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World Bank Document RETUR:'} TO No. E-227 RESTRICTED REPO ", This report is restricted to use within the Bank. Public Disclosure Authorized INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized FOURTH MEETING OF THE CO~SULTATIVE COMMITTEE ON ECONOMIC DEVELOPMENT IN SOUTH AND SOUTHEAST ASIA MARCH 10-28, 1952 Public Disclosure Authorized June 20, 1952 Public Disclosure Authorized Economic Department .. Prepared By: A. Basch TABLE OF cnNTEtITS Page No. 1. The Role of the International Bank • .. • 1 2. Future Oreanization for Continuing Consultations • 3 3. Technical Assistance • • • • .. " • • • • 3 4. Review of the Progress and Preparation of the Annual Report " .. .. .. • • • • .. 4 The 1952-53 Program .. • • • • • .. .. • 7 Changes in the Development Programs .. .. .. • .. • .. 8 Ceylon • • • • • • .. .. • .. • .. .. .. .. .. 9 India • • • • • • • .. .. .. • • • • • • 9 Pakistan .. • • • .. .. • • .. .. • • .' .. .. 9 Malaya • • • .. • .. • • .' .. • .. • • • 10 Dependence on External Assistance. .. • .. • • ., • 10 Fourth Beetin, of the Consultative Committee on opment in South and Sout east aia The l,[eeting of Officials of the participating goverrnnents was held in Karachi from Harch 10 to March 22 and the Ministerial f"ieeting from L1arch 24 to N"Jarch 28. The countries represented as full members of the Comr:Jittee were: Australia, Burma (for the first time), Canada, Ceylon, Cambodia, India, New Zealand, Pakistan, the United Kingdom, the United States, and Vietnam. Laos was unable to send a representative. At the 1Ieeting of Officials it was decided to extend an invi.tation to Hepal to join the ConSUltative Committee.. The Government of Nepal accented and its representatives attended a part of the Karachi meeting. The Governments of IndonEsia, the Philippines, and Thailand were represented by observers. It vras decided to send a standing invitation to the General Secretary of ECAFE to attend meetings that the Consultative Committee might consider a~:)Dropriate .• The main items on the agenda of both the Official and 1unisterial :;:>ieetin::s were: (1) Pre~aration of Annual Report (2) Role of International Bar~ (3) Future Organization for Continuing Consultations (h) Technical Assistance 1. The Role of the International Bank 1M • .. Phen this item was discussed at the l1eetinr: of Officials, the Banl< representative stated that the ?osition of the Bank had been explained atl / the last meeting of the ConSUltative Committee in Co1ombolJ February 1951,­ and had been brought out in the proceedings of the meeting and in the cor­ respondence between the President of the Bank and the U.K. Chancellor of the'Exchequer. He reviewed the operations of the Bailie during the inter­ vening period in Pakistan, India, and Ceylon and pointed out that the President of the Bam{ had visited the countries of the region to get first­ hand knowledge of their nrob1ems.. Thus the governments concerned had a good opportunity to discuss with him any problems arising out of their relations w:tth the Bank. Various questior.s were asked in the discussion, among them the question as to whether the Bank grants loans only for self­ liquidating nrojects. The Bank representative pointed out a number of loans for projects which cannot be considered self-liquidating,. The term Itself­ liquidating" needs clarification. Y See: IlNotes for the Re!,ort to the Board of Executive Directors by A. Basch on Colombo Conference!! -- Sec. Uemo No. 665, May 11, 1951. - 2 - The Government of Pakistan tabled a resolution in which it said that cases have occurred where, in spite of the fact that carefully pre­ !?ared projects have been presented which have withstood the detailed technical scrutiny of the Bank experts, the Bank has been unable to assist those countries to the extent necessary. The reason is that the curren­ cies required by the borrowers are not made available to the Bank by the member countr5es even against their 18% capital subscription. This applies to most European currencies and the result is that the actual availability of loa~s to borrowers is seriously limited., The usefulness of the Bank as an instrument to promote reconstruction and development is thus greatly reduced. The resolution stated that the following may be the best solutions to the problem: "(a) To persuade the countries to release 18% of their subscrtD­ tions within the prescribed notice netiod and not to ~lace restrictions on its utilization for loan purposes. lI(b) The Ban1;;: itself may underta}~e to purchase the currencies required by under-developed countries and make them available without en­ forcing the provisions of Section 3.02 of Loan Reeulation No. III. If necessary, the loan regulations should be modified. 