20079 TM I-A LW WORLD BANK AND IDA ANNUAL REPORT 1964-65 A t Contents-Annual Report 1964-65 Page PRESIDENT'S LETTER OF TRANSMITTAL . . . . . . . . . . . . . 2 PART ONE: THE YEAR'S ACTIVITIES . . . . . . . . . . . . . 4 Summary of World Bank and IDA Operations . . . . . . . . 5 Settlement of Investment Disputes . . . . . . . . . . . . . . 12 The Bank's Finances . I . . . . . . . . . . I . . . . . . 12 IDA's Finances . . . . . . . . . . . . . . . . . . . . . 14 Technical Assistance . . . . . . . . . . . . . . . . 15 Membership and Administration . . . . . . 17 APPENDICES Bank Appendices . . . . . . . . . . . 21 Balance Sheet . . . . . . . . . . . . . . . . . . 22 Funded Debt . . . . . . . . . . . . . . . . . . . . . 29 IDA Appendices . . . . . . . . . . . . . . . . . . 35 Governors, Executive Directors and Officers 46 PART TWO: TRENDS AND OUTLOOK IN DEVELOPMENT FINANCE . .52 Summary . . .. 52 Major Trends in Developing Countries . . . . . . . . . . . . . 53 Rates of Growth . . . . . . . . . . . . . . . . . . . . . 53 Exports and Imports . . . . . . . . . . . . . . . . . . . 54 Current Account Balance . . 56 Investment and Savings . . . . . . . . . . . . . . . . 56 External Finance for Development . . . . . . . . . . . . . . . 57 External Indebtedness of Developing Countries . . .57 Flows of Financial Resources to the Developing Countries . . . . . . . 59 Terms of Official Aid . . . . . . . . . . . . . . . . . . 60 International Capital Markets . . . . . . . . . . . . . . . . 61 Future Needs . . . . . . . . . . . . . . . . . . . 62 ANNEX: COUNTRY-BY-COUNTRY SUMMARY OF ACTIVITIES . . . . . . . . . 64 1 International Bank for Reconstruction and Development International Development Association September 27, 1965 My dear Mr. Chairman: In accordance with Section 10 of the By-Laws of the International Bank for Reconstruction and Development and Section 2 of the By-Laws of the International Development Association, I have been authorized by the Executive Directors of the Bank and the Association to submit to the Boards of Governors this Annual Report for the fiscal year July 1, 1964 to June 30, 1965. The first section of the Report surveys the various activities of the Bank and the Association in the fiscal year, and is followed by the customary Appendices, including the financial statements as of June 30, 1965, and the Administrative Budgets for the fiscal year ending June 30, 1966. A second section of the Report surveys recent trends in the world economy and discusses current problems of development finance. The Report concludes with an Annex giving a Country-by-country summary of Bank and IDA lending and technical assistance. Sincerely yours, George D. Woods President Chairman Boards of Governors International Bank for Reconstruction and Development, and International Development Association 2 Financial Highlights (Expressed in millions of United States Dollars) Fiscal Years 1964 1965 BANK LOANS OF THE YEAR $ 810 $ 1,023 SALES OF PARTS OF BANK LOANS 173 106 REPAYMENTS OF LOANS TO BANK 117 137 GROSS INCOME 252 267 NET INCOME 97 137* TOTAL OF SUPPLEMENTAL RESERVE 558 606 TOTAL OF SPECIAL RESERVE 288 289 TOTAL RESERVES 846 895 BORROWINGS (GROSS) 105 598 NET CHANGE IN FUNDED DEBT (-) 27 232 SUBSCRIBED CAPITAL 21,186 21,669 1964 1965 IDA CREDITS OF THE YEAR 283 309 USABLE RESOURCES 1,450 1,600 includes $35 million which in previous years would have been allocated to the Special Reserve. 3 PART ONE The Year's Activities f D..,:,.SiC:. ..... : . ESl ......S .TSD S:A k .;.t 4R7C; ............................ ;.ES ................2 .. f. . - V X;2 .g .-SAV~~~~~~~~09.i-. SU;- f 00003f - f:.: U C ;- ~~~~~~~~~~~~~~~0 'i ; 10' '''.gt';1''t ; ;i 3'i-' C ,_ ' '\ ;t 0 '? '-;S ' ' / t? -d ,j,'' D'50^ tit0 ? :X;S ;ft 't X 0'' /F \ k \,0 0-~~~ ~ ~~~~~~~~~~ ~ ' K''''' -; ' a?:iSEt'''\' (SdS;'f t-0;:0 f :'' ~ ~ ~ ~ ~ ~ ~ ~ ~~0 7''1 Aj7 0.:ffRr04 W'k,q n,a;-$ i x-- - 0Xi0 ;/A 0 f V ' 0X;,: , ., 0 g 0 i 0 f X X _ ^ < 0 ff . X ; X 0 ; :f~~~~~~~~~~~~~< THE FISCAL YEAR ending June 30, 1965, was the most group operates, discussed in Part Two of this Report. active in the history of the World Bank and its two affili- Work continued on the studies undertaken by the Bank at ates, the International Development Association (IDA) and the request of the United Nations Conference on Trade and the International Finance Corporation (IFC). Loans, credits Development. One of them, relating to the so-called "Horo- and other commitments amounted to $1.36 billion. The witz Plan," was completed and forwarded to the United Bank itself lent more than $1 billion for the first time in a Nations. single year; IDA's cumulative financing rose well above $1 The Commitments entered into by the World Bank billion: and IFC investments and other commitments were group duringtheyearwere composed asfollows: The Bank at a higher level than before. made 38 loans in 27 countries amounting to $1,023 mil- The Bank continued to grow in financial strength. Net lion; IDA extended 20 credits to 11 countries totaling $309 income totaled $137 million, and reserves stood at $895 million; and IFC made commitments (described in detail million. Bank bonds were issued in North American and in IFC's own Annual Report) of $26 million to 15 enter- European markets; the funded debt increased to $2,724 prises in 11 countries. million. IDA's cumulative resources increased to $1,600 Over the years, two-thirds of all Bank and IDA financing million. The increase included a $50 million allocation has been for basic projects for the generation and trans- from the Bank's net income for 1963/64, as decided by mission of power and for transportation, in roughly equal the Board of Governors at its Annual Meeting in September amounts. During the year 1964/65, however, transporta- 1964. At June 30, 1965, IDA had committed all but $514 tion gained a sizable lead with loans and credits in 19 million of its available funds. countries totaling $522 million, bringing the cumulative While the great preponderance of Bank and IDA lending total for such projects as railways, roads, waterways, ports continued to be for basic public utilities, operations in sup- and pipelines to $3,415 million. The power sector ac- port of agriculture and education by both the Bank and counted for loans and credits of $360 million to 13 coun- IDA expanded, pursuant to policies announced during the tries and a cumulative total of $3,127 million. Other sectors previousyear. The total of educational financing more than benefiting from Bank and IDA financing during the year. doubled, while cumulative lending for agricultural projects in order of magnitude of lending, were industry $194 mil- increased by about $167 million. lion, agriculture $167 million, telecommunications $33 Greater emphasis was given to industrial development. million, education $29.5 million and water supply $27 By the close of the fiscal year, member governments had million. nearly completed action on a proposal to increase IFC's In addition to increasing the volume of their financing, financial resources by authorizing the Bank to lend to the all three institutions extended the geographical scope of Corporation. Within the World Bank group, IFC acquired their operations, raising to 86 the number of countries and added responsibilities during the year: it now acts for the territories in which one or more have made loans, credits, whole group in the technical and financial appraisal, prepa- investments or other commitments. The Bank made its ration and supervision of industrial and mining projects. first loans in Jamaica and Sierra Leone, and made its first The Corporation's activities in this respect are comparable loan to Gabon since that country became independent in with its activities since 1962 in the field of development 1960. It also resumed lending operations in Brazil, making finance companies. loan commitments there for the first time since 1959. IDA Technical assistance activities were intensified. Funds became the first of the three institutions to finance de- allocated for feasibility studies of individual development velopment projects in Afghanistan, Bechuanaland, Bolivia projects and studies of sector development programs and Somalia, and it extended credits for the first time to exceeded the total spent for these purposes during the Kenya, Mauritania and Nigeria. IFC made investments in previous four years combined. enterprises in three countries where it had not operated The Executive Directors of the Bank completed work on before: Ethiopia, the Ivory Coast and Uganda. an international Convention on the Settlement of Invest- For the first time, a member of the World Bank group ment Disputes between States and Nationals of Other engaged in joint financing of development projects with States and submitted the Convention to governments. the European Development Fund (FED) of the European Increasing attention was paid to the international eco- Economic Community; IDA and FED joined in financing nomic and financial environment in which the World Bank road projects in Mauritania and in Somalia. 5 Bank Loans- and IDA Cr-edits 1964/65 by Area (Expressed in millions of U.S. Dollars) Bank Loans IDA Credits Total Number Amount Number Amount Number Amount AFRICA Bechuanaland . .- ........$ - 1 $ 3.60 1 $ 3.60 Gabon ......... .1..... .12.00 - - 1 12.00 Kenya ......... .-.... ...- 3 10.30 3 10.30 Mauritania ....... .-.... ...- 1 6.70 1 6.70 Morocco ......... ..........1 17.50 - - 1 17.50 Nigeria .... .... ..........1 82.00 2 35.50 3 117.50 Sierra Leone .................1 3.80 - - 1 3.80 Somalia . . . .- ... ..- 1 6.20 1 6.20 Zambia & Rhodesia ............1 7.70 - - 1 7.70 5 $ 123.00 8 $ 62.30 13 $ 185.30 ASIA AND MIDDLE EAST Afghanistan .-..... .....$ - 1 $ 3.50 1 $ 3.50 China. ...................2 35.00 - - 2 35.00 India. ...................3 134.00 2 95.00 5 229.00 Iran . . . . . . . . . . . . . . . . . . . . 2 40.50 - - 2 40.50 Japan ....................3 125.00 --3 125.00 Malaysia ............. ..1 6.80 - - 1 6.80 Pakistan . . . . . . . . . . . . . . . . . . . 3 90.79 3 90.79 Philippines............... . . . 2 26.20 - - 2 26.20 Thailand ...................2 28.00 --2 28.00 15 $ 395.50 6 $189.29 21 $ 584.79 EUROPE Finland. ..................2 $ 42.50 - $ - 2 $ 42.50 Italy. ...................1 100.00 - - 1 100.00 Portugal . ................ 1 15.00 - - 1 15.00 Spain. ...................1 65.00 - - 1 65.00 Turkey. .................. - - 3 39.00 3 39.00 Yugoslavia. .................1 70.00 - - 1 70.00 6 $ 292.50 3 $ 39.00 9 $ 331.50 WESTERN HEMISPHERE Bolivia ........ .-.. .$ - 2 $ 15.00 2 $ 15.00 Brazil.~........ ..........2 79.50 - - 2 79.50 Chile . . . . . . . . . . . . . . . . . . . . 1 4.40 - - 1 4.40 Honduras . . . . . . . . . . . . . . . . . . 1 6.00 1 3.50 2 9.50 Jamaica . . . . . . . . . . . . . . . . . . 1 5.50 -. - 1 5.50 Mexico ................I 1 32.00 - - 1 32.00 Paraguay ........ ..........1 2.20 - - 1 2.20 Peru .......... ..........2 26.00 - - 2 26.00 Uruguay ......... ..........1 12.70 - - 1 12.70 Venezuela ........ ..........2 44.00 - - 2 44.00 12 $ 212.30 3 $ 18.50 15 $ 230.80 TOTAL .38 $1,023.30 20 $309.09 58 $1,332.39 6 FINANCING FOR AGRICULTURE Agriculture Organization of the United Nations (FAO) rati- Agriculture already had been the object of $549 mil- fied an agreement with the Bank which, it is hoped, may lion in Bank loans and $133 million in IDA credits through increase considerably the number of agricultural projects fiscal year 1963/64, and in addition had been the bene- proposed for Bank and IDA financing. Under their agree- ficiary-sometimes the principal beneficiary-of many ment, FAO and the Bank are cooperating in the identifica- transportation and power projects. However, the agricul- tion and preparation of projects to the point where they tural sector in many developing countries has continued to can be considered for financing by the Bank or I DA. During lag seriously, yielding less food and fiber than it should to the year, 57 missions examined agricultural projects in 34 keep pace with the growth of population and to meet the countries, and in April 1965, the Bank made a $8.5 million rising needs of domestic industry. After careful study, the loan to Iran for the construction of feeder roads to connect Bank decided to seek more effective solutions to this six productive agricultural areas with main highways; this many-faceted problem by giving stronger support to proj- was the first Bank or IDA financing to result from studies ects which involve a comprehensive approach to agricul- undertaken as part of the joint program with FAD. tural development. FAO also will participate in the inspection of projects and Consequently, in the agricultural field the Bank and IDA in appropriate cases may provide technical assistance for not only continue their traditional support of large con- their execution. While appraisal of projects remains the struction projects such as flood control and irrigation exclusive responsibility of the Bank, FAO staff members schemes, but are also becoming increasingly engaged will increasingly form part of Bank appraisal missions. with broad land development programs comprising many In order to gather basic information relevant to agricul- inter-dependent measures in the fields of training and ex- tural planning in Africa, a mission organized by the Bank tension work, farm credit, crop storage, livestock produc- continued a long-range study of experiences with the de- tion, transportation and land settlement. Action to imple- velopment of agriculture on that continent. The study will ment the policy was intensified during the year. be published in the first half of 1966, and is expected to For example, the Bank lent $17.5 million to Morocco to provide useful guidance to the Bank and others working help carry out the Sidi Slimane project, a pilot program in this field. Two new permanent Bank missions in Africa to introduce modern intensive farming on 217,000 acres (see page 15) also will include agricultural projects among and point the way to similar developments in other parts their concerns. of the country. The six-year program, initiated by the Gov- ernment in 1962, encompasses the construction and im- FINANCING FOR EDUCATION provement of irrigation works and drainage facilities, The World Bank group has been involved on a minor improvement of farm-to-market roads, consolidation and scale in educational financing since 1962, when IDA ex- improvement of farms, provision of equipment to permit tended a credit of $5 million to assist in the enlargement the gradual adoption of modern methods, the completion of Tunisia's secondary school system. By June 30, 1964, of 11 Agricultural Service Centers to provide a wide range the Association had approved additional credits of $17.6 of equipment, supplies and technical assistance, and the million for educational projects in Pakistan and Tanzania. establishment and stocking of 13 dairy centers to form a In the spring of 1964, however, the Bank adopted a policy nucleus for the expansion and improvement of meat and of providing more active assistance to member govern- milk production. Associated with the project but not as- ments in strengthening their ability to train people in the sisted by the Bank are a sugar mill, already in operation, a varied skills required for economic development. dairy plant, a cotton gin, a citrus packing plant and a fruit Accordingly, the Bank concluded an agreement with the juice and preserves plant, all to be built by 1966. United Nations Educational, Scientific and Cultural Organ- Other examples of an integrated approach to agricul- ization(Unesco)similartotheoneconcluded with FAO, and tural development are: a loan of $12.7 million to Uruguay during the year 1964/65 Bank and Unesco experts ex- for the second stage of a comprehensive and highly suc- amined educational projects in 17 countries. The cumula- cessful project to increase and modernize livestock pro- tive volume of educational financing more than doubled as duction; a loan of $11 million to Peru for the third stage of new projects came forward. an irrigation project combining land development, farm The Bank itself made its first loan for education, one of credit and many forms of technical assistance, which will $6 million to help construct and equip buildings at the serve as a model for other parts of the country; a $15 mil- College of Agriculture of the University of the Philippines, lion loan to Peru for an agricultural credit institution with as part of a comprehensive program to increase agricul- national coverage; and an IDA credit of $2.8 million for the tural production and raise living standards. second stage of a project which promises to expand tea IDA's largest educational credit, of $20 million, was ex- production and raise the standard of living of African tended to Nigeria in March 1965 to assist in financing a smaliholders in Kenya. large number of projects involving the construction, ex- In October 1964, the GoverningCouncil of the Food and pansionandequippingofsecondary,technicalandteacher- 7 In Venezuela the Bank is helping to build roads through the highlands. Bank loans are also aiding cxpressLvays around Caracas and Valencia and electric power development in the east. training schools, all badly needed to overcome a shiortage of trained manpower in industry, agriculture and govern- ment. IDA also approved a creditof $3.5 million toAfghan- istan to help finance the construction and equipment of seven vocational schools at the secondary level. By June 30, 1965, total educational financing by the Bank and IDA amounted to more than $52 million. FINANCING FOR INDUSTRY Since 1962, IFC has acted for the World Bank group in considering proposals for organizing or strengthening industrial development finance companies, predominantly private institutions which provide both financial and tech- nical assistance for the expansion of existing industrial enterprises and the establishment of new ones. During the fiscal year under review, IFC was assigned responsibility for overseeing all industrial projects to be financed by the Bank, the Association or the Corporation. By June 30, 1965, action was nearly completed by gov- ernments to amend the Articles of Agreement of both the Bank and the Corporation, allowing the Bank to lend to IFC up to four times the Corporation's capital and surplus without governmental guarantees. The amendments will add about $400 million to IFC's potential resources for JR lending to private industry in the developing member countries, further enhancing the Corporation's role as the group's irnstrument for industrial development. A large part of the World Bank group's financing for in- dustry during the fiscal year was in support of industrial development finance companies, which have become a highly successful mechanism for the development of pri- vate industrial enterprises, especially of small and medium size. Beginning in 1950, the Bank group has assisted 19 finance companies in 17 countries with commitments to- taling $383 million. With these and other resources, the companies have provided in the neighborhood of $1,000 million for the development of industry. In addition, some have helped to develop the capital market for industrial securities by entering into standby or underwriting ar- rangements in support of new industrial issues. During 1964/65, the Bank lent $50 million to the Indus- trial Credit and Investment Corporation of India, $15 mil- lion to the China Development Corporation and $14 mil- lion to the Industrialization Fund of Finland; IDA extended two credits totaling $15 million to the Industrial Develop- ment Bank of Turkey; in the Ivory Coast, IFC subscribed some $200,000 of the capital of the new Banque Ivoi- rienne de D6veloppement Industriel, and in Spain it dou- bled its share subscription to the Banco del Desarrollo Eco- n6mico Espanol to a total of about $585,000. Near the close of the fiscal year, the Bank made a loan of $100 million to the Cassa per il Mezzogiorno (the Southern Italy Development Fund) to assist the development of in- dustry in Southern Italy. The funds will be re-lent by the Cassa to three special credit institutes which lend to in- 8 Bank Loans -and -,ID-A -Cred-its-1-9-64/65 by Pu-rpose (E)(pressed in? milllons of U.S. 13ollars) TRANSPORTATION BANVK IDA TOTAL Bechuanaland-Roads .. . ... . ... . . . . $ 3.60 $ 3.60 China-Railways . . . . . . . . . . . . . . . . . . . . . .20.00 - 20.00 Finland-Roads . . . . . . . . . . . . . . . . . . . . . . . . . 28.50 -28.50 Gabon-Roads . . . . . . . . . . . . . .12.00 - 12.00 Hondura s- RDads . . . . . . . . . . . . . . . . . . . . . . . 6.00 3.50 9.50 India-Railways . . . . . . . . . . . . . . . . . . . . . . . .- 62.00 62.00 Iran-Roads . . . . . . . . . . . . . . . . . . . . . . . . . . 40.50 - 40.50 Jamaica-Roads . . . . . . . . . . . . . . . . . . . . . . . . 5.50 5.50 Japan-Roads . . . . . . . . . . . . . . . . . . . . . . . . 100.00 - 100.00 Kenya-Roads .. . . .- . .7.50 7.50 Mauritania-Roads . ., . - 6.70 6.70 Mexico-Roads . . . . . . . . . . . . . . . . . . . . . . . . 32.00 - 32.00 Nigeria-Roads . . . . . . . . . . . . . . . . . . . . . . . .- 15.50 15.50 Pakistan-inland Water Transport . . . . . . . . . . . . . . . . . .- 5.25 5.25 Paraguay-Roads . . . . . . . . . . . . . . . . . . . . . . . 2.20 2.20 Somalia-Roads . . . . . . . . . . . . . . . .6.20 6.20 Spain-Railways . . . . . . . . . . . . . . . . . . . . . . . . . 65.00 - 65.00 Venezuela-Roads . . . . . . . . . . . . . . . . . . . . . . . . 30.00- 30.00 Yugoslavia-Railways . . . . . . . . . . . . . . . . . . . . . . 70.00 - 70.00 $ 411.70 $110.25 $ 521.95 ELECTRIC POWER Bolivia . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ - $ 15.00 $ 15.00 Brazil . . . . . . . . . . . . . . . . . . . . . . . . . . 79.50 79.50 Chile - . . . . . . . . .. . . . . . . 4.40 4.40 India . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84.00 - 84.00 Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . 25.00 - 25.00 Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82.00 - 82.00 Portugal . . . . . . . . . . . . . . . . . . . . . . . . . . 15.00 - 15.00 Sierra Leone . . . . . . . . . . . . . . . . . . . . . . . . . . 3.80 3.80 Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.00 6.00 Turkey . . . . . . . . . . . . . . . . . . . . . . . . . . .- 24.00 24.00 Venezuela . . . . . . . . . . . . . . . . . . . . . . . . 14.00 - 14.00 Zambia and Rhodesia . . . . . . . . . . . . . . . . . . . . . . . 7.70 7.70 $ 321.40 $ 39.00 $ 360.40 AGRICULTURE Kenya-Tea production . . . . . . . . . . . . . . . . . . . . $ - $ 2.80 $ 2.60 Morocco-Irrigation & land settlement . . . . . . . . . . . . . . . . . 17.50 - 17.50 Pakistan-Indus Basin Development . . . . . . . . . . . . . . . . . . - 58.54 58.54 Pakistan-Agricultural credit . . . . . . . . . . . . . . . . . . .- 27.00 27.00 Peru-irrigation and land settlement . . . . . . . . . . . . . . . . . 11.00 11.00 Peru-Agricultural credit . . . . . . . . . . . . . . . . . . . . . 15.00 - 15.00 Thailand-irrigation . . . . . . . . . . . . . . . . . . . . . . . 22.00 - 22.00 Uruguay-Cattle production . . . . . . . . . . . . . . . . . . . . . 12.70 - 12.70 $ 78.20 $ 88.34 $ 166.54 EDUCATION Afghanistan . . . . . . . . . . . . . . . . . . . . . . . . . .$ - $ 3.50 $ 3.50 Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . .- 20.00 20.00 Philippines . . . . . . . . . . . . . . . . . . . . . . 6.00 6.00 $ 6.00 $ 23.50 $ 29.50 INDUSTRY China-Development Finance Company . . . . . . . . . . . . . . . . .$ 15.00 $ - $ 15.00 Finland-Development Finance Company . . . . . . . . . . . . . . . . 14.00 - 14.00 India-Development Finance Company . . . . . . . . . . . . . . . . . 50.00 - 50.00 Italy-Industrial development . . . . . . . . . . . . . . . . . . . . 1UO.00 - 100.00 Turkey-Development Finance Company . . . . . . . . . . . . . . . .- 15.00 15.00 $ 179.00 $ 15.00 $ 194.00 WATER SUPPLY Malaysia-Singapore water system . . . . . . . . . . . . . . . . . . . $ 6.80 $ - $ 6.80 Philippines-Manila water system . . . . . . . . . . . . . . . . . . 20.20 -20.20 $ 27.00 $ - $ 27.00 TELECOMMUNICATIONS India . . . . . . . . . . . . . . . . . . . . . . . . . . .$ - $ 33.00 $ 33.00 TOTAL . . . . . . . . . . . . . $1,023.30 $309.09 $1,332.39 dustrial enterprises on the southern mainland and in was requested to conduct as a result of the deliberations Sicily and Sardinia. This was the Bank's eighth loan to the of UNCTAD. One of these was completed and forwarded Cassa, raising the total to $398 million. to the United Nations in February 1965; it dealt with the "Horowitz Proposal," which was advanced by the Governor STAFF STUDIES of the Bank of Israel as a means of increasing the volume The Bank's effectiveness as a lender for development of development funds available for lending on a multi- depends in large measure upon its knowledge of the bor- lateral basis at low interest and for a long term. Under rowing countries-their resources of land, materials and the proposal, funds would be borrowed in the private capi- manpower; their development plans and programs, to- tal markets by IDA or some other international agency, pri- gether with the details of organization for their execution; marily in the industrialized countries with surpluses in their past performance and future prospects in the light of their balance of payments, and re-lent to the developing all relevant information. In the regular conduct of opera- countries on concessionary terms. The plan contemplates tions, the Bank has produced studies for its own purposes a system of guarantees by the industrialized countries in on the economic position and prospects of some 95 coun- support of such borrowings and the establishment of an tries and territories. "interest equalization fund" to which they would contrib- Such studies must be kept up-to-date to assist the Bank ute amounts required to subsidize the difference between in its consideration of proposals for financing and in pro- the borrowing and lending rates of interest. The Bank viding assistance to members as new problems arise in study analyzed the technical problems involved and stated carrying out their plans. For this purpose, special missions the principal issues for consideration by governments. are sometimes organized, as in the case of Chile in 1961, Of the other studies going forward, one concerns a pro- Colombia in 1962 and Mexico in 1963, to undertake a posal by the United Kingdom and Sweden for a system of thorough review of progress and of plans for further supplementary financing to help mitigate adverse effects investment. on development plans of long-term and unpredictable During the fiscal year 1964/65 this type of activity was fluctuations in commodity prices. The Bank is also examin- expanded. Program review missions were organized to ing the implications for development of the use of sup- conduct comprehensive studies in Argentina, Brazil, Cey- pliers' credits and the possibilities for the establishment of lon, Nigeria, Paraguay, Peru, Turkey and Venezuela. They a system of multilateral investment insurance. involved the services of more than 60 specialists in the principal economic sectors, as well as experts in develop- TERMS OF LENDING ment economics and institutions. Their studies, which will In its own operations, the Bank continued to adjust its not be made public, help to establish a perspective for lending terms, within limits consistent with sound prac- long-term financing by the Bank and IDA and, in some tice, to fit the financial and debt service situation of its less cases, by other lending agencies as well. For example, in developed members. Relatively longer maturities and the light of the report of the mission to Brazil, consider- grace periods were fixed in some cases, where this ap- ation was being given to new loan requests, to the coun- peared appropriate in view of the useful life of the project, try's future needs for external capital and to the most ef- the time required to bring it into productive use, or the fective means of providing outside assistance. debt situation of the borrowing country. For example, the For at least a decade, the Bank has been increasingly Bank's educational loan to the Philippines was for 30 concerned with the rising burden which the service of ex- years with a 10-year grace period; an $82 million loan for ternal debt is placing on the balance of payments of the the big Kainji Dam in Nigeria was for 35 years, with a 5- underdeveloped countries (see page 57). During the year, year period of grace; two other power loans were for terms The Johns Hopkins Press published for the Bank a study, of 26 years, while four loans for power, six for transporta- "Economic Growth and External Debt," by Dragoslav tion, one for agriculture and one for a water supply project Avramovic and other members of the staff. The study were made repayable in 25 years. showed, among other things, that in the period 1955-62, During the year, the Bank considered whether it was the public and publicly guaranteed debt of a representa- justified in continuing to make loans to more developed tive sample of developing countries more than doubled, countries, able to cover the bulk of their requirements and that amortization and interest payments on this debt for external capital from market sources, at the same more than trebled. This study was an outgrowth of staff interest rate as it charged to its less developed members. work undertaken in response to requests from the Devel- As a result of this consideration, the Bank decided that it opment Assistance Committee (DAC) of the Organization would charge such countries rates of interest roughlycom- for Economic Cooperation and Development (OECD) and parable to those they pay when borrowing in the market. the Secretariat of the United Nations Conference on Trade These rates would be up to one per cent higher than the and Development (UNCTAD). Bank's standard interest rate, which remained at 5½/2% Work continued on a number of staff studies the Bank during the year. Pursuant to this policy, a 25-year loan of 10 A $1 9.!j milion Bank loan and a $1 3 million IDA credit are helping to finance the construction of the Roseires Dam across the Blue Nile in the Sudan. Water stored by this 1 darn will make It possible to bring a further 900,000 acres of land under cultivation. $75 million for an expressway in Japan carried an interest information concerning the recipient country's economic charge of 61/2%, while 61/4% was charged on a 15-year position, performance, problems and capital requirements. $100 million loan for industrial projects in Italy. As a result of its study, the Bank is working to enhance Within the World Bank group, however, it is IDA which the effectiveness of existing consultative groups. It is also, makes the most important contribution toward mitigating within staff limitations, preparing to organize new ones, in the debt-service burden. All IDA's credits have been for cases where the establishment of such a group is desired 50 years, repayable in easy stages after 10 years of grace both by the developing country and the principal capital- and with no interest except for a service charge of 3/4 of 1%; exporting countries concerned, and where it is likely that but the need of the underdeveloped countries for financ- the economic performance of the developing country ing on such terms continued to outrun the resources would be improved thereby. available to IDA. SETTLEMENT OF INVESTMENT DISPUTES COORDINATION OF AID One obstacle to economic growth has been uncertainty The amount of international financial assistance avail- on the part of private investors whether investments made able to the underdeveloped countries is limited, and the in many of the less developed countries would be secure need for better use and coordination of external aid con- against other than normal business risks. As a step to- tinues to be urgent. The Bank took its first major initiative ward overcoming this difficulty and encouraging a freer to assist in the coordination of aid in 1958, when a critical flow of private capital to the developing countries, the shortage of foreign exchange threatened to undermine Executive Directors of the Bank completed work during the development program of India. A group consisting the year on the text of a Convention on the Settlement of of the Bank and the capital-exporting countries most Investment Disputes between States and Nationals of directly concerned was organized to surmount the crisis Other States. Drafting the text had occupied the Bank's by mobilizing an adequate flow of external assistance. In legal staff for several years; and the advice of legal experts 1960, a similar consortium was organized by the Bank for from 86 member countries had been obtained in four aid to Pakistan. These consortia have met annually since regional meetings. The final text was prepared by the their inception. Both have served as vehicles for objective Executive Directors with the assistance of a Legal Com- comments on the economic performance and capital re- mittee consisting of representatives of 61 governments. quirements of the recipient countries, and have served to The Convention was sent to member governments in coordinate external aid and improve the terms on which it March 1965, for their consideration with a view to signa- is given. The Bank is also a member of consortia on Greece ture and ratification, acceptance or approval. and Turkey administered by the Organization for Eco- The Convention provides for the establishment of an nomic Cooperation and Development. International Centre for Settlement of Investment Disputes For certain other developing countries, the Bank has as an autonomous institution under the auspices of the undertaken to organize consultative groups of interested Bank. The Centre will make available facilities for concilia- capital-exporting countries. These groups do not engage tion and arbitration, to which contracting states and in- in annual aid pledges but in other respects they are in- vestors who are nationals of other contracting states will tended to serve the same purposes as the consortia. Since have access on a voluntary basis under rules laid down in 1962, consultative groups have been organized for Co- the Convention. lombia, Nigeria, the Sudan and Tunisia, in each case at the The Convention will enter into force 30 days after it has request of the aid-receiving government. In addition, the been signed and ratified, accepted or approved by 20 Bank is a participant in a consultative group for Ecuador governments. By the end of June 1965, the Convention recently organized by the Inter-American Development had been signed by the Ivory Coast, Jamaica, Tunisia and Bank. the United Kingdom; the governments of Nigeria and Paki- During the fiscal year, the Bank carried out an intensive stan had notified the Bank that their signatures would be review of the work of the groups it has organized, canvass- added shortly, and they signed the Convention in July. ing informally the views of major capital-exporting coun- tries as well as of the developing countries for which con- The Bank's Finances sultative groups have been formed. Its conclusion was that there continues to be a pressing need for effective INCOME, LOANS AND REPAYMENTS of loans all set new rec- arrangements to coordinate aid, and that the organization ords. The funded debt increased for the first time in and administration of consultative groups is an appro- three years as the Bank returned to the capital markets of priate and important function for the Bank to assume. At Canada, Germany, Switzerland and the United States with the same time, it was recognized that each consultative public borrowings equivalent to $300 million. group requires a high degree of staff support in the main- Combined net income and loan commissions totaled tenance of liaison and the preparation and exchange of $138 million, compared with the previous high of $131 12 million in the fiscal year 1963/64. Loan commissions bursements amounted to $606 million, compared with amounted to less than $1 million, as compared to $33 $559 million in the previous fiscal year. million a year before. The reduction was due to the discon- Borrowers repaid $137 million to the Bank and $163 tinuance of the practice of treating a part of loan charges, million to investors holding maturities of Bank loans; the amounting to 1% per annum on outstanding loans, as total of $300 million was $33 million above the figure for commission and allocating the proceeds to the Special Re- the year before. This brought cumulative repayments to serve. The discontinuance took effect July 1, 1964, and $1,886 million, including $909 million to the Bank and affected all but a few old loans totaling about $87 million $977 million to purchasers of its loans, while the cumula- on that date. The 1% commission accrued on those loans tive total of loan sales reached $1,885 million by June 30, raised the Special Reserve to about $289 million at June 1965. 