965,151,000 available for generalpurposes, par value of the member's currency or itsforeign exchange value has, inthe $2,186,670,000 hasbeen received and $778.481,000 is reflected as a opinion of IDA.depreciated or appreciated to a significant extent within the receivable from the IBRD,as of June 30,1991. members' territories, so long as and tothe extent that such currency shall Debt Reduction Facility: TheIBRD authorized a transfer to the Debt not havebeen initially disbursed or exchanged for the currency of another Reduction Facility ot $100,000,000 from netincome tor the fiscal year ended member Theprovisions of Article IV,Sections 2(a) and (b) haveby June 30, 1989. Of this amount, $8,422.000 has beenreceived and agreement been extended to cover additional subscriptions and contribu- $91,578,000 isreflected as a receivable from the IBRD,as of June 30.1991. tions of IDAthrough the third replenishment but arenot applicable to those of the fourth and subsequent replenishments. Note H-Income and Expenses The Executive Directors decided on June 30, 1987 that sehtlementsot maintenance-of-value obligations, which would result from the resolution of IDA: IDA pays a management feeto the IBRDrepresenting its shareof the the valuation issue on thebasis of the 1974 SDR,would bedeferred until administrative expenses incurred by the IBRD the Executive Directors decide to resume such settlements. Special Fund: The service and commitment charges payable by Ninth Replenishment: OnMay 8,1990, theBoard of Governors of IDA borrowers under Special Fund development credits arepaid directly to IDA adopted a resolution authorizing the ninth replenishment ot IDAresources to compensate it for services as administrator of the Special Fund.Income Theninth replenishment provides IDA with resources to fund credits from investments of the Special Fund becomes part of the resources ofthe committed during theperiod July 1, 1990 toJune 30,1993. Theamount of Special Fund Report of Independent Accountants 219 Report of Independent Accountants

Price Waterhouse The Hague Tokyo (International Firm) London Washington New York

Price Waterhouse 0

July 29. 1991

President and Board of Governors International Development Association, the Special Fund Administered by the International Development Association. and the Debt Reduction Facility for IDA-Only Countries Administered by the International Development Association

In our opinion, the financial statements appearing on pages 208 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, the Special Fund Administered by the International Development Association, and the Debt Reduction Facility for IDA-Only Countries Administered by the International Development Association at June 30, 1991 and 1990, and the changes in their accumulated surplus and grants and their cash flows for the years then ended in conformity with generally accepted accounting principles in the United States and with 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, including International Auditing Guidelines, 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.

R w_W1C_

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 230 222 IBRD/IDA Appendices

Governors and Alternates Appendix 1 of the World Bank

June 30, 1991 Member Governor Alternate Afghanistan ...... Mohammad Hakim .Mohammad Ehsan Algeria ...... Ghazi Hidouci .Kacim Brachemi Angola ...... Fernando van Dunem .Fernando A.G. Teixeira Antigua and Barbudna ...... John E.St. Luce .Ludolph Brown Argentina...... D omingoCavallo.Roque Fernandez Australia ...... John Kern .Bob Dun Austria ...... Ferdinand Lacina.d.L acin Othmar Haushofer Bahamas, Thea ...... Paul L.Adderley .Warren Rolle Bahraina ...... i...... Ibrahim Abdul Karim ...... Isa Abdulla Borshaid Bangladesh ...... M. Saifur Rahman.Enam Ahmed Chaudhury Barbadosa ...... L.Erskine Sandiford ...... Winston A. Cox Belgium ...... Philippe Maystadt .Alfons Verplaetse Belize ...... Said W.Musa .Joseph D.Waight Benin ...... Paul Dossou.Fatiou Adekounte Bhutan ...... Dawa Tsering .Karma Dorjee Bolivia ...... Enrique Garcia .Raul Boada Botswana ...... F. FestusG.Mogae .Baledzi Gaolathe Brazil ...... Marcilio Marques Moreira .Francisco Gros Bulgariaa ...... Ivan Kostov ...... Atanas Paparisov Burkina Faso ...... Frederic A. Korsaga .Henri Bruno Bessin Burundi ...... Gerard Niyibigira .Salvator Nkeshimana Cameroon ...... Tchouta Moussa .Esther Dang Canada ...... Donald Mazankowski .Marcel Masse Cape Verde ...... Jose Tomas Veiga .Antonio Hilario Da Cruz Central African Republic ...... Thierry Bingaba .Gregoire Zowaye Chad ...... Hassan Fadoul K ittir Gail Gatta Ngothe Chile ...... Alejandro Foxley .Jose Pablo Arellano China ...... Wang Bngqian .Chi Haibin Colombia ...... Rudolf Homes.Francisco J. Ortega Comoros ...... Mohamed Ali .Said Mohamed Mshangama Congo ...... Pierre Moussa. Dieudonne Diabatantou Costa Rica ...... ThelmoVargas Madrgal .Madriga Jorge Guardia Quir6s Cote d'lvoire ...... Kablan D. Duncan .N'Golo Coulibaly Cyprus ...... George Syrimis .Michael Erotokritos Czechoslovakia ...... ac...... VaclavKlaus .Josef Tosovsky Denmark ...... Uffe Ellemann-Jensen. Ole Loensmann Poulsen Djibouti ...... Moussa Bouraleh Robleh. Ibrahim Kassim Chehem Dominica ...... Mary Eugenia Charles .Gilbert Williams Dominican Republic ...... Luis Toral Crdova .Manuel E.Gomez Pieterz Ecuador ...... Pablo Better .Mauricio Valencia Egypt ...... Kamal El-Ganzoury .Maurice Makram-Allah ElSalvador ...... Mirna Lievano de Marques .Jos Roberto Orellana Milla Equatorial Guinea ...... Marcelino Nguema Onguene .Miguel Edjang Angue Ethiopia ...... Bekele Tairat .Seyoum Alemayehu Fiji ...... J. N. Kamikamica .Rigamoto Taito Finland ...... liro Viinanen .Tomi Kankaanniemi France ...... Jacques de Larosie .Jean-Claudere Trichet Gabon ...... Marcel Doupamby-Matoka .Richard Onouviet Gambia, The ...... Saihou S. Sabally .Alieu M. Ngum Germany ...... Carl-Dieter Spranger .Horst Koehler Ghana ...... Kwesi Botchwey .Kwesi Bekoe Amissah-Arthur Greece ...... Et.. Christodouloufthimios .George Vlachos Grenada ...... George. Ignatius Brizan .Lauriston F.Wilson, Jr. Appendix 1 223