1I '".ith regard to the release of 18~;;, the Bank representative referred to the Bank's efforts in this matter and quoted, among others, the respec­ tive sections of the Sixth Annual ReDort (pp. f3 and 10). fa th regard to the second point--accepting the repayment in non-dollar currencies while lending dollars-the position of the Bank vms explained. The U.S. Delegate, supported by the U.K. Dele gate, moved that Pakistan's proposal 1':as a policy matter which could be decided only at the Annual Meeting of Governors and for which the Consultative Committee is not the proper forum. The meeting agreed with this view and the discussion of this problem ,vas not resumed at the j\:Jinisterial J~eeting. The discussion on the Role of the Banl< at the Ministerial 1iIeeting was not very extensive and followed the main lines of the discussion at the Meeting of Officials. Some questions were asked, especially with regard to the sale of Bank bonds held in its portfolio. It should be noted that both the representatives of India and Pakistan expressed their satisfaction with the operations of the Bank in their countries. The Bank representative was treated not as an observer but rather as a member and was invited to ex;;?ress his views on most of the questions and to work on the drafting lJarties ure:Jaring the various chapters of the Annual Report. - 3 - 2. Future Organization for Continuing Consul tationl? At the last meeting of the COIT~ttee in Colombo in February 1951, the U.K. Delegation brought up this subject, ex,ressing the view that it vrould be useful to have a small secretariat for the Consultative COIT~ittee. Apart frori.. functioning as the clearing house of information, it could have the s?ecific functions of serving as secretariat of the meetings of the Consultative Committee and pre:9aring material for the Annual Re;.:>ort. The consensus of the Karachi IT,eetine; was that the setting up of a permanent secretariat was not necessary at present and that the questicm should be left open for consideration at a later meeting. The function of a secre­ tariat for preparing a neeting and an annual report will aliyays be carried out by the country in whose territory the next meeting will be held. Be­ cause the next meetine; will take place in India, the Indian Delegation ar­ ranged to take over the preparation of this meeting.' At the last meeting of the Minister:Lal COmmittee, the Indian Finance Minister moved that a com­ mittee of experts be apnointed to ::;repare the documentation of the Annual Report, beginninG' with sending out a questionnaire for this report. He proposed that the Conmittee consist of the fcllowing experts: Fred Benham U.K. Territories Vfilfred Malenbaum United States P .S.N. P:~asad India J. S. Reid New Zealand P.S. Lokanathan ECAFE A. Basch 3. Technical Assistance The Council of Technical Cooperation submitted to the Committee a re:port dealing 'with the first year of the opera.tion of the Council and the Bureau for Technical Assistance which was established in Colombo.· The amount spent by the members of the Bureau in the first year was around i, 400,000 which is substantially s than Vias expected. The funds vV'hieh were allocated by the various governments for the period of three years amount to ~ e million. This ~~ount, however, does not represent a central fund of liqUid resources but consists of a~ounts cor.~itted to be paid by the member gover~~ents on a bilateral basis. The re!,>ort of the Bureau shmvs that it was not difficult to nlace trainees in the numbers requested by various countries. The governments of Australia, Canada, India, New Zealand, and the United Kingdom have offered to take stated numbers of trainees for academic courses in universities or for practical training in industries and public utilities. It was agreed that in the future increased em~hasis should be placed on the provision of training facilities within the area, - 4 - The provision of experts proved to be much more difficult. The ~rob!em has been aggravated under the existing conditions of increasing world-vnde demand for technologists.. The U.K. Government offered to provide services of firms of consultants which would be able to advise on s1)ecific projects or to supply a team of experts at short notice and on a wide varlet;:.' of subjects. The U.K. representative at the meeting in Karachi indicated that the U.K. Government would be greatly interested to have such consultants associated with the projects financed by the Bank. In the future more emphasis is to be ~laced on providing eqtupment not only for training purposes but also for use by technical experts. The term "equipmentll should be broadly interpreted. The Australian Government has decided to exnend a sUbstar.tial proportion of its contribution to the scheme on the Drovision of equipment. The qupstion of coordination of technical assistance provided under the Colombo scheme with the U.N. Technical Assistance, the U.S. Point IV Progr@m, and the operations of the various Specialized Agencies was discussed in detail. It was emphasized that simultaneous a1jolications to more than one aeency should te confined to cases of great urgency and the fact of a simultaneous a:;proach should be made clear in the apnlication.
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