30, 1965. At the same time, sales of loan maturities declined for Gross income for the year was $267 million, including the third successive fiscal year under the combined impact commissions, $15 million more than the previous record of rising yields on other securities in Europe, the Bank's of combined gross income and commissions. Bond and policy of not offering in the United States market portions note interest and issuance expenses were $107 million, an of loans to countries whose securities are subject to the increase of $5 million. Administrative costs rose by $3.2 United States "Interest Equalization Tax" and the volun- million to $17.8 million. Expenditures for services to mem- tary program to reduce United States private commit- ber countries totaled $4.5 million; these funds were spent ments in the industrialized countries. Sales for the year for economic surveys, project and sector studies, training totaled $106 million, a reduction of $67 million from the programs for officials of the less developed countries and year before; sales from portfolio accounted for $76 million other technical and advisory services. and the balance of $30 million represented participations Loans held by the Bank on June 30, 1965, including by investors who agreed to take up parts of loans at the those not yet effective and net of exchange adjustments, time loan agreements were signed. totaled $5,967 million, an increase of $775 million. Dis- THE BANK'S FUNDED DEBT INCREASED during the year by about $232 million; by June 30, 1965, the total of bonds and notes outstanding was $2,724 million. The increase reflected the Bank's most active borrowing operations in SOURCES OF FUNDS FOR LENDING several years: in public offerings, the Bank borrowed Can$ umulatieAmountsin Milonsof U. S. Dollars 25 million (US$ 23.1 million), DM 250 million (US$ 62.5 9,000 million), Sw F 60 million (about US$ 14 million) and US$ 200 million, of which $17.9 million were sold under delayed ($742 MILLION) S , delivery arrangements, for a total of $299.6 million of new \$742 MILLION 8,0 bonds. The Canadian issue was the first in 10 years and the German issue the first since 1959, while the Swiss and REPAYMENTS OF PRINCIPAL 7,000 United States issues were the first in three years. ($909 MILLION) \ / / t>1 5 Maturing bonds and notes totaling $298 million were re- 6000 funded during the year. Two issues of 31/2% Notes held by USABLE SUBSCRIPTIONS 6,0 0 the Deutsche Bundesbank, denominated in U.S. dollars ($1,763 MILLION) and Deutsche Mark and totaling $198 million equivalent, 5,000 were exchanged for an equal amount of new Notes, approx- SALES OF PORTIONS OF LOANS imately half of which mature in 1968/69 and bear interest ($1,995 MILLION) X - L - _ 4,000 at41/5%, while the remainder carry interest of 41/4% and be- come due in 1969/70. Another issue of $100 million of SALES OF BANK OBLIGAIONS - 3,00033/4% Two-Year Bonds fell due on October 1, 1964, and SALES OF BANK OBLIGATIONS a ______3,000 ($2,742 MILLION) was refunded through the placement at par of an equal amount of 41/4% Bonds with governmental institutions in 2,000 26 countries outside the United States. Two maturities were paid off during the year; they con- sited of Sw F 33.3 million (US$ 7.8 million) of a 33/8% loan made to the Bank by the Swiss Government in 1957, and - - - Can$ 11.5 million (US$ 10.6 million) of 31/4% Bonds issued 1947'48 '49 '50 '5l '52 '53 '54 '55 '56 '57 '56 '59 '60 '61 '62 '63 '64 '65 in 1955. In addition, net sinking and purchase fund op- Fiscal Years erations retired the equivalent of $31 million in Bank obligations. 13 COMMITMENTS AND DISBURSEMENTS aside for transfer to IDA in the form of a grant, after $47 COMMITMENTS AND DISBURSEMENTS million of that year's net income had been allocated to the in Millions of U. S. Dollars Supplemental Reserve. After the close of the 1964/65 fiscal year, the Executive Directors allocated $62 million to the Supplemental Reserve from net income for 1964/65, 200 raising that Reserve to $668 million, and recommended to the Board of Governors that the balance of $75 million of that year's net income be transferred to IDA as a grant. .,000 IDA's Finances 800 THE RESOURCES AVAILABLE to IDA for commitment in de- K,-; velopment credits have been in two principal forms: initial 600 _ -6.- subscriptions of members and supplementary contribu- tions. The initial subscriptions of 18 high income mem- ber countries of IDA (called Part I countries) are payable 400 in gold or freely convertible currency; 10% of the subscrip- tions of the remaining 76 member countries (called Part II 200 countries) also is payable in gold or freely convertible currency, while the balance is payable in the currencies of the members and may be used by IDA only with their con- sent. Through fiscal year 1964/65, usable subscriptions 0947-49 1950-52 1953-55 1956-58 1959-61 1962-64 1965 bybtcaeoisfmmerttld$70ilonTh Three Year Averages Except for 1965 Fiscal Years y both categories of members totaled $780 million. The IDA COMMITMENTS . . IDA DISBURSEMENTS total included the first local currency subscriptions BANK COMMITMENTS BANK DISBURSEMENTS to be released by Part II countries for use by IDA, totaling $4.6 million. Ireland, Israel and Jordan made all of their subscriptions available in convertible form over a period of five years; Panama paid a part of the local cur- rency portion of its subscription in dollars; and Mexico Interest rates on the new issues sold outside the United released pesos for procurement of items purchased in States were considerably higher than in the past. The that country under an IDA credit. United States issue of Twenty-Five Year 41/2% Bonds, The Articles of Agreement provide for a periodic review which was offered through an underwriting syndicate of of the adequacy of the Association's resources. In 1962, 183 commercial banks and investment banking and the Board of Governors requested the Executive Directors dealer houses headed by Morgan Stanley & Co. and The to make such a review, and they prepared a report which First Boston Corporation, was offered to the public at recommendedthat IDA'sresourcesbe replenishedthrough 1003/a to yield 4.475% to maturity. The Canadian issue of supplementary contributions by Part I members. The rec- 51/4% Twenty-Five Year Bonds was offered at 991/2 to yield ommendation was approved. Accordingly, agreed pay- about 5.28%; it was underwritten and sold by a group of ments totaling $753 million, including the initial subscrip- Canadian investment banking and dealer houses led by tions of Belgium and Luxembourg, are being made in the Dominion Securities Corporation Limited, A. E. Ames three annual installments beginning in November 1965. & Co. Limited and Wood, Gundy & Company Limited. The These funds are intended to cover IDA's requirements for German issue of Twenty-Year Bonds at 51/2%, the highest new commitment authority until at least June 30, 1966. rate ever paid by the Bank, was offered to the public at par The cumulative total of IDA's available funds includes by a syndicate of some 70 German banking houses with about $75 million from a number of other sources: the the Deutsche Bank as principal manager and the Dresdner World Bank grant of $50 million from net income for 1963/ Bank as co-manager. The Swiss issue, which was sold by a 64; $18 million in four special supplementary contribu- group of leading Swiss banking institutions headed by the tions by Sweden; and $6.7 million of net income since the Union Bank of Switzerland, the Swiss Bank Corporation start of operations, including about $2.6 million in fiscal and the Swiss Credit Bank, consisted of 43/4% Eighteen- year 1964/65. Year Bonds offered at par. The total of freely usable funds available to IDA from the start of its operations amounted to $1,600 million at June UNDER A DECISION approved by the Board of Governors at 30, 1965 (see table). By the same date, IDA had extended its Annual Meeting in September 1964, $50 million of the 77 credits totaling $1,086 million, net of cancellations, in- Bank's net income for the fiscal year 1963/64 was set cluding $309 million during the fiscal year under review; 14 Usable Funds Available to IDA, 1960-65 specificprojectsforpresentationtothe Bankor IDA.These missions have their offices in Nairobi and Abidjan, respec- (MullionsrifpUS.oDollr E7u80alet2 tively. Initially, they are concentrating their efforts on agri- Subscriptionst. . o$ 780 culture and transportation, but eventually may give their Part I Countries (100% of subscriptions) . . . . . . $751 attention to projects in other sectors as well. Members of Part II Countries (10% of the missions will be available to advise governments, both subscriptions) . . . . . . 24 on general policy issues in connection with projects and on Part 1i Countries (Releases in Con- the solution of practical problems that arise in their prepar- vertible Form of All or Part of their Local Currency Subscriptions) . 5aton. They wil not normally be involved In the appraisal or Supplementary Contributions . . 763 supervision of projects or in the administration of existing Part I Countries (Agreed Contribu- loans. tions to First Replenishment). . 745 In addition to its other duties, the mission in Abidjan Sweden (Four Special Supplemen- will work in close association with the new African Develop- tary Contributions in Addition to ment Bank (ADB). During the year the Bank has kept in Replenishment) . . 18 World Bank Transfer . . . . . 50 touch with the ADB in order to offer whatever assistance Cumulative Net Income . . . 7 may be appropriate. It is hoped that arrangements will in TOTAL . . . . . $1,600 due course be worked out for studying and financing pos- sible projects of common interest, as well as for coordinat- ing the activities of the two institutions more generally. and negotiations already were well advanced looking to- As in the past, the Bank stands ready to assist member ward the commitment of a large portion of the funds still governments, at their request, in the formulation of gen- available, which totaled $514 million. As the fiscal year eral programs of development which can serve as a frame- ended, it was expected that nearly all the resources avail- work for investment and other measures conducive to able would be committed by the summer of 1966. economic growth. For this purpose, the Bank has con- After the close of the fiscal year, the Executive Directors ducted comprehensive economic surveys in 25 countries; of the Bank recommended to the Board of Governors that the most recent was carried out in Morocco by a mission $75 million from net income for 1964/65 be transferred to which was completing its report at the end of the fiscal IDA in the form of a second grant. year. The reports of similar missions to Kuwait and to Papua Actual disbursements by IDA reached a cumulative total and New Guinea were completed during the year and were of $415 million, including $222 million disbursed in the published for the Bank by The Johns Hopkins Press. fiscal year ended June 30, 1965. Bank assistance in bringing development projects and programs to the point of readiness for financing also was Technical Assistance expanded. More funds were allocated for this purpose dur- ing the fiscal year 1964/65 than had been spent during LENDING OPERATIONS of the Bank and IDA and the usual the previous four years combined. The following table conduct of their relationships with member governments summarizes the year's allocations: and borrowers include in normal course many varieties of technical assistance-advice in the preparation of projects, Estimafed Balk Share counsel on the size and composition of development in- Country Object of Study (USs) vestments, recruitment of experts for particular develop- Afghanistan Kunduz-Khanabad River Basin ment tasks, and many others. Some types of technical Developmenthbltio . . $ 350,000 assistance have been singled out for particular emphasis Cameroon Road Improvement . . . 200,000 and specific staff and budget support; but much, and per- Iran Port Reorganization . . . 39,000 haps most, technical assistance is rendered without spe- Jamaica Kingston Expressway Proposal . 200,000 cial recognition, as part of normal operational activity. Dur- Malaysia Land Development Scheme . . 507,000 ityrup ,a funds Nepal Transport Development . 114,000 ing the year Just past, more resources of staff and funds Nigeria Road Program, Eastern Region . 375,000 were devoted to technical assistance than ever before; but Pakistan River Ports and Waterways this increased activity was only partly reflected in the ex- Development .950,000 penditure of $4.5 million, in itself a record figure, recorded Peru Road Transport Development . 300,000 Somalia Mogadiscio Port Improvement . . 375,000 under the Bank's budget Item, 'Services to Member Sudan Review of Gezira Scheme 400,000 Countries." TOTAL . $3,930,500 In eastern and western Africa, where the problems of development are particularly complex, the Bank has es- The total cost of these studies will approximate $5.4 tablished permanent regional missions, primarily to assist million, of which the equivalent of about $1.5 million will the governments in those areas to identify and prepare be provided by the domestic authorities concerned. 15 EXPENDITURES FOR SERVICES railway development possibilities in Costa Rica and of the TO MEMBER COUNTRIES potential of coal deposits in Colombia's Cauca Valley were Exre in completed, as was field work on a study of iron ore trans- Expressed in Thousands of U. S. Dollars port facilities in Gabon. The scope of surveys of power de- 7_000 velopment for South Central Brazil and of mineral re- sources in Surinam was extended. Field work was com- TOTAL pleted and reports were being prepared on port studies in SECTOR AND FEASIBILITY STUDIES 6,000 Thailand. The Bank agreed to act as Executing Agency for OTHER ,' four more Special Fund projects: studies of highway de- ---- BUDGETED velopment in Western Nigeria and Somalia, of transport 5,000 requirements in southern Cameroon and the Central Afri- * can Republic, and of highways and ports on the southern Atlantic coast of Nicaragua. _--~ / _4,000 In other technical assistance activities of the year, a / / Bank mission completed a comprehensive survey of the capital market in Chile and recommended measures for _ _- 1 3,000 the mobilization of private savings through financial in- stitutions and for improving the operation of the stock market. A report on the securities market in Pakistan, pre- - ____ -t __ _ _ u - L- - 2,000 pared by a consultant engaged by the Bank, was submitted -2,000 to the Government and was supplemented by further ad- visory assistance in the preparation of a stock exchange _ | / / | law. A survey of the securities market was conducted in | _ _ _ l /-= _ _ _ - 1,000 Peru, and a five-man mission, including experts from the Bank and the International Monetary Fund, completed a study of budgetary and fiscal policies in Portugal. 1950 19l55 1960 19_65 1_66 _Members of the Bank staff were seconded during the 160 1965 1966 BUDGET year as planning or development advisers in Colombia, Jamaica, Libya, East Pakistan and the Sudan; similar assignments were completed in Kuwait and Malaysia. The During the year the Bank concluded its assistance to the Bank also provided short-term economic advisers to the Ecuadorean Institute of Electrification in the preparation of Governments of Nigeria, Sierra Leone and Zambia and to a national electrification plan. The study of coal transport the National Development Council in Argentina. In addition problems in India, a general transport survey in Zambia to the permanent missions in western and eastern Africa, and a study to improve school building designs in Tunisia already mentioned, resident members of the Bank's staff were completed. provided assistance in the preparation or execution of A Bank team headed by Dr. Pieter Lieftinck and assisted agricultural or transportation projects in Chile, Colombia by a number of consultants completed the first part of a and the Philippines; others served in the Philippines as study of the water and power resources of West Pakistan, advisers on statistics and industry. financed by the Indus Basin Development Fund which is The Bank also agreed to allocate $830,000 over three administered by the Bank. This phase of the study con- years to help continue the services of a group of advisers cerned the technical feasibility, construction cost, and organized by Harvard University who have been assisting economic return of a dam on the Indus River at Tarbela. the Planning Commission of Pakistan and the East and The second part of the study, which is a broad examination West Pakistan Planning Departments. Previously, financial of the development potential of the water and power re- support for these advisers was provided by the Ford sources of West Pakistan, was still in progress. Foundation and the United States Agency for International Besides conducting project and sector studies on its Development. own account, the Bank also acts as the Executing Agency for many similar studies financed by the United Nations THE BANK'S ECONOMIC DEVELOPMENT INSTITUTE, a staff Special Fund. During the year, field work was organized on college for senior government officials who deal with four such projects: feasibility studies in connection with the economic and financial problems of development, began development of irrigation and power facilities in the Yaque its tenth year. During 1964/65, the Institute conducted del Norte and Yaque del Sur River basins in the Dominican general courses on economic development in English and Republic, a transport survey in Surinam and a study of French, project evaluation courses in English and Spanish, telecommunications needs in Pakistan. Studies of port and and an industrial project evaluation course in English. 16 Inaddition,thelnstituteofferedaspecialprojectevaluation the International Monetary Fund since 1950. Mr. Andrew course in Jaipur, India, for participants from four Asian M. Kamarck was appointed Director of the Economics countries. Through the end of June 1965, 460 officials of Department; he had been Economic Adviser to the Africa 91 countries had participated in EDI courses, including Department. Mr. Dragoslav Avramovic was promoted from 143 during the fiscal year 1964/65. Assistant Director of the Economics Department to be Director of Special Economic Studies. Mr. Abdel G. El Emary became Director of the Africa M E M B E R S H I P A N D Department, succeeding Mr. Pierre L. Moussa, who re- signed to become President of the Fed6ration Francaise A DMI N IST RAT ION des Societ6s d'Assurances. Mr. El Emary previously had been Director of the Department of Investments, Africa, FOR THE FIRSTTIME in fouryears,therewere nochangesin Asia and Middle East, of the International Finance membership of the World Bank. Eight countries increased Corporation. their capital subscriptions: Costa Rica from $8 million to Mr. Michael L. Lejeune, who had been Assistant Director $10.7 million, Dominican Republic from $8 million to of the Far East Department, was appointed Director of $13.3 million, Honduras from $6 million to $8 million, Administration, succeeding the late Mr. William F. Howell. Italy from $360 million to $666 million, Malaysia from $50 Mr. Alexander Stevenson, who had been Assistant million to $133.3 million, Panama from $400,000 to $9 Director of the South Asia Department, became Director, million, Sudan from $20 million to $60 million and United succeeding Mr. Escott Reid. Mr. Reid became a consultant Arab Republic from $106.6 million to $142.1 million. At in the Office of the President, prior to taking up a university the close of the fiscal year, subscribed capital of the Bank post in Canada in July 1965. was $21,669.4 million. The first group of appointees under the Junior Profes- Belgium became the 94th member of IDA. sional Recruitment Program completed 18 months of rotational assignments, and were confirmed in permanent AT THE END OF THE FISCAL YEAR, the staff serving the World appointments to the staff. This group numbered 11; two Bank and IDA numbered 1,094 employees from 65 additional groups totaling 20 are still in training; a fourth countries. group of 20 has been appointed and will arrive in Washing- The President designated certain senior officers to serve ton in October 1965. The Program brings outstanding as the President's Council, each taking cognizance over young university graduates into the Bank for intensive particular sectors of activity and over the departments and in-service training, working in at least two departments and, offices responsible for them. The members of the Council in most cases, taking part in one or more field missions to are J. Burke Knapp, Geoffrey M. Wilson and Simon Alde- member countries. Upon successful completion of their wereld, Vice Presidents; A. Broches, General Counsel; training, they are assigned to regular staff positions. The Richard H. Demuth, Director of the Development Services recruits have averaged 27 years of age at the time of their Department; and Irving S. Friedman, The Economic Ad- appointment and they have come from 27 countries on visor to the President. 6 continents. Mr. Aldewereld, who was appointed a Vice President The countries represented in the program and the during the year, will continue to serve as Director of the number of junior professionals from each are: Argentina 1, Projects Department (formerly the Technical Operations Austria 2, Belgium 2, China 1, Colombia 1, Cuba 1, France Department). 5, Germany 7, Ghana 1, Greece 1, India 2, Iran 1, Israel 1, Mr. Irving S. Friedman was appointed to a newly created Italy2, Japan 1, Norway 2, Pakistan 1, Philippines 2, Spain post as The Economic Adviser to the President. He had 1, Sweden 1, Switzerland 3, Thailand 1, Togo 1, Turkey 1, been Director of the Exchange Restrictions Department of United Kingdom 4, United States 4, Yugoslavia 1. 17 Bank Loans and IDA Credil CUMULATIVE TOTAL, JUNE 30, 1965 (Millions of U S. Dollars, initial commitments net of cancellations and refundings) Total Purpose Bank and IDA Grand Total. . . . . . . . . . . . . . . . . . . . $9,857.3 ELECTRIC POWER . . ........ . .. . .. . . $3,127.4 TRANSPORTATION. . . . . . . . . . . . . $3,414.9 Railroads. . . . . . . . . . . . . . . . . . 1,458.1 Roads. . . . . . . . . . . . . . . . . . . . . 1,458.8 Shipping. . . . . . . . . . . . . . . . . 12.0 Ports and Waterways . . . . . . . . . 350.1 Airlines and Airports. . . . . . . . . . . . . . . . 56.9 Pipelines . . . . . . . . . . . . . . . . . . . . 79.0 TELECOMMUNICATIONS . . .. . ... ... ...... $ 121.2 AGRICULTURE, FORESTRY AND FISHING . .. .. . .. . .. $ 844.3 Farm Mechanization . . . . . . . . . . . . . . . . 150.2 Irrigation and Flood Control . . . . . . . . . . . . . . 558.8 Land Clearance, Farm Improvement, etc. . . . . . . . . . . 55.3 Crop Processing and Storage . . . . . . . . . . . . . . 7.4 Livestock Improvement . . . . . . . . . . . . . . . . 53.5 Forestry and Fishing . . . . . . . . . . . 19.1 INDUSTRY . . . . . . . . . . . . . . . . . . . . . $1,500.1 Iron and Steel . . . . . . . . . . . . . . . . . . 380.1 Paper and Pulp . . . . . . . . . . . . . . . . . . . 132.2 Fertilizer and Other Chemicals . . . . . . . . . . . . . . 82.0 General Industries . . . .... . .. . .. . .... 331.7 Mining . . . . . . . . . . . . . . . . . . . . . . 203.5 Development Finance Companies . . . . . . . 370.6 WATER SUPPLY . . . . . . . . . ... ... .... .. $ 95.5 EDUCATION PROJECTS . . .. . .. ......... $ 52.1 GENERAL DEVELOPMENT . . . . . . . . . . . . . . . $ 205.0 POST-WAR RECONSTRUCTION . . . . .. . .. . .. . .. $ 496.8 NOTE: Detail may not add to totals because of rounding. Detailed Statements is of Bank Loans and IDA credits are available on request. Dlassified by Purpose and Area Bank Loans by Area IDA Credits by Area Asia and Western Asia and Western Total Africa Middle East Australasia Europe Hemisphere Total Africa Middle East Europe Hemisphere $8,771.8 $1,103.6 $3,011.5 $ 457.3 $1,991.4 $2,207.9 $1,085.5 $ 116.7 $ 802.6 $ 65.7 $ 100.5 $3,030.7 $ 405.6 $ 682.3 $ 161.8 $ 546.6 $1,234.4 $ 96.7 $ - $ 56.0 $ 25.7 $ 15.0 $2,950.8 $ 443.2 $1,345.4 $ 139.4 $ 334.9 $ 687.9 $ 464.1 $ 71.3 $ 313.9 $ $ 78.9 1,279.6 274.0 620.4 37.3 172.4 175.5 178.5 - 178.5 - - 1,200.6 86.6 483.0 50.9 96.5 483.6 258.2 71.3 108.0 - 78.9 12.0 - - - 12.0 - _ - - - - 322.7 32.6 207.4 7.1 46.9 28.7 27.4 - 27.4 - - 56.9 - 5.6 44.1 7.2 - _ - - _ _ 79.0 50.0 29.0 - - - - - $ 46.2 $ 4.4 $ -$ - $ 0.2 $ 41.6 $ 75.0 $ -$ 75.0 $ $ - $ 624.7 $ 69.9 $ 208.3 $ 103.4 $ 87.8 $ 155.3 $ 219.6 $ 15.8 $ 180.2 $ 20.0 $ 3.6 123.2 - - 89.4 2.0 31.8 27.0 - 27.0 - - 374.1 45.5 185.9 6.0 73.3 63.4 184.7 13.0 151.7 20.0 - 51.0 23.2 13.6 6.0 2.2 6.1 4.3 2.8 1.5 - - 7.4 0.3 - - 4.2 2.8 _ - - - - 49.9 0.9 1.0 - - 48.0 3.6 - - - 3.6 19.1 - 7.8 2.0 6.2 3.1 _ - - - - $1,378.6 $ 140.5 $ 667.6 $ 52.7 $ 431.2 $ 86.6 $ 121.5 $ - $ 101.5 $ 20.0 $ - 380.1 - 314.0 13.4 22.7 30.0 _ _ _ _ 132.2 - 4.2 1.1 106.9 20.0 _ _ _ _ 82.0 - 25.0 0.3 56.8 - _ - - _ 235.2 20.5 5.2 23.8 170.9 14.8 96.5 - 96.5 - 203.5 101.0 54.5 14.2 11.9 21.8 _ - - - 345.6 19.0 264.7 - 61.9 - 25.0 - 5.0 20.0 $ 33.0 $ - $ 27.0 $ - $ 3.9 $ 2.1 $ 62.5 $ -$ 59.5 $ - $ 3.0 $ 6.0$ - $ 6.0 $ -$ - $ - $ 46.1 $ 29.6 $ 16.5 $ -$ - $ 205.0 $ 40.0 $ 75.0 $ -$ 90.0 $ - $ -$ -$ -$ $ - $ 496.8 $ - $ - $ -$ 496.8 $ - $ -$ -$ -$ $ - 19 AF Bank Appendices page A Balance Sheet ................................. . 22 B Comparative Statement of Income and Expenses . . . . 24 C Statement of Subscriptions to Capital Stock and Voting Power .... . . . . . . 25 D Summary Statement of Loans ...... . . . . ...... . . . . . . . . . . 27 E Funded Debt of the Bank . ............... ............ . 29 F Notes to Financial Statements ....... . ...... ....... ... . . 31 OPINION OF INDEPENDENT AUDITOR . .................. . . . . . . 33 G Administrative Budget of the Bank .. .34 Picking tea at Ragati in Kenya. Tea is one of the country's main export commodities. Two Bank loans and three IDA credits to Kenya are helping the development of agriculture and the improvement of roads in the tea-growving areas. 21 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT / APPENDIX A Balance Sheet JUNE 30, 1965 Expressed in United States Currency-See Notes to Financial Statements. Appendix F ASSETS Due from Banks and Other Depositories Member currencies, including $9,490,128 United States dollars Unrestricted . . . . . . . . . . . . . . . . . $ 18,503,132 Subject to restrictions-NOTE B . . . . . . . . . . . . 139,962,721 $ 158,465,853 Non-member currency (Swiss francs) . . . . . . 1,841,007 $ 160,306,860 Investments Government obligations (At cost or amortized cost) Face amount $743,185,350 including $530,123,000 United States Government obligations. . . . . . . . . . . $ 737,032,734 Time deposits, including $500,000,000 United States dollars . . . 547,473,684 Accrued interest . . . . . . . . . . . . . . . . . 20,173,828 1,304,680,246 Receivable on Account of Subscribed Capital (See Appendix C) Member currencies, other than United States dollars-NOTE B Non-negotiable, non-interest-bearing, demand notes . . . . . . . $ 323,113,530 Amounts required to maintain value of currency holdings . . . . . . . 1,650,408 324,763,938 Effective Loans Held by Bank (See Appendix D)-NOTE C (Including undisbursed balance of $1,662,573,606) . . . . . . . 5,480,681,755 Accrued Charges on Loans-NOTE C . . . . . . . . . . . . . . . 57,934,324 Receivable from Purchasers on Account of Effective Loans Agreed to be Sold (Including undisbursed balance of $29,241,937) . . . . . . . . . 42,467,789 Unamortized Bond Issuance Costs . . . . . . . . 16,685,883 Land and Buildings . . . . . . . . . . . . . . . . . . . . $ 22,489,575 Less-Reserve for depreciation . . . . . . . . . . . . 1,927,726 20,561,849 Other Assets . . . . . . . . . . . . . . . . . . . . . 1,803,814 Special Reserve Fund Assets-NOTE D Due from Banks-member currency-United States . . . . . . . . . $ 164 Investment securities-United States Government obligations ($289,202,000 face amount; at cost or amortized cost) .. . . . . . . 288,678,718 Accrued loan commissions-NOTE C . . . . . . . . . . . 292,634 288,971,516 Staff Retirement Plan Assets (Segregated and held in trust) . . . . . . . . . . . . . 22,354,595 Total Assets . . . . . . . . . . . . . . . . . . . $7,721,212,569 (Continued) 22 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT / APPENDIX A Balance Sheet (Continued) JUNE 30, 1965 Expressed in United States Cufrency-See Notes to Financial Statements, Appendix F LIABILITIES, RESERVES AND CAPITAL Liabilities Accrued interest on borrowings . . . . . . . . . . . . . . . . . . $ 38,243,551 Accounts payable and other liabilities . . . ..5,199,346 Due to International Development Association . . . . . . . . . . . . . . . . 39,600,000 Undisbursed balance of effective loans (See Appendix D) Held by Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,662,573,606 Agreed to be sold . . . . . . . . . . . . . . . . . . . . . . . . 29,241,937 1,691,815,543 Funded debt (See Appendix E) (Of this amount $186,307,388 is due within one year) . . . . . . . . . . . . . 2,723,989,353 Reserves for Losses Special reserve-NOTE D . . . . . . . . . . . . . . . . . . . . . . . . $ 288,971,516 Supplemental reserve against losses on loans and guarantees-NOTE E . . . . . . . 605,570,854 894,542,370 Staff Retirement Plan Reserve . . . . . . . . . . . . . . . . . . . . . . . 22,354,595 Capital Capital stock (See Appendix C)-NOTE F Authorized 220,000 shares of $100,000 par value each Subscribed 216,694 shares . . . . . . . . . . . . . . . . . . . . . . $21,669,400,000 Less-Uncalled portion of subscriptions-NOTE G . . . . . . . . . . . . . . 19,501,410,000 2,167,990,000 Payment on account of pending subscriptions . . . . . . . . . . . . . . . . 563,560 Net income-NOTE E From July 1, 1964 to June 30, 1965 . . . . . . . . . . . . . . . . . . . 136,914,251 Contingent Liability-LOANS SOLD UNDER GUARANTEE-NOTE H . . . . . . . $4,195,000 Total Liabilities, Reserves and Capital . . . . . . . . . . . . . . . . . . $7,721,212,569 23 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT / APPENDIX B Comparative Statement of Income and Expenses FOR THE FISCAL YEARS ENDED JUNE 30, 1964 AND JUNE 30, 1965 Expressei in United States Currency-See Notes to Financial Statements. Appendix F July I to June 30 1963-1964 71964-1965 Income Income from investments . . . . . . . . . . . . . . . . . . . . . $ 62,255,005 $ 61,394,497 Income from loans: Interest. ..... ................ ..... 145,499,497 198,282,681 Commitment charges . . ...................... 10,177,747 5,761,229 Commissions-NOTE D . . . . . . . . . . . . . . . . . . . . . . . . 33,176,093 852,062 Service charges . . . . . . . . . . . . . . . . . . . . . . . . . . 65,478 87,511 Other income . . . . . . . . . . . . . . . . . . . . 1,146,786 1,242,453 Gross Income . . . . . . . . . . . . . . . . . . . . . $252,320,606 $267,620,433 Deduct-Amount equivalent to commissions appropriated to Special Reserve-NOTE D . . . . . . . . . . 33,176,093 852,062 Gross Income Less Reserve Deduction . . . . . . . . . . . . . . . . . $219,144,513 $266,768,371 Expenses Administrative expenses: Personal services . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,169,350 $ 9,460,526 Contributions to staff benefits . . . . . . . . . . . . . . . . . . . 1,307,724 1,455,842 Fees and compensation . . . . . . . . . . . . . . . . . . . . . . . . . 514,382 1,156,906 Representation . ............. . 164,063 162,486 Travel ... . . . . . . .................. .. 1,841,405 2,906,195 Supplies and material . . . . . . . . . . . . . . . . . . . . 135,203 146,296 Office occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . 967,115 1,010,163 Communication services . . . . . . . . . . . . . . . . . . . . . . . . 519,341 585,122 Furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . 547,062 388,324 Books and library services . . . . . . . . . . . . . . . . . . . . . . 177,612 186,027 Printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 162,964 260,579 Insurance 77,851 65,205 Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,249 22,914 Total Administrative Expenses . . . . . . . . . . . . . . . . . . . . $ 14,591,321 $ 17,806,585 Services to member countries . . . . . . . . . . . . . . . . . . . . . . 4,304,571 4,516,721 Interest on borrowings . . . . . . . . . . . . . . . . . . . . . . . . 100,712,616 105,456,176 Bond issuance and other financial expenses . . . . . . . . . . . . . . . . . . . 1,860,149 1,914,106 Discount on sale of loans . . . . . . . . . . . . . . . . . . . . . . . . . 220,005 160,532 Gross Expenses . . . . . . . . . . . . . . . . . . . . . . . . . $121,688,662 $129,854,120 Net Income-NOTE E . . . . . . . . . . . . . . . . . . . . . . . . . $ 97,455,851 $136,914,251 4 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT/ APPENDIX C Statement of_Subscriptions to Capital Stock and Voting Power JUNE 30, 1965 Expressed in United States Currency (In thousands) -See Notes to Financial Statements, Appendix F Amounts Paid in In currency In non- of.member negotiable, Subject orher than non-in reresr- to Call Subscriptions United bearing, to meet Voting Power In Unitedi States demnand obligations Per-cent Amount States dollars notes of Bank NVumber Percent Member Shares of total (Note F,, dollars (Note B, (Note B) tNote G) of votes of total Afgha nista n ...300 .14 $ 30,000 $ 300 $ 1,200 $ 1,500 $ 27,000 550 .23 Algeria .. .... 800 .37 80,000 800 72 7,128 72,000 1,050 .43 Argentina ...3,733 1.72 373,300 3,733 27,000 6,597 335,970 3.983 1.64 Australia 5,330 2.46 533,000 5,330 47.970 - 479,700 5,580 2.30 Austria ...1,000 .46 100,000 1,000 9,000 - 90,000 1,250 .52 Belgium 4,500 2.08 450,000 4,500 40,500 - 405,000 4,750 1.96 Bolivia .210 .1 0 21,000 210 13 1,877 18,900 460 .19 Brazil 3,733 1.72 373,300 3,733 33,597 - 335,970 3,983 1.64 Burma 400 .18 40,000 400 1,207 2,393 36,000 650 .27 Burundi (2) 150 .07 15,000 150 9 764 13,500 400 .1 7 Cameroon .. . . 200 .09 20,000 200 18 1,782 18,000 450 .19 Canada .7,500 3.46 750,000 7,500 67,500 - 675,000 7,750 3.20 Central African Republic 100 .05 10,000 100 9 891 9,000 350 .14 Ceylon (I) 600 .28 60,000 600 1,135 4,265 54,000 850 .35 Chad ...... 100 .05 10,000 100 9 891 9,000 350 .14 Chile ... 933 .43 93,300 933 8,397 - 83,970 1,183 .49 China ... 7,500 3.46 750,000 7,500 2,028 65,472 675,000 7,750 3.20 Colombia ...... 