Member Governor Alternate Guatemala ...... Richard Aitkenhead Castillo ...... Juan Luis Miron Aguilar Guinea ...... Ibrahima Sylia ...... Kerfalla Yansane Guinea-Bissau ...... Pedro A. Godinho Gomes ...... Jose Lima Barber Guyana ...... Carl Greenidge ...... Winston Murray Haiti ...... Marie Michele Rey ...... Renaud Bernardin Honduras ...... Benjamin Villanueva ...... Ricardo Maduro Joest Hungary ...... Mihaly Kupa ...... Imre Tarafas Iceland ...... Jon Sigurdsson ...... Fridrik Sophusson India ...... Manmohan Singh ...... S. P. Shukla Indonesia ...... J. B. Sumarlin ...... Hasudungan Tampubolon Iran, Islamic Republic of ...... Mohsen Noorbakhsh ...... Mehdi Navab Iraq ...... Subhi Frankool ...... Hashim Ali Obaid Ireland ...... Albert Reynolds ...... Sean P. Cromien Israel ...... Michael Bruno ...... Shalom Singer Italy ...... Carlo Azeglio Ciampi ...... Mario Draghi Jamaicaa ...... P. J. Patterson ...... Omar Davies Japan ...... Ryutaro Hashimoto ...... Yasushi Mieno Jordan ...... Khalid Amin Abdullah ...... Ibrahim Badran Kampuchea, Democratic ...... (vacant) ...... (vacant) Kenya ...... George Saitoti ...... Charles S. Mbindyo Kiribati ...... Teatao Teannaki ...... Baraniko Baaro Korea, Republic of ...... Yong-Man Rhee ...... Kun Kim Kuwait ...... Nasser Abdullah Al-Roudhan ...... Bader Meshari Al-Humaidhi Lao People's Democratic Republic ...... Sisavath Sisane ...... Soulingong Nhouyvanisvong Lebanon ...... Ali El-Khalil ...... Habib Abu-Sakr Lesotho ...... A. L. Thoahlane ...... T. N. Thokoa Liberia ...... Elijah E. Taylor ...... Mary B Dennis Libya ...... Mohamed El Madni Al-Bukhari ...... Bashir Ali Khallat Luxembourg ...... Jean-Claude Juncker ...... Yves Mersch Madagascar ...... Jean Robiarivony ...... Nirina Andriamanerasoa Malawi ...... L. Chimango ...... Graham Chipande Malaysia ...... Anwar Ibrahim ...... Zain Azraai Maldives ...... Fathulla Jameel ...... (vacant) Mali ...... Bakary Mariko ...... Souleymane Dembele Maltaa ...... George Bonello Du Puis ...... Edgar Wadge Mauritania ...... Mohamedou Ould Michel ...... M'Rabih Rabou Ould Cheikh Bounena Mauritius ...... Beergoonath Ghurburrun ...... Dharam Dev Manraj Mexico ...... Pedro Aspe Armella ...... Jose Angel Gurria Mongolia ...... Gochoogiin Khuderchuluun ...... Dairain Davaasambuu Morocco ...... Mohamed Berrada ...... Mohammed Dairi Mozambique ...... Abdul Magid Osman ...... Eneas da Conceicao Comiche Myanmar ...... D. C. Abel ...... Min Aung Namibiaa ...... Zedekia Ngavirue ...... Godfrey Gaoseb Nepal ...... Devendra Raj Panday ...... Sashi Narayan Shah Netherlands ...... W. Kok ...... J. P. Pronk New Zealand ...... Graham C. Scott ...... Chris N. Pinfield Nicaragua ...... Emilio Pereira ...... Silvio DeFranco Niger ...... Almoustapha Soumaila ...... Nassirou Sabo Nigeria ...... Abubakar Alhaji ...... Ahmadu Abubakar Norway ...... Sigbjoern Johnsen ...... Grete Faremo Oman ...... Gais Abdul-Munim Al-Zawawi ...... Mohammed Bin Musa Al Youset Pakistan ...... Sartal Aziz ...... R. A. Akhund (continued) 224 IBRD/IDA Appendices

Governors and Alternates Appendix 1 of the World Bank (continued)

June 30, 1991 Member Governor Alternate Panama ...... Guillermo Ford B.Luis H. Moreno, Jr. Papua New Guinea ...... Paul Por .Morea Vele Paraguay ...... Juan J. Diaz Perez ...... (vacant) Peru ...... Carlos Bolona Behr .Alfredo Jalilie Awapara Philippines ...... Jesus P.Estanislao .Jose Cuisia, Jr. Poland...... Grzegorz Wojtowicz. Wladyslaw Golebiowski Portugala ...... Luis Miguel Beleza .Carlos Manuel Tavares da Silva Qatara ...... Abdul Aziz Khalita Al-Thani .Abdullah Khalid Al-Atiyyah Romania' ...... Theodor Dumitru Stolojan .Marian Crisan Rwanda ...... Benoit Ntigulirwa .Felicien Ntahondi St. Kitts and Nevis ...... Kennedy A.Simmonds .William V. Herbert St. Lucia ...... John G.M. Compton .Bernard Lacorbiniere St. Vincent and the Grenadines ...... James F.Mitchell .Dwight Venner Sao Tome and Prin ...... cipe N obertoCosta Ale .Manuel gre de Nazareh Mendes Saudi Arabia ...... Mohammad Abalkhail .Hamad Al-Sayari Senegal ...... Famara Ibrahima Sana .Awa Thiongane Seychellesa ...... Danielle de St. Jorre. Bertrand Rassool Sierra Leone ...... Thomas. Taylor Morgan .Y. T.Sesay Singaporea...... Richard Hu Tsu Tau .Ngiam Tong Dow Solomon Islands ...... Christopher C. Abe .Snyder Rini Somalia ...... Abdurahman. Jama Barre .Said Ahmed Yusuf South Africa ...... C.L. Stals .Simon Streicher Brand Spain ...... Carlos Solchaga .Mariano Rubio Jimenez Sri Lanka ...... D.B. Wijetunga .R. Paskaralingam Sudan ...... Abdul Rahim Mahmood Hamdi Mohamed Khair ElZubair Surinamea ...... Jules Wijdenbosch .R. W.Braam Swaziland ... :...... Elliot Bhembe ...... Noreen N. Maphalala Sweden ...... Allan Larsson .Lena Hjelm-Wallen Syrian Arab Republic ...... Mohammed Khaled Mahayni .Adnan Al-Saty Tanzania ...... K.A. Malima .Simon Mbilinyi Thailand ...... Suthee Singhasane.Panas Simasathien Togo...... BarryMoussa Barque.Kwassi Klutse Tonga ...... James Cecil Cocker .Selwyn Percy Jones Trinidad and Tobago .... . Selby Wilson .William G.Demas Tunisia ...... Mustapha Kamel Nabli .Abdellatit Saddem Turkey...... Namik. Kemal Kilic .Mahfi Egilmez Uganda ...... Joshua Mayania Nkangi .James Kahoza United Arab Emirates ...... Hamdan bin Rashid Al Maktoum .Ahmed Humaid Al-Tayer United Kingdom ...... Robin Leigh-Pemberton .Timothy Lankester United States ...... Nicholas F.Brady .Richard T.McCormack Uruguaya ...... Enrique Braga .Conrado Hughes Vanuatu ...... S. J.Regenvanu .George Pakoa Venezuelaa ...... Miguel Rodriguez .Carlis Stark Rausseo Viet Nam ...... Cao Si Kiem .Le Van Chau Western Samoa ...... Tuilaepa S. t: .l. .I- . EpaTuioti Yemen, Republic ot .... Farag Bin Ghanem .(vacant) Yugoslavia ...... Branimir Zekan .Slavoltub Stanic Zaire ...... Ilunga llunkamba .Mbonga Magalu Engwanda Zambia ...... M. N. Masheke .Leonard Nkhata Zimbabwe ...... B.T. G.Chidzero .K. J. Moyana a. Member of theIBRD only Appendix 2 225

