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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

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1 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 (IBŘD), the International Finance Corporation (IFC), and the International Development Association (IDA), as of Dec. 31, 1961-Continued

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! 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.

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.

08

See American Foreign Policy: Current Documents, 1960, pp. 140-141. "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.) "

80

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70

*

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.

The U.S. Executive Director of the International Development Association, or his Alternate, acting on the advice of the Council, supported the decisions taken with respect to the foregoing development credits.

66. OPERATIONS OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION DURING THE PERIOD JULY 1DECEMBER 31, 1961: Report of the National Advisory Council on International Monetary and Financial Problems, Submitted February 8, 1963 (Excerpt) 71

FIRST ANNUAL MEETING

The Board of Governors of the International Development Association held its First Annual Meeting jointly with the Annual Meetings of the International Monetary Fund, the International Bank and the International Finance Corporation, and received the First Annual Report.

In his comments, Eugene R. Black, President of the IDA, reviewed the lending activities of the Association during the first 8 months of its existence and the broad criteria under which it is permitted to operate. He indicated that, in addition to questions relating to the most effective administration of its funds, a major problem confronting the IDA was the adequacy of its resources in the light of the substantial volume of promising applications.

The Board of Governors reviewed the financial statements and audit report for the fiscal year ended June 30, 1961, and the administrative budget for the fiscal year ending June 30, 1962, and approved resolutions for the admission of Cyprus, Liberia, Senegal, Sierra Leone, and Togo to membership in the Association, subject to the usual terms and conditions.

IDA DEVELOPMENT CREDITS

As indicated in previous Semiannual Reports, the IDA is authorized to assist in financing economic development in the less-developed areas of the world included within the Association's membership on terms which are more flexible and bear less heavily on the balance of payments than those of conventional loans, thereby furthering the objectives of the International Bank and supplementing its activities. Its range of financing may include any project which will make an important contribution to the economic development of the area or areas concerned.

In the 6-month period under review, the IDA approved 14 credits in the total amount of $79.8 million in 7 member countries in Asia

71

H. Doc. 69, 88th Cong., Feb. 14, 1963, pp. 18–21. Part V of the NAC report.

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