933 .43 93,300 5,973 3,357 - 83,970 1,183 .49 Congo (Brazzaville). . . 100 .05 10,000 100 9 891 9,000 350 .14 Congo, Dem. Rep. of 600 .28 60,000 600 5,400 - 54,000 850 .35 Costa Rica.... . . 107 .05 10,700 467 603 - 9,630 357 .15 Cyprus . . . . . 150 .07 15,000 150 14 1,336 13,500 400 .1 7 Dahomey . . 100 .05 10,000 100 9 891 9,000 350 .14 Denmark . . . 1,733 .80 173,300 1,733 15,597 - 155,970 1,983 .82 Dominican Republic 133 .06 13,300 133 483 714 11,970 383 .16 Ecuador .... . 171 .08 17,100 1,323 387 - 15,390 421 .1 7 El Salvador ... 107 .05 10,700 287 783 - 9,630 357 .15 Ethiopia . 100 .05 10,000 1,000 - - 9,000 350 .14 Finland (1).... . . 760 .35 76,000 760 6,840 - 68,400 1,010 .42 France . . . . . 10,500 4.84 1,050,000 10,500 94,500 - 945,000 10,750 4.44 Gabon ..... 100 .05 10,000 100 17 883 9,000 350 .14 Germany .... . 10,500 4.84 1,050,000 10,500 94,500 - 945,000 10,750 4.44 Ghana (') 467 .21 46,700 467 2,702 1,501 42,030 717 .30 Greece 500 .23 50,000 500 4,500 - 45,000 750 .31 Guatemala I. .. . .. 80 .04 8,000 440 360 - 7,200 330 .13 Guinea . . ... 200 .09 20,000 200 1,800 - 18,000 450 .19 Haiti .... 150 .07 15,000 150 35 1,315 13,500 400 .17 Honduras 80 .04 8,000 620 - 180 7.200 330 .13 Iceland 150 .07 15,000 564 17 919 13,500 400 .1 7 India. . . 8,000 3.69 800,000 8,000 23,717 48,283 720,000 8,250 3.41 Indonesia .... 2,200 1.01 220,000 2,200 198 19,602 198,000 2,450 1.01 I ran (1) .900 .42 90,000 900 6,048 2,052 81,000 1,150 .47 Ira q (1) 150 .07 15.000 150 1.350 - 13,500 400 .17 Ireland .... 600 .28 60,000 600 5,400 - 54,000 850 .35 Israel . .. 666 .31 66,600 666 2,997 2,997 59,940 916 .38 Italy ... 6,660 3.07 666,000 6,660 59,940 - 599,400 6,910 2.85 Ivory Coast . . . . 200 .09 20,000 200 180 1,620 18,000 450 .19 Jamaica . .267 .12 26,700 267 24 2,379 24,030 517 .21 Japan .. . . 6,660 3.07 666,000 6,660 59,940 - 599,400 6,910 2.85 Jordan (1) 150 .07 15,000 150 42 1,308 13,500 400 .17 Kenya . ...333 .15 33,300 333 30 2,967 29,970 583 .24 Korea 250 .12 25,000 250 2,250 - 22,500 500 .21 Kuwait .667 .31 66,700 667 6,003 - 60,030 917 .38 Laos .100 .05 10,000 100 900 - 9,000 350 .14 Lebanon 90 .04 9,000 900 - - 8,100 340 .14 (Continued) 25 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT/ APPENDIX C Statement of Subscriptions to Capital Stock and Voting Power (Continueco JUNE 30, 1965 Expressedl in United States Currency (in thousands.,-See NVotes to Financial Statements. Appendix F Amounts Paid in In currency In non- of memnber negotiable. Subject other than non-interest- to call Subscriptions United beari,ng, to Meet Voting Power In United States oemanct obligations Percent Amount States dollars no!ss of Bank Number Percent Member Shares ot total (NVote F) dollars (Note B) (No;te Sj (Vote iS) of votes of total Liberia ....150 .07 $ 15,000 $ 150 $ 14 $ 1,336 $ 13,500 400 .1 7 Libya ........ 200 .09 20,000 1,400 29 571 18,000 450 .1 9 Luxembourg... . . 200 .09 20,000 200 1,800 - 18,000 450 .1 9 Malagasy Republic 200 .09 20,000 200 22 1,778 18,000 450 .1 9 Malaysia ...1,333 .61 133,300 1,333 4,500 7,497 119,970 1,583 .65 Mali ........ 173 .08 17,300 173 1,557 - 15,570 423 .1 7 Mauritania... . . . 100 .05 10,000 100 9 891 9,000 350 .14 Mexico ....... 1,733 .80 173,300 1,733 15,597 155,970 1,983 .82 Morocco ...I 700 .32 70,000 700 75 6,225 63,000 950 .39 Nepal . ...... 100 .05 10,000 100 9 891 9,000 350 .14 Netherlands.. . . 5,500 2.54 550,000 5,500 49,500 - 495,000 5,750 2.37 New Zealand.. . . . 1,667 .77 166,700 1,667 150 14,853 150,030 1,917 .79 Nicaragua ... . .. 60 .03 6,000 150 450 - 5,400 310 .13 Niger ........ 100 .05 10,000 100 9 891 9,000 350 .14 Nigeria ....... 667 .31 66,700 667 102 5,901 60,030 917 .38 Norway ... . ... 1,333 .61 133,300 1,333 11,997 - 119,970 1,583 .65 Pakistan I... 2,000 .92 200,000 2,000 2,049 15,951 180,000 2,250 .93 Panama ....... 90 .04 9,000 126 - 774 8,100 340 .14 Paraguay..... . 60 .03 6,000 60 540 - 5,400 310 .13 Peru...... . . 350 .16 35,000 3,500 - - 31,500 600 .25 Philippines .. . ... 1,000 .46 100,000 3,700 6,300 - 90,000 1,250 .52 Portugal .. . . . . 800 .37 80,000 800 72 7,128 72,000 1,050 .43 Rwanda ....... 150 .07 15,000 150 - 1,350 13,500 400 .1 7 Saudi Arabia (') . ... 733 .34 73,300 733 22 6,575 65,970 983 .40 Senegal ... . ... 333 .15 33,300 333 30 2,967 29,970 583 .24 Sierra Leone.. . . . 150 .07 15,000 150 14 1,336 13,500 400 .17 Somalia. ...... 150 .07 15,000 150 14 1,336 13,500 400 .1 7 South Africa. .... 2,000 .92 200,000 2,000 18,000 - 180,000 2,250 .93 Spain. ...... 2,000 .92 200,000 2,000 10,980 7,020 180,000 2,250 .93 Sudan. ...... 600 .28 60,000 600 1,800 3,600 54,000 850 .35 Sweden ....2,000 .92, 200,000 2,000 18,000 - 180,000 2,250 .93 Syrian Arab Republic t)333 .15 33,300 333 44 2,953 29,970 583 .24 Tanzania ... . . . 333 .15 33,300 333 30 2,967 29,970 583 .24 Thailand (') ... . . 600 .28 60,000 3,455 123 2,422 54,000 850 .35 Togo .... . ... 150 .07 15,000 150 14 1,336 13,500 400 .1 7 Trinidad and Tobago . 267 .12 26,700 267 24 2,379 24,030 517 .21 Tunisia ... . ... 300 .14 30,000 300 74 2,626 27,000 550 .23 Turkey ....... 1,150 .53 115,000 1,150 271 10,079 103,500 1,400 .58 Uganda.... . . . 333 .15 33,300 333 30 2,967 29,970 583 .24 United Arab Republic . . 1,421 .66 142,100 1,421 107 12,682 127,890 1,671 .69 United Kingdom. . . . 26,000 12.00 2,600,000 26,000 234,000 - 2,340,000 26,250 10.84 United States . . ... 63,500 29.30 6,350,000 635,000 - - 5,715,000 63,750 26.32 Upper Volta .... 100 .05 10,000 100 9 891 9,000 350 .14 Uruguay (t) (2) . . .105 .05 10,500 588 438 - 8,400 355 .15 Venezuela .. . ... 1,400 .65 140,000 2,471 1,986 9,543 126,000 1,650 .68 Viet-Nam .. . ... 300 .14 30,000 300 2,700 - 27,000 550 .23 Yugoslavia .. . . . 1,067 .49 106,700 2,167 8,503 - 96,030 1,317 .54 Totals... . . 216,694 100.00 $21,669,400 $810,635 $1,032,590 $323,114 $19,501,410 242,194 100.00 (ll Additional subscriptions in the amount ot S277,500,O00 are in erocess ot con,pletion. (1) Ameunts aggregating the equivalent of $1,650,408 receivable as a result of revaluation ot these currencies are not nclucded in the "Amo-nts Paid in" columns. 26 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT / APPENDIX D Summary Statement of Loans JUNE 30, 1965 Expressed in Unlted Scares Currency-See Notes to Financial Statements, 4poenslha F Effect,ive bcars held by Bank Memrbers in whose territories loans have been rrade(') Disbursed ino,sburseri Loans not yet portion prr!porion(, Tu,91a(il offiecrire v Algeria .. . .$ 19,950,000 $ - $ 19,950,000$ - Argentina 104,391,484 37,083,516 141,475.000 - Australia 176,676,891 17,612,288 194.289,179 - Austria 58,664,208 - 58,664,208 - Belgium ...39,639,655 - 39,639,655 - Brazil . ...177,889,950 764,236 178,654,186 79,500,000 Burma . .......23,551,551 1,673,016 25,224,567 - Ceylon .27,630,824 4,527,146 32,157,970 - Chile .62,312,615 46,550,385 108,863,000 China . ....3,880,902 36,019,098 39,900,000 - Colombia ... ....207,248,661 108,569,339 315.818,000 - Costa Rica .......21,540,811 18,428,365 39,969,176 - Cyprus. 5,391,374 13,874,826 19,266,200 - Denmark ......37,805,169 6,700,381 44,505,550 - Ecuador ... ...33,874,435 6,893,732 40,768,167 - El Salvador 23,649,962 10,454,747 34,104,709 - Ethiopia .. ......22,807,872 20,155,128 42,963,000 - Finland ...... ...... 87,136,378 30,744,846 1 17,881,224 14,000,000 France .45,334,507 - 45,334,507 Gabon . .........2,079,113 9,805,887 1 1.885,000 - Ghana . ...... ... 33,639,841 13,260,159 46,900,000 - G uate malIa 8,027,000 - 8,027,000 - Haiti .....1,373,637 - 1,373.637 - Honduras 13,904,657 53,343 13.958,000 6,000,000 Iceland ......4,521,981 241,132 4,763,113 - India 525,565,916 82,474,088 608,040,004 134,000,000 Iran .97,327,117 19,144,059 116,471,176 40,500,000 Israel 47,374,565 22,752,435 70,127,000 - Italy ...131,480,820 - 131.480,820 100,000,000 Jamaica -5,218,000 5,218,000 Japan . ...... 414,384,805 151,768,589 566,153,394 75,000,000 Lebanon .......21,281,181 1,725,810 23,006,991 - Liberia . ......183,901 3,066,099 3,250,000 - Malaysia 35,331,689 53,716,31 1 89,048.000 - Mexico .. ..295,678,345 89,327,962 385,006,307 - Morocco . .7,131,197 24,933,803 32,065,000 - New Zealand ..... ...18,816,478 14,762,990 33,579,468 - Nicaragua .......19,610,088 3,413,279 23,023,367 - Nigeria I ....... . . . 17,473,880 103,786,120 121,260,000 - Norway .......75,016,669 21,590,429 96,607,098 - Pakistan .... ......140,408,798 152,530,785 292,939,583 - Panama ...........7,132,085 3,275,915 10,408,000 - Paraguay ....... - - 2,200,000 Peru . .73,477,613 17,811,086 91,288,699 26,000,000 Philippines . 48,615,910 49,458,390 98,074,300 - Portugal . 8,367,031 17,657,720 26,024,751 - Sierra Leone... . . . . 2,252,966 1,307,034 3,560,000 South Africa ........43,587,588 - 43,587,588 - Spain -95,166,412 95,166,412 - Sudan .........56,104,489 9,461,51 1 65,566,000 - Thailand ........91,783,725 65,511,647 157,295,372 - Tunisia .... .... - 6,580,000 6,580,000 - Turkey....... . . 32,937,223 - 32,937,223 - United Arab Republic .......45,220,080 - 45,220,080 - United Kingdom . .. 99,268,703 25,225,569 124,494,272 - Uruguay ...........48,384,524 17,522,476 65,907,000 12,700,000 Venezuela ..........48,280,337 116,696,663 164.977,000 - Yugoslavia 133,707,147 103,276,854 236.984,001 - Totals .. . . . . $3,829,108,348 $1,662,573,606 $5,491,681,954$ 489,900,000 LESS: Exchange adjustments . . . 1 1,000,199 11,000,199 $3,818,108,149 $5,480,681,755 (Contiriuecl) 27 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT / APPENDIX D Summary Statement of Loans (Continued) JUNE 30, 1965 Fycorescend in United States Currency -See ,Vu:es tc Finoancial Statements. Appendix F SUMMARY OF CURRENCIES REPAYABLE (') Loans are made (a) to the member or (b) to a political sub- ON EFFECTIVE LOANS HELD BY BANK division or a public or a private enterprise in the territories of the Currency. Amount member with the member's guarantee. Argentine pesos ......... $ 1,049,583 Australian pounds ,60,853,960 (2) This does not include $29,241,937 of effective loans which Austrian schillings . 12,793,021 the Bank has agreed to sell. Of the undisbursed balance, the Belgian francs . . . . 67,935,156 Bank has entered into irrevocable commitments to disburse Burmese kyats . . . . . . . . . 1,196,013 $19,597,363. Canadian dollars . . . . . . . . . 118,777,953 Ceylon rupees . . . . . . 540,000 (3) Original principal amount of loans signed $8,954,627,893 Danish kroner . . . . . . . . . . 17,038,006 Deutsche mark . . . . . . . . . . . 521,211,358 DEDUCT: Finnish markkas . . . . . . . . 6,909,536 (a) Cancellations, termina- rench francs . . 132,675,236 tions and refundings $ 182,804,956 Indian rupees . . . . . . . . . . . 29,863,993 (b) Principal repayments to Iranian riais . . . 8,010,195 the Bank . . . . 909,256,727 Iraqi dinars . . . . . . . . . . 1,620,277 (c) Loans sold or agreed to Irish pounds . . . . . . . . . 6,401,885 be sold of which Israel pounds . . . . . . . . 3,299,803 $29,241,937 has not Italian lire . . . . . . . . . . 37,878,283 yet been disbursed 1,880,984,256 Kuwaiti dinars . . . 60,925,890 (d) Loans not yet effective . 489,900,000 3,462,945,939 Luxembourg francs .....2,338,466 LES xhneajsmns$5,491,681,954 Malayan dollars . 5,429,512 LESS: Exchange adjustments 11,000,199 Mexican pesos . . . . . . 20,653,372 Effective loans held by Bank. . . . . $5,480,681,755 Netherlands guilders . . . . . . 88,989,288 Norwegian kroner . . . . 15,287,443 Pakistan rupees 174,552 (4) Agreements providing for these loans have been signed, but Pounds sterling . . . . . 239,978,705 the loans do not become effective and disbursements thereunder South African rand . . . . . . 25,358,815 do not start until the borrowers and guarantors, if any, take cer- Spanish pesetas . . . . . . . . . . 11,597,383 tain action and furnish certain documents to the Bank. The Sudanese pounds . . . . . . 2,234,863 Bank has agreed to sell $3,770,000 of loans not yet effective Swedish kronor . . . . . . . . 21,077,302 and thus the total of both effective and non-effective loans sold Swiss francs . . . . . . . . . . . 198,619,391 or agreed to be sold is the equivalent of $1,884,754,256. New Taiwan dollars . . . . . . . . . . 1,296,911 United States dollars . . . . . . . . 2,093,364,674 Venezuelan bolivares . . . . 2,589,371 Yugoslav dinars. . . . . . . . 1,784,459 Disbursed portion of effective loans held by Bank . . . . . . . . $3,829,108,348 LESS: Exchange adjustments . . . . 11,000,199 $3,818,108,149 ADD: Undisbursed portion of effective loans held by Bank . . . . . . . . 1,662,573,606 Effective loans held by Bank. . . . . $5,480,681,755 28 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT / APPENDIX E Funded Debt of the Bank JUNE 30, 1965 Expressed in Linted States Currency-See Notes to Financial Statements, Appendix F Ptincipal Annual sinking Payable in Issue and matudty outstanding fund requirernent(l) United States Dollars 33/4% Notes of 1961, due 1965-67 (4) . . . . . . . . . . . . . .$ 110,000,000 None* 4% Two Year Bonds of 1963, due 1965 100,000,000 None* 41/4% Two Year Bonds of 1964, due 1966 . . . . . 100,000,000 None* 4% Notes of 1962, due 1967 . . . . . . 5,000,000 None* 41,2% Twelve Year Bonds of 1960, due 1968-72 . . . . . . . . . . . . 120,000,000 None* 33h4% Ten Year Bonds of 1958, due 1968 . . . . . . . . . . . 150,000,000 None* 41/8% Notes of 1964, due 1968-69 60,000,000 None* 3i/2% Fifteen Year Bonds of 1954, due 1969 . . . . . . . . . 63,215,000 1966 $3,215,000 1967-68 $5,000,000 41/4% Notes of 1965, due 1970 38,000,000 None* 32/2% Nineteen Year Bonds of 1952, due 1971 . . . . 42,109,000 1965 $ 109,000 1966 $2,000,000 1967-70 $2,500,000 3% Twenty-Five Year Bonds of 1947, due 1972 . . . . . . . 120,326,000 1966 $3,326,000 1967 $4,500,000 1968-72 $7,500,000 4i/2% Fifteen Year Bonds of 1958, due 1973 . . . . . . . . . . . . 88,100,000 1966 $3,100,000 1967-73 $5,000,000 33/e% Twenty-Three Year Bonds of 1952, due 1975 . . . . . . . 37,780,000 1966 $ 780,000 1967-74 $1,500,000 3% Twenty-Five Year Bonds of 1951, due 1976 . . . . . . . 43,661,000 1966 $ 661,000 1967-75 $2,000,000 4'/2% Twenty Year Bonds of 1957, due 1977 (2) . . 85,176,000 1967-76 $5,000,000 41/2% Fifteen Year Bonds of 1962, due 1977 5,000,000 1973-77 $1,000,000 41A4% Twenty-One Year Bonds of 1957, due 1978 . . . . . . . . . . . 100,000,000 1967-71 $4,000,000 1972-77 $5,000,000 41/4% Twenty-One Year Bonds of 1958, due 1979 . . . . . . . . . . . 150,000,000 1968-77 $7,000,000 1978 $5,000,000 43/4% Twenty-Three Year Bonds of 1957, due 1980 (2) 70,601,000 1968-79 $3,000,000 1980 $1,500,000 31/4% Thirty Year Bonds of 1951, due 1981 . . . . . . . . . . . 100,000,000 1966-67 $2,000,000 1968-73 $3,000,000 1974-80 $4,000,000 41/2% Twenty Year Bonds of 1962, due 1982 . . . . 100,000,000 1972-81 $5,000,000 5% Twenty-Five Year Bonds of 1960, due 1985 . . . . . . 125,000,000 1970-79 $3,750,000 1980-84 $5,000,000 41/2% Twenty-Five Year Bonds of 1965, due 1990 (3) . . . 182,100,000 1975-79 $6,000,000 1980-89 $7,000,000 Sub-Total . . . . . . . . . . . . . . . . . . . . . . $1,996,068,000 (4) Belgian Francs 5% Ten Year Bonds of 1959, due 1969 (BF500,000,000) . . . . . . . $ 10,000,000 None Sub-Total-. . $ 10,000,000 Canadian Dollars 3Y/2% Fifteen Year Bonds of 1954, due 1969 (Can$18,920,000) . . . . . . $ 17,501,018 1966 Can$420,000 1967-68 Can$900,000 51/4% Twenty-Five Year Bonds of 1965, due 1990 (Can$25,000,000) . . . . 23,125,023 1978-89 Can$500,000 Sub-Total $ 40,626,041 Deutsche Mark 33A4% Notes of 1961, due 1965-67 (DM200,000,000) (4) . . . . . . . $ 50,000,000 None* 41/2% Bonds of 1960, due 1968-72 (DM500,000,000) . . . . . 125,000,000 None* 41/8% Notes of 1964, due 1968-69 (DM160,000,000) . . . . 40,000,000 None* 41/4% Notes of 1965, due 1969-70 (DM240,000,000) . . . . . . 60,000,000 None* 5% Bonds of 1959, due 1974 (DM180,000,000) . . 45,000,000 1966-74 DM20,000,000 51/2% Bonds of 1965, due 1985 (DM250,000,000) (2) 62,500,000 1971-84 DM17,000,000 1985 DM 12,000,000 $ 382,500,000 Less: bonds purchased (2) . . . . . . . . . . . . . . . . . . 62,500 Sub-Total . . . . . . . . . . . . . . . . . . . . . . . $ 382,437,500 (4) (Continued) 29 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT / APPENDIX E Funded Debt of the Bank (Continued) JUNE 30, 1965 Expressed in United States Currency-See Notes to Financial Statements. Appendix F Princips' Annual.sinking Payable in Issue ano maturity outstanding fund requirement(t) Italian Lire 5% Bonds of 1961, due 1976 (Lit.15,000,000,000) $ 24,000,000 None Sub-Total . . . . . . . . . . . . . . . . . . .. $ 24,000,000 Netherlands Guilders 31/2% Fifteen Year Bonds of 1954, due 1969 (f.15,652,000) . . . . . $ 4,323,757 1966 f.3,652,000 1967-69 f.4,000,000 31/2% Twenty Year Bonds of 1955, due 1975 (f.26,532,000) . . . . . . 7,329,281 1966 f.2,372,000 1967-74 f.2,640,000 1975 f.3,040,000 41/2% Twenty Year Bonds of 1961, due 1981 (f,50,000,000) . . 13,812,155 1972-81 f.5,000,000 41/2% Twenty Year Bonds of 1962, due 1982 (f.40,000,000) 11,049,724 1973-82 f.4,000,000 Sub-Total . ..... .... .. .... . . .. . $ 36,514,917 Pounds Sterling 31/2% Twenty Year Stock of 1951, due 1971 (£3,233,721) . . . . . . . $ 9,054,419 1966 £149,779 1967-71 £166,700 31/2% Twenty Year Stock of 1954, due 1974 (£3,844,787) . . . . 10,765,403 1965 £ 25,618 1966-74 £166,700 5% Twenty-Three Year Stock of 1959, due 1982 (£9,637,212). . . . . . 26,984,194 1966 £C237,009 1967-82 £278,000 Sub-Total . ..... ... ... . ... ... .... $ 46,804,016 Swiss Francs 3%/4% Loan of 1961, due 1966-68 (Sw F 100,000,000) . . . . . . . $ 23,269,343 None 4% Loan of 1961, due 1967 (Sw F 33,333,333) . . . . . . . 7,756,448 None 31/2% Fifteen Year Bonds of 1953, due 1968 (Sw F 50,000,000) 11,634,671 None 3/2% Fifteen Year Bonds of 1953 (Nov. Issue), due 1968 (Sw F 50,000,000) 11,634,671 None 31/2% Eighteen Year Bonds of 1954, due 1972 (Sw F 50,000,000) . . 11,634,671 None 4'/2% Twelve Year Bonds of 1960, due 1972 (Sw F 60,000,000) . . . . 13,961,606 None 4% Eleven Year Bonds of 1962, due 1973 (Sw F 100,000,000) . . . . 23,269,342 None 4% Fifteen Year Bonds of 1959, due 1974 (Sw F 100,000,000) 23,269,343 None 4% Fifteen Year Bonds of 1960, due 1975 (Sw F 60,000,000) . . . 13,961,606 None 31/2% Twenty Year Bonds of 1955, due 1976 (Sw F 42,615,000) . . . . 9,916,230 1966 Sw F 615,000 1967-74 Sw F 4,000,000 1975-76 Sw F 5,000,000 4% Eighteen Year Bonds of 1961, due 1979 (Sw F 100,000,000) . . . . . 23,269,343 1971-78 Sw F 11,000,000 1979 Sw F 12,000,000 43/4% Eighteen Year Bonds of 1965, due 1983 (Sw F 60,000,000) . . . . . 13,961,605 None Sub-Total ..... .. $ 187,538,879 Gross Total . . . . . . . . . . . . . . . . . . $2,723,989,353 (') Each issue, except those indicated with an asterisk, is subject to (2) In the cases of the 41/2% Twenty Year Bonds of 1957 and the 43/4% redemption prior to maturity at the option of the Bank at the prices and Twenty-Three Year Bonds of 1957 the Bank will, as purchase funds, use upon the conditions stated in the respective bonds. The amounts shown its best efforts to purchase bonds of these issues in the open market or as annual sinking fund requirements are the principal amounts of bonds by acceptance of tenders at prices up to and including 100% of the to be purchased or redeemed to meet each year's requirement, except principal amount plus accrued interest. The purchase funds will be at that in the cases of the 31/2% Twenty Year Stock of 1951 and of 1954 the annual rate of $5,000,000 through 1966 in the case of the 41/½% and the 5% Twenty-Three Year Stock of 1959 the amount shown is the Twenty Year Bonds of 1957 and at the annual rate of $3,750,000 through amount of funds to be provided annually for purchase or redemption. 1967 in the case of the 43/4% Twenty-Three Year Bonds of 1957. The The amounts are shown after deduction of sinking fund requirements purchase funds are cumulative on a month-to-month basis only within met as of the date of this statement. each calerndar year. In the case of the 51/2% Deutsche Mark Bonds of 1965 the Bank intends to support the market for these bonds whenever The following table shows the aggregate principal amount of the it may appear appropriate from time to time. maturities and sinking fund requirements each year for the five years (3) The Bank has entered irto agreerents to sell additional bonds in the following the date of this statement: principal amount of $17,900,000 of the 41/2% Twenty-Five Year Bonds of 1965, due 1990. Delivery of such bonds was made against payment Period Amount therefor on July 1, 1965. (4) The Bank has arranged to refinance at maturity notes totaling $44 July 1, 1965 to June 30, 1966. . . . . . $ 186,307,388 million and DM 80 million (U.S. equivalent $20 million) which mature J.uly 1, 1966 to June 30, 1967.... . . . . 200,821,956 on August 1, 1965 and February 1, 1966 and to borrow an additional July 1, 1967 to June 30, 1968. . . . . . 267,944,120 amount equivalent to $5.5 millicn by issuing new notes totaling $34.75 July 1, 1968 to June 30, 1969. . . . . . . 282,693,805 million and DM 139 million (U.S. equivalent $34.75 million) with maturi- July 1, 1969 to June 30, 1970.. . . . . . . 178,976,948 ties on February 1, 1968 and February 1, 1971. Of these amounts, notes for $18.75 million and DM 75 million (U.S. equivalent $18.75 million) Total . . . . . . . . . . $1,116,744,217 are to be issued on August 1, 1965 with an interest rate of 4'A/%. 30 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT / APPENDIX F Notes to Financial Statements JUNE 30, 1965 N OT E A ments of interest, other charges or amortization on the Bank's Amounts in currencies other than United States dollars have been own borrowings or to meet the Bank's liabilities with respect to translated into United States dollars: contractual payments on loans guaranteed by it. (i) In the cases of 66 members, at the par values as specified in the "Schedule of Par Values", published by the International Under Article II, Section 9, each member is required, if the par Monetary Fund; value of its currency is reduced or if the foreign exchange value (ii) In the cases of the remaining 36 members [Algeria, Argen- of its currency depreciates to a significant extent in its territories, tina, Bolivia, Brazil, Cameroon, Central African Republic, Chad, to maintain the value of the Bank's holdings of its restricted cur- Chile, China, Colombia, Congo (Brazzaville), Democratic Repub- rency, including the principal amount of any notes substituted lic of Congo, Dahomey, Gabon, Guinea, Indonesia, Ivory Coast, therefor, and the Bank is required, if the par value of a member's Kenya, Korea, Laos, Malagasy Republic, Mali, Mauritania, Nepal, currency is increased, to return to the member the increase in Niger, Paraguay, Peru, Rwanda, Senegal, Sierra Leone, Tan- the value of such restricted currency held by the Bank. To the zania, Togo, Uganda, Upper Volta, Viet-Nam and Yugoslavial, extent such restricted currencies are out on loan, the Bank and at the rates used by such members in making payments of cap- the members are obligated to make such payments only when ital subscriptions to the Bank; and such restricted currencies are recovered by the Bank. (iii) In the case of Swiss francs, non-member currency, at the rate of 4.2975 francs to 1 United States dollar. The equivalent of $1,650,408 is due from 2 members in order See also Notes B and C. to maintain the value of their restricted currencies as required No representation is made that any currency held by the Bank is under Article II, Section 9. convertible into any other currency at any rate or rates. Some members have converted part or all of the Bank's holdings NOTE B of their restricted currency into United States dollars to be used and reused as United States dollars in the Bank's operations, These currencies of the several members, and the notes issued subject to the right of the Bank or the member to reverse the by them in substitution for any part of such currencies as per- transactions at any time, with immediate effect as to dollars then mitted under the provisions of Article V, Section 12, are derived held by the Bank, and, as to dollars loaned, upon repayment of from the portion of the subscriptions to the capital stock of the the loans. Such dollars while held by the Bank or on loan are not Bank which is payable in the currencies of the respective mem- subject to the provisions of Article II, Section 9. Such dollars held bers (such portion being hereinafter called restricted currency). by the Bank or repayable on loans are shown in these financial Such restricted currencies may be loaned by the Bank, and funds statements under "United States dollars" and, where relevant, received by the Bank on account of principal of loans made by the as "unrestricted". Bank out of such restricted currencies may be exchanged for other currencies or reloaned, only with the approval in each case of the member whose restricted currency is involved; provided, N OT E C however, that, if necessary, after the Bank's subscribed capital The principal disbursed and outstanding on loans and the ac- is entirely called, such restricted currencies may, without restric- cruals for interest, commitment charge, service charge and loan tion by the members whose currencies are offered, be used or commission are receivable in United States dollars and other cur- exchanged for the currencies required to meet contractual pay- rencies (for which the dollar equivalent is shown) as follows: (Continued) 31 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT / APPENDIX F Notes to Financial Statements (Continued) JUNE 30, 1965 Receivable in NOTE G U.S. dollars Other currency Total Subject to call by the Bank only when required to meet the obli- Principal Outstand- gations of the Bank created by borrowing or by guaranteeing ing . $2,093,364,674 $1,724,743,475 $3,818,108,149 loans. As to $17,335,520,000 the restriction on calls is imposed Accrued Interest, Commitment and by the Articles of Agreement; as to $2,165,890,000 by a resolu- Service Charges . 32,505,029 25,429,295 57,934,324 Accrued Loan Com- tion of the Board of Governors. missions . . 284,328 8,306 292,634 Total . . . $2,126,154,031 $1,750,181,076 $3,876,335,107 NOTE H The dollar equivalent shown as principal outstanding includes an The Bank has sold under its guarantee $69,003,844 of loans of amount which in accordance with Article II, Section 9, will be which amount $64,808,844 has been retired. The following table receivable from members to maintain the value of their curren- setsforththe maturitiesof theguaranteed obligationsoutstanding: cies, and is net of an amount, equal to the increase in the value of their currencies, which in accordance with Article II, Section 9, will be payable by the Bank to members, when such currencies Period Amount are recovered by the Bank. July 1, 1965 to June 30, 1966. . . . . $1,000,000 July 1, 1966 to June 30, 1967 . . 1,195,000 NOTE D July 1, 1967 to June 30, 1968 . 1,000,000 Amounts of commissions set aside pursuant to Article IV, Section July 1,1968 to June 30, 1969 1,000,000 6, as a Special Reserve to be held in liquid form and to be used Total . . . . . . . $4,195,000 only for the purpose of meeting liabilities of the Bank on its bor- rowings and guarantees. Subject to minor exceptions, no portion of the charges on loans accruing after June 30, 1964 will be desig- G EN ERA L nated as commissions. As of June 30, 1965, the Board of Governors had approved the applications for membership from Malawi and Zambia with sub- N 0OT E E scriptions of $15 million and $53.3 million respectively. Malawi Of the $136,914,251 net income earned in the fiscal year ended made partial payment on account of its subscription prior to June June 30, 1965, the Executive Directors on July 29, 1965 allocated 30, 1965 and in July paid the balance due and became a member $61,914,251 to the Supplemental Reserve Against Losses on on July 19, 1965. Loans and Guarantees and have recommended to the Board of Governors that an additional amount equal to the balance of The Board of Governors has until October 29, 1965 to approve a $75,000,000 be transferred by way of grant to the International resolution of the Executive Directors to increase the authorized Development Association. Capital Stock of the Bank by $2,000 million to $24,000 million. As of June 30, 1965, increases in subscriptions from eleven mem- N OT E F bers aggregating $277.5 million were in process of completion In terms of United States dollars of the weight and fineness in and one member had made partial payment on account of its effect on July 1, 1944. increase. 32 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Opinion of Independent Auditor 1707 L STREET, N.W. WASHINGTON, D.C. 20036 July 29, 1965 To INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT WASHINGTON, D.C. In our opinion, the accompanying financial statements present fairly, in terms of United States currency, the financial position of International Bank for Recon- struction and Development at June 30, 1965, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Our examination of these statements was made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary. PRICE WATERHOUSE & CO. FINANCIAL STATEMENTS COVERED BY THE FOREGOING OPINION Balance Sheet . . . . . . . . . . . . . . . . . appendix A (page 22) Comparative Statement of Income and Expenses. . . . . . . appendix B (page 24> Statement of Subscriptions to Capital Stock and Voting Power . .appendix C (page 25> Summary Statement of Loans . . . . . . . . . . . . appendix D (page 27) Funded Debt of the Bank . . . . . . . . . . . . . . appendix E (page 29> Notes to Financial Statements . . . . . . . . . . . . . appendix F (page 31) 33 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT / APPENDIX G Administrative Budget of the Bank FOR THE FISCAL YEAR ENDING JUNE 30, 1966 Actual Expenses Budget 1964 1965 1966 REGULAR OPERATIONS BOARD OF GOVERNORS . . . . . . . $ 419,024 $ 882,725 $ 488,000 EXECUTIVE DIRECTORS . . . . . . 869,554 953,019 1,034,000 STAFF Personal Services . . . . . . . . . $ 7,471,444 $ 8,507,581 $10,547,000 Staff Benefits . . . . . . . . . . 1,223,760 1,349,474 1,767,000 Travel .. . . 1,425,915 1,944,602 2,554,000 Consultants . . ........ 342,754 771,045 500,000 Representation 120,153 10,584,026 125,521 12,698,223 150,000 15,518,000 RESIDENT MISSIONS . , . . . . . . - 328,424 355,000 COOPERATIVE PROGRAM WITH FAO . . . . 1,115 105,510 205,500 COOPERATIVE PROGRAM WITH UNESCO . . 31,967 29,000 OTHER ADMINISTRATIVE EXPENSES Fees and Compensation . . . . . . . $ 165,273 $ 223,447 $ 315,000 Supplies and Material . . . . . . . . 131,249 144,811 178,000 Office Occupancy . . . . . . . . . 954,231 997,531 1,260,000 Communications . .514,674 545,421 604,000 Furniture and Equiement . . . . . . 530,632 369,867 385,000 Printing .. . .... . 158,927 255,493 373,000 Books and Library Services . . . . . . 177,591 184,998 206,000 Insurance .. . . . . . . . . 77,776 62,235 115,000 Other ... . . . .. . . . 7,249 2,717,602 22,914 2,806,717 10,000 3,446,000 CONTINGENCY . . . . . . . . . . . - - 200,000 Total Regular Operations . . . . . . $14,591,321 $17,806,585 $21,275,500 SERVICES TO MEMBER COUNTRIES Sector and Feasibility Studies . . . $ 1,503,202 $ 1,494,241 $ 2,531,000 General Survey Missions . . . . . . . 293,043 133,906 175,000 Resident Missions . . . . . . . . . 670,222 656,869 710,000 Advisory Missions . . . . . . . . . - 213,336 223,000 Cooperative Program with FAO . . . . 12,625 295,406 561,000 Cooperative Program with Unesco . 25,000 141,664 427,500 Economic Development Institute . . . . 1,066,484 882,495 1,050,000 Training Programs . . . . . . . . 71,396 41,461 62,000 Settlement of Investment Disputes . . . 189,038 151,245 Other Services . . . . . . . .473,561 506,098 810,000 Total Services to Member Countries . 4,304,571 4,516,721 6,549,500 Totals .$18,895,892 $22,323,306 $27,825,000 The Administrative Budget for the fiscal year ending June 30, 1966, was prepared by the President and approved by the Executive Directors in accordance with Section 19 of the By-Laws. For purposes of comparison, the administrative expenses incurred during the fiscal years ended June 30, 1964 and 1965 are also shown. 34 IDA Appendices page A Statement of Condition ................ .......... . . . 36 B Comparative Statement of Income and Expenses . ... . . . . . . . . . . . . . 37 C Statement of Holdings of Currencies and Notes .... . . . . . . . . . . . . . . 38 D Summary Statement of Development Credits .... . . . . . . . . . . . . . . . 40 E Statement of Subscriptions, Voting Power and Supplementary Resources . . . 41 F Notes to Financial Statements. . ............. . .... 43 OPINION OF INDEPENDENT AUDITOR . ........ . . . .. . . . . .. . .... 44 G Administrative Budget of IDA . . ................... . 45 35 INTERNATIONAL DEVELOPMENT ASSOCIATION / APPENDIX A Statement of Condition JUN E 30, 1965 Expressed in United States Currency-See Notes to Financial Statements. Appendix F ASSETS Due from Banks and Other Depositories (See Appendix C) Member currencies Unrestricted ... . . . . . . . . . . . . . . . . . . . $ 27,549,475 Subject to restrictions-NOTE B . . . . . . . . . . . . . . . . 54,794,250 $ 82,343,725 Investments Government obligations (At cost or amortized cost) Face amount $44,254,859 including $43,750,000 United States Government obligations . . . . . . . . . . . . . $ 43,478,522 Accrued interest . . . . . . . . . . . . . . . . . . . . . 267,804 43,746,326 Receivable on Account of Subscriptions (See Appendix C) Non-negotiable, non-interest-bearing, demand notes Unrestricted . . . . . . . . . . . . . . . . . . . . . . $303,320,650 Subject to restrictions-NOTE B . . . . . . . . . . . . . . . . 164,459,548 $467,780,198 Amount required to maintain value of currency holdings-NOTE C . . . . 240,000 468,020,198 Receivable on Account of Supplementary Resources Non-negotiable, non-interest-bearing, demand notes Unrestricted .10,236,638 Receivable from International Bank for Reconstruction and Development-NOTE D . . . . . . . . . . . . . . . . . . . 39,600,000 Effective Development Credits Held by Association (Including undisbursed balance of $580,584,145) (See Appendix D)-NOTE E . . . . 995,272,825 Accrued Service Charge on Development Credits-NOTE E . . . . . . 730,891 Total . . . . . . . . . . . . . . . . . . . . . . . $1,639,950,603 LIABILITIES, SUBSCRIPTIONS, SUPPLEMENTARY RESOURCES, TRANSFER AND ACCUMULATED NET INCOME Liabilities Accounts payable and other liabilities . . . . . . . . . . . . . . $ 364,665 Undisbursed balance of effective development credits (See Appendix D) 580,584,145 Subscriptions (See Appendix E)-NOTE F Amounts subscribed . . . . . . . . . . . . . . . . . . . $995,695,000 Less portion for which payment is not yet due-NOTE G 8,625,000 987,070,000 Payment on account of pending subscription . . . . . . . . . . . . 76,000 Supplementary Resources (See Appendix E)-NOTE F . . . . . . . . . . $755,880,000 Less portion for which payment is not yet due-NOTE H . . . . . . . 740,745,000 15,135,000 Transfer from International Bank for Reconstruction and Development-NOTE D . . . . . . . . . . . . . . . . . . . 50,000,000 Accumulated Net Income At June 30, 1964 ... . . . . . ....... $ 4,138,676 The period from July 1, 1964 to June 30, 1965 . . . . . . . . . . . 2,582,117 6,720,793 Total . . . . . . . . . . . . . . . . . . . . . . . $1,639,950,603 36 INTERNATIONAL DEVELOPMENT ASSOCIATION / APPENDIX B Comparative Statement of Income and Expenses FOR THE FISCAL YEARS ENDED JUNE 30, 1964 AND JUNE 30, 1965 Expressed in United States Currency-See Notes to Financial Statements, Appendix F July 1 to June 30 1963-1964 1964-1965 Income Income from investments . . . . . . . . . . . . . . . . . . . . . $3,308,511 $3,340,800 Income from development credits . . . . . . . . . . . . . . . . . . . . . . 