Executive Directors and Alternates Appendix 2 of the World Bank and Their Voting Power June 30, 1991 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 ...... 206,507 17.59 1,269,436 16.71 Masaki Shiratori ...... (vacant)a ...... Japan ...... 94,020 8.01 746,192 9.82 Gerhard BoehmerP ...... Harald Rehm ...... Germany ...... 72,649 6.19 525,122 6.91 Jean-Pierre Landau ...... Philippe de Fontaine Vive .. France ...... 69,647 5.93 299,850 3.95 David Peretz ...... Robert Graham-Harrison ... United Kingdom ...... 69.647 5.93 420,870 5.54 Elected Jacques de Groote ...... Walter Rill ...... Austria, Belgium, Czechoslovakia, (Belgium) (Austria) Hungary, Luxembourg, Turkey . 59,685 5.08 303,987 4.00 Rosario Bonavoglia ...... Fernando S. Carneiro .. . Greece, Italy, Malta,* Poland, (Italy) (Portugal) Portugal* .59,350 5.06 407,040 5.36 Frank Potter .... Clarence Ellis ...... Antigua and Barbuda,* The (Canada) (Guyana) Bahamas,* Barbados,* Belize, Canada, Dominica, Grenada, Guyana, Ireland, Jamaica,* St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines .. 51,854 4.42 329,035 4.33 Eveline Hertkens ...... Boris Skapin ..... Bulgaria,* Cyprus, Israel, (Netherlands) (Yugoslavia) Netherlands, Romania,* Yugoslavia .50,048 4.26 229,065 3.02 Moises Naim ... .. Silvia Charpentier 0 ...... Costa Rica, ElSalvador, (Venezuela) (Costa Rica) Guatemala, Honduras, Mexico, Nicaragua, Panama, Spain, Venezuela* .46,866 3.99 221,235 2.91 J.S. Baijal .... M. A.Syed .... Bangladesh. Bhutan, India, (India) (Bangladesh) Sri Lanka .45,384 3.87 326,693 4.30 Jonas H.Haralzd ...... Jorunn Maehlum ...... Denmark, Finland, Iceland, (Iceland) (Norway) Norway, Sweden .44,772 3.81 370,510 4.88 John H.Cosgrove ...... A. John Wilson ...... Australia, Kiribati, Korea (Australia) (New Zealand) (Republic of), New Zealand, Papua New Guinea, Solomon Islands, Vanuatu, Western Samoa ...... 39,580 3.37 200,099 2.63 Wang Liansheng ...... Jin Liqun .China ...... 35,221 3.00 154,320 2.03 (China) (China) Mohamed Benhocine ...... Salem Mohamed Omeish... Afghanistan. Algeria, Ghana, (Algeria) (Libya) Iran (Islamic Republic of), Libya, Morocco, Tunisia ...... 32,741 2.79 115,741 1.52 Vibul Aunsnunta ...... Aung Pe... Fiji, Indonesia. Lao People's (Thailand) (Myanmar) Democratic Republic, Malaysia, Myanmar, Nepal, Singapore,* Thailand, Tonga, Viet Nam ..... 31,804 2.71 228,329 3,01 Ernest Leung... .. Paulo C. Ximenes-Ferreira. Brazil, Colombia, Dominican (Philippines) (Brazil) Republic, Ecuador, Haiti, Philippines, Suriname,* Trinidad and Tobago ...... 31,428 2.68 230,036 3.03 Fawzi Hamad Al-Sultan ...... Mohamed W.Hosny ...... Bahrain, Egypt (Arab Republic (Kuwait) (Arab Republic of Egypt) of), Jordan, Kuwait, Lebanon. Maldives, Oman, Pakistan, Qatar,* Syrian Arab Republic, United Arab Emirates, Yemen (Republic of) ...... 30,767 2.62 269,900 3.55

(continued) 226 IBRD/IDA Appendices

Executive Directors and Alternates Appendix 2 of the World Bank and Their Voting Power [confinued) June 30, 1991 IBRD IDA Total %of Total %of Executive director Alternate Casting votes of votes total votes total J. Ayo Langley ...... 0. K. Matambo ...... Angola, Botswana, Burundi, (The Gambia) (Botswana) Ethiopia, The Gambia, Guinea, Kenya, Lesotho, Liberia, Malawi, Mozambique, Namibia,* Nigeria, Seychelles,* Sierra Leone, Sudan, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe ...... 30,083 2.56 308,951 4.07 Ibrahim A. Al-Assaf ...... Ahmed M. Al-Ghannam ... Saudi Arabia ...... 25,390 2.16 254,722 3.35 (Saudi Arabia) (Saudi Arabia) Felix Alberfto Camarasa ...... Nicolas Flano ...... Argentina, Bolivia, Chile, (Argentina) (Chile) Paraguay, Peru. Uruguay* ..... 24,745 2.11 143,701 1.89 Jean-Pierre Le Bouder ...... Ali Bourhane...... Benin, Burkina Faso, Cameroon, (Central African (Comoros) Cape Verde, Central African Republic) Republic, Chad, Comoros, Congo (People's Republic of the), Cdte dilvoire, Djibouti, Equatorial Guinea, Gabon, Guinea-Bissau, Madagascar, Mali, Mauritania, Mauritius, Niger, Rwanda, Sao Tome and Principe, Senegal, Somalia. Togo, Zaire ...... 21.843 1.86 241,707 3.18

In addition to the executive directors and alternates shown in the foregoing list, the following also served after October 31, 1990: Executive director End of period of service Alternate director End of period of service Cesare Caranza...... February 11, 1991 Abdulaziz Al-Sehail ...... December 21, 1990 (Italy) (Saudi Arabia) Chang-Yuel Lim ...... May 31, 1991 Robert G. Carling ...... February 28, 1991 (Republic of Korea) (Australia) Bernd Esdar ...... January31, 1991 (Germany) M. Mustatizur Rahman ...... April 30, 1991 f~ 'tZ' .- 1 Yukio Yoshimura ...... June 7,1991 (Japan)

