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Recent Activity—International Bank for Reconstruction and Development, International Development Association, and International Finance Corporation

Author(s):
International Monetary Fund. External Relations Dept.
Published Date:
June 1970
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World Bank Assists Educational TV

The World Bank is assisting an educational project that will enable school children in Ivory Coast to learn through television. It is the Bank’s first loan for educational TV.

The Bank is helping to finance the construction of a nationwide instructional television production center in Bouake, the second largest city in this West African nation. Pilot programs are expected to be offered next year. Ultimately, more than 700,000 pupils, in grades one through six, will have televised instruction.

The Bouake center is part of a broader $19 million educational project designed to expand and improve teacher training, and primary and secondary education, vocational and technical instruction over the next five years. In March, the Bank announced a loan of $11 million to cover the foreign exchange requirements.

The project was formulated as a result of extensive studies over the last few years by the Ivory Coast Government assisted mainly by the United Nations Educational, Scientific and Cultural Organization (UNESCO), the French Aid and Development Agency (FAC) and the French National Television Agency. In addition to FAC and UNESCO, agencies which will provide additional financial or technical assistance for the instructional television scheme include the United Nations Development Program, the United Nations Children’s Fund, and the European Development Fund.

WORLD BANK LOANS DURING THE SECOND QUARTER OF FISCAL 1970
COUNTRYPURPOSEAMOUNT

($ millions)
BrazilIndustry—Development Finance Company25.00
CameroonRoads12.00
CeylonIrrigation and Power14.50
IranAgricultural Credit6.50
MexicoElectric Power125.00
MoroccoIndustry—Development Finance Company15.00
PanamaElectric Power42.00
ParaguayRoads6.00
SingaporeIndustry—Development Finance Company5.00
ThailandElectric Power46.50
YugoslaviaIndustry18.50
YugoslaviaTelecommunications40.00
Loans made during the third quarter of fiscal 1970356.00
Loans made during the first half of fiscal 1970514.35
Total loans made during the nine months of fiscal 1970 ended March 31, 1970870.35
IDA CREDITS DURING THE THIRD QUARTER OF FISCAL 1970
COUNTRYPURPOSEAMOUNT

($ millions)
BoliviaAgriculture—Livestock1.40
BotswanaProject Preparation2.50
CameroonRoads7.00
CeylonIrrigation and Power14.50
EcuadorAgriculture—Livestock1.50
HondurasAgriculture—Livestock2.60
IndiaIrrigation35.00
MalawiElectric Power5.25
PakistanIndustry-Development Finance Company20.00
Papua and New GuineaAgriculture5.00
Sierra LeoneEducation3.00
Credits extended during the third quarter of fiscal 197097.75
Credits extended during the first half of fiscal 1970121.70
Credits extended during the nine months of fiscal 1970 ended March 31, 1970219.45

World Bank President, Robert S. McNamara, said that the television project illustrated the Bank’s conviction that new educational technology can, if carefully designed and efficiently used, contribute significantly to the learning process and, thereby, help overcome one of the most stubborn bottlenecks in development efforts.

Bank Borrows in Japan

The World Bank is moving ahead with its policy of increased support to economic development. The expansion of the Bank’s lending program over the years ahead entails a rising borrowing requirement. The Bank is seeking to satisfy this requirement by broadening still further the market for the Bank’s obligations.

During the quarter under review, the Bank tapped yet another new source of funds—Japan. The Bank of Japan has made two loans totaling ¥72,000,000,000 ($200 million) to the World Bank. The first loan of ¥ 36,000,000,000 was granted in February, the second loan also amounting to ¥36,000,000,000 was granted in March.

In commenting on the second loan, Mr. McNamara stated: “The action by the Bank of Japan further internationalizes the market for World Bank obligations, a development that is of prime importance to future financing of our activities. Only through the broadening of sources of funds available to the World Bank, can it insure a continuing and sufficient supply of financing for its expanding loan operations.”

IDA Replenishment

The debt-servicing problems facing a number of developing countries has once again underlined the need for providing a greater volume of development assistance on concessional terms. The International Development Agency is the special instrument in the Bank Group for this purpose.

The Bank has started negotiations with the richer member countries of IDA, generally known as the Part I countries, on the subject of the Third Replenishment of IDA’s resources. The Second Replenishment, amounting to $1,200 million, became effective in July 1969. IDA’s resources, including the Second Replenishment, will be committed by June 30, 1971. To ensure continued operations thereafter, the Third Replenishment will have to become effective by that date.

