of development programs. Another important form of technical assistance is the Economic Development Institute, which has been operating since 1956 as a staff college to assist in improving the quality of economic management in Government in the less-developed countries. The Institute began its seventh course in October 1961, with 20 officials from 18 countries participating. The Bank has also maintained close cooperation with the U.N. Special Fund. In the period under review, the Bank agreed to act as Executing Agency for economic studies on Thailand and Guatemala, with funds supplied by the Special Fund.

SECURITY ISSUES AND SALES OF LOANS

During the 6-month period under review, there was a net increase of $197.1 million in the outstanding funded debt of the Bank. In this period, the increase in gross borrowings totaled $321.1 million, consisting of a public issue of 5 percent Italian lire bonds equivalent to $24 million; 63 the private placement outside the United States of $100 million of 4-percent, 2-year bonds; 64 the drawing down of 50 million Swiss francs ($11.6 million equivalent) of the Swiss franc borrowing of October 1961; the drawing down of $120 million and the balance of DM250 million ($62.5 million equivalent) under the German borrowing of August 1960; and the delivery of $3 million of 5-percent, 25-year bonds of 1960, which had been subject to delayed delivery arrangements. The funded debt was decreased in this period by $124 million as the result of debt maturities ($105 million), the redemption of 50 million Swiss francs ($11.6 million equivalent), and sinking and purchase funds transactions ($7.4 million). On December 31, 1961, the total funded debt of the Bank was equivalent to $2,425.6 million, of which $1,815 million, or approximately 75 percent, was denominated in U.S. dollars. This compares with about 82 percent of the total funded debt so denominated on December 31, 1959.

In the last half of 1961, the Bank sold or agreed to sell the equivalent of $85 million principal amount of its loans, all without the Bank's guarantee, bringing the total of such sales for calendar 1961 to the equivalent of $204 million. Through December 31, 1961, total sales, and agreements to sell portions of Bank loans, amounted to the equivalent of $1.1 billion, all except $69 million without the Bank's guarantee. This total consisted of $322 million of participations, whereby other investors assumed parts of Bank loans at the time the loans were signed, and $776 million of sales from the Bank's loan portfolio. Repayments to December 31, 1961, on these sales and participations totaled $470 million, in addition to $486 million paid directly to the Bank.

More than one-half of the Bank's outstanding debt is held by investors outside the United States. Included in the holdings of these investors, in addition to nondollar bonds and notes of the Bank, are

63 The first issue of Italian lire bonds of the Bank in the Italian market. [Footnote in source text.]

This issue replaces an equal amount of 2-year, 44-percent bonds placed outside the United States in September 1959. [Footnote in source text.]

approximately $784 million of dollar bonds and notes, or about 43 percent of total U.S. dollar obligations.

The Council gave the approval of the United States to borrowings by the Bank in U.S. dollars, as well as to sales by the Bank of portions of its loans in the U.S. investment market.

FISCAL RESULTS

During the 6 months under review, the Bank had net earnings of $34.9 million (compared with $29.8 million for the first half of 1961) which, in accordance with usual procedure, were added to the Supplemental Reserve against losses on loans and guarantees. Loan commissions for the same period totaled $15 million (compared with $14.6 million for the preceding half-year period) and were credited to the Special Reserve. On December 31, 1961, the Supplemental Reserve totaled $443.1 million and the Special Reserve $208.6 million.

TABLE E-1.-Membership and quotas in the International Monetary Fund (IMF) and membership and subscriptions in the International Bank (IBRD), the International Finance Corporation (IFC), and the International Development Association (IDA), as of Dec. 31, 1961

Additional IBRD subscriptions from these members aggregating $37,500,000 are in process of completion. * Part I countries of the International Development Association.

Source: International Monetary Fund, International Bank, International Finance Corporation, and International Development Association.

TABLE E-1.-Membership and quotas in the International Monetary Fund (IMF) and membership and subscriptions in the International Bank (IBRD), the International Finance Corporation (IFC), and the International Development Association (IDA), as of Dec. 31, 1961-Continued

[Expressed in thousands of U.S. dollars]

760

300

100

40, 350

4, 540 760 3, 030 1, 680 218, 160

2 33, 590

300

1,260

1,010

8,740

3, 530

001 Additional IBRD subscriptions from these members aggregating $37,500,000 are in process of completion. 2 Part I countries of the International Development Association.

Source: International Monetary Fund, International Bank, International Finance Corporation, and International Development Association.