1,017,017 2,144,797 Gross Income . . . . . . . . . . . . . . . . . . . . . . . . . . $4,325,528 $5,485,597 Expenses Administrative expenses: Personal services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,517,570 $1,677,752 Contributions to staff benefits . . . . . . . . . . . . . . . . . . . . . . . . . 213,032 239,677 Fees and compensation . . . . . . . . . . . . . . . . . . . . . . . . . . 171,450 198,930 Representation ..2,593 3,028 Travel ..335,319 375,642 Supplies and material . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,328 29,028 Office occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161,740 165,377 Communication services . . . . . . . . . . . . . . . . . . . . . . . . . . 84,374 111,919 Furniture and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 79,075 47,210 Printing ..26,372 29,739 Insurance ..21,563 17,977 Handling of gold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149 Total Administrative Expenses . . . . . . . . . . . . . . . . . . . . . . . $2,635,565 $2,896,279 Exchange adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,185 7,201 Gross Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . $2,641,750 $2,903,480 Net Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,683,778 $2,582,117 37 I NT ER NAT] ONAL D EVE LOP MENT ASS OCI ATI ON / APPENDIXC Statement of Holdings of Currencies and Notes J UN E 30, 1 965 Expressed in United States Currency-See Notes to Financial Statements, Appendix F Non-negotiable, UInit of non-interest-beafrig, Member currency Currency demiand notes Total Afghanistan ............ . . Afghani $ 606,000 $ 303,000 $ 909,000 Algeria.......... . . . Dinar - 3,627,000 3,627,000 Argentina . ..*.. Peso - 16,947,000 16,947,000 Australia .......Pound - 9,998,410 9,998,410 Austria......... . . . . Schilling - 2,394,846 2,394,846 Bolivia ......... .... Peso Boliviano - 954,000 954,000 Brazil ...... ...... . Cruzeiro 16,947,000 - 16,947,000 Burma...... . . . . Kyat - 1,818,000 1,818,000 Burundi . Franc - 684,000 684,000 Cameroon.......... . . Franc - 909,000 909,000 Canada ........Dollar - 18,680,237 18,680,237 Central African Republic ....... Franc - 450,000 450,000 Ceylon. . . ......... . . Rupee - 2,727,000 2,727,000 Chad . ....... II. Franc - 450,000 450,000 Chile... ... . ... .. . .....Escudo 3,177,000 - 3,177,000 China ... . New Taiwan Dollar - 27,234,000 27,234,000 Colombia ~~~~~~Peso 3,177,000 - 3,177,000 Congo (Brazzaville). . . . . . Franc - 450,000 450,000 Congo, Dem. Rep. of....... . . . . Franc 2,718,000 - 2,718,000 Costa Rica........ . . . . . Colon 180,000 - 180,000 Cyprus ....... . . . . . . Pound - 684,000 684,000 Dahomey...... .... . . . . Franc- 450,000 450,000 Denmark . ... Krone - 4,408,794 4,408,794 Dominican Republic Peso 360,000 - 360,000 Ecuador ...Sucre 585,000 -585,000 El Salvador....... Colon 270,000 - 270,000 Ethiopia . ..... ........Dollar - 450,000 450,000 Finland............. . . . Markka 1,839,495 - 1,839,495 France. . . . . Franc - 25,055,398 25,055,398 Gabon .. ... .Franc -450,000 450,000 Ghana .. Pound - 2,124,000 2,124,000 Greece . . . ... . Drachma 2,268,000 - 2,268,000 Guatemala ........ ....I Quetzal 360,000 - 360,000 Haiti . . ......... . .- . Gourde - 684,000 684,000 Honduras........ . . . . . . Lempira 270,000 - 270,000 Iceland... . . . . . Krona - 90,000 90,000 India ............ ....Rupee 89,964 36,225,036 36,315,000 Iran............. . . . . Rial - 4,086,000 4,086,000 Iraq.......... ... . . . Dinar - 684,000 684,000 Ireland . . . . . .- . Pound - 2,698,318 2,698,318 Israel ..... . . . . . . . Pound - 1,209,600 1,209,600 Ivory Coast . . . . . . Franc - 909,000 909,000 Japan ..... ... . . . . . . . Yen - 16,379,533 16,379,533 Jordan.... ... . . . . . . . . Dinar - 270,000 270,000 Kenya ......... . . . . . . . Shilling - 1,512,000 1,512,000 Korea . . . . . . . . . Won 1,134,000 - 1,134,000 Kuwait........... . . . Dinar - 1,695,092 1,695,092 (Continued) 38 INTERNATIONAL DEVELOPMENT ASSOCIATION/ APPENDIX C Statement of Holdings of Currencies and Notes Conrtnued) JUNE 30, 1965 Expressed in Unitied States Cutrenicy-See Noctes to Financial Statements. Appenaix F Non -negoniable, Member ~~~~~~~~~~~~~~Unit of non-tnterest-beaning, Member ~~~~~~~~~~currency Currency demand notes Total Leanon Kip $ 210,000 $ -$ 210,000 Liberia Pound 405,000 -405.000 Liberia ~~~~~~Dollar - 684,000 684,000 Libya ...Pound 000 000 Malagasy Republic Franc -8,0 909,2000 909,000 Malaysia Dollar - 2,268,000 2,268,000 Mali Franc 783,000 - 783,000 Mauritania .......Franc 29 450,000 450,029 Mexico ...Peso 7,790,281 - 7,790,281 Morocco Dirham - 3,177,000 3,177,000 Nepal Rupee -450,000 450,000 Netherlands Guilder - 13,852,911 13,852,91 1 Nicaragua ...... Cordoba 270,000 - 270,000 Niger Franc - 450,000 450,000 Nigeria Pound - 3,024,000 3,024,000 Norway K ro ne - 3,246,179 3,246,179 Pa kistan Rupee - 9,081,000O 9,081,000 Panama Balboa 3,598 -3,598 Paraguay ..Guarani 270,000 - 270,000 Peru Sol - 1,593,000 1,593,000 Philippines . . .... .. Peso - 4,536,000 4,536,000 Rwanda . . .Franc 136,800 547,200 684,000 Saudi Arabia ... .Riyal - 3,330,000 3,330,000 Senegal....... . . . Franc - 1,512,000 1,512,000 Sierra Leone . . .Leone - 684,000 684,000 Somalia . . . .Shilling - 684,000 684,000 South Africa Rand 5,176,666 - 5,176,666 Spain .. ...Peseta 7,264,800 1,816,200 9,081,000 Sudan . . . Pound - 909,000 909,000 Sweden . . .. Krona - 15,235,889 (1) 15,235,889 (1) Syrian Arab Republic .Pound 342,000 513,000 855,000 Tanzania . .Shilling - 1,512,000 1,512,000 Thailand ...Baht - 2,727,000 2,727,000 Togo .Franc 7 683,993 684,000 Tunisia .. .... Dinar - 1,359,000 1,359,000 Turkey .. ...... Lira - 5,220,000 5,220,000 Uganda .Shilling - 1,512,000 1,512,000 United Arab Republic .Pound - 4,572,000 4,572,000 United Kingdom Pound 70,000 64,610,000 64,680,000 United States . Dollar 20,463,285 138,000,000 158,463,285 Upper Volta . . .Franc - 450,000 450,000 Viet-Nam Piastre 1,359,000 - 1,359,000 Yugoslavia .Dinar 3,636,000 -3,636,000 Totals . . . .$82,343,725 $478,016,836 $560,360,561 (2) (I) lud,ng Suppl-mentary Resources. C) f t,cuoO~oi t,eesuvueetof 3411Oe7~3is orstntedeedtheeuculet o $59.ae.97 s sbjet t ruiseoeoe f clueNot C 39 I NTER NATIONAL DEVELO PM ENT ASSOCIATION / APPENDIX D Summary Statement of Development Credits J UN E 30, 1965 Expressed in United States Currency-See Notes ro Financial Statements, Appendix F Effective development cred;ts held by Associartcn Development Member in whose territories developmerit Disbursed Undisbursed credits not yet credits have been made (1) portion portion (2) Total effective (3) Afghanistan . ............. . .. $ - $ - $ - $ 3,500,000 Bolivia ........... . . . 2,149,584 12,850,416 15,000,000 - Chile .. : . 5,359,658 13,640,342 19,000,000 - China . . ... . ..... ........ .. 12,412,985 919,985 13,332,970 - Colombia . . . . . . . . . . . . . . . . . . 9,281,507 10,218,493 19,500,000 - Costa Rica . . .. .. ..... ..... . . . 2,138,871 3,361,129 5,500,000 - Ecuador ... . . . . . . . . . . . . . . .. - 8,000,000 8,000,000 - El Salvador . . . . . . . . . . . . . . . . . . . 2,375,352 5,624,648 8,000,000 - Ethiopia ... . . . . . . . . .... . .. 3,839,111 9,660,889 13,500,000 - Haiti . . . . . . . . . . . . . . . . . . . . 349,855 - 349,855 - Honduras. . . . . . . . . . . . . . . 5,404,897 3,595,103 9,000,000 3,500,000 India ... . .. . . . . . .... . 287,923,691 197,076,309 485,000,000 - Jordan ... . . . . . . . . . . . . . ... 2,954,034 5,545,966 8,500,000 - Kenya.. . ......... 82,054 7,217,946 7,300,000 3,000,000 Korea. . . . . . . . . . . . . . . . . . . . 13,939,845 60,155 14,000,000 - Mauritania.. .... ......... - 6,700,000 6,700,000 Nicaragua . . . . . . . . . . . . . . . . . . . 2,364,914 635,086 3,000,000 - Niger.. . ............ - - - 1,500,000 Nigeria. . . ......... - - - 35,500,000 Pakistan ... . . . . . . . . . . . . . . . . 35,122,163 207,667,837 242,790,000 27,000,000 Paraguay . . . . . . . . . . . . . . . . . . . 1,425,157 8,174,843 9,600,000 - Somalia .... .. .... ...... - - - 6;200,000 Sudan. . . ....... 7,680,603 5,319,397 13,000,000 - Syrian Arab Republic . . . . . . . . . . . . . . - 8,500,000 8,500,000 - Tanzania .... . . . . . . . . . . . . . . . 2,274,574 16,325,426 18,600,000 - Tunisia ... . . . . . . . . . . . . . . . . . 2,941,477 2,058,523 5,000,000 - Turkey ... . . . . . . . . . . . . . . . . . 11,698,760 44,001,240 55,700,000 10,000,000 United Kingdom: Bechuanaland Protectorate. ... . . . . . . .. . 169,588 3,430,412 3,600,000 - Swaziland ............ . ... ... 2,800,000 - 2,800,000 Totals . . . . . . . . . . . . . . . . . . $414,688,680 $580,584,145 $995,272,825 $ 90,200,000 (L) All development credits have been made to member governments or to the government of a territory of a member. (2) Of the undisbursed balance the Association has entered into irrevocable commitmennts to disburse $2,655,442. (') Agreements providing for these development credits have been signed, but the development credits do not become effective and disbursements thereunder do not start until the borrower takes certain action and furnishes certain documents to the Association. 40 INTER NATIONAL DEVELOPMENT ASSOCIATION/ APPENDIX E Statement of Subscriptions, Voting Power and Supplementary Resources JUNE 30, 1965 Expressed in United States Currency-See Notos to Financial Statements. Appendix F Supplemnentary Subscriptions ()Voting Power Resources Total -- - - ~~~~~~~~~~~~~~~~~Subscriptions Total Amounts Amounts and (Notes C Percent Number Percent palidin not yet due Supplemnentary Member andY F) of total of votes of total (Note C) (Note H) Resources Australia. .........$ 20,180,000 2.03 4,536 1.84 $ - $ 19,800,000 $ 39,980,000 Austria. ......... 5,040,000 .51 1,508 .61 - 5,040,000 10,080,000 Belgium-NOTE G . ... . 8,250,000 .83 2,150 .87 - 8,250,000 16,500,000 Canada. ......... 37,830,000 3.80 8,066 3.28 - 41,700,000 79,530.000 Denmark. ......... 8,740,000 .88 2,248 .91 - 7,500,000 16,240,000 Finland. ......... 3,830,000 .38 1,266 .52 - 2,298,000 6,128,000 France. ......... 52,960,000 5.32 11,092 4.51 - 61,872,000 114,832,000 Germany. .. ...... 52,960,000 5.32 11,092 4.51 - 72,600,000 125,560,000 Italy. .......... 18,160,000 1.82 4,132 1.68 - 30,000,000 48,160,000 Japan. .......... 33,590,000 3.37 7,218 2.93 - 41,250,000 74,840,000 Kuwait........ 3,360,000 .34 1,172 .48 - 3,360,000 6,720,000 Luxembourg-NOTE G 375,000 .04 575 .23 - 375,000 750,000 Netherlands. ....... 27,740,000 2.79 6,048 2.46 - 16,500,000 44,240,000 Norway ........... 6,720,000 .67 1,844 .75 - 6,600,000 13,320,000 South Africa. ....... 10,090,000 1.01 2,518 1.02 - - 10,090,000 Sweden. ......... 10,090,000 1.01 2,518 1.02 15,135,000 15,000,000 40,225,000 United Kingdom. ......131,140,000 13.17 26,728 10.86 - 96,600,000 227,740,000 United States. .......320,290,000 32.17 64,558 26.23 -312,000,000 632,290,000 Total Part I Members . . . . $751,345,000 75.46 159,269 64.71 $15,135,000 $740,745,000 $1,507,225,000 Afghanistan. ........$ 1,010,000 .10 702 .28 $ - $ -$ 1,010,000 Algeria. ......... 4,030,000 .40 1,306 .53 --4,030,000 Argentina.18,830,000 1.89 4,266 1.73 --18,830,000 Bolivia. ......... 1,060,000 .11 712 .29 --1,060,000 Brazil. .......... 18,830,000 1.89 4,266 1.73 --18,830,000 Burma. ......... 2,020,000 .20 904 .37 --2,020,000 Burundi..... . . ... 760,000 .08 652 .27 - 760,000 Cameroon.... . . ... 1,010,000 .10 702 .28 --1,010,000 Central African Republic . ... 500,000 .05 600 .24 --500,000 Ceylon ..... ... ... 3,030,000 .30 1,106 .45 - 3,030,000 Chad...... .. . ... 500,000 .05 600 .24 --500.000 Chile..... . . .... 3,530,000 .35 1,206 .49 --3,530,000 China. .......... 30,260,000 3.04 6,552 2.66 --30,260,000 Colombia. ......... 3,530,000 .35 1,206 .49 - - 3,530,000 Congo (Brazzaville). ..... 500,000 .05 600 .24 - - 500,000 Congo, Dem. Rep, of. ..... 3,020,000 .30 1,104 .45 - - 3,020,000 Costa Rica. ........ 200,000 .02 540 .22 - - 200,000 Cyprus. ......... 760,000 .08 652 .27 - - 760,000 Dahomey. ........ 500,000 .05 600 .24 - - 500,000 Dominican Republic. ..... 400,000 .04 580 .24 - - 400,000 Ecuador. ......... 650,000 .07 630 .26 - - 650,000 El Salvador. .......300,000 .03 560 .23 - - 300,000 Ethiopia. ......... 500,000 .05 600 ..24 - - 500,000 Gabon. ......... 500,000 .05 600 .24 - 500,000 Ghana. ......... 2,360,000 .24 972 .40 - - 2,360,000 Greece. ......... 2,520,000 .25 1,004 .41 - - 2,520,000 Guatemala. ........ 400,000 .04 580 .24 - - 400,000 Haiti. .......... 760,000 .08 652 .27 - - 760,000 Honduras. ........ 300,000 .03 560 .23 - - 300,000 Iceland. ......... 100,000 .01 520 .21 - - 100,000 (Continued) 41 INTER NATIONAL DEVELOP MENT ASSOCIATION / APPEN Dix E State-ment -of Subscriptions, Voting Power a-nd Supple-mentar-y Resources (Continueol) J UN E 3 0, 1 965 Expressedl in United~ States Currency--See Notes to Finanoiel Statemnents. Appendix F Supoclenrentery Su)bscriptions (1) Voting Power Posoerizes Total Subscriptions Total Amounts Amounts and (Notes C Percent Number Percent paid in not yet due Supplementary Mlember enp F) Of total of votes of total (Note C) (Note i-) Hesources India ...........$ 40,350,000 4.05 8,570 3.48 $ - $ - $ 40,350,000 Iran ........... 4,540,000 .46 1,408 .57 - - 4,540,000 I raq ......760,000 .08 652 .27 - - 760,000 I rela nd ....... . 3,030,000 .30 1,106 .45 - - 3,030,000 Israel ........1,680,000 .17 836 .34 - - 1,680,000 Ivory Coast . . 1,010,000 .10 702 .28 - - 1,010,000 Jordan .......... 300,000 .03 560 .23 - - 300,000 Kenya ........... 1,680,000 .1 7 836 .34 - - 1,680,000 Korea ........... 1,260,000 .13 752 .31 - - 1,260,000 Laos ........... 500,000 (2) .05 600 .24 - - 500,000 Lebanon...... . . . . 450,000 .04 590 .24 - - 450,000 Liberia . - . . 760,000 .08 652 .27 - 760,000 Libya . .......... 1,010,000 .10 702 .28 - - 1,010,000 Malagasy Republic I..... 1,010,000 .10 702 .28 - - 1,010,000 Malaysia .......... 2,520,000 .25 1,004 .41 - - 2,520,000 Mali ........... 870,000 .09 674 .27 - - 870,000 Mauritania ......... 500,000 .05 600 .24 - - 500,000 Mexico .... ..... 8,740,000 .88 2,248 .91 - - 8,740,000 Morocco . 3,530,000 .35 1,206 .49 - - 3,530,000 Nepal ........... 500,000 .05 600 .24 - - 500,000 Nicaragua ,. ...... 300,000 .03 560 .23 - - 300,000 Niger . .. ....... 500,000 .05 600 .24 500,000 Nigeria .......... 3,360,000 .34 1,172 .48 - - 3,360,000 Pakistan . 10,090,000 1.01 2,518 1.02 - - 10,090,000 Panama .......... 20,000 (3) 504 .20 - - 20,000 Paraguay . . 300,000 .03 560 .23 - - 300,000 Peru ........... 1,770,000 .18 854 .35 - - 1,770,000 Philippines...... . . . 5,040,000 .51 1.508 .61 - - 5,040,000 Rwanda....... . . . 760,000 .08 652 .27 - - 760,000 Saudi Arabia .....I . . 3,700,000 .37 1,240 .50 - - 3,700,000 Senegal........ . . 1,680,000 .1 7 836 .34 - - 1,680,000 Sierra Leone . ....... 760,000 .08 652 .27 - - 760,000 Somalia....... . . . 760,000 .08 652 .27 - - 760,000 Spain .......... 10,090,000 1.0l 2,518 1.02 - - 10,090,000 Sudan .......... 1,010,000 .10 702 .28 - - 1,010,000 Syrian Arab Republic ..... 950,000 .10 690 .28 - - 950,000 Tanzania . ......... 1,680,000 .1 7 836 .34 - - 1,680,000 Thailand .......... 3,030,000 .30 1,106 .45 3,030,000 Togo ........... 760,000 .08 652 .27 - - 760,000 Tunisia .......... 1,510,000 .15 802 .33 - - 1,510,000 Turkey .......... 5,800,000 .58 1,660 .67 - - 5,800,000 Uganda ......... 1,680,000 .1 7 836 .34 - - 1,680,000 United Arab Republic 5,080,000 .51 1,516 .62 - - 5,080,000 Upper Volta...... . . . 500,000 .05 600 .24 - - 500,000 Viet-Nam..... . . . . 1,510,000 .15 802 .33 - - 1,510,000 Yugoslavia ..... . . . . 4,040,000 .41 1,308 .53 - - 4,040,000 Total Part 11 MemnberS-NOTE B $244,350,000 24.54 86,870 35.29 $ - $ - $ 244,350,000 Grand Totals... . . . . $995,695,000 100.00 246,139 100.00 $15,135,0030 $740,745,000 $1,751,575,000 ()P. m fui e--eo eei,in- and L-oentio-g -Note C. Ann Amont in the equivalent of $240.000 is due as a result of reoul,at on of this currency. (i) Less th.n .000 peecent. 42 INTERNATIONAL DEVELO PMENT ASSOCIATION /APPEN DIX F Notes to Financial Statements J UNE 30, 1965 NOTE A NOTE D Amounts in currencies other than United States dollars have been The International Bank for Reconstruction and Development has translated into United States dollars: authorized the transfer, by way of grant, to the Association of (i) In the cases of 60 members, at the par values as specified $50,000,000 from the net income of the Bank for the fiscal year in the "Schedule of Par Values", published by the International ended June 30, 1964. Of this amount, $10,400,000 has been re- Monetary Fund; ceived as of June 30, 1965. (ii) In the cases of the remaining 34 members [Algeria, Argen- NOTE E tina, Bolivia, Brazil, Cameroon, Central African Republic, Chad, The principal disbursed and outstanding on development credits Chile, China, Colombia, Congo (Brazzaville), Democratic Repub- and the accrued service charge are expressed in terms of United lic of Congo, Dahomey, Gabon, Ivory Coast, Kenya, Korea, Laos, States dollars of the weight and fineness in effect on January 1, Malagasy Republic, Mali, Mauritania, Nepal, Niger, Paraguay, 1960 and the equivalent is payable by the borrowers in currencies Peru, Rwanda, Senegal, Sierra Leone, Tanzania, Togo, Uganda, which the Association determines to be freely convertible or freely Upper Volta, Viet-Nam and Yugoslavia], at the rates used by exchangeable by the Association for currencies of other members such members in making payments of subscriptions to the of the Association, except that such amount would be reduced if Association. (a) there is a uniform proportionate reduction in the par values of NOTE B the currencies of all members of the International Monetary Fund Pursuant to Article IV, Section 1 (a), these amounts may be used or (b) the Association so decides because of a substantial reduc- by the Association for administrative expenses incurred by the tion in the value of one or more major currencies of members. The Association in the territories of any Part 11 member whose cur- foregoing does not apply to a credit of $9,000,000 which is ex- rency is involved and, insofar as consistent with sound monetary pressed and is repayable in legal tender dollars. policies, in payment for goods and services produced in the ter- NOTE F ritories of such member and required for projects financed by the Subscriptions and supplementary resources are expressed in Association and located in such territories; and in addition when terms of United States dollars of the weight and fineness in effect and to the extent justified by the economic and financial situa- on January 1, 1960. tion of the member concerned as determined by agreement between the member and the Association, such currency shall be NOTE G freely convertible or otherwise usable for projects financed by the This portion of the subscriptions of members, being that of Association and located outside the territories of the member. Belgium and Luxembourg, is due in three equal instalments on or before November 8, in each of the years 1965, 1966 and 1967, NOTE C and is payable in gold or freely convertible currency. Under Article IV, Section 2, each member is required, if the par value of its currency is reduced or the foreign exchange valie of its NOTE H currency has in the opinion of the Association depreciated to a These supplementary resources are to be paid by Part I members significant extent within that member's territories, to maintain the in freely convertible currencies in three equal instalments on or value of the Association's holdings of its ninety percent currency, before November 8, in each of the years 1965, 1966 and 1967. including the principal amount of any notes substituted therefor, In July, South Africa agreed to make a contribution of $3,990,000 and the Association is required if the par value of the member's on the same basis. In addition, in July 1965, Sweden paid to the currency is increased, or the foreign exchange value of the mem- Association a further contribution equivalent to $3,000,000. ber's currency has in the opinion of the Association appreciated to a significant extent within that member's territories, to return to GENERAL the member the increase in the value of such ninety percent cur- The Board of Governors has approved the applications for mem- rency held by the Association; provided, however, that the fore- bership from the following countries: going shall apply only so long as and to the extent that such cur- rency shall not have been initially disbursed or exchanged for the Country Subscription Dat to Accepr currency of another member. Supplementary resources of the Association have, by agreement, Guinea $1.01 million September 30, 1965 the same respective rights and obligations as to maintenance of Malawi $ .76 million September 15, 1965 value as are set forth in Article IV, Section 2, of the Articles of the Trinidad and Tobago $1.35 million September 15, 1965 Association. Zambia $2.69 million November 17, 1965 The equivalent of $240,000 is due from one member in order to Malawi made partial payment on account of its subscription prior maintain the value of the Association's holdings of its ninety per- to June 30, 1965 and in July paid the balance due and became a cent currency as required under Article IV, Section 2. member on July 19, 1965. 43 INTER NATIONAL D EVELOPMENT ASSOCIATIO N Opinion of Independent Auditor 1707 L STREET, N.W. WASHINGTON, D.C. 20036 July 29, 1965 To INTERNATIONAL DEVELOPMENT ASSOCIATION WASHINGTON, D.C. In our opinion, the accompanying financial statements present fairly, in terms of United States currency, the financial position of International Development As- sociation at June 30, 1965, and the results of its operations for the year then ended, in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. Our examination of these statements was made in accord- ance with generally accepted auditing standards, and accordingly included review of the allocation of expenses incurred jointly with International Bank for Reconstruction and De- velopment, tests of the accounting records and such other auditing procedures as we considered necessary. PRICE WATERHOUSE & CO. FINANCIAL STATEMENTS COVERED BY THE FOREGOING OPINION Statement of Condition . . . . . . . . . . . . . . . appendix A (page 36) Comparative Statement of Income and Expenses. . . . . . . appendix B (page 37> Statement of Holdings of Currencies and Notes . . . . . . . appendix C (page 38) Summary Statement of Development Credits . . . . . . . . appendix D (page 40> Statement of Subscriptions, Voting Power and Supplementary Resources . . . . . . . . . . . . appendix E (page 41) Notes to Financial Statements . . . . . . . . . . . . . appendix F (page 43) 44 INTERNATIONAL DEVELOPM ENT ASSOCIATIO N /APPEN DiX G Administrative Budget of IDA FOR THE FISCAL YEAR ENDING JUNE 30, 1966 Actual Expenses Budget 1964 1965 1966 STA FF Personal Services . . . . . . . . . . . . . . . . . . . . . . . . $1,517,570 $1,677,752 $2,241,000 Staff Benefits .213,032 239,677 323,000 Travel .. ............. 335,319 375,642 481,000 Consultants .158,386 171,109 200,000 Representation. 2,593 3,028 3,500 $2,226,900 $2,467,208 $3,248,500 COOPERATIVE PROGRAM WITH FAO . . . . . . . . . . . . . . . . . . . 3,250 10,474 21,000 COOPERATIVE PROGRAM WITH UNESCO . . . . . . . . . . . . . . . . . - 7,284 18,500 OTHER ADMINISTRATIVE EXPENSES Fees and Compensation . . . . . . . . . . . . . . . . . . . . . 9,814 10,063 27,000 Supplies and Material . . . . . . . . . . . . . . . . . . . . . 22,328 29,028 34,000 Office Occupancy . . . . . . . . . . . . . . . . . . . . . . . . 161,740 165,377 233,000 Communications .84,374 111,919 116,000 Furniture and Equipment . . . . . . . . . . . . . . . . . . . . . 79,075 47,210 78,000 Printing .26,372 29,739 36,000 Insurance .21,563 17,977 24,000 Other .149 - - $ 405,415 $ 411,313 $ 548,000 CONTINGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . - - 50,000 Totals . . . . . . ............. $2,635,565 $2,896,279 $3,886,000 The Admin istrative Budget for the fiscal year endingJune 30,1966, was prepared by the President and approved by the Executive Directors in accordance with Section 8 of the By-Laws. For purposes of comparison, the administrative expenses incurred during the fiscal years ended June 30, 1964 and 1965 are also shown. 45 Other Appendices page 1 Governors and Alternates of the Bank and IDA . ..... . . . . . . . . . . . . 47 2 Executive Directors and Alternates of the Bank and IDA and their Voting Power . 49 3 Principal Officers of the Bank and IDA ....... . .......... . . . . 50 46 APPENDIX1 Governors and Alternates of the Bank and IDA JUNE 30, 1965 Memrber Governmnent Governor Alternate Afghanistan ................ . . Sayed Kassem Rishtiya Zia H. Noorzoy Algeria..... .......Smail Mahroug Abdallah Khodja Argentina................... .Fdlix Gilberto Maria Elizalde Enrique Garcia V6zquez Australia.... ......Harold Holt Sir Roland Wilson Austria............ . . .......Wolfgang Schmitz Hugo Rottky Belgium............ . . .......G. Eyskenst Hubert Ansiaux Bolivia. ...................Alberto lb65ez Gonz6les Enrique Vargas Guzm6n Brazil ............ . . .......Octavio Gouv6a de Bulhbes Denio Chagas Nogueira Burma............ . . .......U Kyaw Nyein U Kyaw Nyun Burundi............ . . .......Eric Manirakiza Francois Dupont Cameroon............ . .......Laurent Ntamag Jacques Kuoh Moukouri Canada. ...................Waiter L. Gordon A. F. W. Plumptre Central African Republic ...... ........Charles Bornou Louis Kpado Ceylon ......... ...........Ukku Banda Wanninayake H. Jinadasa Samarakkody Chad .......... ...........Georges Diguimbaye Boukar Abdoul Chile .......... ...........Carlos Massadt Jorge Marshialit China ......... ...........Ching-yu Chen Kuo-Hwa Yu Colombia ......... . . . Joaquin Vallejot Jorge Mejia-Salazar Congo (Brazzaville). .............. . Bernard Banza Bouiti Elie Dinge Congo, Democratic Republic of .... . .......Dominique Ndinga Alfred Jean Roux Costa Rica ........ ..........Alvaro Castro J. Alvaro Vargas E. Cyprus ........ ...........Renos Solomides M. E. Guven Dahomey ......... ..........Francois Djibode Aplogan Marcel Tokpanou Denmark ......... ..........Otto Muller Karl Otto Bredahi Dominican Republic . ....... . ......Di6genes H. Fern6ndez Luis Scheker Ecuador............ . . .......Wilfrido Freire Duer'ias Gustavo Larrea C6rdova El Salvador............ . .......Francisco Aquino h. Abelardo Torres Ethiopia ............ . . ..... Yilma Deressa Bulcha Demeksa Finland............ . . .......R. v. Fieandt Esko Rekola France............ . . .......Minister of Finance Bernard Clappiert Gabon ............ .......Andrg-Gustave Anguile Daniel H-lyna Ekamkamt Germany, Federal Republic of..... . . .....Kurt Schm0cker Rolf Dahlgrtin Ghana ............ . . .......K. Amoako-Atta W. M. Q. Halm Greece............ . . .......George Mavros John P. Paraskevopoulos Guatemala............ . .......Carlos E. Peralta M6ndez Jorge Lucas Caballeros Mazariegos Guinea* .,........... .......Moussa Diakite Mamadlou Fofana Haiti............. . . .......Herv6 Boyer Antonio Andrd Honduras........... . .......Manuel Acosta Bonilla Ricardo Ztiniga Augustinus Iceland............ . . .......P6tur Benediktsson India............. . . .......T. T. Krishnamachari S. Bhioothalingam I ndonesia* ........ . .......Arifin Harahap Soerjono Sastrohadi koesoemo Iran............. . ........Jamshid Amuzegar Jahangir Amuzegar Iraq............. . ........Mohammed J. Oboosy Khair El-Din Haseeb Ireland............ . . .......John Lynch T- K. Whitaker Israel ............ . . .......David Horowitz Jacob Arnon Italy............. . . .......Guido Carli Donato Menichella Ivory Coast............ . .......Rapha6l Sailer Mohamed Diawara Jamaica* ............ . .......D. B. Sangster G. Arthur Brown Japan ............ . . .......Takeo Fukuda Makoto Usami Jordan............ . . .......Hatim S. Zu'bi Niimeddin Dajani Kenya. ......... .........J. S. Gichuru John Njoroge Michukit 47 APPENDIX1 Governors and Alternates of the Bank and IDA (Continued) Member Government Governor Alternate Korea .................... Seung Hi Hong Se Ryun Kim Kuwait-.......... Sheikh Jabir Al-Ahmad AI-Jabir Abdiatif Y. Al-Hamad Laos ..... ............... Sisouk Na Champassak Oudong Souvannavong Lebanon . .......... ....... Elias Sarkis Raja Himnadeh Liberia . ............... Charles Dunbar Sherman James Milton Weeks Libya............. . . ......Mansur Ben Gaddara All A. Attiga Luxembourg . . . ...............Pierre Werner Pierre Guill Malagasy Republic.............. . . Ralison Rakotovao Louis Rakotcomalala Malaysia . . . . Tan Siew Sin Mohamed Sharif bin Abu Abdul Samad Mali . . . . . . . . . . . . . . . . . . . Louis-Pascal Nbgre Mauritania . . . . Kane Elimanit Moktar Quid Haibat Mexico........ . . Antonio Ortiz Mena Jos6 Hern6ndez Delgado Morocco ...........I..... . . Mohamed Cherkaoui Mamoun Tahiri Nepal................... . . Surya Bahadur Thapa Yadav Prasad Pant Netherlands................ . . A. Vondeling J. H. 0. Count van den Bosch New Zealand* . . H. R. Lake D. W. A. Barker Nicaragua . . . Guillermo Sevilla-Sacasa Silvio Argiiello Cardenal Niger.................. . . . Courmo Barcourgne Lucien Bayle Nigeria . ......... ......- . Chief Festus Sam Okotie-Eboh E. 0. Ogbu Norway. ...................Trygve Lie Christian Brinch Pakistan. ..........I ......Mohamed Shoaib S. A. F. M. A. Sobhan Panama. ...................David Samudio A. Carlos Velarde Paraguay. ..................C6sar Romeo Acosta Oscar Stark Rivarola Peru. ....................Celso Pastor Tulio De Andrea Philippines............ . .......Andres V. Castillo Rafael S. Recto Portugal* . . . Antonio M. Pinto Barbosa Luis M. Teixeira Pinto Rwanda ....................Gaspard Cyimana Leon Mbarushimanat Saudi Arabia................ . . Ahmed Zaki Saad Senegal ......... ..........Habib Thiam lbrahima Tal Sierra Leone ........... ..P.... . G. 0. King Elkanah Laurence Cokert Somalia .......... ..........Awil Hagi Abdutlahi Francesco Palamenghi-Crispi South Africa . . T. E. Donges Gerard Rissik Spain ........Juan Jos6 Espinosat Mariano Navarro Rubiof Sudan ....................Ibrahim El Mufti Sayed Abdel Rahim Mirghani Sweden ....................G. E. Strang N. G. Lange Syrian Arab Republic ...............Abd el-Fattah Beuchi Abdul Hadi Nehlawi Tanzania, United Republic of . - . . . . Paul Bomani E. 1. M. Mtei Thailand ......... ..........Sunthorn Hongladarom Chalong Pungtrekul Togo .......... ...........Boukari Djobo Jean Tevi Trinidad and Tobago, ..... ........A. N. P. Robinson F. A. Francis Tunisia ......... ...........Ahmed Ben Salah All Zouaoui Turkey ........ .l...... hsan Gursan Zeyyat Baykarat Uganda............ . . .......Laurence Kalule-Settala A. J. P. M. Ssentongo United Arab Republic ........ ......Abdel Moneim El Kaissouni Hamed Abdel Latif El Sayeh United Kingdom .................The Earl of Cromer Sir Denis Rickett United States. ................. Henry H. Fowler Thomas C. Mann Upper Volta ..................Edouard Yameogo Pierre-Claver Damiba Uruguay'* ........ . .......Ra~il Ybarra San Martin Hector L. Rios Venezuela*.... ...... . .......Rafael Alfonzo Ravard Luis Vallenilla Meneses Viet-Nam ............. .. . ....Nguyen Xuan Oanh Yugoslavia. .......... .......Kiro Gligorov Zoran Zagar *Member.ofth.cBack oriy. tAppoiefment effective after June350, 9E5 48 APPENDIX 2 Executive Directors and Alternates of the Bank and IDA and Their Voting Power JUNE 30, 1965 Executive Director Alternate Casting Votes of Total Votes APPOINTED Bank IDA John C. Bullitt' United States. . . . . . . . . . . . . . 63,750 64,558 J. M. Stevens N. M. P. Reilly United Kingdom . . . . . . . . . . . . 26,250 26,728 Ren6 Larre Jean Malaplate France . . . . . . . . . . . . . . . 10,750 11,092 Otto Donner Helga Steeg Germany . . . . . . . . . . . . . . . 10,750 11,092 K. S. Sundara Rajan S. Guhan India . . . . . . . . . . . . . . . . 8,250 8,570 ELECTED Joaquin Gutierrez Cano Sergio Siglienti Italy, Spain, Portugal', Greece . . . . . . . . 10,960 7,654 (Spain) (Italy) John M. Garland A. J. J. van Vuuren2 Australia, South Africa, New Zealand', Viet-Nam . . 10,297 7,856 (Australia) (South Africa) Gengo Suzuki Eiji Ozaki3 Japan, Ceylon, Thailand, Burma, Nepal . . . . . 9,610 10,934 (Japan) (Japan) L. Denis Hudon S. J. Handfield-Jones' Canada, Ireland, Jamaica . . . . . . . . . 9,117 9,172 (Canada) (Canada) Mumtaz Mirza Ali Akbar Khosropur Pakistan, United Arab Republic, Iran, Saudi Arabia, (Pakistan) (Iran) Kuwait, SyrianArabRepublic,Iraq,Jordan,Lebanon 8,694 10,346 Abderrahman Tazi Chedly Ayari Indonesia', Malaysia, Algeria, Morocco, Ghana, (Morocco) (Tunisia) Afghanistan, Tunisia, Libya, Laos . . . . . 8,650 7,294 Pieter Lieftinck Aleksandar Bogoev Netherlands, Yugoslavia, Israel, Cyprus . . . . 8,383 8,844 (Netherlands) (Yugoslavia) Andre van Campenhout Othmar Haushofer Belgium, Turkey, Austria, Korea, Luxembourg . . . 8,350 6,645 (Belgium) (Austria) Reignson C. Chen China . . . . . . . . . . . . . . . . 7,750 6,552 (China) John Mamman Garba S. Othello Coleman Nigeria, Congo (Democratic Republic of), Sudan, (Nigeria) (Liberia) Kenya, Tanzania, Uganda, Trinidad and Tobago8, Guinea*, Mali, Burundi, Liberia, Sierra Leone, Ethiopia ..... ........... 7,306 8,716 Vilhi6lmur Thor Odd Hokedal Sweden, Denmark, Norway, Finland, Iceland . . . 7,226 8,396 (Iceland) (Norway) Jorge Mejia-Palacio Jose Camacho Brazil, Philippines, Colombia, Ecuador, Dominican (Colombia) (Colombia) Republic ... ... . 7,220 8,190 Luis Machado Rufino Gil Mexico, Venezuela', Peru, Haiti, Costa Rica, El Sal- (Cuba) (Costa Rica) vador, Panama, Guatemala, Honduras, Nicaragua 6,657 7,058 Manuel San Miguel Juan Haus-Solis Argentina, Chile, Bolivia, Uruguay*, Paraguay . . . 6,291 6,744 (Argentina) (Bolivia) Mohamed Nassim Kochman Said Mohamed Ali Senegal, Cameroon, Ivory Coast, Malagasy Republic, (Mauritania) (Somalia) Rwanda, Somalia, Togo, Central African Republic, Chad, Congo (Brazzaville), Dahomey, Gabon, Mau- ritania, Niger, Upper Volta. . . . . . . . . 5,933 9,698 In addition to the Executive Directors and Alternates shown in the foregoing list, the following also served as Executive Director or Alternate after November 1, 1964, the effective date of the Tenth Regular Election: Executive Director End of Period of Service Alternate End of Period of Service Sir Eric Roll January 14, 1965 Helmut Abramowski March 31, 1965 (United Kingdom) (Germany) A. F. W. Plumptre April 13, 1965 (Canada) *Mernber of the Bank only. 'To be succeeded by L-a,ngston T. Merchant (Un,ted States) effective July 23, 1965. 'To be succeeded by A. M. de Viliers (South Africa) effe-tive Septe-ber 1, 1965. 3To be succeeded by Chalong Pungtrakul (Thaland) effect,ve July 1, 1965. 49 4To be succeeded by Patrick M. Re,d (Canada) effective July 1, 1965. APPENDIX 3 Principal Officers of the Bank and IDA JUNE 30, 1965 George D. Woods . . . . . President J. Burke Knapp* . . . . . . Vice President and Chairman, Loan Committee Geoffrey M. Wilson' . . . . . Vice President S. Aldewereld* . . . . . . . Vice President and Director, Projects Department A. Broches* . . . . . . . . General Counsel Richard H. Demuth* . . . . . Director, Development Services Department Irving S. Friedman* . . . . . The Economic Adviser to the President and Chairman, Economic Committee S. R. Cope . . . . . . . . Director, Europe and Middle East Department and Deputy Chairman, Loan Committee John H. Adler . . . . . . . Director, Economic Development Institute Gerald Alter . . . . . . Director, Western Hemisphere Department Dragoslav Avramovic . . . . Director of Special Economic Studies 1. P. M. Cargill . . . . . . . Director, Far East Department Robert W. Cavanaugh . . . Treasurer Bernard Chadenet . . . . . Associate Director, Projects Department Federico Consolo . . . . . . Special Representative for U. N. Organizations Abdel G. El Emary . . . . . Director, Africa Department Harold N. Graves, Jr. . . . . Director of Information Howard C. Johnson . . . . . Director, New York Office Andrew M. Kamarck . . . . . Director, Economics Department Michael L. Lejeune . . . . . Director of Administration M. M. Mendels . . . . . . . Secretary John D. Miller . . . . . . . Director, European Office Escott Reid . . . . . . . . Consultant Leonard B. Rist . . . . . . Special Adviser to the President Orvis A. Schmidt . . . . . . Special Adviser to the President Alexander Stevenson . . . . Director, South Asia Department "Member, the President's Council. Mr. Cope serves as Mr. Knapp's alternate on the President's Council. 