NOTE:Iraq 13,058 votes in the IBRDand 9,407 votes in IDA)Democratic Kampuchea (464 votes inthe IBRDand 7,626 votes in )DA),Mongolia (716 votes inthe IBRDand 546 votes inIDA), and South Africa (13,712 votes inthe IBRD and 24,592 votes in IDA)did not participate inthe 1990 regular election of executive directors * Member of theIBRD only a.Kiyoshi Kodera (Japan)was appointed eftective July a, 1991. b. Tobe succeeded by Fritz Fischer (Germany)asof July 1,1991. c.To be succeeded by Gabriel Castellanos (Guatemala)asof Ju y 1, 1991 d. Tobe succeeded by EinarMagnussen (Norway) asof August 1, 1991 Appendix 3 227

Officers and Deparlment Directors Appendix 3 of the World Bank

June 30, 1991

President ...... Barber B. Conable* Senior Vice President, Operations ...... Moeen A. Qureshi** Senior Vice President, Finance ...... Ernest Stern** Senior Vice President, Policy, Research, and External Affairs ...... Wiltried P. Thalwitz** Finance Vice President and Controller ...... Stephen D. Eccles Vice President and Treasurer ...... Donald Roth Vice President, Financial Policy and Risk Management ...... 0...... D. Joseph Wood Operations Vice President, Latin America and the Caribbean Regional Office ...... S. Shahid Husain Vice President, Africa Regional Office ...... Edward V. K. Jaycox Vice President, Asia Regional Office ...... Attila Karaosmanoglu Vice President, Cofinancing and Financial Advisory Services ...... Koji Kashiwaya Vice President, Europe, Middle East, and North Africa Regional Oftice ...... Willi A. Wapenhans Policy, Research, and External Affairs Vice President, Development Economics and Chief Economist ...... Lawrence H. Summers Vice President, Sector Policy and Research ...... Visvanathan Rajagopalan Operations Evaluation Director-General ...... Yves Rovani Corporate Planning and Budgeting Vice President ...... Robert Picciotto Legal Vice President and General Counsel ...... Ibrahim F. I. Shihata** Secretary's Vice President and Secretary ...... Timothy T. Thahane** Personnel and Administration Vice President ...... Bilsel Alisbah Office of the President Director ...... Sven Sandstrom Finance Director, Financial Operations Department ...... Jessica P. Einhorn Director, Resource Mobilization Department ...... Basil G. Kavalsky Director, Tokyo Office ...... Nobuaki Kemmochi Deputy Treasurer and Director, Treasury Operations ...... Caio K. Koch-Weser Director, Cash Management Department ...... Walter Peyerl Director, Loan Department ...... V. S. Raghavan Director, Investment Department ...... Jean-Frangois Rischard Director, Accounting Department ...... Michael E. Ruddy Director, Risk Management and Financial Policy Department ...... Everardus J. Stoutjesdijk Operations Director, Operations Staff ...... David R. Bock Director, Economic Advisory Staff ...... Enzo R. Grilli Director, Cofinancing and Financial Advisory Services Department ...... John M. Niehuss Director, Central Operations Department ...... Hans Wyss Africa Regional Office Director, Country Department: Angola, Burundi, Comoros, Djibouti, Madagascar, Rwanda, Seychelles, Zaire ...... Francisco Aguirre-Sacasa Director, Country Department: Botswana, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe ...... Stephen M. Denning Director, Country Department: Benin, Cameroon, Central African Republic, the Congo, C6te d'lvoire, Equatorial Guinea, Gabon, Guinea, Togo ...... Michael J. Gillette

(continued) 228 IBRD/IDA Appendices

Officers and Department Directors Appendix 3 of the World Bank (continued)

June30, 1991 Director, Country Department: Ghana, Guinea-Bissau, Liberia, Nigeria, Sao Tome and Principe, Sierra Leone ...... Edwin R.Lim Director, Country Department: Ethiopia, Kenya, Mauritius, Somalia, Sudan, Uganda ...... Callisto E.Madavo Director, Country Department: Burkina Faso, Cape Verde, Chad, The Gambia, Mali, Mauritania, Niger, Senegal ...... Katherine Marshall Director, Technical Department ...... Ismail Serageldin Asia Regional Office Director, Country Department: Bangladesh, Bhutan, Nepal, Sri Lanka ...... Shinji Asanumaa Director, Country Department: China, Mongolia ...... Shahid Javed Burki Director, Country Department: Fiji, Indonesia, Kiribati, Maldives, Papua New Guinea, Solomon Islands, Tonga, Vanuatu, Western Samoa ...... Marianne Haug Director, Country Department: Democratic Kampuchea, Republic of Korea, Lao People's Democratic Republic, Malaysia, Myanmar, Philippines, Thailand, Viet Nam ...... Gautam S.Kaji Director, Country Department: India ...... Heinz Vergin Director, Technical Department ...... Daniel Ritchie Europe, Middle East, and North Africa Regional Office Director, Country Department: Bahrain, Egypt, Islamic Republic of Iran, Iraq, Jordan, Kuwait, Lebanon, Qatar, Oman, Saudi Arabia, Syria, United Arab Emirates, Republic of Yemen ...... Ram Kumar Chopra Director, Country Department: Algeria, Libya, Malta, Morocco, Portugal, Tunisia ...... Kemal Dervisb Director, Country Department: Bulgaria, Cyprus, Czechoslovakia, Hungary, Poland, Romania, Yugoslavia ...... Eugenio F.Laril Director, Country Department: Afghanistan, Pakistan, Turkey ...... Michael H. Wiehen Director, Technical Department ...... Harinder S.Kohli Latin America and the Caribbean Regional Office Director, Country Department: Antigua and Barbuda, the Bahamas, Barbados, Belize, Bolivia, Colombia, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago ...... Yoshiaki Abe Director, Country Department: Argentina, Chile, Ecuador, Paraguay, Uruguay ...... Pieter P.Boftelierd Director, Country Department: Brazil, Peru, Venezuela ...... Armeane M. Choksi Director, Country Department: Costa Rica, ElSalvador, Guatemala, Honduras, Mexico, Nicaragua, Panama ...... Rainer B.Steckhan Director, Technical Department ...... Edilberto L.Segura Policy, Research, and External Affairs Director, Geneva Office ...... Jean Baneth Director, Industry and Energy Department ...... Anthony A. Churchill Director, Environment Department ...... Mohamed T. El-Ashry Director, Publications ...... James K. Feather Director, Economic Development Institute ...... Amnon Golan Director, Population and Human Resources Department ...... Ann 0. Hamilton Director, Policy and Review Department ...... Paul Isenman Director, European Office ...... Olivier Lafourcade Director, Country Economics Department ...... Johannes F.Linn Director, Agriculture and Rural Development Department ...... Michel J. Petit Director, Infrastructure and Urban Development Department ...... Louis Y.Pouliquen Director, International Economics Department ...... D. C.Rao Director, External Affairs Department ...... Alexander Shakow Head, Research Advisory Staff ...... Gregory K.Ingram Executive Secretary, Consultative Group on International Agricultural Research ...... Alexander von der Osten-Sacken Operations Evaluation Director, Operations Evaluation Department ...... Hans-Eberhard Kopp Corporate Planning and Budgeting Auditor-General, Internal Auditing Department ...... Allan D. Legg Director, Planning and Budgeting Department ...... Richard B. Lynn Head, Organization Planning Staff ...... Ian A.Scott Appendix 3 229