THE INTERNATIONAL DEVELOPMENT ASSOCIATION

65. OPERATIONS OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION DURING THE PERIOD JANUARY 1-JUNE 30, 1961: Report of the National Advisory Council on International Monetary and Financial Problems, Submitted May 10, 1962 (Excerpt) 65

The International Development Association came into existence in September 1960, and began operations in November of that year.66 Although it is an affiliate of the International Bank, the IDA is an independent legal entity with financial resources separate from those of the Bank. It is intended to assist member countries which are unable to achieve a satisfactory rate of economic development on the basis of their own resources and conventional external financing. Although precise financing terms are not specified, the IDA charter does provide for terms which are flexible and which bear less heavily on the balance of payments of less-developed countries than would be the case with conventional loans.

The IDA charter also permits flexibility in terms of the countries in which it may operate as well as the range of projects which it may consider. A basic requirement, as in the case of the International Bank, is a clear showing that the borrowing country is making a real effort to utilize its own resources and to avoid inflationary policies. Under broad criteria, the IDA is prepared to assist those countries whose foreign exchange situation is such that they are unable to borrow abroad on conventional terms. Another and larger group of countries which may avail themselves of the Association's resources includes those which, while they can borrow on conventional terms, are unable to borrow on reasonable terms all of the capital needed to carry out appropriate development programs. Under these conditions, IDA credits and IBRD loans may be extended concurrently. With respect to the range of projects to be financed, the IDA is permitted under its charter to finance not only the usual types of projects considered by the Bank, but also projects of a type not heretofore financed by the Bank, such as municipal water supplies and technical training.

The Council, in the period under review, advised the U.S. Executive Director of the IDA with respect to the general financial terms and conditions applicable to IDA credits.

IDA DEVELOPMENT CREDITS

Through June 30, 1961, the Association authorized four development credits in the equivalent of $101 million. (See table 8.) 67 In two countries-Chile and the Sudan-the International Bank provided

.

H. Doc. 402, 87th Cong., pp. 14-16. Part V of the NAC report. See American Foreign Policy: Current Documents, 1960, pp. 140–141. 67 Not reprinted here.

Doc. 65

additional financing in the form of loans. A large number of proposals were also under consideration, including not only projects for the development of basic activities normally financed by the Bank, such as road development, port facilities, and irrigation works, but also a much broader range which includes municipal improvements and technical training programs.

The IDA extended its first credit in May-in the equivalent of $9 million to assist in financing a highway development and maintenance program in Honduras. In June, the Bank and the IDA combined to provide the equivalent of $57.5 million to Chile and the Sudan. A credit of $19 million was authorized by IDA for the construction, rehabilitation, and consolidation of the main secondary roads in 10 southern provinces of Chile. Additional funds provided by the Bank amounted to $6 million. A credit of $13 million, supplemented by a Bank loan of $19.5 million, will assist in financing construction of the Roseires Dam in the Sudan. The Federal German Government is expected to provide additional foreign exchange financing for this project. Also in June, the IDA made available the equivalent of $60 million for highway development in India. This credit is part of the total to be provided by IDA to assist in meeting the external financial requirements of India's Third Five-Year Plan.

Consistent with the IDA objective of providing development capital on terms which do not bear heavily on the borrower's balance of payments, each of the credits outlined above has a maturity of 50 years, with no interest or commitment charges. Each credit, however, carries a service charge of three-fourths of 1 percent per annum to assist in covering administrative expenses. Amortization in each instance begins after a 10-year grace period, with repayment to be made in foreign exchange.

MEMBERSHIP AND SUBSCRIPTIONS

Under the Articles of Agreement,68 members of the Association are divided into two groups-Part I countries which comprise the economically more advanced countries, and Part II countries, which include the less-developed members. All Part II countries are eligible for IDA assistance which, as indicated above, may in some cases be increased by loans from the International Bank. On June 30, 1961, 51 member governments of the Bank had accepted membership in the IDA-15 as Part I members and 36 as Part II members. (See appendix table D-1.) 69 This represents an increase of 14 over the number of members on December 31, 1960. Subscriptions amounted to the equivalent of $906 million, including $756 million which may be converted by IDA as required for its operations. A total of $208 million had been received on account of subscriptions through June 30, 1961. (See table 9.) "

70

*

6 TIAS 4607; 11 UST 2284 (cited as an unnumbered title in American Foreign Policy: Current Documents, 1960, p. 140).

69

Not reprinted here. See instead table E-1, appended to doc. 64, supra. 70 Not reprinted here.