50 - S 4 -'4 S~ ~ ___-o^W * !I _~~~~~~~~ I '1w _~~~~~~ Two of the new super-express "Rullet" trains of the Japanese National Railways, used on the world's fastest passenger train service. These trains travel bet seen Tokyo and Osaka along 51 the NIew Tokaido Line, wnich was constructed with the help of a World Bank loan. PART TWO Trends and Outlook in Development Finance The year 1964 was a good one for the world economy. In the developing countries,' output rose nearly as fast World industrialoutputroseby7%,comparedwiththe as in the industrial countries, at a rate between 4% and postwar average of 5%. The value of recorded interna- 5% in 1963 and 1964; but the absolute figures were much tional trade increased by 12%, as compared with 9% in lower: total national product rose from around $170 bil- 1963 and an average of 7% between 1950 and 1962. lion in 1960 to some $200 billion in 1964. As a result of This acceleration reflected primarily an upswing in the rising demand in the industrial countries, the value of economic activity of major industrial countries. The United exports of the developing countries rose by 9% in both States, in the fourth year of continuous prosperity, in- 1963 and 1964, compared to an average of about 3.5% creased total output as much as 5%. In the United King- between 1950 and 1962. The prices of their exports rose dom, output rose by over 5.5%-the highest rate on record after a decline which had lasted seven years, and since in the postwar period. The long sustained expansion in there was little increase in the prices of their imports, their the industrialized Western European countries continued terms of trade improved considerably. in 1964 without interruption and their aggregate output The recovery in trade provided much needed help to the showed an increase of more than 5%. The Japanese growth developing countries by raising their capacity to import. rate of some 10% indicated that the expansionary forces Their aggregate import volume had risen at a rate of only of the last decade still retained much of their strength 2% per year in the period 1957-1962; and since popula- in 1964. tion grew at 2.5%, imports per capita had in fact declined. The outlook for 1965 in the major industrial countries The upswing in commodity prices enabled the developing as a whole seems fairly favorable. The domestic situation countries to increase their import volume by 3% in 1963 of the U. S. so far in the current year shows continued and by 5% in 1964. expansion, with price stability, and the external payments Some of the most important indexes of the year were, position shows distinct improvement. In the United King- however, less favorable to the developing countries, and dom, there is evident determination to take any further the situation has worsened in 1965. measures that may become necessary to restore external As a result of rapid population growth, the developing equilibrium. In some industrial countries of Europe and in countries generally were unable to increase their per cap- Japan, while industrial production leveled off toward the ita product faster than about 2%, even in the improved end of 1964 and early in 1965, there is now some relaxa- conditions of the last two years. The highest rates of popu- tion of the measures that were taken to contain the pres- lation increase have been in Asia and Latin America. In sure on wages and prices and the pause in expansion is Mexico and Venezuela, for instance, population has been expected to be temporary. increasing by around 3.5% annually. The need for taking In the industrial countries with market economies, total effective measures to slow down the rate of population national product, which was around $920 billion in 1960, increase in the developing countries has by now become rose to $1,100 billion (in 1960 prices) in 1964. These countries buy about 75% of the exports of the developing I In this section the term "developing countries" refers to all countries of Asia except Japan and Sino-Soviet countries, of Africa except South world and they supply almost all the capital the develop- Africa, of Latin America and of Southern Europe (Turkey, Yugoslavia, Greece, Spain and Portugal). The group covers 1,500 million people or ing countries receive from abroad. 70% of the population of the world outside the Sino-Soviet countries. 52 widely accepted; but even successful measures taken to- ing their export earnings. But these cases are still excep- day are unlikely to have any important impact on living tions. For the large majority of developing countries, even standards for a considerable time, and the actual carrying assuming improved domestic resource mobilization, exter- out of these measures is still too slow. nal capital requirements are likely to rise at least through In 1963, the prices of exports from the developing coun- 1969. There is no doubt that much more can and should tries rose after a 7-year decline; but the prices of agricul- be done in many of the developing countries to cut down tural products started to weaken toward the end of 1964. on waste, to make better use of the resources available, Although most mineral prices have continued strong, the to encourage private enterprise and public efficiency, and present outlook over the medium term (assuming there to slow down the rapid growth in population. These are is no sharp increase in international tensions) is that the objectives the World Bank group and other international prices of primary products generally will tend to decline. development agencies are conscious of and, within their On this basis, the rate of growth in export earnings of the abilities, are working toward. developing countries is likely to return again to a rate of But it is also true that with the accumulation of expe- 3% or 4% a year, with a corresponding decline in their rience and with the spread of education, training and ability to pay for a rising level of imports. research, the ability of the developing countries to make The capacity to pay for imports is an important con- good use of external finance is expected to rise faster straint on the rate at which a country can grow. If the than the amount of finance available to them on condi- future growth in external earnings of the developing coun- tions that do not put them in peril of over-indebtedness. tries is not rapid enough their capacity to import will be The opportunity to achieve more rapid advance by the held down, unless there is an offsetting increase in the developingcountriesisgrowing;whatisnotcleariswhether capital made available to them. Here the record of the last this opportunity will be fully exploited by the developing few years has not been very encouraging. Total private countries and whether the developed countries will pro- long-term capital invested in the developing countries vide the full measure of help that would make it possible reached a peak in 1957 at $3.4 billion and has since re- for them to do so. mained below this point. The disbursements of the total net official flow of long-term financial resources from the Major Trends in the developed countries (outside the Sino-Soviet area), after a sharp rise at the end of the 1950's and the beginning Developing Countries of the 1960's, in 1964 were slightly below the 1961 figure. Global figures obviously are very rough-especially for Net disbursements by international institutions, however, the developing countries where statistics are still often rose both in 1963 and 1964. An increase is also believed to have taken place in Sino-Soviet disbursements, as well inadequate; and the estimated growth rate of 4% to 5% as in exporter credits from all countries, in 1964. The total in the output of the underdeveloped countries in 1964 net flow of finance (private, official bilateral and funds further conceals wide variations among these countries. made available to multilateral institutions) in 1964 was Acceleration of growth, nevertheless, appears to have about $9.5 billion. At the same time, payments of interest, been quite widespread. Countries that have been showing dividends and profits by the developing countries to the particularly good growth during the last few years include industrial ones rose sharply and were over 40% of the the Republic of China and Thailand in Asia; Tunisia and total net capital flows. Libya in Africa; Israel and Iraq in the Middle East; Greece, The level of disbursements of foreign assistance in any Spain and Yugoslavia in Southern Europe; and Mexico, given period reflects to a considerable extent the commit- Peru and Venezuela in Latin America. Growth rates, on ment decisions undertaken several years before, partic- the other hand, have been very low in a number of devel- ularly insofar as project assistance is concerned. Thus a oping countries including Indonesia, Ceylon, Tanzania, rising level of commitments would indicate an increasing Togo, Mali and Haiti. flow of foreign assistance in the future. In fact, while com- Industry has been the most dynamic sector in the under- mitments by the World Bank group and other international developed countries; industrial output grew by 7% in both development institutions are going up, there is no indica- 1963 and 1964. In almost all cases, as might be expected, tion that the trend of over-all commitments for official bi- the increase in industry has been significantly faster than lateral aid is rising substantially at the present time. the growth of total product. Within the industrial sector, There is, however, still an increasing need of developing mining and electric power supply have tended to achieve countries for development finance. Analyses by the Bank the fastest growth. Production of minerals expanded very staff have shown that in a few countries the need for offi- rapidly until temporary capacity limitations were encoun- cial foreign assistance may decline over the next several tered in 1963 and 1964. In response to the improved years as a result of the progress they have already demand in world markets, prices rose. The fastest and, achieved in raising their domestic savings and in improv- over the longer run, steadiest increase has been in petro- 53 leum, in high demand not only because of the general rise measures are described in other sections of this report. in world economic activity, but also because of its dis- In contrast to industrial output, agricultural production placement of other fuels. has been growing at an average rate of only 2.5% a year Manufacturing grew at an annual rate of some 7% in over the past decade. The underdeveloped countries as a both 1963 and 1964 (see Table I). In some countries whole are not growing enough food to keep pace with the increase in industrial production was concentrated in increasing population and rising consumption standards. heavy industry, but in others the main emphasis, which In 1963, they spent more than $4 billion on imports of was economically justifiable, was on the expansion of food, and received another $1 billion worth under U. S. light industries. In both, development has been oriented Public Law 480. Food imports by the developing countries toward substitution for imported manufactures, exports in 1964 were at least as large as in 1963. accounting for only a small part of production. The share Theexpansion of food production fordomestic consump- of manufactures in the total exports of the developing tion is hampered by a variety of structural difficulties, eco- countries, including exports to other developing countries, nomic and social. is still only about 10%. While learning to produce and sell To grow more and better food is in many respects the manufactures abroad is very difficult, countries like Yugo- most difficult part of development. It is in the traditional slavia, Israel, Mexico, and the Republic of China have farming sector where the inflexibility of custom, the rigid- already demonstrated the benefits for growth at home ity of structure, the narrowness of vision, the age-old land that such exports can provide. tenure systems-singly or in combination-hold back ad- vance. Yet because a farmer's relationship to land involves TABLE I one of the most deep-seated of all human emotions and ANNUAL GROWTH OF because it is often the central focus of family and social MANUFACTURING, MINING AND AGRICULTURAL structure, change is not easy and cannot be brought about PRODUCTION IN THE DEVELOPING COUNTRIES by bull-dozer. Change and the pressure for change are (Per cent) occurring at a different pace in different countries. Insti- Manufacturing Mining Agricultual/Productiorn tutions like the Bank can help, and the Bank group is Output Output Total Focod expanding its help, through finance of farming schemes 1956 . . 6.8 7.3 2.0 1.0 and the provision of technical assistance together with 1957 . 7.5 6.8 4.9 5.9 FAO, but all this is peripheral-the main job has to be and 1958 . . . 6.4 6.4 0.9 0.0 can only be done by each people for itself. 1959 . 7.0 2804 43.5 18 Total output and income in most countries at their pres- 1961 8.6 12.3 1.7 2.6 ent stage of development increase slowly because agri- 1962 4.8 10.3 0.8 0.8 cultural output and income increase slowly-hampered in 1963 6.8 6.8 2.0 0.8 some cases by mistaken government policies. The inade- 1964 . . 7.1 7.6 (3.0)a quate increase limits the rate at which inputs of agricul- (a) Estimate tural raw materials can be fed to the industrial sector; it SOURCES-U.N., F-A.O., and U.S. Dept. of Agricilture. also limits the rate at which labor force can be released for absorption in non-agricultural activities, since growth In several countries, expansion of manufacturing was of agricultural incomes plays a major role in determining seriously hampered by shortages of raw materials and theexpansionoftheinternalmarketforgoodsandservices. spare parts needed from abroad which could not be im- The export sector, which is usually the most progressive ported because of a shortage of foreign exchange. While part of agriculture in the developing countries, can, how- this was due in some cases to over-emphasis on import- ever, scarcely be blamed for the lag in agricultural growth. substitution as compared to export industries, or over- In the various agricultural export commodities growth has allocation of foreign exchange to new projects as against tended to be more rapid than the growth of demand in the import needs of existing industries, the net result was the industrialized countries. Consequently, the developing the same-factories operating below capacity or unable countries suffered from a sustained decline in the prices to expand. In 1964, in some countries, improved balance of their agricultural exports during 1957-1962. of paymentsearnings and foreign assistance enabled some liberalization of the imports of raw materials and, as in EXPORTS AND IMPORTS Pakistan, factories were able to raise output quickly. Con- Most of the exports of the developing countries are still scious of the need to accelerate industrialization and to primary commodities; over the long run, the demand for secure the adoption of effective policies in this direction these commodities, both agricultural and mineral prod- in the developing countries, the World Bank group has ucts, rises relatively slowly, and from year to year is sub- been trying to increase its lending operations in this field ject to sharp fluctuations. Experience since 1957 has been and to expand its assistance in project identification. These significant in illustrating the ability of the developing coun- 54 tries as a whole to increase production for export, the rela- rise and fall of sugar prices. Excluding sugar, average com- tively slower increase of demand for their products, and modity prices increased by 2.5% in the five quarters begin- the great difficulty they experience in shifting to products, ning October 1962, and by 5% in 1964, according to the such as manufactures, for which demand is more elastic. Bank's price index for primary products produced by low The annual increase in the volume of exports for the and medium-income countries. Including sugar, prices in- developing countries as a whole was around 5% in the creased by 12% from 1962 to 1963, decreased slightly period 1957-62, somewhat higher than the rate of increase in 1964 and dropped 6% in the first half of 1965.2 in total gross national product. But during that time, prices In general, in 1963 and 1964 prices of agricultural com- fell, and export earnings increased by not more than 3%. modity exports went up, and then in the first half of 1965 One of the most severely affected commodities was cof- declined again. The price increase in the last two years fee, the total export earnings of which declined in that included a variety of commodities, including coffee, wool period by one quarter (or by around $600 million a year), and such non-ferrous metals as copper. Together with in spite of an increase of one quarter in volume of exports. cocoa, coffee and oilseeds declined in price in the first In cocoa, the rise in production has been such that cocoa half of 1965, while the price of copper continued to rise. prices have been under almost continuous pressure since The price recovery in 1963 and 1964 was due to the boom- 1959 and by June 1965 were under 50% of the 1955-57 ing demand in the industrial countries combined with a average. Sugar prices, after a spectacular rise in 1963-64, slower growth in supplies of commodities subsequent to due to short crops, have suffered an equally spectacular the slump in former years. In some commodities, such as fall since. coffee, agreements by the producer countries resulted in In 1963 and 1964, export earnings of the developing a more controlled supply. countries, the largest single source of foreign exchange, As prices went up, however, commodity production rose by 9% in each year, due to an increase in both volume tended to expand and to depress prices again. The recent and prices. The greatest increases in the value of exports drop in agricultural export prices and the present primary were 15% and 18%, in Africa and the Middle East respec- commodity price outlook strongly suggest that the con- tively. Export earnings in Latin America rose by 9%. The siderable increase in export earnings of the developing smallest increase, around 2%, was in Southeast Asia. I See Chart 1. The index was adjusted by substituting producers' copper Average price movements of export commodities in the prices for price quotations in London, as the large increase in the latter last two years have been heavily affected by the sharp fwas less representative of the price at which the bulk of copper sales PRIMARY COMMODITY PRICE INDEX FOR LOW AND MEDIUM INCOME PRIMARY PRODUCERS (1955-1957=100) ANNUAL AVERAGES 160 CHART I F ! ~~~~~~~~~~~ r - 1 ~~~~~~~~~~~~140 __ __ _ _ __ 120 - j~~~~~~~~~~~~~~~~~* ~~~~~~~~100 _____ _____ so ~~~~~~~~~~~~TOTAL*t - AGRICULTURAL NON-FERROUS .________ ,___ I_ _ __i_- 60 METALSt 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 (JAN.-JUNE *Including petroleum TFrom 1962 adjusted to reflect producers' price quotations of copper AVERAGE) 55 countries in the last two years may prove to be only tem- only as long as there are severe foreign exchange short- porary. Even with continued expansion in the industrial ages and resulting balance of payments restrictions or countries, the ability of the developing countries to in- extremely high protective duties. crease production at a rate which is faster than demand grows for most of their usual export commodities tends CURRENT ACCOUNT BALANCE to result in a downward pressure on their export prices. The increase in export earnings of the developing coun- While some developing countries have good prospects tries in 1963 and 1964 somewhat exceeded the rise in for an increase in their agricultural or mining export earn- imports, so that the deficit on balance of payments cur- ings, many of the others to increase their export earnings rent account decreased. The current account deficit of the have to diversify their exports, especially to manufactures. developing countries as a whole, which was estimated at Although some of them, chiefly in the intermediate or in- $4.9 billion in 1962, was $3.7 billion in 1963 and $4.5 dustrializing stage of growth, have shown a marked ability billion in 19643. to move in this direction, most developing countries can- These figures include the major oil exporters (Saudi not diversify effectively unless far-reaching economic and Arabia, Iran, Iraq, Kuwait, Libya, Netherlands Antilles, social changes can be induced; such changes take time. Venezuela) some of which run a considerable surplus The Bank has been concerned for a long time with the which is not available to the other developing countries. problems of fluctuations and sluggish growth of external The estimates of the total current deficit of the developing earnings of developing countries. These two subjects were countries, excluding the major oil producers, were: 1962, in the forefront of the deliberations of the United Nations $6.3 billion; 1963, $5.3 billion; and 1964, $5.9 billion.4 Conference on Trade and Development last year. At the These sets of estimates can be compared with those for request of the Conference, the Bank is currently examin- current payments for investment service (interest, divi- ing the feasibility of establishing a mechanism which would dends and profits but excluding amortization) by the de- assist countries hurt by shortfalls of external earnings veloping countries as a whole. These amounted to $3.5 below reasonable expectations to avoid disruption of their billion in 1963. Income payments due from the develop- development programs. It is generally accepted that, if ing countries to the U. S., which in 1963 accounted for development programs are to be executed as planned, 70% of their total, have shown an increase of $400 million, supplementary assistance in some form will be needed in from $2.3 billion in 1963 to $2.7 billion in 1964. Increases many cases to offset the effects of unfavorable develop- also are indicated for other industrial countries. The total ments in external trade. payments for investment service by the developing coun- The total imports of goods by the developing countries tries amounted to no less than $4 billion in 1964. The increased from 1957 to 1962 at an annual rate of 2% at increase in investment income payments was mostly due constant prices, and about 1% at current prices. The slow to the maturing of the results of private investments in growth of imports was the net result of several factors. recent years, for example the start of large-scale produc- Perhaps the single most important one has been the avail- tion of petroleum in North Africa. ability of foreign exchange. Thus in 1963 and 1964 the substantial increase in export earnings enabled the devel- INVESTMENT AND SAVINGS oping countries to increase their imports rapidly as well The level and composition of investment, of course, are as partly to rebuild depleted foreign exchange reserves. important determinants of growth. While the productivity In those years, imports of goods into the developing coun- of investment shows significant differences among coun- tries as a group increased at an average rate of 4% in tries, the more rapidly growing economies have generally constant prices, and of 5% in current prices. Imports, like shown higher ratios of investment to total output. Thus, exports, increased at a relatively high rate in the Middle in Israel, the Republic of China and Yugoslavia, gross East and Africa and at a much lower rate in South and investment over the 1957-1962 period amounted to some Southeast Asia and Latin America. 30% of gross national product. The ratio was 17% in Latin The increase in investment in manufacturing, which has America and less than 13% in most countries of Asia and a high import component, has tended to raise import re- Africa. It should be stressed, however, that some coun- quirements. In some countries, the inability to raise food tries which have had low investment rates-India, Pakistan production on a sufficient scale has necessitated increases and a number of African countries, for instance-have in essential food imports. On the other hand, other devel- been raising them in recent years. oping countries were able to substitute some domestic In most developing countries, 75% or more of gross production for imports. This factor was particularly sig- investments are financed by domestic savings. Conse- nificant in Latin America. Recently, import substitution quently, the greater the success in mobilizing such sav- has played an increasingly important role in India and Pakistan. Some of the import substitution industries are 3 IMF estimates. 4 Estimated from IMF data and from world Bank and IMF Direction of economically viable in the long run, but many can survive Trade. 56 ings, the higher the rate of investment can be pushed. developing world (excluding the 1,000 million people in A rise in savings rates often requires a substantial in- the Sino-Soviet countries), outstanding public and publicly crease of public savings through higher taxes or cuts in guaranteed debt with a maturity of one year or more rose expenditure. This is painful, especially in those countries from $18 billion at the end of 1962 to $21 biliion at the where much of the population is outside the monetized end of 1963, and preliminary estimates give a total of sector, and so have limited tax-paying capacity. Thus the $25 billion for 1964. Over the last two years, the annual actual tax burden on the monetized economy is heavier rate of growth in debt was about 17%, compared to 15% than indicated by the ratio of total tax revenue to total between 1955 and 1962. (The impact of this continuous income. The alternative of resorting to inflationary financ- increase in debt on debt service is discussed below.) ing to try to obtain resources temporarily for development Table II shows the differing rates at which debt has is an unsatisfactory and frequently self-defeating substi- grown in different areas. After rapid growth in the late tute for greater fiscal effort. 1950s and early 1960s, the accumulation of indebtedness Rates of savings show great variation among countries, during the past two years in Latin America has shown a rarely corresponding to differences in absolute levels of somewhat slower pace. In contrast, marked acceleration income. Some countries, such as Uganda, Peru, Colombia was experienced in the African and Asian countries as and Malaysia, have attained gross savings rates as high well as in southern Europe. as 20% of gross national product. In others, such as the TABLE II Sudan, Chile, the Philippines and Pakistan, rates of gross AVERAGE ANNUAL RATES OF INCREASE OF PUBLIC DEBT, savings have been as low as 10% or less. In many coun- THIRTY-SEVEN COUNTRIES, 1955-62 AND 1962-1964 tries, the rates of savings have been increasing; this is (Per cent) true even in low income countries, such as Pakistan, the Region 7955-62 1962-64 Philippines and Kenya. Assuming effective use of available investment funds, the rate of increase in savings is clearly Latin America . . . . . . . . . . . 12 9 one of the best indicators of the development effort being South Asia and Middle East . . . . . . 26 30 made by a country. ~~~~~~~Southern Europe . ........ . . . . . . ..... 10 15 made by a country.EatAi .155 East Asia . . . . . . . . . . . . . 1 5 15 ExternalFinance.forDevelopment.Africa .. 10 14 External Finance forDevelopment Thirty-seven countries . ..... 15 17 Trends in the world economy underline the need for Most developing countries are international debtors, further measures to accelerate growth in the developing although international indebtedness is heavily concen- countries, both through appropriate action and policies trated in about a dozen countries, shown in Table IlIl. This of these countries themselves and through the help of the concentration does not appear to have diminished in re- developed countries. While adequate supply and effective cent years. use of domestic and externally provided capital is only TABLE III one of the problems of development, it is one of the most SELECTED DEBTORS: PUBLIC DEBT OUTSTANDING, important and its urgency has been greatly heightened 1955 AND 1963a by the increasing burden of debt servicing. (BILLIONS OF U. S. DOLLARS) The need to replenish IDA resources in 1966 will focus 1955 7963 attention on questions of debt burdens and of the volume India . . . . . . . . . . . . 0.3 4.0 and terms of future development finance. It offers an Brazil .. ...... 1.4 2.3 appropriate occasion to reappraise what is being done in Argentina . . . . . . . (0.6) 2.1 development finance and affords an opportunity to adapt Mexico . . . . . . . . . . . . 0.5 1.6 government policies to present conditions. United Arab Republic . . . . . . . (0.2) 1.3 Pakistan . . ...... 0.1 1.2 EXTERNAL INDEBTEDNESS Turkey ...... ... (0.6) 1.1 OF DEVELOPING COUNTRIES Yugoslavia . . . . . . . . . . . 0.3 1.1 In 1963 and 1964 the external indebtedness of develop- Israel . . . . . . . . . . (0.4) 0.9 ing countries continued to increase at a rapid rate. In a Colombia 0.4 0.9 group of 37 countries5 with a population of 1,100 million, representing almost three-fourths of the population of the Total . . . . . . . . 5.1 17.2 (a) End of year. Figures in parentheses are crude estimates. 5 Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Dominican Re- For the developing countries as a whole, it is estimated pub ic, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, and Venezuela; India, Iran, Israel, that outstanding public and publicly-guaranteed indebt- Pakistan; Burma, Ceylon, the former Malaya, Philippines, and Thailand; the Sudan, Ethiopia, the former Federation of Rhodesia and Nyasaland, edness with a maturity of one year and over may have Kenya, Nigeria, the former Tanganyika, and Uganda; Spain, Turkey, and amounted to $9 billion in 1955, $28 billion in 1963 and Yugoslavia. amounted to $9 billion in 1955, $28 billion in 1963 and 57 as much as $33 billion at the end of 1964. This is, how- those years in which-for one reason or another, but com- ever, not an all-inclusive estimate. The debt of private monly because of a shortfall of export earnings-the for- parties not guaranteed by governments in developing eign exchange position is tight. Thus a country may be countries is excluded, and so are obligations arising from faced with acute foreign exchange shortage primarily be- commercial arrears. There is also the need to provide for- cause of an unfavorable debt structure. This calls both eign exchange for the remittance of profits, dividends, for a continuing review of existing debt and careful con- managerial services, etc., which are associated with for- sideration as to how it should be handled. For the imme- eign direct investment. Such remittances must be allowed diate future, the solution in exceptional cases may lie in by governments, whether they have formally committed debt rescheduling or, in others, it may require a shift in themselves to this or not, if the productive help of foreign the flow of new lending toward longer grace and amortiza- direct investment is to be secured and maintained. tion periods; in some cases, a combination of both will be The growth in debt was accompanied by a rise in debt necessary. service payments (amortization and interest). For the Aside from the short-term problem of an awkward debt group of 37 countries mentioned above, debt service pay- structure, for the longer term it is the possibility of con- ments on public and publicly-guaranteed debt with a ma- tinuing increase in external debt-and in service payments turity of one year and over rose from $2.0 billion in 1962 -which causes most concern for many a country. There and $2.3 billion in 1963 to an estimated level of $2.5 bil- is commonly a phase in the development process in which lion in 1964. While it appears that the rate of growth in a country's external borrowing not only bridges the gap debt service payments of those countries has slackened between domestic savings and investment, but also to a in the past two years (see Table IV), the volume of such large extent finances amortization and interest charges payments is now almost four times what it was in the mid- on external debt previously incurred. This phase involves 1950s, and it continues to rise. a cumulation of external debt at a pace principally deter- mined by the magnitude of the gap between domestic TABLE IV savings and investments, the rate of economic growth and PUBLIC DEBT SERVICE, THIRTY-SEVEN COUNTRIES savings, the efficiency with which investment resources (MILLIONS OF U. S. DOLLARS) are deployed, and the rate of interest on borrowed capital. A rapid mounting of debt in this phase need not be worry- Region 7956' 1962 7964 ing, provided that there is a good prospect that the gap Latin America. . . . . . 455 1,280 1,442 between savings and investment will be closed before the South Asia, Middle East . . . 95 378 484 payments on accumulated debt reach intolerable propor- East Asia . . . .... 22 62 99 tions. For a large number of developing countries, how- Africa. . . . . . 37 104 131 ever, the point in time when this gap will be closed appears still to be quite distant. Southern Europe . . . . . 71 174 341 Different developing countries face different problems Total . . . . . 