Legal Associate General Counsel, Legal Department ...... Hugh N. Scott Assistant General Counsel, Legal Department ...... David M. Goldberg Assistant General Counsel, Legal Department ...... Eva L. Meigher Assistant General Counsel, Legal Department ...... Stephen A. Silard Personnel and Administration Director, Personnel Operations Department ...... Alberto de Capitani Director, Intormation, Technology, and Facilities Department ...... Hywel M. Davies Director, General Services Department ...... Harold W. Messenger Director, Health Services Department ...... Dr. Bernard H. Liese Director, Personnel Policy Department ...... Everardo C. Wessels Chairman, President's Council. Member, President's Council a. Tobe succeeded byJochen Kraskeas of July 1, 1991. b. Tobe succeeded by Pieter P.Bottelier as of July 15,1991. c.As ot July 1,1991, Bulgaria, Cyprus, Romania, and Yugoslavia wid bespit off into a new country department, with Russeli J. Cheetham as director, and KemalDervis will serveas director of thecountry department comprising Czechoslovakia, Hungary, andPoland. d. To besucceeded by Ping-Cheung Loh asoa July 15,1991. 230 IBRD/IDA Appendices

Offices of the World Bank Appendix 4

June 30, 1991 Headquarters: 1818 H Street, N.W., Washington. 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 Oftice United Nations 747 Third Avenue (26th Floor) New York, N.Y. 10017, U.S.A. European Office Olivier Lafourcade The World Bank Director 66, avenue d'1lna 75116 Paris, France Geneva Office Jean Baneth The World Bank Director ITC Bui ding 54, rue de Montbrillant Geneva, Switzerland (mailing address: P.O. Box 104, 1211 Geneva 20 CIC, Switzerland) Tokyo Office Nobuaki Kemmochi The World Bank Director Kokusai Building (Room 916) 1-1, Marunouchi 3-chome Chiyoda-ku, Tokyo 100, Japan Regional Mission Peter Eigena The World Bank in Eastern Africa Director View Park Towers Monrovia Street Nairobi, Kenya r,ililg address: P.O. Box 30577) Regional Mission Elkyn A. Chaparro The World Bank in Western Africa Chief Corner of Booker Washington & Jacques AKA Streets Cocody, Abidjan 01 Cote dilvoire ,T,3rj address: B.P. 1850) Regional Mission Philippe E.Annez The World Bank in Thailand Chief Udom Vidhya Building (5th Floor) 956 Rama IVRoad, Sala Daeng Bangkok 10500, Thailand Argentina Myrna L.Alexander Banco Mundial Resident Representative Bartolome Mitre 797-Piso 8 Buenos Aires, Argentina Bangladesh Christopher Willoughby The World Bank Chief, Resident Mission 3A Paribagh Dhaka 1000, Bangladesh (mail ng address: G.P.O. 97) Benin Eduardo Locatelli The World Bank Resident Representative Zone R@sidentielle de la Radio Cotonou, Benin (mail ng address: B.P. 03-2112) Bolivia Constance A.Bernard Banco Mundial Resident Representative Ediffcio BISA, Piso 9 16 de Julio 1628 La Paz, Bolivia (mailing address: Casilla 8692) Appendix 4 231

Brazil George P. Papadopoulos Banco Mundial Resident Representative Setor Comercial Sul, Quadra 1, Bloco H Edificio Morro Vermelho-8 Andar Brasilia, DF 70.302, Brazil Brazil George P. Papadopoulos Banco Mundial Representative c/o Furnas Centrais Eletricas, S.A. Rua Real Grandeza, 219, Botatogo Edificio A, Piso 901 22283 Rio de Janeiro, RJ, Brazil Brazil Christoph Diewald Banco Mundial, S/127 Head of Field Oftice Edificio SUDENE Cidade Universitaria 50,000 Recife PE.Brazil Burkina Faso Claude R. Delapierre The World Bank Resident Representative Immeuble BICIA (3eme etage) Ouagadougou, Burkina Faso (mailing address: B.P. 622) Burundi Maurice H. 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 Immeuble Kennedy Avenue Kennedy Yaounde, Cameroon (mailing address: B.P. 1128) Central African Republic Jean-Paul Dailly Banque mondiale Resident Representative Rue des missions Bangui, C.A.R. (mailing address: B.P. 819) Chad Horst M. Scheffoldb The World Bark Resident Representative P.O. Box 146 N'djamena, Chad China Attila Sonmez The World Bank Chief, Resident Mission No. 2 Fu Cheng Lu Diaoyutai, Building No. 5 Beijing 100830, China ,I -,9 address: P.O. Box 802) Colombia Padmanabha Hari Prasad Banco Mundia Resident Representative Carrera 10, No. 86-21, Piso 3 Apartado Aereo 10229 Bogota, D.E., Colombia (mailing address: Apartado Aereo 10229) Congo Manga Kuoh-Moukouri Banque mondiale Resident Representative ImmeubJe Arc (5eme dtage) Avenue Amilcar Cabral Brazzaville, Congo (mailing address: B.P. 14536)

