During the week beginning June 27, 1966, the World Bank offered in the United States a new issue of US$175 million of 5% per cent 25-year bonds. The bonds, which will mature on July 1, 1991, were offered through a nationwide group of underwriters headed by The First Boston Corporation and Morgan Stanley and Company. The issue was offered at 99% and was oversubscribed.
Before entering any capital market, the Bank is bound under its Articles of Agreement to seek approval of the government concerned. In a letter granting the U.S. Government’s approval of the issue, the Secretary of the Treasury said: “The Bank has made an outstanding contribution to the sound economic advance of less developed countries.” The Secretary added that he approved of the borrowing because the activities of the Bank coincided with the national interests of the United States in this area. This was the nineteenth public offering of World Bank bonds in the United States—see “World Bank Bonds in the World’s Capital Markets,” p. 179.
Consultative Group Meetings
The Consultative Groups on Development Assistance to Thailand and Malaysia met in London under the chairmanship of the World Bank in the second half of May. The following countries were represented on both groups: Australia, Belgium, Canada, Denmark, France, Germany, Italy, Japan, the Netherlands, New Zealand, Switzerland, the United Kingdom and the United States.
A report prepared by the World Bank on the economic prospects of Thailand in relation to its Second Development Program for the 1967-71 period, together with a report prepared by Thailand and a list of projects requiring external assistance, were discussed by the Group. Although consultative group meetings are not intended to elicit specific pledges of aid, the Chairman concluded that the confidence and good will expressed offered reasonable expectations that Thailand’s capital and technical assistance requirements could be met. The Thai Government will have further talks with individual members of the Group during the forthcoming year.
The Consultative Group for Malaysia heard a statement of Malaysia’s progress during its current Five-Year Plan; papers prepared by the Government of Malaysia and the World Bank were also discussed. The Group decided that a significant increase in aid will be required to achieve the targets of the current Malaysian Plan without running down Malaysia’s external reserves. The representatives of the member countries indicated that they would give sympathetic consideration to Malaysia’s aid requests and to this end would separately hold direct discussions with the Government. Some of these discussions had already begun during the tour which the Malaysian Finance Minister had made of European countries.
Two meetings of countries interested in helping the development effort in Korea and Ceylon were also chaired by the World Bank in London during May. The Ceylon meeting was to obtain assistance from the participating countries for its current difficult foreign exchange situation. The Korea meeting was a preliminary to the official consideration of a Consultative Group for that country.
Supplementary Financial Measures
During April, a committee of the United Nations Trade and Development Board met in Geneva to discuss a scheme outlined by the Bank staff for an international system of supplementary financing to defend development programs against disruption caused by unexpected falls in export earnings. Mr. Irving Friedman, The Economic Adviser to the President of the Bank, represented the Bank at this conference. A resolution was adopted setting up a group of experts to study and elaborate the scheme, and the Bank staff will assist in this work.
The Bank study outlining the scheme was carried out at the request of the United Nations Conference on Trade and Development (UNCTAD). It was completed and transmitted to the Secretary-General of the United Nations in December 1965, and has been published by the Bank in English, French, and Spanish.
Bank Mission to Central America
A 17-man economic mission was sent to Central America in April to make a comprehensive study of the development plans of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua. These countries have made notable progress in recent years toward achieving economic integration, and the study of the Bank mission will be within the framework of this movement. (See “Economic Integration in Central America,” Finance and Development, Vol. Ill, No. 1, March 1966.)
The Bank mission is staffed by general economists and by experts in agriculture, transport, industry, education, and public health. The United Nations Food and Agriculture. Organization and the United Nations Educational, Scientific and Cultural Organization are also taking part in this mission.
|Colombia||Development Finance Companies||25.00|
|Colombia||Livestock Development Program||16.70|
|Morocco||Development Finance Company||17.50|
|Portugal (2 loans)||Electric Power||30.00|
|Tunisia||Development Finance Company||5.00|
|Loans made during the second quarter of 1966||$223.70|
|Loans made during the first quarter of 1966||50.70|
|Total amount lent during calendar year 1966 (up to June 30)||$274.40|
|Paraguay||Livestock Development Program||7.50|
|Credits extended during second quarter of 1966||$111.50|
|Credits extended during first quarter of 1966||61.60|
|Total amount of credits extended during calendar year 1966 (up to June 30)||$173.10|
|Country||Type of Project||Amount|
|Brazil||Pulp and Paper||$ 6,132,881|
|Tunisia||Development Finance Company||571,428|
|Investments announced during second quarter of 1966||$13,973,274|
|Investments announced during first quarter of 1966||7,834,029|
|Total investments announced during calendar year 1966 (up to June 30)||$21,807,303|