680 1,998 2,497 related to their international indebtedness, and different solutions have to be adopted in extending long-term devel- For the developing countries as a whole, total service opment capital to them. Liquidity crises can be avoided payments on public and publicly-guaranteed debt with a or their effects mitigated by a suitable structure of debt, maturity of one year and over are estimated at about $3.5 with a higher proportion of longer maturities; the long-run billion in 1964. A large proportion of this outstanding debt piling up of debt and debt service payments can be slowed consists of medium and short-term maturities. If allow- by a reduction in the rate of interest and by a lengthening ance is made for the liquidation of commercial arrears of maturities. and similar short-term obligations, aggregate debt service Part of the indebtedness problem arises from unwise payments may easily have amounted, in 1964, to well over borrowing and unwise lending. The trouble arises from $4 billion. high-pressure salesmanship on the one side, often facili- These are very large numbers. In the mid-1950s, public tated by abuse of export credit insurance, and the desire, debt service absorbed less than 4% of export earnings of on the other side, to avoid all the hard work of preparing developing countries. In 1964, this proportion had risen and negotiating help for projects. In these cases, large to 12%. (For a number of debtors, the ratio of public debt amounts of short and medium-term indebtedness are service to exports is substantially higher than this average taken on, although foreign exchange earnings are not -in some cases, twice as high.) As a consequence, an likely to increase fast enough to meet quickly maturing increasing proportion of official gross capital inflow is being repayments. Such short and medium-term money is often offset by service on the existing debt. used to finance slow-yielding projects and in too many The fixed nature of these obligations means that pay- cases projects which will never yield an economic re- ments in foreign exchange must continue to be made in turn at all. 58 Capital is vital, but equally important is effective use of OFFICIAL FLOWS capital. While the developing countries have no monopoly The official bilateral financial flows from the developed on bad investment, prestige projects, excessive defense world outside the Sino-Soviet countries to the developing expenditure, and other forms of waste, continued improve- countries totaled about $6 billion both in 1963 and 1964. ment in how they handle their investments is necessary While the figures were the same in these two years, their simply because they have so little capital available. composition changed somewhat: U. S. disbursements de- clined from $3.8 billion in 1963 to $3.5 billion in 1964, FLOWS OF FINANCIAL RESOURCES while those of the U. K. and Germany increased. Disburse- TO THE DEVELOPING COUNTRIES ments by France remained on the level of the previous year. While the data are still incomplete, the evidence so far Since U.S. aid commitments increased considerably in available indicates that financial assistance from devel- 1964, disbursements in the next years may be expected oped countries (including the Sino-Soviet countries) to to rise. Canada and the Netherlands also increased their developing countries directly and to international develop- commitments. The official aid commitments of some coun- ment institutions, after a substantial rise in the latter part tries, however, have declined. of the 1950's, has increased little over the past four years. The amount of assistance from these countries, net of capital repayments, has now reached $9.5 billion a year6; TABLE V it has come mostly from public sources. THE FLOW OF LONG-TERM FINANCIAL RESOURCES By far the largest part of the total originates in the IDA TO THE DEVELOPING COUNTRIESa Part I countries, that is the capital-contributing member (MILLIONS OF U. S. DOLLARS) countries of the International Development Association (see Table V). The total net flow of funds (including private 1961 1962 9 Prelm. and official bilateral as well as capital made available to Est.J multilateral institutions) to the developing countries from 1. Total Official Flow, Net the IDA Part I countries amounted to $8.9 billion in 1961, Australia . . ... n.a. n.a. 96 103 $8.3 billion in 1962 and 1963, and $9 billion in 1964. Austria . . ..... . . 2 9 4 13 About 85% of the total has originated in four countries: Belgium . ... . . 92 80 91 80 the United States (55%), France (15%), the United King- Canada . . . . . 62 54 98 129 dom (9%) and Germany (8%). Finland .1 1 .2 12 Assistance from international development institutions, France . . . . . 943 977 843 841 including the World Bank group, has increased steadily, Germany ...... . . 589 427 422 460 from $250 million in 1961 to around $800 million in 1964; Italy .6.6. . . . ...6 67 64 56 and commitments indicate that these figures will con- Japan ....... . . 214 165 172 178 tinue to rise. Kuwait . . . . . . . . . 5 15 49 52 Luxembourg - - - - Aid from the Sino-Soviet countries is now around 5% of Netherlands . .. . 69 91 38 49 the whole. Their net disbursements are estimated to have Norway .... . . . 9 7 21 17 increased from $300 million in 1961 to $400 million in South Africa . ..... . n.a. n.a. n.a. n.a. 1962, $425 million in 1963, and perhaps around $500 Sweden . . . . 8 19 23 34 United Kingdom . ... 458 418 414 491 million in 1964. Disbursements have grown steadily, but United States ..... 3,535 3,713 3,842 3,534 commitments show large fluctuations, rising in the years Total above countries .. 6,060 6,050 6,189 6,050 from 1958 to 1960, and then declining to 1963. In 1964, commitments by the Sino-Soviet countries increased five- II. Private Long-Term, Net fold over the previous year, and reached a peak level of Direct investment & other new lending . ... . . 2,600 1,900 1,900 2,500 $1.5 billion. The Soviet Union has been the largest creditor Trade credits, over 5 years, of the group; but its share has diminished from some 85% net ..... ..... 200 300 250 400 in 1959 to approximately 60% in 1964. The remainder Total Private Long- originated about equally in the eastern European coun- Term, Net .. . . . .2,800 2,200 2,150 2,900 tries and in mainland China. Ill. Total Official and Private, Net (I + II). . . . 8,900 8,300 8,300 9,000 6 Sizable differences exist between the figures for the developing coun- tries' balance of payments deficits on current account (see p. 56) and the total capital movements which finanice thiermi. The differerices are (a) Excludes flow from Sino-Soviet countries. These figures include the largely due to omissions, errors and inconsistencies in reporting, and to flow of funds from these countries to multilateral agencies. This is not the fact that some of the developing countries (particularly oil producers) identical with the net disbursements of multilateral agencies to the devel- were adding about $1 billion to reserves in 1963/1964. The World Bank oping countries. the international Monetary Fund and the Organization for Economic Co- operation and Development are engaged in a cooperative effort to make Note: The detailed figures do not always exactly add up to the total. the reporting of the data more complete and more uniform. Source: O.E.C.D., and World Bank estimates. 59 PRIVATE FLOWS The European Economic Community countries as a group Net flows of private capital to the developing countries had a net inflow of capital, and some of them, notably totaled $2.9 billion in 1964, a considerable increase over Germany, were concerned over the inflationary impacts of the level of the two previous years, and about $200 million such inflows. The German authorities took fiscal and other above the average recorded for the period 1956-1961. measures to encourage private investments abroad, espe- The 1964 total was composed of 70% direct investments, cially in the developing countries. A recovery in such invest- including reinvested profits, and 30% long-term loans and ment was registered in 1964. export credits for five years or more, mostly guaranteed by official institutions; and both these components were TERMS OF OFFICIAL AID greater than in 1963. Direct investment was attracted The harder the terms of financial assistance, the greater especially to petroleum production and distribution. The will be the return flow of amortization and interest from largest part of direct investment was made in Latin America, the developing countries. The greater the return flow, the while the share of Africa and Asia was very small. larger the gross amount of aid has to be to make available In addition to the private capital flows stated above, pri- a given net amount of capital. The hardness or softness vate commercial credit for periods of less than 5 years, of terms is, therefore, of as great importance to the devel- guaranteed by governmental institutions, amounted to an oping countries as the amount of assistance. Two main average of $225 million in 1962 and 1963 and an esti- factors determine the hardness or softness of aid: (a) the mated $350 million in 1964. No satisfactory estimates share of grants in the total flows; (b) the structure of inter- are available of the amount of unguaranteed private com- est rates and the length of grace and amortization periods. mercial credit. The share of grants in bilateral aid commitments has In February 1965, the U. S. Administration, concerned been gradually declining in recent years. While in 1962, over the increase in the over-all balance of payments defi- grants and grant-like contributions equaled 60% of aid cit, took several measures to restrict private capital out- commitments, in 1963 the share declined to 56%, and in flows. Banks and other financial institutions were asked 1964 to 54%. The U. S. reduced its share of grants from to limit their foreign investments and loans so that the 62% of aid commitments in 1963 to 56% in 1964, and outstanding amount of private foreign loans should not France, the second largest extender of grants, from 80% increase during 1965 by more than 5%. As by February to 76%. The U. K. also reduced the share of grants in its 1965 in some cases the outstanding credits had already commitments for 1964. The proportion of grants in com- reached 105% or more, a cutback for some institutions mitments of Germany and the Netherlands increased in became necessary. Within this ceiling, priority was to be 1964; but these countries accounted for a relatively small given to credits directly financing exports from the U. S. share in the total flows. and then to credits in the less developed countries. Non- On the other hand, the over-all terms of bilateral official bank corporations were also asked to exercise restraint lending have been improving, with a lengthening of the on their investments in other industrial countries and to amortization period and a small lowering of interest rates. report the balance of payments effect of their operations The average maturity of loan commitments made in 1964 with other countries. Direct investments in developing was 27.6 years, compared with 24.6 years in 1963 and countries were specifically excluded from this request. In 23.9 years in 1962. addition, the Administration made the Interest Equaliza- The average interest rate for official bilateral commit- tion Tax, which increases the cost of certain foreign bor- ments made in 1964 was 3.1% compared with 3.4% in rowing in the United States, applicable to commercial bank 1963 and 3.6% in 1962. This was the net result of reduc- loans to foreigners with maturities of one year or more. tions in interest rates charged by some countries, which The Administration also requested Congress to extend the were partially compensated for by an increase in rates duration of the Interest Equalization Tax and to expand on U.S. commitments; U.S. rates, however, were still below the coverage of the tax to include non-bank credit of one the average. to three years maturity. The trends indicated above are on a commitments basis, In April 1965, the U. K. Government also announced and will be reflected only in future disbursements. For measures to reduce private capital outflow, by the equiva- disbursements made in recent years, the average terms lent of $280 million annually, to help correct a balance of for lending have remained about the same. payments deficit. To that end, exchange allocations for The improvement in the terms of lending reflects the direct investments outside the sterling area were to be growing concern over the debt service burden of the devel- made on a stricter basis, taking into account the expected oping countries. In June 1965 the British Government an- exchange income. In addition, one of the effects of changes nounced that it will make interest-free loans to selected in the method of taxing company profits was that in gen- developing countries (based on, in particular, the per eral the tax treatment of income from foreign investments capita income of the recipient country and its present would be less favorable than before. debt burden), thus taking a major step in alleviating the 60 future burden of indebtedness on these countries. Canada London has continued its traditional role as an important also has considerably improved its terms by inaugurating capital market; but Jamaica was the only developing a new program of lending on terms equivalent to the pres- country which made a direct issue in the London market ent IDA terms. during 1964 and again in 1965, borrowing around $9 Loans given by the Soviet Union have been made at low million each time. interest rates, usually about 2.5%, but the amortization Foreign issues have increased rapidly in Germany, but period has been relatively short, about 12 years on the the developing countries did not place any issues there. average. Loans from other eastern European countries The value of foreign bond issues in Germany increased to have been given on harder terms, carrying interest rates $225 million in 1964, compared to only $40 million in of up to 5% and amortization periods of four to eight years. 1963 and $25 million in 1962. The borrowers were govern- ments and municipalities in Japan and the Scandinavian INTERNATIONAL CAPITAL MARKETS countries, EEC financial bodies and the Inter-American While the major share of external finance to developing Development Bank. In March 1965, the World Bank also countries has been through official bilateral channels or made an issue in Germany in Deutsche Marks of an amount in the form of direct investment and loans, a part of such equivalent to $62.5 million. financing came through international capital markets. While Switzerland has been a well-established market These markets have been an important source of financing for foreign issues, the volume of such issues contracted for international development institutions including the considerably in 1964. In effect, from September 1964 World Bank and the Inter-American Deveiopment Bank; until March 1965 almost no foreign issues were made on official bodies and private corporations in a number of the Swiss market. In April 1965, the World Bank made an developing countries have also been able to sell bonds in issue equivalent to $14 million in Swiss francs. the private markets. These markets should furnish a The French capital market was, for many years, closed growingamount of the needed capitalfunds of the develop- to borrowers from outside the Franc Zone. This policy was ing countries, changed in November 1963, when the French authorities announced their intention to re-open the market forforeign The total amount of new issues (including private ones) borrowing. Under the new policy, an issue of $30 million sold by the developing countries in foreign capital markets by the European Coal and Steel Community was placed was some $350 million in 1964, compared to $200 million in the French Market in 1964, following a similar issue of in 1963. In addition, international institutions sold bonds $12 million by the European Investment Bank in 1963. amounting to some $180 million in 1964, compared to only These international institutions have been the only bor- $50 million in the previous year. rowers from outside the Franc Zone in the French capital Changes in the capital markets were mainly due to the market in recent years. measures taken by the U.S. and the U.K. to protect their The Netherlands was an active market for foreign issues, balance of payments and by the EEC countries to secure especially in 1961 and 1962. Due to balance of payments domestic stability. The U.S. Interest Equalization Tax on difficulties, no foreign issues were made in 1963. In 1964, purchases of certain foreign securities raises the actual foreign issues of an amount equivalent to $15 million interestcosts to the foreign borrowers concerned by about were made by the European Investment Bank and the 1%. (The tax became effective as of the date of its pro- European Coal and Steel Community. posal, July 1963.) Securities issued by the developing Thus, as an outcome of the changes during 1964 in- countries and international organizations of which the creased recourse was had to European capital markets. United States is a member (including the World Bank), Nevertheless, the United States still accounted for more are exempt and new issues of Canadian securities were than half of the amount of all international issues, includ- exempted by Executive Order. A 1965 Executive Order ing those of international institutions, and was almost the exempted from the tax new issues of debt securities pay- only market for issues of the developing countries. able in dollars issued or guaranteed by the Government of The general trend of interest rates, affecting domestic Japan up to an annual amount of $100 million. as well as foreign issues, has been upward in 1964. The The exemption from the tax of issues by developing trend was most noticeable in discount and short-term countries resulted in an increase of such issues in the lending rates, which were raised in the U.K. and in the U.S. market. The sales of new bonds publicly issued by the United States primarily to curb capital outflows, and in a developing countries almost doubled from $97 million in number of other countries, including Germany, to contain 1963 to some $180 million in 1964. In 1965, through the inflationary dangers. Long-term interest rates also rose in end of June, some $55 million more was borrowed by most capital markets (see Chart 2), with the important developing countries. The main borrowers were Israel, exception of the U.S. in which long-term rates were on the Malaysia, Mexico, the Philippines and Venezuela. The whole stable. These high interest rates, the substantial World Bank also sold an issue of $200 million early in 1965. costs of issue in European markets (which reflect the still 61 YIELDS ON LONG-TERM GOVERNMENT BONDS IN SELECTED CAPITAL MARKETS (PERCENT) 8% I I I I , . I ,, z | I I MONTHLY FRANKFURT 7% LONDON 6% - ,----LONDON (EUROPEAN DOLLAR) .AMSTERDAM 5% - Fr ...... ~_~PARIS 5% CHART 11 4% _ - -5--.------ - -== NEW YORK _~~~~~~~~~~~~~~~~~~... .._.__ _. ................... ZURICH 3%~ . ., ,............................. AMSTERDAM-Netherlands Governmnent Perpetual 3% 2%- LOFRANKFURT-Average of bonds of public authorities 2% - ~~~~~~LONDON-U.K. Government Consols 2½/% LONDON (EUROPEAN DOLLAR)-Bonds of, or guaranteed by, a government, public authority or international organization NEW YORK-U.S. Treasury 31A%, 1983/78 1% PARIS-French Government Rente Perpetuelle 5%, 1949 ZURICH-Swiss Government 3%, 1949-1974 J F M A M J J A S O N D J F M A M J J A S O N Di J F M A M J J A S O N D 1963 1964 1965 inadequate development of the capital market institutions companies within the developing countries themselves, and habits of investors), and the still unestablished private are making strenuous efforts to encourage and enlarge capital market credit of most of the less developed coun- the flow of private capital into the less developed countries. tries, limit the amount of foreign borrowing presently There is nodoubtthatthisflowcan be expected to increase feasible for the developing countries. above the levels recorded in the recent past, thereby accelerating the pace of development and relieving the Future Needs pressure on public funds. For the present, however, it must be recognized that for some time to come the in- While the amount of external finance has grown little in creasing needs of the less developed countries for external recent years after a substantial rise in the 1950's, the capital will probably have to be covered mainly by official capability of the developing countries to make productive flows originating in the developed countries and channeled use of resources has increased considerably. A preliminary through bilateral agencies or international financial institu- Bank inquiry, carried out country by country and based on tions. Meanwhile, the official flows, through their help in the judgment and experience of the Bank's country special- creating stronger economic structures in the developing ists and area economists, suggests that the developing countries, both widen the outlets for private investment countries could effectively use, on the average over the and multiply the productive contribution it can make. next five years, some $3 billion to $4 billion more of The question of the future level of development finance external capital per year than has been provided in the is intimately related to the question of terms on which recent past. finance is provided. At the present time a substantial An important source of funds, of course, is private proportion of capital flows is in the form of grants. As capital, which may have a productive or catalytic effect indicated earlier, grants from official sources in industrial considerably greater than its volume would indicate. In countries have declined slightlyduringthe lastthreeyears, some instances, the exports generated by such invest- and there is no indication at presentthattheywill increase. ments may actually result in foreign exchange earnings The harderthetermsoflending,thelargeraretheamounts which considerably surpass the requirements for service of gross capital transfers needed over future years to on the investments. The World Bank group and other assure a given net transfer of resources. Meeting this international organizations, as well as developmentfinance need through lending on hard terms would necessitate a 62 gross flow of lending of increasingly large magnitudes. countries to review development policies of the recipient The question arises whether such large and increasing countries. amounts can be raised through foreign aid appropriations. As stated earlier, there is room for the developing coun- But more important, large reliance on lending on hard tries to improve the mobilization of domestic savings and terms would result in further sharp increases in external to make more effectivethe useof both internal and external indebtedness and in debt service obligations. For countries capital resources. There has been steady progress in this where the dependence on foreign finance is moderate in recent years. However, it must be recognized that there and is expected to diminish in the foreseeable future, is a scarcity of capital even in the industrial countries, that where yields on investment and the marginal savings their capital markets are often still underdeveloped, and ratios are satisfactory, and where export prospects are that there are competing investment outlets within these favorable, exclusive reliance on hard lending terms is economies for capital resources. Also, when the industrial justified. For developing countries, where dependence on nations are called upon to extend assistance to other foreign finance is substantial and expected to last for a countries for a prolonged period, their own governments very long period, where yields on investment and the are likely to be closely questioned by their legislatures and marginal savings ratios are relatively low, and where export peoples on various aspects of such assistance. The most prospects are uncertain, low interest rates or long grace careful husbanding and effective utilization of aid re- and amortization periods are needed in varying degrees. sources by each of the recipient countries is constantly Countries with extremely low rates of savings and serious necessary, therefore, if they are to expect continued assist- institutional obstacles to raising them cannot sustain hard ance, and on a larger scale. Performance, in terms of the terms even if their present indebtedness is low. Countries pursuit of sound economic and financial policies and where the debt service burden is already high and the effective implementation of programs and projects, has dependence on foreign resources is still large despite to stand up to close scrutiny. rising savings, also need softening of terms. If external financing is not extended in larger amounts, The need for finance on concessionary terms stems the less developed countries will, of course, have to accom- from the balance of payments position of a developing modate themselves to what is available, but some of the country (which reflects its economic structure) and is consequences can be foreseen. A slackening in the rate connected with its stage of development and paucity of of investmentactivitymaybecome unavoidable;thegrowth resources. This very fact emphasizes that the need that rate may be reduced; low standards of living may rise even such funds be used effectively is as great as in the case of more slowly than in the past, particularly in the face of conventional loans. It is for this reason that the Bank's rising population; the pressure to resort to inflationary affiliate, the International Development Association (IDA), financing in order to obtain domestic resources would offers concessionary financial terms but insists on stand- become greater, and even more intensive restrictions ards of project preparation and evaluation that are as would have to be placed on imports and foreign exchange exacting as those of the Bank itself. This is also the reason payments. These developments may well discourage the for the so-called "two-step" policy in IDA credits, whereby flows of private capital and distort the pattern of invest- the country gets the balance of payments benefits of IDA ment. terms but the project financed has to bear the discipline In conclusion, both the problem of the terms at which of conventional terms in local currency when it is admin- development finance is made available and the problem istratively feasible to do so. At the same time, the economy of the volume of future flows of resources are key ques- aided is under regular economic review, which includes an tions both developing and developed countries face today. assessment of economic and financial performance. For Closely related is the problem of improving the export specific countries where a number of aid-giving countries performance of the developing countries, both by changes are involved in addition to the Bank group, consortia and in their domestic policies and through improved access to consultative groups provide an opportunity for the donor foreign markets. 63 ANNEX The information in this section de- during the year were all without annum is payable on the amounts scribes Bank loans, IDA credits and the Bank's guarantee. withdrawn and outstanding, to meet other activities of both institutions All IDA credits were made to the the administrative costs of IDA. duringthefiscalyear.Moneyamounts governments concerned, on identical This Annex also records commit- are usuallyexpressed in United States terms: No principal repayments are ments during the year by the Bank's dollar equivalents. to be made for the first 10 years; other affiliate, the International Fi- Bank loans to borrowers other than thereafter 1% per annum is repay- nance Corporation. Fuller descrip- member governments carry the guar- able for the next 10 years and 3% per tions of those commitments are given antees of the governments con- annum is repayable for the final 30 in the Annual Report of IFC, which is cerned, and the participations of years. The creditsarefree of interest, published simultaneously with the financial institutions in loans made but a service charge of 3/4 of 1% per Bank/IDA Report. 64 AFRICA REGIONAL Permanent Bank missions were estab- lished in western and eastern Africa, with the primary object of assisting member countries in identifying and preparing proj- ects for presentation tc the Bank, IDA or IFC for financing. The western African mis- . y -~- sion, in Abidjan, Ivory Coast, began opera- tions in April, and that for eastern Africa, < 1 <4 / . 4tN i C ->t$f - with offices in Nairobi, Kenya, began work in June. They were staffed initially with ex- perts in transportation and agriculture. A staff member was assigned by the Bank for an initial period of two years as Bank Representative in Addis Ababa, Ethi- opia, for liaison with the United Nations Economic Commission for Africa and with the Organization for African Unity. Field work on a study of experiences with the development of African agriculture was completed by a Bank mission; its report is expected to be published toward the end of calendar year 1965. The Bank has agreed to act as Executing Agency for a United Nations Special Fund survey of transport requirements of the southern regions of Cameroon and the Central African Republic. 65 BECHUANALAND ETHIOPIA IVORY COAST TRANSPORTATION-ROADS IFC COMMITMENT - $2,503,778 in loan IFC COMMITMENT . $204,081 investment $3.6 million IDA credit of August 3, 1964. and share capital for Cotton Company of in share capital of Banque Ivoirienne de The Bechuanaland Protectorate, a United Ethiopia, S.C., a textile producer under- Developpement Industriel, S.A., a new de- Kingdom dependency in southern Africa, taking a modernization and expansion velopmentfinance company. has an area of 225,000 square miles and program. KENYA is entirely landlocked. The main occupa- GABON AGRICULTURE-TEA PRODUCTION tions of the people, who number about TRANSPORTATION-ROADS $2.8 million IDA credit of August 17, 1964. 450,000,arecattle-raisingandsubsistence $12 million 20-year 51/2% Bank loan of Tea production has become one of the agriculture. The livestock industry is capa- July 10, 1964, to Gabon. most important industries in Kenya, with ble of considerable expansion and future Gabon's dense tropical forests have tradi- tea now ranking as one of the three lead- economic growth dependschiefly on its de- tionally been its most important resource. ing exports. Although the greater part of velopment. A prerequisite, however, is an Although petroleum, manganese ores and the tea is produced on large estates, em- integrated road system. It will permit the uranium are making a growing contribu- phasis in recent years has been given to transport of cattle to markets by truck, as- tion to the economy, exports of tropical expanding tea growing by African small- sist in the redistribution of cattle from hardwood still account for 60% of Govern- holder farmers. A program, started in the overgrazed and overstocked regions of the ment income and of foreign exchange earn- nineteen-fifties and considerably ex- country, and open new areas to produc- ings. Since economically useful timber panded after 1960 with the financial and tion. The IDA credit to Bechuanaland was along the coast and near navigable rivers technical assistance of the Commonwealth therefore for a project which will improve is gradually being exhausted, new logging Development Corporation (CDC), provided the road system. areas farther inland must be opened up to for the planting of 11,100 acres of tea and The north-south road, which extends 418 avoid a serious drop in timber production. the construction of six tea factories; it has miles from the border of Rhodesia to that The Bank loan will help to finance the rovedsopopularthatover20,000farmers of South Africa and connects all the larger construction or improvement of three have already participated. towns in Bechuanaland, will be improved roads, with a total length of about 116 IDA, in association with the CDC, is as- to all-weather standards; it will stimulate miles, leading into the so-called Second sisting in financing the second stage of the agricultural development in the regions Forest Zone where logging companies are program under which 14,400 acres of tea served and facilitate through traffic. The ready to operate as soon as penetration will be planted and 10 additional factories mnain east-west road extending from Fran- roads are built. Funds are included for final will be built. It aims to provide about 15,- cistown to Maun acrosstheTerritorywill be engineering and supervision of construc- 000 smallholders, some of whom are al- built or rebuilt. It will enable cattle to be tion. The roads will give ready access to red palticipatin some prom are a moved by truck to the railhead at Francis- stands of timber which will permit logging ready participating in the program, with a town for shipment to the Lobatsi abattoir at the rate of 200,000 tons a year for more living. The increased tea production will or to Rhodesia; the larger return that will than 20 years; this annual increase repre- contribute substantially to Kenya's foreign result to producers will encourage in- sents a fourth of present timber exports. exchange earnings. creased cattle production, as well as cash Funds from the loan will finance feasibility The IDA credit will be used for expendi- crop farming. Two short roads wil be built studies and preliminary engineering for a tures on field development, which includes in the eastern part of the Territory, one further 175 miles of roads in the interior materials and equipment for nurseries, from the capital, an eoterf to the South forestzone, as well as for improved loading field supervision, inspection and collection African border, and the other from Serowe, facilities at the logging port of N'Djole on of leaf to be delivered to factories. The to- the largest town in Bechuanaland and the Ogooue River. The loan will also finance tal cost of the field sector is estimated at the center of a large cattle ranching and the services of experts to strengthen the the equivalent of $4,928,000 of which the crop producing area, to the railhead at technical staff of the Directorate of Public CDC will contribute $686,000, together Palapye. Road maintenance will also be Works, and the procurement of equip- with approximately half of the $4,032,000 improved through the purchase of addi- ment and materials for a pilot road main- required for the construction of the new tional equipment, a training program, and tenance division. tea factories. the construction of maintenance depots Participation totaling $115,000: by The development of smallholder tea cul- along the main roads. The total cost of the First National City Bank. tivation is organized and supervised by the project is estimated to be $4.6 million. OTHER ACTIVITIES . Work was completed Kenya Tea Development Authority. The on a railway study financed by the UN Government of Kenya will relend the pro- TheBankisfinancingtheforeignexchange Special Fund, with the Bank acting as ceeds of the credit to the Authority, with cost of preparing a project to check the de- Executing Agency. The study comprises repayment to be made in 16 years, includ- cline in cocoa production and to improve surveys of the technical and economic ing a nine-year grace period, and interest its quality in selected areas. The study also feasibility of a railway to transport iron ore of 51/2%. covers the requirements for feeder roads from the Mekambo mines to a seaport TRANSPORTATION-ROADS to facilitate the collection of cocoa. The near Libreville and studies of the railway's $3 million IDA credit of June 30, 1965. work is being undertaken in cooperation impact on the economic development of with the Food and Agriculture Organization Gabon. The technical report has been fin This credit is assisting a road project which of the United Nations (FAO). The cost to ished and the economic study should be is an integral part of the smaliholder tea the Bank is estimated at $120,500. ready by July 1965. development program beingcarried out by The Bank is also meeting the foreign ex- the Kenya Tea Development Authority. It change costs, estimated at $200,000, of a GHANA will help to finance the engineering, con- study and recommendations for further A member of the Bank's Development Ad- struction or reconstruction of approxi- improvement of the N'Gaoundere-Garoua visory Service completed a two-year as- mately 800 miles of tea collection roads Road. signment as Resident Representative. and nine factory access roads totaling 94 66 miles in length, and equipment for 15 cover about three-fourths of the total esti- northeast of Rabat, the capital. The cultiv- small units for maintenance of the roads. mated cost of $6 million. able area at Sidi Slimane comprises 217,- The tea collection roads, where traffic will 000 acres and its soil and climate make it be light, will be built to relatively modest LIBYA one of the most promising agricultural standards and surfaced only where drain- A member of the Bank's Development Ad- areas in Morocco, particularly