(continued) 232 IBRD/IDA Appendices

Offices of the World Bank (continued) Appendix 4

June 30, 1991

Ethiopia Theodore J. Goering The World Bank Resident Representative I.B.T.E. New Telecommunications Building (lst Floor) Churchill Road Addis Ababa, Ethiopia (mailing address: P.O. Box 5515) Ghana Silvio Capoluongo The World Bank Resident Representative 69 Eighth Avenue Extension Northridge Residential Area Accra, Ghana (mailing address: P.O. Box M27) Guinea Michael J. Wilson Banque mondiale Resident Representative Immeuble de l'Archeveche Face Baie des Anges Conakry, Guinea (mailing address: B.P. 1420) Guinea-Bissau Yves J. Tencalla Banco Mundial Resident Representative Apartado 78 1041, Guinea-Bissau India Jochen Kraske The World Bank Chief, Resident Mission 55 Lodi Estate New Delhi 110003, India (mailing address: P.O. Box 416, New Delhi 110001) Indonesia Nicholas C. Hope 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. Bronfman Banque mondiale Resident Representative 1, rue Patrice Lumumba Antananarivo 101, Madagascar (mailing address: B.P. 4140) Malawi John M. Malone Banque mondiale Resident Representative Development House Capital City Lilongwe 3, Malawi (mailing address: P.O. Box 30557) Mali Monique P. Garrity The World Bank Resident Representative Immeuble SOGEFIH Quartier du Fleuve Avenue Moussa Travele Bamako, Mali (mailing address: B.P. 1864) Mauritania Sunil Mathrani The World Bank Resident Representative Villa No. 30, Ilot A Quartier Socofim Nouakchott, Mauritania (mailing address: B.P. 667) Mexico Eugene D. McCarthy Banco Mundial Resident Representative Plaza Nafin Insurgentes Sur 1971 Nivel Paseo, Locales 71 y 72 Col. Guadalupe Inn 01020 Mexico, D.F. Mexico Appendix 4 233

Mozambique Nils 0. Tcheyan The World Bank Resident Representative Av. 25 de Setembro, 1218 2-Andar Maputo, Mozambique Nepal Nigel Roberts The World Bank Resident Representative Jyoti Bhawan, Kantipath Kathmandu, Nepal (mailing address: P.O. Box 798) Niger Whitney P. Foster Banque mondiale Resident Representative Rue des Dallois Niamey, Niger (mailing address: B.P. 12402) Nigeria Tariq Husain The World Bank Resident Representative 1st Floor Plot PC-10 Engineering Close, off ldowu Taylor Street Victoria Island Lagos, Nigeria (mailing address: P.O. Box 127) Pakistan Abdallah El Maaroufi The World Bank Chief, Resident Mission 20 A Shahrah-e-Jamhuriat Islamabad, Pakistan (mailing address: P.O. Box 1025) Philippines Thomas W. Allen The World Bank Resident Representative Central Bank ot the Philippines Multi-Storey Building, Room 200 Roxas Boulevard Manila, Philippines Poland Ian M. Hume The World Bank Resident Representative Intraco I Building 17th Floor 2 Stawki Street 00-193 Warsaw, Poland Rwanda Emmanuel Akpa The World Bank Resident Representative Blvd. de la Revolution BRD Building Kigali, Rwanda (mailing address: P.O. Box 609) Saudi Arabia John R. Bowlin The World Bank Director Riyadh, Saudi Arabia 11432 IrJ address: P.O. Box 5900) Senegal Francois-Marie Patorni Banque mondiale Resident Representative Immeuble S.D.I.H. 3, place de l'lndependance Dakar, Senegal (mailing address: B.P. 3296) Somalia Luciano Borin The World Bank Resident Representative Savoy Centre (2nd Floor) Mogadishu, Somalia (mailing address: P.O. Box 1825)

(continued) 234 IBRD/IDA Appendices

Offices of the World Bank (continued) Appendix 4

June30, 1991

Sri Lanka Hari C. Aggarwal The World Bank Resident Representative Development Finance Corporation of Ceylon (DFCC) Bui ding (lst Floor) 73/5 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, Sudan (mailing address: P.O. Box 2211) Tanzania (an C. Porter The World Bank Resident Representative N.I.C. Building (7th Floor. B) Dar es Salaam, Tanzania (mailing address: P.O. Box 2054) Togo Jacques Daniel Banque mondiale Resident Representative 169. boulevard du 13 janvier Immeuble BTC[ (8eme etage) Lome, Togo (mailing address: B.P. 3915) Turkey Luis de Azcarate The World Bank Resident Representative Ataturk Bulvari, No. 211 Gama-Guris Building Kat 6 06683 Kavaklidere, Ankara, Turkey Uganda Seung Hong Choi The World Bank Resident Representative P.O. Box 4463 * jwps,j, Uganda Zaire William J. Grau (acting) The World Bank Resident Representative Immeuble de la Communaute Hellenique Boulevard du 30 Juin Kinshasa 1, Za re (mailing address: P.O. Box 14816) Zambia John A. Innes The World Bank Resident Representative CMAZ Building Ben Bella Road Lusaka, Zambia 10101 lug address: P.O. Box 35410) Zimbabwe Christiaan J. Poortman The World BanK Resident Representative CABS Centre (llth Floor) Jason Moyo Avenue Harare, Zimbabwe (mailing address: P.O. Box 2960) a.To be succeeded by F.Stephen O'Brien as of July 1, 1991. b. Tobe succeeded by Noel M Carrereas of July 1, 1991. 235

Index

Africa region rescheduling of debt, 64n, 137 debt relief for, 35 China, performance in 1990, 119-20 Eastern and Central African performance in 1990, Cofinancing 113 ECO (expanded cofinancing operations) program, global coalition for Africa, 116 19, 79 regional integration, 114-15 EXCEL (export-credit enhanced leverage) pro- Sahelian countries' performance in 1990, 112 gram, 78-79, 140 Southern African performance in 1990, 113-14 special program of assistance (SPA), 79 special program of assistance (SPA), 12,30, 44-47, trust-fund arrangements, 79-80, 94 109-11 volume, fiscal 1991, 78 sub-Saharan Africa's performance in 1990, 28-30, Colombia, reform efforts in, 135 109 Commodities, primary, price movements in 1990, West African performance in 1990, 111-13 35-36 World Bank commitments in fiscal 1991, 11 Congo, performance in 1990, 111-12 World Bank support for environmental concerns, Consultative Group on International Agricultural 62 Research (CGIAR). See Agriculture World Bank women-in-development activities, Consultative groups 56-57 meetings chaired by the Bank, 20 (table) African capacity-building initiative (ACBI), 12, 90, meetings for countries in the Latin America and 95, 115-16 the Caribbean region, 140 African Development Bank, World Bank cooper- Costa Rica, reform efforts in, 136 ation with, 99 Cte d'Ivoire, performance in 1990, 112-13 Agriculture Council for Mutual Economic Assistance (CMEA), Consultative Group on International Agricultural 41, 42-43, 125, 130, 132 Research (CGIAR), activities in fiscal 1991, Czechoslovakia, performance in 1990, 130-31 100-102 World Bank research on agricultural issues, 93 Debt. See also Paris Club Algeria, performance in 1990, 127-28 developments in Latin America, 137 Argentina, reform efforts in, 135-36 overall developments in 1990, 32-35 Asia region review of progress of the World Bank's debt and economic performance in 1990, 30, 117 debt-service reduction program for middle- World Bank operations and strategy, 123-24 income countries, 19, 64-65 World Bank support for environmental concerns, World Bank support for debt and debt-service 62-63 reduction efforts, 13, 64-65 World Bank women-in-development activities, 57 Debt Reduction Facility for IDA-only Countries Asian Development Bank, World Bank cooperation use by Mozambique, 13, 67, 112 with, 99, 124 use by Niger, 13, 67, 112 Development Committee Bangladesh on integrating environmental concerns into World performance in 1990, 121 Bank operations, 60 World Bank support for general education, 57 response to the Gulf crisis, 42 Benin, performance in 1990, 112 support for private-sector development, 68 Brazil Disbursements, by source of supply, 80-85. See also reform efforts, 136 International Bank for Reconstruction and De- World Bank support for the environment, 63-64 velopment; International Development Associ- World Bank support for science research and ation; World Bank training, 54, 140 Bulgaria, performance in 1990, 130 Eastern and Central Europe Burundi, performance in 1990, 113 effects of Gulf crisis on, 29, 42, 125 interagency collaboration in support of reforms, Cameroon, performance in 1990, III 44, 95 Chile performance in 1990, 31, 42, 44, 130-32 commercial-bank borrowings, 33n World Bank environmental-assistance strategy reform efforts, 135 for, 63 236 Index