At present it is difficult to give an indication about the size of the Third Replenishment. However, two groups of experts have recommended that the replenishment should be at a higher level. The Commission on International Development, headed by Lester Pearson of Canada, recommended that additional resources to IDA should be provided at the rate of $1,000 million a year by 1972, rising to $1,500 million a year by 1975. This recommendation has been specifically endorsed by President Nixon’s Task Force on International Development headed by Rudolph Peterson.

Aid Coordination

The Consultative Groups for East Africa and Ceylon met during the quarter under review.

The Consultative Group for East Africa discussed the capital and technical assistance requirements of Kenya in the light of documentation prepared by the Government of Kenya and the Economic Report issued by the World Bank. The meeting concluded that the economic performance and prospects of Kenya justified continued financial and technical assistance from the members of the Group and that a substantial part of financial aid should be on concessionary terms.

The Ceylon Aid Group, reviewing the development of Ceylon’s economy since its formation in 1965, noted with satisfaction the acceleration of economic growth and the expansion in investment activity that had been achieved. Commitments signed by the Group in 1969 amounted to about $95 million and disbursements were about $65 million, the highest levels since the Aid Group was formed. On the basis of indications by member countries of their intentions for 1970 and taking into account undisbursed commitments from previous years, disbursements in 1970 are expected to be larger than in 1969. Several delegations emphasized that in establishing the terms of assistance, account should be taken of Ceylon’s need to avoid an excessive debt service burden.

The operators of this dairy farm have received financial assistance from the Kenya Government. The World Bank, a member of the East African Consultative Group, is assisting agricultural development in Kenya.

New IFC Investments

IFC and the World Bank joined to help finance a $105.8 million project to double the output of Zavodi Crvena Zastava (ZCZ), Yugoslavia’s largest automobile manufacturer. The IFC commitment, its second in Yugoslavia, is $8 million, while the Bank is providing a $10 million loan. The funds will be used for a joint venture by the Yugoslav car maker and Fiat S.P.A. of Italy to expand ZCZ’s production to 193,000 vehicles a year.

The largest IFC commitment in the first three quarters of 1970, $10.9 million, was in Minera Sagasca S.A., which is carrying out a $32.5 million equivalent copper mining venture in northern Chile. IFC joined Chilean, Japanese, and U.S. interests in sponsoring Sagasca. Sagasca is expected to produce and export 24,000 metric tons of fine copper equivalent annually and will generate foreign exchange earnings, increase employment opportunities, and develop infrastructure.

A futher step in the establishment of a balanced and economic petrochemical industry in Brazil was taken with the financing of Poliolefinas S.A., a firm making low-density polyethylene near Sao Paulo. IFC made a $8.4 million commitment in the $29 million equivalent venture. The petrochemical industry will provide Brazilian businesses and consumers with a wide variety of products and permit substantial foreign exchange savings. Poliolefinas will obtain its raw material, ethylene, from the new Petroquimica Uniao S.A., a naphtha cracker and reformer which IFC helped finance last year.

IFC INVESTMENT COMMITMENTS ANNOUNCED DURING THE THIRD QUARTER OF FISCAL 1970
COUNTRYTYPE OF PROJECTIFC

COMMITMENT

($ millions)
PROJECT

COSTS

($ millions)
BrazilPoliolefinas S.A. Plastics8.4029.00
ChileMinera Sagasca S.A. Copper mining10.9032.50
ColombiaPromotora de Hotels de Turismo Medellin S.A. Tourism.344.15
GreeceAluminium de Grece, S.A. Aluminum8.6029.80
HondurasCompania Pino Celulosa de Centro America S.A. Pulp and paper.04.50
IndiaZuari Agro Chemicals Limited Fertilizer3.004.00
MalaysiaIndia-Malaysia Textiles Berhad Textiles1.505.90
MexicoMinera del Norte, S.A. Iron mining1.504.60
PhilippinesPaper Industries Coporation of the Philippines Pulp and paper3.4668.60
YugoslaviaZavodi Crvena Zastava Automobiles8.00105.80
Total45.74284.85

New IFC Vice President

Mr. McNamara announced in January the appointment of Mr. Ladislaus von Hoffmann as Vice President of the International Finance Corporation effective July 1. Mr. von Hoffmann succeeds Mr. James S. Raj, of India, who is leaving IFC to become Managing Director of an investment banking firm in India. When Mr. Raj came to IFC he had already been away from India for three years and indicated his desire to return there after a few years’ service with IFC.

Mr. von Hoffmann, a German national, has been IFC since 1960 and during the past five years was director of IFC’s Department of Investments, Africa, Asia, and Middle East.

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