where irri- age is poor and grades are steep. The fac- visory Service completed his assignment gation is available. The program is a pilot tory access roads will be subject to much as Economic Adviser to the Prime Minister. undertaking to introduce modern intensive heavier traffic and will be built to higher Another member of the Service continues agriculture, and its successful execution standards and surfaced throughout. The as Principal Adviser on Planning for the will point the way to similar developments Government of Kenya will be responsible Ministry of Planning and Development. in other parts of the country. Its purpose is for maintenance of the roads. The 15 MAURITANIA to improve the quality and quantity of agri- maintenance units will be centrally located TRANSPORTATION-ROADS cultural products both for the home mar- near the tea factories and will be used for $6.7 million IDA credit cf ket and for export, to diversify production day-to-day maintenance of the roads. The December 28, 1964. mainly through the introduction of sugar KenyaTea DevelopmentAuthoritywill man- This credit was part of an operation in beet to meet part of Morocco's sugar re- age these units with funds and equipment which IDA joined for the first time with the quirements, and to improve living stand- provided by the Government. Local author- European Development Fund (FED) of the ards through raising the level of farm ities will undertake periodic maintenance European Economic Community to provide incomes. in their own areas and the Government will finance for a development project. FED's The Bank loan will be used for the first ensure that they have sufficient funds for contribution amounted to $3,220,000. stage of the program, which is scheduled this purpose. Funds from both institutions will be used for completion in 1968 at a total estimated The total cost of the project is estimated for the construction of a 125-mile two-lane, cost of $46.6 million. The main elements at $4.2 million. The roads will be finished all-weather road between Nouakchott, the are the improvement of the existing irri- in 1968-in time for the transport of tea to capital of Mauritania, and Rosso, on the gation system on some 69,000 acres and factories from the newly planted areas border of Senegal. In addition, IDA will fi- the construction of irrigation works for an when the seedlings mature. Although the nance the design and supervision of con- additional 10,000 acres; improvement and roads are being built mainly for the trans- struction of the road and a study of general extension of drainage facilities; improve- port of tea in various parts of central and road maintenance requirements. ment of existing farm-to-market roads; western Kenya,theywillalsoimprovetrans- With the exception of a railroad in the consolidation of farm holdings, land level- port for other commodities, such as milk, north used for the transport of iron ore ing, construction of farm buildings and the vegetables, fruit, wattle bark, pyrethrum from Fort Gouraud to Port Etienne, the only provision of equipment to enable farmers and charcoal. means of surface transport in Mauritania graduallytoadoptmodern methodsof crop is a rudimentary road network of unim- production, dairy and livestock farming; TRANSPORTATION-ROADS proved earth roads and tracks. The most the completion of 11 Agricultural Service $4.5 million IDA credit of densely settled and agriculturally promis- Centers which will provide farmers with ing part of the country is in the south. This equipment, seeds, fertilizer, transport and An extensive road network is of primary region is at present supplied largely marketing services, as well as advice and importance to the continuing economic de- through the port of Dakar in Senegal which vocational training; and the establishment velopment of Kenya. The railway is used involves costly and time-consuming trans- and stocking of 13 dairy centers which will primarily for long distance haulage be- shipments. A newwharf being built at Nou- form the nucleus for increased milk and tween market centers and the portof Mom- akchott will give the capital direct access to meat production. basa on the Indian Ocean, and roads are the sea and the road being financed will Participation totaling $100,000: by Bank needed to supplement it. There are now provide a permanent artery between the of America National Trust and Savings about 26,000 miles of roads of which 3,900 wharf, Nouakchott, and Rosso in the Sene- Association. are classified as primary roads. Good prog- gal Valley. It will substantially'reduce the ress has been made in recent years in distance over which Mauritania's exports OTHER ACTIVITIES . The draft report of a improving the highway system and part of and imports must be shipped, reduce ve- general survey mission to Morocco has a World Bank lean of $5.6 million made in hicle operating costs, and save road main- been submitted to the Government. It is 1960 assisted in the construction of one tenance costs. The Mauritanian Govern- expected to be published in early 1966 new road and the improvement of 22 roads ment is retaining consultants to draw up after.discussionswiththe Government.The totaling 400 miles. the final design and to supervise construc- mission was organized by the Bank to as- The project being assisted by this IDA tion of the road, as well as to undertake a sess the country's development potential credit is essentially an extension of the studyof maintenance requirements forthe and to make recommendations concerning road work carried out earlier. It involves entire road network. The project is sched- economic policy, institutional arrange- the up-gradingof additional roads in widely uled for completion in 1969 at a total esti- ments and the elements of an investment separated parts of the country. The work mated cost of $10 million, program designed to accelerate economic includes the relocation of several road sec- growth. tions, improvement of drainage, paving, MOROCCO and the replacement of 18 narrow and AGRICULTURE-IRRIGATION AND NIGERIA poorly located bridges. The improvements LAND DEVELOPMENT ELECTRIC POWER should contribute to the efficiency of the $17.5 million 25-year 5V/2% Bank loan of $82 million 35-year 51/2% Bank loan of trunk road network as a whole: they will re- August 26, 1964, to Morocco. July 7, 1964, to the Niger Dams Authority. sult in better access to important cash This loan will assist in carrying forward a The Bank loan was part of a $208 million crop production and marketing centers, program begun in 1962 for the compre- financing plan to build a large scale dam at and in a reduction of transport and road hensive development of the Sidi Slimane Kainji Island on the Niger River which, to- maintenance costs. The IDA credit will area in the Rharb Plain about 65 miles gether with associated works and installa- 67 tions, will be the final link in the creation of tance are a new Advanced Teacher Train- important railhead at Kano in Nigeria and a national power network. Other financing, ing College in Northern Nigeria which will connects with new roads being built in totaling about $57 million, will come from reduce the present dependence of second- Niger with IDA assistance. The IDA credit Italy, the United Kingdom, the United ary schools on expatriate teachers, a Na- will alsofinancetheservicesofconsultants States and the Netherlands, to be drawn tional Teacher Training College in Lagos to supervise construction of the roads and upon mainly for purchases of equipment which will train technical college and trade the procurement of miscellaneous equip- or services to be provided from those coun- instructors for the whole of Nigeria, and ment needed for the road program. Prior- tries. The Federal Republic of Nigeria will the addition of science laboratories and ities for the program were determined by a finance local currency costs and any re- metal and wood workshops at many sec- study, completed in August 1964, which sidual foreign exchange requirements not ondary schools, which will reduce the pre- the Bank helped to finance. otherwise covered. vailing emphasis on academic studies at The Federal Government will relend the The Kainji project is the largest yet to be the expense of scientific and technical proceeds of the credit to the Regional undertaken by Nigeria and is considered training. Government of Northern Nigeria on the to be the cornerstone of the country's Na- The project has been drawn from Ni- same terms as it receives from IDA. tional Development Plan (1962-68). The geria's National Development Plan which project, located 260 miles north of Lagos, gives priority to the acceleration of educa- OTHER ACTIVITIES . A mission organized the Federal capital, will consist of a main tion of all kinds and at all levels. Because of by the Bank to study the progress of the dam about 14,000 feet long and 215 feet the importance of expanding and improv- Nigerian Development Plan, priorities in in maximum height, a power station con- ing secondary education to increase the the principal sectors, capital requirements taining initially four 80,000-kilowatt gener- availability of intermediate and high level and institutional arrangements and policies ating units and facilities for eight more manpower essential to the developing related to economic planning and develop- units of the same size, an auxiliary dam, economy of Nigeria, nearly 60%o of the proj- ment completed its field work toward the navigation locks, a transmission system ect's total cost of $30 million has been al- end of June. The mission's report is due in and attendant works and installations. located to general secondary education. September 1965. When completed the Kainji project will The Federal Government will relend the A Bank staff member completed a two- supply all the major load centers served by proceeds of the credit to the Regional Gov- year assignment as Resident Representa- the Electricity Corporation of Nigeria (ECN). ernments in the amounts allocated to them tive. A member of the Bank's Development Three main transmission systems now be- on the same terms it receives from IDA. Advisory Service completed short-term ing formed by ECN will be interconnected assignments as Economic Adviser to the with Kainji to create a national grid. Kain- TRANSPORTATION-ROADS Federal Governmentand to the Premier of ji's initial capacity of 320,000 kilowatts will $15.5 million IDA credit of March 1, 1965. the Mid-Western Region. be sufficientto meet the demand expected The Nigerian National Development Plan The Bank has agreed to help finance a by 1968; additional units will be installed includes a six-year program for road de- study which will provide the basis for im- periodically thereafter to increase total velopment in Northern Nigeria, an area of proving and expanding the road network in capacity to 960,000 kilowatts by 1981. In 282,000 square miles. Although much of Eastern Nigeria. Foreign exchange costs to addition to power, other benefitscan come the long-haul freight is carried by rail, an be borne by the Bank are estimated at from improved navigation on the Niger extensive road network is essential to link $375,000. River and from the development of fish- with railway centers and to interconnect The Bank also agreed to act as Executing eries in the reservoir, which will cover an producing and consuming centers. The Agency for a UN Special Fund study of area of 500 square miles. project being assisted by the IDA credit in- highway development in Western Nigeria. Participations totaling $1,410,000: by cludes high priority items in the road pro- Bankers Trust Company, New York Branch gram and consists of the building of three SIERRA LEONE of Barclays Bank D.C.O., Bank of America new roads totaling 225 miles in length and ELECTRIC POWER National Trust and Savings Association, the improvement of another 50 miles of $3.8 million 20-year 51/2% Bank loan of Irving Trust Company, Continental Illinois feeder roads. August 18, 1964, to the Sierra Leone National Bank and Trust Company of Chi- Two of the roads will connect with the Electricity Corporation. cago, The First National Bank of Boston, new Bornu railway extension in the north- This was the first Bank operation in Sierra and The First Pennsylvania Banking and east, which was completed in 1964 with Leone. Itis helpingto finance the construc- Trust Company. the help of a $28 million World Bank loan tion of a 13,200-kilowatt diesel power plant made in 1958. One of them will extend 128 at King Tom Point in Freetown, the capital, EDUCATION miles from Maiduguri, the terminus of the and the expansion of electricity distribution $20 million IDA credit of March 1, 1965. railway, to Baga on Lake Chad. This road facilities. The credit will help to finance high priority will open up an agricultural area to year- The greater part of the country's popula- education projects, involving some 192 in- round traffic and will facilitate the trans- tion of some 2.2 million is engaged in sub- stitutions in all, in the four Regions of Ni- port of agricultural products and fish from sistence agriculture including fishing. In geria and the Federal Territory, It provides Lake Chad. The second road runs 82 miles the past 10 years minerals have assumed for the expansion and construction of from Biu to Gombe on the railway, crossing an important role in the economy, account- schools which will increase pupil enroll- the Gongola River. This road will reduce ing for 80% of the value of exports. There ment by 11,000 in secondary schools, by transport costs and stimulate increased is limited use of electricity in Sierra Leone 700 in teacher training schools and by outputofcrops in a productiveanddensely atthe presenttime. The largestdemand is 5,000 in trade training schools. Some 9,- populated area. East of the river, about 50 in the Freetown area where power growth 000 of the additional secondary school miles of feeder roads, connecting with the has averaged 16% annually in recent years places will be in Northern Nigeria which new road, will be improved. The third road and is expected to increase at a rate nearly contains about half the population and will extend 14 miles from Gumel to Maiga- as high for the next several years. There where the growth of secondary education tari, a market center on the border with are now two plants in Freetown with a total has been relatively slow. Of special impor- Niger. This road is part of the route to the capacity of 9,800 kilowatts. The new King 68 Tom plant will more than double this ca- investment needs for all forms of transport The project being assisted by the loan pro- pacity, and provision is being made for the in Somalia. vides for the continuing development of installation of a third 6,600-kilowatt unit, The IDA credit will be applied to the cost the Kariba hydroelectric scheme by the which may be necessary by 1968. Con- of constructingthe road. Funds amounting construction of a second 268-mile, 330 struction of the new power station is to $5,150,000 from FED will finance the kilovolt transmission line from Kariba to scheduled for completion this year at a remainder of construction costs, consul- Kitwe in the Copperbelt and an interme- total estimated cost of about $5 million. tants' fees, and maintenance installations diate switching station at Broken Hill in Participations totaling $240,000: by the and equipment. A Special Fund grant of Zambia, together with an expansion of New York Agency of Barclays Bank D.C.O., $2,095,000, together with $800,000 pro- existing substations at Kariba, Lusaka and Chemical Bank New York Trust Company, vided by the Government of Somalia, will Kitwe. Meadow Brook National Bank, and The finance technical assistance of foreign The dam and 700,000-kilowatt power First Pennsylvania Banking and Trust experts to carry out the transport studies plant at Kariba Gorge on the Zambezi Company. involved in the project, to staff and operate River were built with the help of an $80 the Highway Department and to train million Bank loan made in 1956. Nearly OTHER ACTIVITIES. In December 1964, a Somalis in road maintenance and con- 900 miles of transmission lines carry member of the Bank's Development Ad- struction work. The World Bank will act as power northward to the Copperbelt and viscry Service completed a three-month Executing Agency for the Special Fund. to the principal consuming centers of assignment as Economic Adviser to the Rhodesia to the south. The new transmis- Prime Minister. OTHER ACTIVITIES . A study to determine sion facilities are needed to meet the a suitable site, form and layout for a deep increasing demands of the copper industry SOMALIA water port at Mogadiscio commenced dur- and of the Central Electricity Corporation in TRANSPORTATION-ROADS ing the year and is expected to be com- Zambia. The Copperbelt now also draws $6.2 million IDA credit of March 29, 1965. pleted in about two years. The Bank has supplies of power from the Democratic This credit was part of a joint operation in allocated $375,000 to meet the foreign Republic of the Congo under a contract which IDA joined with the European Devel- exchange costs. which terminates in late 1966. The new line opment Fund (FED) of the European is scheduled to come into operation in Economic Community and the United Na- SUDAN December 1966. tions Special Fund to provide financing for A member of the Bank's Development The Kariba system is owned and con- a highway project which is expected to cost Advisory Service was replaced as Adviser to trolled jointly by the Governments of approximately $14.2 million. the Departmentof Finance and Economics, Zambia and Rhodesia through the Central Over two-thirds of Somalia's population Economic Planning Secretariat, by another African Power Corporation, a statutory of about 21/2 million are nomads engaged in member of the Bank staff. The Bank also corporation established for that purpose. raising livestock. The rest of the people are assigned to the Government, for a two-year The loan is guaranteed by the Govern- settled mainly in three areas: one in the period, an adviser on project preparation. ments of the United Kingdom, Zambia and north, another in the south and the third The Bank has agreed to help finance a Rhodesia. in the center of the country between study to review the basic concepts, objec- Participations totaling $4,540,000: by Baidoa and Mogadiscio, the capital and tives, and practices of the Gezira Scheme, Continental Illinois National Bank and principal port. Most of the people now bearing in mind the vital importance to the Trust Company, Confederation Life Asso- depend on primitive means of transport, national economyand the individual tenant ciation, Mellon National Bank and Trust mainly the camel and donkey. Road trans- of increased production and efficiency. Company, New York Branch of Barclays port is still in its early stages; nearly half The Bank will pay the foreign exchange Bank D.C.O., Morgan Guaranty Trust Com- the network of 7,500 miles are only earth costs, estimated at $400,000. pany, Chemical Bank New York Trust tracks and all but about 500 miles are im- Company, Bank of America National Trust passable during the rainy season. TUNISIA and Savings Association, Societe Financiere The project being financed isa compre- A studyto improve school buildingdesigns Pour Les Pays d'Outre-Mer, Banque hensive approach to developing an ade- and to lower construction costs was com- Lambert,S.C.S.,and lrvingTrustCompany. quate road network. It involves the con- pleted. The Bank contributed $375,000 struction of a 125-mile, two-lane road from toward the foreign exchange costs of the ZAMBIA Afgoi to Baidoa, passingthrough Somalia's study. The report of consultants on the country's most important dry-farming area. It will general transport requirements, including reduce the costs of transporting agricul- UGANDA prioritiesofvarious proposalsforthefuture tural products to the largest consuming IFC COMMITMENT . $3,513,038 in loan development of transport, was submitted center, Mogadiscia, which IS already linKed tenfgr, byad19-mil aweather arad, and and share capital, as well as standby com- to the Government. The Bank paid wl encourage further production ro fod mitment, for Mulco Textiles, Limited, a new $140,000 to meet the foreign exchange crops. The project provides for adequate company establishing a textile mil. costs of the study. road maintenance installations and equip- ZAMBIA nd RHODESIA A member of the Bank's Development ment and for the creation of an effective ELECTRIC POWER Advisory Service was assigned in February organization to carry out maintenance $7.7 million 25-year 5½% Bank loan of 1965 as Adviser to the Planning Commis- operations .It also includes feasibility October 2, 1964, to the Central African sion in the office of the President for a studies of future roads and an analysis of Power Corporation. period of up to six months. 69 expenditures increased almost threefold and school enrollment rose by 66%. The current educational program gives em- phasis to improving the quality and effec- tiveness of education to provide the quali- fied manpower essential to the country's economic and social development. The .-1 tsir. f u project being assisted by the IDA credit is part of this program. Itwill make it possible to increase the output of agricultural tech- * .*,fr 56 = 9 m t,9 - -nicians by about 100%, of skilled mechani- cal workers by about 50% and of primary school teachers by 30% above the levels otherwise scheduled for 1967.1 n the longer term, the academy and teacher training school at Kabul will provide the staff re- quired to double the primary teacher and mechanical education training programs in the next 10 years. The Government of Afghanistan is providing $1.7 million for ASIA AND w M mo,^the project, and expects to receive about $2.5 million for staff and equipment for ST some of the schools from Unesco, UNICEF ,i -< I THE MIDDLE EAST and the Federal Republic of Germany. OTHER ACTIVITIES . The Bank is assisting in organizing and financing a study of the Kunduz-Khanabad River Basin to select a suitable area for an integrated agricultural project. The Bank has allocated $350,000 to meet the foreign exchange costs of the study. {7 *, tr j 2 t" ,REGIONAL A member of the Bank's Development CHINA dy ,5 ./ ,J Advisory Service, seconded to the United INDUSTRY-DEVELOPMENT FINANCE Nations, continued as the Director of the COMPANY X ~ ,,<- /-- j,.-Asian Economic Development Institute in $15 million 51/2%Bankloan of December17, / \ ,gv Bangkok. 1964, to the China Development 7 , b S / As a special step toward meeting regional Corporation (CDC). training needs, the Bank's Economic Devel- CDC, a private development finance com- j ,.- .:; opment Institute conducted a two-month pany, was established in 1959 to assist course on project evaluation in Jaipur, the establishment, modernization and ex- India, for 23 participants from India, Iran, pansion of private industrial enterprises Pakistan and Thailand. in Taiwan. An IDA credit of $5 million made in 1961, together with a $10 million loan AFGHANISTAN from the U.S. Development Loan Fund, EDUCATION provided its foreign exchange resources. $3.5 million IDA credit of This year's Bank loan will replenish those November 23, 1964. resources, enabling the CDC to meet its This was the first operation in Afghanistan foreign exchange requirements until mid- by one of the World Bank group. It will help 1967. to finance the construction and equipment Industrial production in Taiwan, particu- of seven vocational schools at the sec- larly exports, has expanded rapidly in ondary level; an academy for training recent years: output has grown at an teacher educators and a technical teacher- average rate of 16% since 1958, while in- training school in Kabul, the capital; an dustrial exports have risen at an average agricultural, a mechanical and a teacher- rate of 40% annually. CDC has made a sig- training school in Kunduz in northern nificant contribution to this growth. Ex- Afghanistan: an agricultural and a ports by CDC's clients have risen from mechanical school in Herat in western $10 million in 1959 to $85 million in 1964. Afghanistan. CDC has approved 269 loans for 237 The Government has been giving in- industrial projects totaling $36.6 million creasing attention to the development of and has made 12 equity investments and a modern educational system in recent 16guaranteestotaling$4.2 million. Chemi- years. During the First Five-Year Plan, cal, ceramic and textile industries ac- which ended September 1961, educational counted for about two-thirds of the 70 financial transactions both by number and First National City Bank, Crocker-Citizens The credit is helping to finance imports of value. Other industries which received National Bank, Irving Trust Company, The equipment and materials needed by the assistance were food and beverages, elec- American Express Company, Inc., New Indian Railways for its development pro- trical equipment, wood processing, coal York Agency of the Bank of China, Meadow gram during the 15-month period ending mining and iron and steel. Brook National Bank, Detroit Bank and September 30, 1965. Including this credit, Industrial growth is expected tocontinue Trust Company, Wells Fargo Bank, The IDA and the World Bank have together lent at a high rate and the availability of long- First National Bank of Boston, The First over $500 million for the Indian Railways- term finance is importanttothe realization Pennsylvania BankingandTrust Company, by far the largest amount they have lent of Taiwan's full growth potential. With the and The Northern Trust Company. for any single enterprise anywhere. additional resources provided bythe Bank The Indian railway system, comprising loan, CDC can be expected to continue to INDIA 35,000 route-miles, is one of the largest play a leading role in Taiwan's industrial TELECOMMUNICATIONS systems in the world. Railway investments development. $33 million IDA credit of July 6, 1964. under the Third Five Year Plan account for The Bank loan will be committed in parts This credit, like one of $42 million made by about a fifth of the total investment in the by CDC for individual projects and each IDA in 1962, is being made available to the public sector. The greater capacity and part will be repaid according to a schedule Indian Posts and Telegraphs Department improved efficiency resulting from thisand to be determined at the time of the com- (P&T) as part of the Government's capital earlier investment have made possible an mitment, subject to a maximum term of investment in that organization. The pro- increase of 66% in freight traffic and 42% 15 years from the date of commitment. ceeds of the credit are financing raw ma- in passenger traffic during the eight years terials and components to be imported by from 1955/56 to 1963/64. Last year the TRANSPORTATION-RAILWAYS the three principal Indian manufacturers railways carried 192 million tons of freight $20 million 20-year 5t/2% Bank loan of of telecommunications equipment and by and 1,870 million passengers; by 1966 April28, 1965, to the Republic of China. P&T's own workshops, thus enabling full freight traffic is expected to reach 205 This loan will assist in financing high use to be made of indigenous manufactur- million tons and the number of passengers priority items in the current improvement ing capacity in supplying the needs of the will probably be 15% greater than in program of the Taiwan Railway Adminis- P&T program. 1963/64. Traffic growth at this pace re- tration (TRA). Railways are the principal India has only about 1.3 telephones per quires a large and continuous program of means of transportation in Taiwan, carry- thousand inhabitants, compared with 50 investment. ing about four-fifths of the freight traffic for the world as a whole. The backlog of The railway investment under the Third and nearly half the country's passenger applicationsfortelephone serviceon which Plan calls for expenditures of $3,449 mil- traffic. The system is operated by TRA and deposits have been paid equals about half lion, of which about $600 million will be consists of the West and East Lines which the number of subscribers, and non- foreign exchange. The program, already are separated by a chain of high mountains priority applicants have to wait five years well advanced, places emphasis on equip- and have no interconnection, or more for service. The expansion being ping the system to carry heavier trains at The improvement program now under assisted by the credit will extend service higher speeds. More diesel or electric loco- way is designed to increase the capacity, to about 75% more subscribers, as well motives and over 100,000 freight cars are efficiency and safety of the railways, to as improve the telecommunications net- being acquired; some 1,500 route-miles of provide better service and to reduce op- work in many other ways. track are being electrified; about 1,500 erating expenses. The key elements of the P&T's expansion program under the miles of new lines are being built; and work- program are further dieselization, the re- Third Five Year Plan callsforan investment shops, bridges, yards and signaling works placement of overage rolling stock, the of $350 million. The program is being are being improved. In order to reduce provision of centralized traffic control and executed by the P&T's Telecommunica- foreign exchange expenditures, the Rail- of adequate safety devices, and the re- tions Branch which will provide a major ways have begun to build their own electric placement of the congested marshalling portion of the estimated $237 million and diesel locomotives. The 1964 IDA yard that serves the Keelung-Taipei area, required in local currency. Among the im- credit will finance the import of steel and the most populous and industrialized part provements being carried out affecting components for locomotives, electric of the country. public telephone and telegraph facilities multiple units, coaches and freight cars, The part of the program being assisted and railway communications are the follow- track and signaling equipment and ma- by the Bank loan will cost a total of $30.2 ing: The number of telephone subscriber terials for the electrification program. million. It includes the purchase of 55 sets is to be increased from 460,000 to diesel locomotives; the provision of 150 810,000. About 3,700 miles of coaxial INDUSTRY-DEVELOPMENT FINANCE new passenger cars of various types, of cable will be added to the 295 miles that COMPANY which 89 will be built in Taiwan with im- existed when the program began. About $50 million 5'/i% Bank loan of May 28, ported components; the purchase of com- 1,500 miles of microwave radio links will 1965, to The Industrial Credit and ponents for 1,065 freight cars which will be installed. Nearly 1,700 miles of open Investment Corporation of India Limited be constructed in Taiwan; equipment for telephone lines along railways that are ( centralized traffic control; the installation beingelectrifiedwillbereplacedbyshielded ICICI is a privately owned development of automatic block signaling; automatic underground cables. Teleprinters will be finance company which invests in private signaling equipment at 200 grade cross- installed to step up the speed of transmis- industrial enterprises in India. This was ings; and materials for the construction sion on trunk lines to the international the Bank's sixth loan to ICICI, bringing the of a new marshalling yard at Chi Tu which rate of 66 words per minute rather than total amount of Bank lending to the Cor- will havethecapacityto handle some 2,000 the 25 words possible with existing equip- poration to $140 million. cars daily, or more than twice the capacity ment. In its 10 years of operation, ICICI has of the existing Hua-Shan yard. approved financial assistance totaling Participations totaling $1,930,000: by TRANSPORTATION-RAILWAYS 1,023millionrupees($215million)for374 Chemical Bank New York Trust Company, $62 million IDA credit of October 26, 1964. projects. This included foreign exchange 71 and rupee loans, underwriting operations have been built or are under construction. other necessary authorization, for the final and direct equity investments. Although The Bank loan will provide the foreign year (April 1, 1965 to March 31, 1966) of there was wide variety in the type of in- exchange required to complete the pro- the Third Five Year Plan, bringing the total dustry receiving financial assistance, ICICI gram and to build some of the most urgent of pledges for the Third Plan to $5,472 concentrated on those industries, such as works programmed for the Fourth Plan. million. machinery, machine tools and chemicals, Participations totaling $350,000: by Girard that are relatively new in India. About a Trust Bank, The First National Bank of IRAN third of the 125 projects which have al- Memphis, and The Marine Trust Company TRANSPORTATION-ROADS ready come into production were sponsored of Western New York. $32 million 25-year 5-/2% Bank loan of by entrepreneurs entering industry for the $14 million 26-year 51/2% Bank loan of April 28, 1965, to Iran first time. June 11, 1965, to India. This loan will help to finance the construc- With the continued growth expected in This loan will help to finance the extension tion or improvement of 1,050 miles of the private industrial sector in India, the of the Kothagudem thermal power station main highways. When they are completed demand for ICICI financing is expected to now under construction inAndhra Pradesh Iran will have some 4,860 miles of roads, rise, particularly for foreign exchange by the installation of two additional or about a third of its main highway net- loans. This year's Bank loan will cover the 60,000-kilowatt units and associated work, built to modern standards. Three bulk of ICICI's foreign exchange require- works. An IDA credit of $20 million was Bank loans, totaling $122.5 million, will ments until mid-1967. The Corporation is made in May 1963 for the first stage of the have assisted this development. The high- also taking steps to increase its rupee project; the current extension will bring ways so far completed have already had funds. As a result of the new financing, the station to its designed capacity of a favorable impact on the economy. The ICICI will have had total resources over the 240 000 kilowatts. When Kothagudem and volume of traffic has doubled, with com- years equivalent to $225 million. another large power project now under mercial vehicles accounting for up to 80% Repayments of the Bank loan will be construction are completed, the installed of the total. Productive activities have subject to adjustment from time to time so capacity in Andhra Pradesh will be in- grown in the areas served, and the charges that ICICI's repayments to the Bank will creased from 292,000 kilowatts in 1965 to of public carriers have been reduced. Fur- correspond approximately to the borrow- 600,000 kilowatts in 1967. This will permit thermore, competent and well-equipped ers' repayments to ICICI which are not to the removalofall restrictionson powercon- Iranian road construction firms have extend beyond 15 years in each case. sumption in Andhra Pradesh and, with the been developed. ELECTRIC POWER bringing into production of new factories, Two of the roads to be improved with $70 million 26-year 5½/2% Bank loan of energy sales are expected to more than the assistance of this year's loan are in June 11, 1965, to India. double in the same period. The total cost the southern part of the country: the Nain- of both stages of the Kothagudem project Kerman road which connects the Kerman Duraig the past few years there has