World Bank support for, 11-12, 44, 130-32 G-7 countries, economic performance in 1990, 25-26 Eastern Caribbean countries, performance in 1990, Gabon, performance in 1990, III 136 Germany Economic Development Institute (EDI) unification effects on Eastern and Central Europe, activities in fiscal 1991, 89-91 42, 44 McNamara Fellowship Program, 90-91 unification of, 28 World Bank Graduate Scholarship Program, 91, 94 Ghana, performance in 1990, 112 Education. See Human-resource development Global coalition for Africa, 116 Egypt. See also Gulf crisis Global Environment Facility. See under Environ- debt relief, 30, 35, 65, 129 ment performance in 1990, 129 Guinea, performance in 1990, 112 Energy Sector Management Assistance Program, Gulf Cooperation Council 95-96 performance of member countries in 1990, 130 Environment program of assistance to Arab countries, 42n Antarctic, exploitation of, 39 Gulf crisis Global Environment Facility (GEF), 12-13. 19, 39, effect on Bangladesh, 121 61, 93, 95 effect on cofinancing activities, 78 global warming, 38-39, 61 effect on developing countries, 28-31, 41 United Nations Conference on Environment and effect on Eastern and Central European countries, Development, 38, 60 29, 41, 42, 125 World Bank operations and activities, fiscal 1991, effect on Egypt, 29, 30, 129 12, 60-64 effect on Gulf Cooperation Council countries, 130 Europe, Middle East, and North Africa region effect on India, 120 economic performance in 1990, 30-31, 125 effect on Jordan, 29, 30-31, 129 World Bank operations in fiscal 1991, 132 effect on low-income Asian countries, 30 World Bank support for environmental concerns, effect on Morocco, 29, 31, 128 63 effect on Pakistan, 29, 30, 126 World Bank women-in-development activities, effect on petroleum prices, 29, 36, 40-41, 130 57-58 effect on the Philippines, 120 European Bank for Reconstruction and Develop- effect on Tunisia, 128 ment, World Bank cooperation with, 43, 91, 99 effect on Turkey, 29, 30, 127 Executive directors effect on world trade, 36-37 Ad Hoc Committee on Board Procedures, 23 effect on Yemen, 129 Ad Hoc Committee on Criteria for Allocation of effect on Yugoslavia, 132 Shares of Bank Capital, 22-23 World Bank response to, 11, 29. 40-42 allocation of fiscal 1990 net income, 18 allocation of future net income, 17-18, 71-72 Human-resource development amendments to Project Preparation Facility, 94 education of girls, 56 collaboration with the International Monetary World Bank lending for education projects in fiscal Fund, 21, 100 1991, 11, 52, 54-55 Committee on Cost Effectiveness and Budget World Bank lending for population, health, and Practices, 23 nutrition projects in fiscal 1991, 11, 58-59 Committee on Directors' Administrative Matters, World Bank policies for vocational and technical 23 education and training, 56 Committee on Personnel Policy Issues, 22 World Bank research on, 92-93 consideration of the Operations Evaluation De- World Bank support for women-in-development partment's activities, 18, 21-22, 87 activities, 12, 55-58 country-strategy reviews, 20 Hungary, performance in 1990, 31, 131 discussion on shift in World Bank urban policy, 53 discussion on World Bank strategy to reduce pov- India erty, 19, 49-50 country economic memorandum, 48 discussions on the Gulf crisis, 42 performance in 1990, 30, 120 involvement with the Development Committee, World Bank support for pollution control, 63 19, 21 Indonesia environment issues, 19 performance in 1990, 118-19 Joint Audit Committee, 21-22, 87 Third Jabotabek Urban Development Project, 96-97 loan-loss provisioning policy, 18 Inter-American Development Bank review of negative-pledge policy, 18-19, 66 cofinancing with the World Bank, 99, 140 review of program to strengthen the private sec- World Bank cooperation with, 99 tor, 19, 69-70 Internal Auditing Department, activities in fiscal review of program to support debt and debt- 1991,104-105 service reduction, 19, 64-65 International Bank for Reconstruction and Develop- review of staff benefits plan, 20-21, 104 ment (IBRD) Steering Committee, 24 borrowings in fiscal 1991, 14, 71, 72 (table,), 75-77 support for expanded cofinancing operations capital subscribed during fiscal 1991, 77 (ECO) program, 19, 79 disbursements, 14, 74 Index 237

guidelines for annual allocation of net income, Maldives, performance in 1990, 123 17-18, 71 Mediterranean Environmental Technical Assistance lending rate in fiscal 1991, 74 Programme, 63 loans in nonaccrual status, 74 Metropolitan Environmental Improvement Pro- negative-pledge policy, 19, 66 gramme, 63 modification of repayment terms for middle-in- Mexico come borrowers, 73 performance in 1990, 3I-32 net income, 71 reform efforts in, 135 reserves-to-loan ratio, 71 results from Brady initiative operation, 34-35, 64 provisioning for possible loan losses, 18, 74-75 Montreal Protocol, 61n, 93 workout programs for countries in arrears, 73-74 Morocco. See also Gulf crisis International Centre for Settlement of Investment performance in 1990, 128 Disputes (ICSID), activities in fiscal 1991, 108 rescheduling of debt, 64n, 128 International Development Association (IDA) Mozambique assistance to sub-Saharan Africa. 44-46 performance in 1990. 114 assistance to the poorest countries, 13 use of Debt Reduction Facility for IDA-only commitment authority in fiscal 1991, 77-78 Countries, 13, 67, 112 commitments in fiscal 1991, 13 Multilateral Investment Guarantee Agency (MIGA) disbursements in fiscal 1991, 14 activities in fiscal 1991, 106-108 ninth replenishment, effectiveness of, 77 private-sector development strategies, 69 International Finance Corporation (IFC) activities in fiscal 1991, 105-106 National environmental-action plans (NEAPs), collaboration with the World Bank in private- World Bank support for, 62 sector development, 68-69 Nepal, performance in 1990, 121-22 International Monetary Fund (IMF) Net transfers coordination with the Bank on countries with large long-term aggregate net transfers, 33 (table) and protracted arrears, 73-74 on long-term lending, 34 (table) structural-adjustment facilities, 35, 44, 45, 46 World Bank net transfers to the Africa region, 115 World Bank collaboration with, 21, 41, 43, 44, 73, (table) 92, 99-100 World Bank net transfers to the Asia region, 122 Iran, performance in 1990, 129-30 (table) World Bank net transfers to the Europe, Middle Japan East, and North Africa region, 131 (table) cofinancing of World Bank projects, 78, 140 World Bank net transfers to the Latin America and special fund for policy and human-resource devel- the Caribbean region, 139 (table) opment, 80, 91, 97 Niger, use of Debt Reduction Facility for IDA-only Jordan, performance in 1990, 128-29. See also Gulf Countries, 13, 67, 112 crisis Nigeria performance in 1990, 29, 111 Kenya, performance in 1990, 113 women-in-agriculture program, 58 Korea, Republic of, performance in 1990, 117-18 Nongovernmental organizations participation in poverty-reduction projects, 50 Lao People's Democratic Republic, performance in participation in the Third Jabotabek Urban Devel- 1990, 121 opment Project, 96-97 Latin America and the Caribbean region World Bank involvement with, 89, 96-98 cofinancing activities in fiscal 1991, 140 consultative groups, 140 Operations evaluation economic performance in 1990, 31-32, 133-34 activities in fiscal 1991, 87-89 economic reform in, 134-36 executive directors' oversight of, 18, 21-22, 87 debt and debt-service progress, 137 Organisation for Economic Co-operation and Devel- lessons learned from reform, 136-37 opment (OECD), World Bank cooperation with, poverty alleviation in, 138 43, 88-89, 91, 98-99 World Bank operations in fiscal 1991, 139-40 World Bank support for environmental concerns, Pacific island countries, performance in 1990, 122-23 63-64 Pakistan, performance in 1990, 125-26. See also Gulf World Bank women-in-development activities, 58 crisis Lesotho, performance in 1990, 113-14 Papua New Guinea, performance in 1990, 122 Low-income, middle-income countries' performance Paris Club in 1990, 26. 28-32 reschedulings of debt of lower-middle-income countries, 65 Maastricht conference, 114, 116 reschedulings of debt of low-income countries, Madagascar, performance in 1990. 113 66-67 Malawi reschedulings of debt of middle-income countries, country economic memorandum, 48 35, 64 performance in 1990, 113 reschedulings of debt of sub-Saharan African Malaysia, performance in 1990, 117-18 countries, 45 238 Index

Peru, reform efforts in, 136 developments in Uruguay Round negotiations, Philippines 37-38 elementary-education project, 52, 54 World Bank research on trade issues, 92 performance in 1990, 120-21 Trinidad terms, 35, 46, 46n, 67 Poland Tropical Forestry Action Plan, 54, 95 debt relief. 35, 65, 131 Trust funds, 79-80, 94 performance in 1990, 31, 131 Turkey, performance in 1990, 127. See also Gulf Population, health, and nutrition. See Human-re- crisis source development Tunisia, performance in 1990, 128. See also Gulf Poverty reduction crisis World Bank commitments for poverty-reduction projects in fiscal 1991, 50, 51 (table) United Nations Centre for Human Settlements (Hab- World Bank research on, 92 itat), 96 World Bank strategy to reduce poverty, 11, 47-50 United Nations Development Programme (UNDP). Private-sector development See also African capacity-building initiative coordination between the World Bank and the (ACBI); Global Environment Facility; Energy International Finance Corporation, 68-69 Sector Management Assistance Programme private-sector development action program, 67-69 (ESMAP); Metropolitan Environmental Im- World Bank efforts to strengthen, 13, 68-69 provement Programme; Urban Management World Bank lending in support of. 67-68 Programme World Bank research, 69. 91-92 roundtables. 124 Project Preparation Facility. See Technical assis- support for national long-term perspective studies, tance 114 World Bank execution of UNDP projects, 94 Research program of the World Bank, 9/-93 Urban development Romania. performance in 1990, 131-32 shift in World Bank policy, 53 Rwanda, performance in 1990. 113 World Bank research on urban-development is- sues, 93 Severely indebted, low-income countries Urban Management Programme, 96 debt relief. 66, 67 debt situation in 1990. 35 Venezuela, reform efforts in, 135 Severely indebted, middle-income countries Viet Nam. performance in 1990, 121 debt and debt-service reduction program for, 64-65 economic performance in 1990, 32 Women in development. See Human-resource devel- Sierra Leone, reforms in 1990, 113 opment Socialist economies, World Bank research on, 91. World Bank See also Soviet Union adjustment lending in fiscal 1991, 13-14, 15 (table) Soviet Union. joint study of the Soviet economy, 43. assistance to the poorest countries, 13, 14 (figure) 91, 95 budget for fiscal 1992, 102-103 Special program of assistance (SPA). See also Africa commitments in fiscal 1991, 13 region disbursements in fiscal 1991, 14 performance of currently active SPA countries. membership, 12. 14, 16 45-46,109-11 personnel. 104 second phase (SPA-It) begun, 12, 44-47 rehabilitation of main complex, 104 Special Project Preparation Facility. See Technical staff benefits, 20-21, 22. 104 assistance World Development Report 1990, 19, 47-49, 59, 92, Sri Lanka, performance in 1990, 122 98 World Development Report 1992, 60, 99 Tanzania, performance in 1990, 114 Technical assistance Yemen, performance in 1990, 129. See also Gulf Project Preparation Facility, 94 crisis Special Project Preparation Facility, 94 Yugoslavia, performance in 1990, 31, 132. See also technical assistance through the Global Environ- Gulf crisis ment Facility, 95 World Bank activities in 1990, 93-95 Zaire, performance in 1990, 113 Thailand, performance in 1990, 117-18 Zambia Toronto terms, 35, 45, 46, 66 clearance of arrears, 74, 114 Trade, world performance in 1990, 114 movements in volume and value in 1990, 36-37 Zimbabwe, performance in 1990, 114 156 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. Asecond 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