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and Latin America. (See table 10.) This compares with four credits totaling $101 million authorized to four countries in the first 8 months of operations through June 30, 1961. In Asia, the credits ranged in amount from $1 million for the Dacca irrigation project, designed to increase agricultural production in Pakistan, to $10 million to assist in financing a flood protection and surface drainage project of about 8 million acres in the State of Punjab, India. Additional credits to these countries included a $2 million loan to help finance the first phase of a program to improve the inland water transport system of East Pakistan and 3 loans totaling $18.5 million for projects to increase agricultural production in India. In China (Taiwan), the IDA approved four loans totaling $15.3 million for the financing of private industry ($5 million), the expansion and improvement of water supply facilities ($4.4 million), the installation of deep wells to supply additional irrigation water ($3.7 million), and the improvement and maintenance of the island's three commercial harbors ($2.2 million). A $2 million loan to the Hashemite Kingdom of Jordan will assist in financing the expansion and improvement of the water supply system in the capital City of Amman. In Latin America, the IDA approved a total of $31 million for highway improvement and maintenance projects in Colombia, Paraguay, and Costa Rica.

Through the end of the period under review, the Association had authorized 18 credits totaling $181 million for purposes of transportation ($123.2 million), agriculture and forestry ($46.2 million), water supply facilities ($6.4 million), and industry ($5 million). These credits all have terms of 50 years, are interest free, and are repayable in foreign exchange. Amortization in each case begins after a 10-year grace period. A service charge of three-fourths of 1 percent on amounts withdrawn and outstanding is made to meet IDA's administrative costs, and is payable in dollars.

MEMBERSHIP AND SUBSCRIPTIONS

In the period under review, five member countries of the International Bank became members of the International Development Association-Ecuador, Libya, Nigeria, Panama, and Peru-with subscriptions totaling $6,810,000. The Board of Governors also approved the admission of the Syrian Arab Republic to membership in the IDA, subject to the usual terms and conditions, with a subscription of $950,000 and a corresponding reduction in the subscription of the United Arab Republic. As of December 31, 1961, 56 member Governments of the Bank had accepted membership in the IDA—15 as Part I members and 41 as Part II members. (See appendix table E-1.) 78

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Total subscribed capital amounted to the equivalent of $912.4 million on December 31, 1961. (See table 11.) 74 The subscriptions are payable in annual installments, and all but $3.5 million had been paid in on the $385.5 million due by that date. Part I countries,

72 Not reprinted here.

73 Appended to doc. 64, ante. "Not reprinted here.

including the United States, pay their subscriptions in gold or freely convertible currencies, whereas Part II countries pay 10 percent of their subscriptions in gold or freely convertible currencies and 90 percent in their own national currencies. The United States made its second payment, amounting to $61,655,825, on November 9, 1961.

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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 matters.

THE INTERNATIONAL FINANCE CORPORATION

67. OPERATIONS OF THE INTERNATIONAL FINANCE CORPORATION DURING THE PERIOD JANUARY 1JUNE 30, 1961: Report of the National Advisory Council on International Monetary and Financial Problems, Submitted May 10, 1962 (Excerpt) 75

IFC INVESTMENT COMMITMENTS

In the half-year under review, the IFC authorized five investment commitments totaling $2.6 million in productive private enterprises in Argentina, Colombia, India, and Jamaica. An investment of $1.5 million in Argentina was made to assist in financing the manufacture of transmission units and gears for the tractor and automotive industries. Two investments in Colombia were made during the period: one of $170,000 to expand and modernize the manufacture of home furniture and furniture components, and one in the equivalent of $500,000 to assist in financing the manufacture of electrical equipment. In India, the IFC made an investment of $210,000 to assist in financing the construction and operation of a plant for the manufacture of special purpose pumps. An investment of $224,000 was also approved by the IFC to assist in the acquisition of new equipment to expand the production of premixed concrete in Jamaica. The total cost of the projects financed by the IFC during the current period is estimated at the equivalent of $6.6 million.

Investment commitments during the year ended June 1961 totaled the equivalent of $6.2 million. In this period the IFC received $91,250 as the first repayments of principal on two of its investments— one in Australia and one in Mexico-in addition to over $288,000 in excess of fixed interest as the result of payment of contingent interest and profit sharing. The Corporation in this period sold its entire

"H. Doc. 402, 87th Cong., pp. 12-14. Part IV of the NAC report.

holdings in three investments totaling $2,457,000, and also sold participations totaling $1 million in two investments.

During the period of its operations through June 30, 1961, the Corporation made 40 investment commitments 76 in 18 member countries in the net equivalent of $44.4 million," over 70 percent of which had been disbursed. (See table 7.) 78 It has not only supplemented much larger amounts of private business capital, but has also encouraged private participation in its investments. Total net sales of the Corporation's investments and participations by private capital amounted to approximately $9 million, or about one-fifth of total net commitments.

AMENDMENT OF IFC CHARTER

As indicated in the preceding Semiannual Report of the Council.” the Board of Governors at the Fourth Annual Meeting of the IFC discussed the proposal to amend the charter of the Corporation to remove the existing prohibition against investments in capital stock. The Executive Directors believed that on the basis of experience this restriction was in practice a serious handicap both to the growth of the Corporation's operations as well as to the mobilization of private capital for foreign investment. The ability to provide and stimulate the flow of equity capital would, in the opinion of the Corporation, substantially assist in increasing the scale of its operations, and therefore increase its contribution to economic development. There would, however, be no change in the established policy of the Corporation of exercising no control over, and not participating in, the management of any enterprise in which it invests. In February, a draft resolution to amend the Corporation's charter to permit it to make investments in capital stock was formally submitted to the Board of Governors for action.s 80

MEMBERSHIP AND SUBSCRIPTIONS

In March 1961, the Government of Nigeria became a member of the Corporation with a subscription of $369,000, thereby increasing the total subscribed capital of the Corporation to $96,576,000 on June 30, 1961. The membership of the Corporation at the end of the period under review comprised 59 countries. (See appendix table D-1.) 81

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76 An earlier commitment of $3 million to Papelera Rio Parana, S.A., in Argentina, was canceled in the current period. [Footnote in source text.]

"This compares with net commitments of $44.8 million through Dec. 31, 1960. and reflects the effect of the $3 million cancellation referred to in the preceding footnote. [Footnote in source text.]

78 Not reprinted here.

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See American Foreign Policy: Current Documents, 1960, pp. 143–146.

In May 1961, Secretary of the Treasury Dillon appeared before the House Committee on Banking and Currency, and in July Assistant Secretary Leddy appeared before the Senate Committee on Foreign Relations in support of the proposed amendment. On Aug. 30, 1961, the U.S. Governor of the IFC was authorized to agree to an amendment of Art. III of the Agreement permitting the Corporation to invest in capital stock (Public Law 87-185) and on Sept. 1, the charter was amended to accomplish this purpose. [Footnote in source text.] Not reprinted here. See instead table E-1, appended to doc. 64, ante.

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The U.S. Director of the International Finance Corporation, or his Alternate, acting on the advice of the Council, supported the decisions taken with respect to the foregoing matters.

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

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FIFTH ANNUAL MEETING

The Board of Governors of the International Finance Corporation held its Fifth Annual Meeting jointly with the Annual Meetings of the International Monetary Fund, the International Bank and the International Development Association. The President of the Corporation, Robert L. Garner, submitted the Fifth Annual Report to the Board of Governors. In his address to the Board on the occasion of his retirement as President of the Corporation,83 Mr. Garner reviewed significant events during the past year which gave promise of increasing activity and usefulness for the Corporation, and outlined in some detail his personal observations on the relationship between foreign aid and economic development.

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Probably the most important event during the year was the amendment of the Corporation's charter permitting the investment of equity capital in private enterprises.84 With the amendment of sections 2 and 3 of Article III of the Articles of Agreement, the IFC is now empowered to make investments in such form or forms as it may deem appropriate in the circumstances. However, the Corporation may not assume responsibility for managing any enterprise in which it has invested, and may not exercise voting rights for such purpose or for any other purpose which, in its opinion, properly is within the scope of managerial control. The new authority is expected to assist substantially in enlarging the scale of IFC operations, thereby increasing its contribution to economic development. During the year, the Corporation made its first sales of entire investments out of its portfolio, thereby adhering to its basic purpose of revolving its funds and attracting private capital for overseas investment.

*H. Doc. 69, 88th Cong., Feb. 14, 1963, pp. 15-17. Part IV of the NAC report. Mr. Garner retired on Oct. 13, 1961, and was succeeded by the President of the International Bank, Mr. Eugene R. Black, who assumed the additional post of President of the Corporation. [Footnote in source text.]

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The bill (Public Law 87-185; 75 Stat. 413) authorizing Secretary Dillon, as U.S. Governor of the IFC, to vote in favor of this amendment was signed into law by the President on Aug. 30, 1961. [Footnote adapted from source text.]

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Text in American Foreign Policy: Current Documents, 1956, pp. 213–228. For the amendments here referred to, see TIAS 4894; 12 UST 2945.

The Temporary U.S. Alternate Governor of the IFC, John M. Leddy, commended the work of President Garner and welcomed the new officers of the Corporation. In view of the Corporation's relatively limited capital resources, he emphasized the importance to the Corporation of revolving its funds, and expressed the hope that the authorization to engage in equity financing would result in larger sales from its portfolio.

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, and Sierra Leone to membership in the Corporation, subject to the usual terms and conditions.

MEMBERSHIP AND SUBSCRIPTIONS

During the period under review, Indonesia withdrew its membership in the Corporation, the Dominican Republic was reinstated to membership, and New Zealand became a member of the Corporation with a subscription of $923,000. The Board of Governors also approved the admission of the Syrian Arab Republic to the Corporation, subject to the usual terms and conditions, with a subscription of $72,000, and a corresponding reduction in the subscription of the United Arab Republic. On December 31, 1961, the membership of the Corporation comprised 60 countries, with a total subscribed capital of $96.3 million. (See appendix table E-1.) 8:

IFC COMMITMENTS AND DISBURSEMENTS

In the half-year under review, the Corporation authorized investment commitments totaling the equivalent of $13.5 million in five projects in four member countries: Argentina, Colombia (2), Pakistan, and Peru.

An investment of $3,050,000 in Pasa, Petroquimica Argentina, will assist in financing the construction of an integrated petrochemical complex in Argentina to convert natural gas into synthetic rubber and other rubber chemical intermediates, all of which are presently imported. Additional funds amounting to $15.5 million will be provided by 15 private investment institutions. The total cost of the project is estimated at the equivalent of $72 million. Investments of $2 million each in two Colombian financial institutions-the first by the IFC in such institutions-will provide additional equity and long-term capital for industrial development in Colombia. It is expected that these investments will make IFC funds available to a wider variety of enterprises and to smaller industrial units than the Corporation has found it practical to finance directly. In September, the Corporation and the Pakistan Industrial Credit and Investment Corp., Ltd. (PICIC) announced financial commitments totaling $7 million to the Ismail Cement Industries, Ltd., to assist in financing the construction and operation of a Portland cement plant in West See American Foreign Policy: Current Documents, 1960, p. 144. Appended to doc. 64, ante.

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