been is estimated at $66 million. area with the industrial and marketing rapid developmentin India of transmission In view of the location of the plant in center around Isfahan and is an important facilities to interconnect power sources the center of the Singareni coal field, and part of the arterial highway between within the States. With the impetus being the proximity of adequate circulating water Tehran and the southeastern provinces; given to industrial expansion ih Indiars supplies, the site at Kothagudem could be and the Kerman-Sirjan road which will successive Five Year Plans and the large expanded to provide for a generatingcapa- continue the highway southward to con- nvestments required to provide for the city of one million kilowatts or more. It nect with a road being built by the Govern- accompanying rise m demand for elec- ultimately may become one of the most ment to the new port under construction tricity, it is becoming increasingly neces- important sources of power not only for at Bandar Abbas. The highways traverse sary to form regional transmission systems Andhra Pradesh but also for the States an area of potentially productive land and to make the most economical use of power AnhaPaehbtasfothStts aarafptnilypodcveadad generating capacity. India is therefore to be interconnected by the southern one rich in mineral resources. A third road taking steps to further integrate its power regional system. brder via Meshed. This will be an impor- systems by interconnecting State systems OTHER ACTIVITIES The Bank continued to tant trunk road serving Meshed, one of to form regional networks. Such a program maintain a resident mission in New Delhi. the country's largest cities and the admin- is strongly endorsed by the Government's The Chief of the mission ended a two-year istrative center of northeastern Iran, and Energy Survey Committee, which recently assignment in May 1965. an international road connection with completed an exhaustive study of India's Astudyof India's coal transport problem land-locked Afghanistan. The Tehran- energy resources and requirements. was completed in July 1964 at a total cost Rudenhen-Babol road, built in recent This loan will helptofinancean extension to the Bank of approximately $862,000. years, will be paved to accommodate the of existing power transmission facilities, A special mission completed field work heavy volume of traffic between the capi- the interconnection of smaller systems on an intensive study of the country's tal and the Caspian littoral. The project within each of the States, and facilities economic position, in preparation for the is scheduled for completion in 1968 at a which will provide the first effective steps Bank's appraisal of India's Fourth Five Year total estimated cost of $90 million. toward the operation of integrated regional Plan (April 1, 1966 to March 31, 1971). Participations totaling $890,000: by Irving systems. This involves the construction of Two meetings of the Consortium on Aid Trust Company, Bank of America National approximately 8,000 miles of high voltage to India were held during the year. Partici- Trust and Savings Association, First Na- lines and the construction or extension of pants were representatives of Austria, tional City Bank, Fidelity-Philadelphia Trust 300 substations. These works form part of Belgium, Canada, France, Germany, Italy, Company, and The First Pennsylvania the power transmission system expansion Japan, the Netherlands, the United Banking and Trust Company. under the Third Pian which will cost an Kingdom, the United States, the Bank estimated $390 million. Of the 30,000 and IDA. In April 1965, the Consortium $8.5 million 20-year 51/2% Bank loan of miles of transmission lines being erected pledged the equivalent of $1,027 million, April 28, 1965, to Iran. under the Third Plan, about 22,000 miles subject as appropriate to legislative or This loan will assist a project for the con- 72 struction of some 50 feeder roads with a as a consequence vehicle operating costs expressway between Tokyo and Kobe for total length of 1,125 miles to connect six are high and accident rates are heavy. which the Bank has already lent $205 mil- agriculturally productive areas with the The number of registered motor vehicles lion. The Tokyo-Kobe Expressway will be main highway system and thus with large has reached 6.8 million-a fivefold in- open over its entire length in early 1969 consuming centers. crease in the last 10 years-and freight and will alleviate traffic congestion in the About 70% of Iran's population of 21 and passenger traffic by highway has in- Tokaido region, one of the greatest con- million resides in rural areas and is en- creased at a substantially higher rate than centrations of industry and population in gaged mainly in subsistence farming. Mod- other modes of transportation. The Gov- the world. ernagriculture is nowbeingdeveloped-but ernment is taking measures to improve all The western end of the Expressway, ex- is confined generally to areas with easy forms of transport and highways in par- tending 114 miles from Kobe to Nagoya, access to markets. In areas without roads ticular. It has approved an investment is already open to traffic. The Shizuoka- practically all farm-to-market transporta- equivalent to $11.4 billion in highway con- Toyokawa section is part of the Expressway tion is still provided by the farmers them- struction, improvement and maintenance between Nagoya and Tokyo. It will be a selves using donkeys, pack horses, or overthefive-year period from 1964through four-lane divided highway designed to the even shoulder packs. Adequate road trans- 1969. The general objectives of the pro- same standards as the rest of the Express- port into agricultural areas will enable the gram are to double the paved length of the way. Its estimated cost is $322 million; toll farmers to sell their products for higher general road network by 1969 and to in- revenues are expected to pay back the prices at more distant markets and to crease the expressway network from 50 entire investmentcosts, including interest, devote more time and energy to farm miles to about 500 miles. The two express- in a period of 20 to 23 years. activities, will facilitate and improve the ways for which the Bank made loans this The Shizuoka-Toyokawa highway is im- efficiency of the Government's extension year are of high priority in this program. portant not only because it will benefit the services, and will lower the price of farm Tokaido area as a whole, as part of the materials. These factors should lead to $25 million 24-year 5,% Bank loan of Expressway, but also because it will im- expanded areas of cultivation, to more in- Decembere23, 1964 to the Tokyo prove local traffic conditions in its service tensive use of existing farm areas, and to - area-the Shizuoka and Aichi prefectures. the growing of more profitable cash crops. This loan weil assist i fimancing an $88 mT - Taking into accountthe reduction in vehicle The areas in which the feeder roads will lion expressway frum Haneda, Tokyo's operating costs and travel time, both for be built were selected on the basis of their international airport, to Yokohama. It will those who will use it and for those who proximity to the existing highway system beaneight-mile,four-lanetollroadand,for continue to use a parallel highway, it is the fertility of the land, the availability of most of its length, will be built on piers as estimated that total benefits in the first Irrigation facilities and the possibilities for an elevated structure over a city street. year of its operation will be about 20 bil- further expansion of agricultural produc- The Tokyo Expressway Public Corpora- lion yen ($56 million). tion. Four of them are located on the tion was established in 1959 as a public Caspian littoral, the fifth is about 75 miles entity responsible for the construction and ELECTRIC POWER northwest of Tehran, and the sixth and maintenance of toll roads in Tokyo and its $25 million 25-year 5½12% Bank loan of largestisinthevicinityof Kermanshahand suburbs. The new expressway is an ex- January 13, 1965, to the Electric Power Hamadan in west-central Iran. The project tension of the one the Corporation already Development Company, Ltd. (EPDC). is scheduled for completion early in 1969 operates between Tokyo and Haneda. EPDC is a government corporation which at a total estimated cost of $33.7 million. The Tokyo-Yokohama region is one of the develops special hydroelectric power proj- Participations totaling $355,000: by First most densely populated and heavily in- ects and sells the output of its plants in dustrialized regionscts adoselsttheoutpu of istplats i National City Bank, and Bank of America dustrialized regions of the world. It has a bulk to private utilities. The loan will assist National Trust and Savings Association. population of 13 millhon, although It ac- in financing two hydroelectric plants with counts for only slightly over 1% of Japan's acmie aaiyo 7,0 ioat OTHER ACTIVITIES -The Bank has agreed total land area, and is the country's most which the Company is building on the to help organize and finance a study to important center of finance, commerce Kuzuryu River. Power from the plants will recommendthe bestmeansof reorganizing and industry. Approximately a quarter of be fed into a large interconnected system port operations in Iran. The Bank will pay thelargerindustrialenterprisesarelocated which serves the central art of the coun- the foreign exchange costs, estimated at in the area and a like amount of the coun- the stest growing inutria regioni $39,000. try's production originates there. In 1963 try, the fastest growing pdustrial region 4 A Bank mission undertook an economic about 80% of the total tonnage of freight Japano It accounts ot ower Consumption. study of the results of a road loan made in traffic in the area was moved by truck. The then total 1963 consumption 1959. The study attempts to compare the new expressway will relieve the severe con- Bethan doubled 1963 onsumption actual costs and benefits of the project gestion of city streets between Tokyo and kilowatt hours, and is expected to reach with those originally expected and to Yokohama and sharply reduce vehicle op- 81 billion kilowatt hours in 1968. The identify factors which may be crucial in erating costs and travel time, both for Kuzuryu project forms part of a coordi- determining the economic success or vehicles using the expressway and for nated program being carried out by EPDC failure of a project. those which continue to use existing and three private power companies, streets. Hokuriku, Kansapivate power compan JAPAN Participation of $50,000: by Banque expected Karsand Cheibu, to meet the TRANSPORTATION-ROADS Lambert, S.C.S. ~~~~expected demands of the region in 1968, TRANSPORTATION-ROADS Lambert, S.C.S. at which time the interconnected system Japan's road network, excluding municipal $75 million 25-year 61,§,% Bank loan of will have a total generating capacity of roads, exceeds 94,000 miles in length, but May 26, 1965, to Japan Highway Public about 17 million kilowatts. less than 20% is paved. Most roads, even Corporation. The two plants being built with Bank national highways, are narrow and winding The loan will help to finance a 66-mile assistance consist of a 220,000-kilowatt with little or no shoulder. Traffic normally expressway between Shizuoka and Toyo- pumped-storage station with an associated operates under congested conditions and kawa. It is the final link in the 335-mile toll dam and reservoir at Nagano. and a 73 54,000-kilowatt conventional type station ciation, Morgan Guaranty Trust Company system and to serve as an aid to naviga- atYugami. The project is part of a plan for of New York, Irving Trust Company, tion; the expansion of a workshop for the the development of three sites on the Crocker-Citizens National Bank, Girard repair and maintenance of navigational Kuzuryu River being carried out jointly by Trust Bank, and The First Pennsylvania equipment; the construction of about 100 EPDC and the Hokuriku Electric Power Banking and Trust Company. landing facilities; a salvage unit to remove Company. EPDC will sell the entire output wrecks and obstructions to navigation; and of its two stations to the Hokuriku com- OTHER ACTIVITIES * In April 1965, the Bank the continuation of consultants' services. pany which will build a third station down- organized a mission to study the Govern- An additional $950,000 is being provided stream. The main purpose of the Bank ment's development program for 1966- by the Bank under its technical assistance project is to supply peaking capacity for 1970. program to cover the foreign exchange the central regional power system. Its total The Bank has agreed to meet the foreign costs of consultants' services for a detailed estimated cost is $92.5 million. exchange costs, estimated at $507,000, of survey of river ports and waterways look- engaging experts to carry out a study and ing to the preparation of a plan of priority KUWAIT the preparation of an outline master plan improvements. ABankstaffmembercompletedhisassign- of a land development scheme in the ment as adviser to the Arab Economic Jengka Triangle. AGRICULTURE-IRRIGATION Development Fund. The Bank continued to provide to the $58.54 million IDA credit of July 21, 1964. Treasury the services of an expert in or- The creditwas made available to the Indus MALAYSIA ganizing economic data. Basin Development Fund to help cover WATER SUPPLY NEPAL the cost of works being constructed by $6.8 million 20-year 51/2% Bank loan of A survey of transport facilities was carried Pakistan in the Indus Basin. The Fund February 26, 1965, to the Public Utilities out as a first step toward the formulation was set up in September 1960 at the time Board (PUB), Singapore. of a coordinated transport investment pro- The Indus Waters Treaty 1960" was The PUB, an autonomous public corpora- gram within Nepal's next Five-Year Plan, signed, and is administered by the World tion, is responsible for water supply, gas beginning July 1965. The Bank paid the Bank. At that time the Fund was provided and electricity in the State of Singapore. foreign currency costs of the survey, ap- with resources of about $900 million by Its Water Department supplies sub- proximately $100,000. The final report of the Governments of Australia, Canada, stantially all the water used by Singapore's the consultants was to be transmitted to Germany, India, Pakistan, New Zealand, more than 1.8 million people, as well as by the Government in July 1965. the United Kingdom, the United States a considerable sector of the population of and the World Bank. In April 1964 a Sup- the nearbyStateof Johoreonthe Malaysian PAKISTAN plemental Agreement came into force mainland.Waterconsumption in Singapore TRANSPORTATION-INLAND WATERWAYS under which the Governments of Australia, has more than doubled since 1950 and $5.25 million IDA credit of August 26, 1964. Canada, Germany, New Zealand, the U.K., PUB's daily water sales averaged 68.2 East Pakistan is composed largely of the the U.S., and the World Bank agreed to million gallons in 1964. Daily sales are deltaic area of two of the world's largest provide an additional $315 million in for- expected to reach over 85 million gallons rivers, the Ganges and the Brahmaputra. eign exchange to be applied toward the in 1968; this projection may be exceeded This great system of rivers and estuaries cost of the works. The Government of in view of the Government's program of makes water transport economical and, in Pakistan undertook to finance the local encouraging industrial development. The many rural areas, it provides the only expenditures not covered by the rupee Water Department has made notable prog- means of transport. The inland waterways contributions provided for under the 1960 ress in extending its service and increas- comprise about 3,100 route-miles, which Agreement. An amount of $58,540,000 ing its supply, but new water sources will grow to 4,900 miles in the flood season. In was to be in the form of a Bank loan or be required by 1968. The Bank loan will 1963 water transport accounted for 337 an IDA credit, or both. The Bank and IDA finance the first stage of a long range pro- million ton-miles for cargo and 1,277 decided that in order not to overburden gram to develop the considerable re- million passenger-miles; the number of Pakistan with external debt, this contri- sources of the Johore River in the State of vessels had increased by a third in the bution should be in the form of an IDA Johore. It includes intake works on the preceding five years. Further development credit. Johore River, raw water supply conduits, andimprovementofinlandwatertransport The first charge on the Indus Basin a treatment plant, pumping facilities, and is therefore important to the economy. Development Fund is the cost of con- a 17-mile transmission main. These instal- Because of siltation and the instability structing the dam on the Jhelum River lations will increase the water supply by of the rivers, there is special need for the and the link canals and barrages specified 30 million gallons a day, bringing total maintenance of channels, navigational aids in the 1960 Agreement. Execution of the production capacity to about 132 million and pilotage service, and care and super- works already under way is proceeding gallons a day. The project will provide vision in the construction and operation of well. The first link canal system, joining enough additional water for Singapore's ports and landing facilities. To centralize the Chenab to the Sutlej River, was fin- requirements until the mid-1970's, and responsibility for providing these services, ished on schedule by the end of March lay the basis for future expansions for the Provincial Government established the 1965. If there are no unforeseen delays, many years thereafter. Construction Inland WaterTransportAuthority(IWTA)in the Mangla Dam project on the Jhelum, should be completed in 1968 at a total 1958. An IDA credit of $2 million was made by far the largest undertaking, may be estimated cost of $13.7 million. in 1961 to improve and strengthen IWTA's completed about a year before the re- Participations totaling $1,090,000: by The organization and to improve five inland quired completion date of July 1, 1969. Chase Manhattan Bank, New York branch ports. This year's credit will assist further The Indus Basin Development Fund is of The Chartered Bank, The Hongkongand stages of IWTA's development program. also financing the cost of a study of the Shanghai Banking Corporation, Manufac- They will cost a total of $10,350,000 and water and power resources of West turers Hanover Trust Company, Bank of include the establishment of radio location Pakistan to provide the Government of America National Trust and Savings Asso- stations to provide a vessel position-fixing Pakistan with a basis for development 74 planning in the water and power sectors cultural output. The ADB will be able to tional and efficient development and op- of the economy within the context of the expand its loans for these purposes with eration of such facilities. The Bank is successive Five Year Plans. A World Bank the resources being provided by the acting as Executing Agency. team, headed by Dr. Pieter Lieftinck and IDA credit. assisted by a number of consultant firms, TheGovernmentwill relendthe proceeds IFC COMMITMENTS . $1,950,000 in loan completed the first part of the study in of the credit to the ADB for a period of 20 capital for Crescent Jute Products Limited, February 1965. A principal conclusion was years, including five years of grace and a new company establishing a jute mill in that the construction of a dam on the Indus interestat the Government's standard rate West Pakistan. at Tarbela would be technically feasible for remunerative agricultural projects, $1,676,504 supplemental investment in and that the economic return would be which at the time of the credit was 4% loan and share capital for Ismail Cement substantial. The second part of the study, per annum. Industries Limited, to assist expansion of covering the more comprehensive aspects cement plant. of water and power development in West OTHER ACTIVITIES .The Bank continued to $3,150,001 in loan and share capital for Pakistan, is in progress. Consultants' maintain a resident mission, with offices Packages, Limited, to help the company studies will be completed in March and the in Rawalpindi and Karachi, headed by a expand its production of paperboard con- Bank's final report is due in June 1966. member of the Bank's Development tainers and packages. Advisory Service. An expert engaged by the Bank to carry PHILIPPINES AGRICULTURE-FARM CREDIT out a preliminary survey of the securities WATER SUPPLY $27 million IDA credit of June 30, 1965. market submitted his reportto the Govern- $20.2 million 25-year 5/2% Bank loan of This credit will be made available to the ment. Further help is being given in the July 22, 1964, to the National Waterworks Agricultural Development Bank (ADB), preparation of a stock-exchange law, which and Sewerage Authority (NWSA). Pakistan's major source of medium and is under consideration. The loan will help to finance the first part long-term agricultural credit. The lending The Bank has agreed to allocate up to of a long-range program to provide an ade- program of the ADB for the next three $830,000 to help continue for three years quate water supply system in Manila and years, 1965-68, is being expanded by the assistance provided by the Develop- its suburbs, which include the cities of about 50% to approximately $90 million ment Advisory Service of Harvard Uni- Quezon, Pasay, Caloocan and 16 con- equivalent. Of the total, $40 million will versity to the Planning Commission of tiguous municipalities. There is an acute be required for medium and long-term Pakistan and the Provincial Planning water shortage in the Manila area since loans to farmers for the installation of pri- Departments. For the last 10 years finan- the supply systemwasdesigned to meetthe vate tubewells and farm machinery. The cial support for advisers to the Planning water requirementsof onlya million people. IDA credit will provide $27 million of this Commission has been provided by the The population has increased by one mil- amount. The tubewells under the project Ford Foundation and the U.S. Agency for lion to 2.8 million in 12 years and is con- will provide irrigation for an estimated International Development. tinuing to grow at the same rate. The new 700,000 acres and the farm machinery A transportation economist, whose ser- works will increase the water supply by will permit mechanization of some 500,000 vices are financed jointly by the Bank and about 200 million gallons a day and should acres. The net value of increased output Pakistan, has been in Dacca since July meet requirements until the early 1970's. resulting from the investments should ex- 1964 advising the Provincial Government Studies will be undertaken concurrently to ceed $27 million a year. of East Pakistan on transportation policy plan for Manila's future water require- Tubewell irrigation and farm mechaniza- and programs. ments and for the improvement of the tion have been important factors in the The Consortium of governments and sewerage system. increased agricultural production which institutions interested in development NWSA, an autonomous government has made a major contribution to the suc- assistance to Pakistan held its sixth meet- agency, is also responsible for the water cess of Pakistan's Second Five Year Plan. ing in Washington on July 16, 1964. Par- supply systems in other cities and munici- Individual initiative, encouraged by Gov- ticipants were Belgium, Canada, France, palities outside the Manila area. It will ernment policies, has been a key element Germany, Italy, Japan, the Netherlands, initiate studies to make similar inprove- in thisgrowth, particularly in West Pakistan the United Kingdom, the United States ments in the operations of these systems. where nearly half the additional annual and the World Bank and IDA. Consortium In addition to the physical improvements water supply has been provided from pri- members pledged the equivalent of $431 of the Manila water system, NWSA is mak- vate tubewells. Demand for tubewells has million, subject as appropriate to legis- ing extensive changes in its management, increased sharplyasfarmers have become lative or other necessary authorization, to organization and procedures to improve aware of the profitability of such invest- assist the fifth and final year (1964-65) of its efficiency and finances. ments. Between 1959 and 1964 the num- the Second Five Year Plan. In all, aid The project being assisted by the Bank ber installed annually rose from 1,340 to pledgedthroughtheConsortiumamounted loan will cost a total of $48.2 million. The 6,400, and is expected to increase to to the equivalent of $1,818.7 million dur- loan will be applied to the foreign exchange 8,000 a year during the Third Plan. The ing the four years 1961/62 through costs of the new installations which include availability of more water has been accom- 1964/65. The seventh meeting was held intake works, a four-mile tunnel, 16 miles panied by more intensive cropping involv- in Washington on June 1, 2 and 3, 1965. of aqueducts, additions to the treatment ing increased use of fertilizers, better The Consortium members agreed to meet plant, nine pumping stations and reser- seeds, tractors, power tillers and other again ata later date toconsideraid pledges voirs, and additional transmission and farm machinery. A substantial increase in for 1965/66. distribution mains. medium and long-term credit will be re- A team of consultants, supported by the Participations totaling $1,020,000: by quired during the Third Plan in order to United Nations Special Fund, began work Chemical Bank New York Trust Company, finance the tubewell program and the in June 1965 to determine future telecom- Continental Illinois National Bank and investments in farm machinery necessary munications requirements of the country Trust Company of Chicago, The Chase to achieve the projected increases in agri- and to recommend measures for the ra- Manhattan Bank, Meadow Brook National 75 Bank, Mellon National Bank and Trust THAILAND development and feasibility studies for the Company, Central National Bank of Cleve- ELECTRIC POWER next stages. The Government will intensify land, The First National Bank of Memphis, $6 million 20-year 51/2% Bank loan of its extension services and establish dem- Wells Fargo Bank, The Marine Midland March 22, 1965, to the Yanhee onstration farms in the area to instruct Trust Company of New York, Bank of Electricity Authority (YEA). farmers in irrigation farming and the use America National Trust and Savings Asso- The Yanhee Electricity Authority was of fertilizers. Rice production will continue ciation, The Bank of California National established in 1957 with responsibility for to be the principal crop during the rainy Association, National Bank of Commerce the generation and transmission of electric season, and about 20,000 acres will be of Seattle, First Western Bank and Trust energy in the most developed and popu- suitable for the growing of othercrops dur- Company, The First Pennsylvania Banking lated part of Thailand-a service area ing the dry season. and Trust Company, Grace National Bank covering 33 of Thailand's 71 provinces. This is the fifth loan made by the Bank of New York, and Irving Trust Company. Two earlier Bank loans, totaling $72.6 mil- for the development of irrigation and in- lion, helped to finance the multipurpose provement of flood control in Thailand. EDUCATION Bhumibol dam for the production of elec- Regulated water supply has been an im- $6 million 30-year 51/2% Bank loan of tric power, irrigation and flood control, and portant factor in the large increase in rice October 28, 1964, to the Philippines. transmission facilities to bring power to production which, in the past 10 years, has This was the Bank's first loan in the field Bangkok and 24 other communities. Two risen by a third. This has enabled Thailand of education. The beneficiary is the College units with a capacity of 140,000 kilowatts to meet domestic demand in the face of a of Agriculture of the University of the were installed initially at the dam. This population growth rate which is now more Philippines at Los Banos. The College is year's loan will help finance the installa- than 3%, and to maintain a surplus for currently engaged in a comprehensive Five tion of two more 70,000-kilowatt units, export which now accounts for nearly a Year Development Program. It is conceived works required for the future installation third of the country's export earnings. as a means of strengthening the College's of the next two units, an increase in sub- When the full benefits from the first stage role as the country's leading source of station capacity in Bangkok, and an exten- of the Me Kiong River development are high-quality professional personnel for ag- sion of transmission lines to three more realized in about nine years, it is expected ricultural services, for research scientists communities. that the annual production of rice alone in in public and private employment, and for YEA sells power in bulk to two utilities, the area will increase from 200,000 to agricultural higher education. The Bank one serving the Bangkok area and the 400,000 tons, with a net benefit to the loan will be used for improvements of the other the rural communities within YEA's economy of about $11 million annually. College's physical facilities being under- service area. By far the largest power Construction of the first stage will take taken insupportoftheacademicobjectives market is Bangkok where demand has about five years and will cost an estimated of the Development Program. It w 11 cover risen by 66% in the past three years. This $57.9 million. about half the cost of constructing and increase has been due to the rehabilitation Participations totaling $1,025,000: by The equipping 16 new buildings and of reno- of distribution facilities, the provision of an Chase Manhattan Bank, First National City vating three others. The local currency adequate and reliable supply of power by Bank, Bank of America National Trust costs equivalent to $6 million will be met YEA, the introduction of a modern rate and Savings Association, and The First by the Government. structure, and a significant increase in Pennsylvania Banking and Trust Com- Agriculture now accounts for a third of light and medium industry. During the pany. the national product of the Philippines and rest of the 1960's the Bangkok area is two-thirds of export earnings. There is a expected to absorb more than 80% of the OTHER ACTIVITIES .The Bank continued to large potential for further development, outputof YEA's plants, with power demand maintain a resident mission in Bangkok. however, if agricultural extension and re- increasing atan estimated average annual Consultants completed field work on a search services are greatly improved and rate of 14%. Demand is also expected to study of the future of the Port of Bangkok, other measures are taken to increase rise substantially in rural communities. a continuation of the U.N. Special Fund productivity and encourage expansion of The expansion being assisted by the Bank study of Thailand ports, for which the Bank cultivation. The Program of the Agricul- loan will cost a total of $9.8 million, and is has been Executing Agency, which was tural College is a vital part of a compre- scheduled for completion in late 1968. approved initially in 1959 and extended In hensive effort now being made by the Participations totaling $600,000: by The 1960. Philippine Government to raise the level of Chase Manhattan Bank, Irving Trust Com- agricultural production. In recognition of pany, Bank of America National Trust and the importance of the College as a leading Savings Association, First National City agricultural institution in Southeast Asia, Bank, Manufacturers Hanover Trust Com- AUSTRALASIA the Ford and Rockefeller Foundations have pany, Crocker-Citizens National Bank, and both pledged substantial grants to finance Grace National Bank of New York. educational and training elements of the TERRITORY OF PAPUA AND NEW GUINEA Development Program. AGRICULTURE-IRRIGATION 'The Economic Development of the Terri- $22 million 20-year 5½/°% Bank loan of tory of Papua and New Guinea," the report OTHER ACTIVITIES . A member of the November 25, 1964, to Thailand. of a general survey mission organized by Bank's Development Advisory Service The loan will finance the first stage of the the Bank, was published during the year. completed his assignment as head of a Me Klong River Basin development which The purpose of the mission, undertaken at resident technical assistance mission. provides for the regulated irrigation, sur- the request of the Australian Government, However, at the request of the Govern- face drainage and partial flood control of wasto review the economic potentialities of ment, the Bank agreed to extend the 432,000 acres in southwestern Thailand. the Territory and to make recommenda- assignments of the industrial, statistical Eventually irrigation will be expanded to tions to assist in planning an economic de- and agricultural advisers of the resident 964,000 acres. The current project in- velopment program designed to raise the mission for a further period of one year. cludes land classification for the entire standard of living of the people. 76 FINLAND TRANSPORTATION-ROADS $28.5 million 15-year 5½./% Bank loan of July 10, 1964, to Finland. The National Board of Roads and Water- ways (NBR) is responsible for the con- struction and maintenance of all public roads in Finland: they comprise 24,000 miles of main roads and, by 1966, will in- clude over 21,000 miles of local roads. Road traffic has more than doubled in the past seven years and NBR has built or improved about 2,200 miles of roads in the last three years alone, in an effort to keep pace with the increased volume of traffic. The Bank loan will assist the NBR in financing the paving of 1,500 miles of EUROPE c---. - roads-mainly those newly built-which are widely scattered throughout the country and were selected on the basis of traffic density; a 9-mile freeway between Gumbole and Veikkola which is a continua- - tion of the freeway between Helsinki and . . . -. r >i - - Gumbole and part of the main higlhway between Helsinki and Turku, the two _____ .rXr o t ,- '- t , largest cities in Finland; and the purchase of equipment for road maintenance which in Finland is a very large operation because Arkj~l. / of the need for snow removal to keep traffic moving in winter. Since Finland's transport sector will t5; A" - require large investments in the coming 7 ~~~years, better planning and coordination have become essential. The Bank is help- ing the Government to organize a study which will provide the basis for a coordi- nated transport policy and for the formula- tion of a long-range investment program; funds from the loan will help to finance rarticipations totaling $5,260,000 by Manufacturers Hanover Trust Company, Chemical Bank New York Trust Company, Mellon National Bank and Trust Company, The Chase Manhattan Bank, Bankers Trust 4W Company, Girard Trust Bank, The National Shawmut Bank of Boston, Irving Trust Company, Morgan Guaranty Trust Com- pany of New York, Fidelity-Philadelphia Trust Company, Meadow Brook National 1/ ~~~~~ ~Bank, The American Express Company, Inc., The Philadelphia National Bank, Banque Lambert, S.C.S., Bayerische Hypo- theken- und Wechselbank, Hill, Samuel & Co. