World Bank Document

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

Load more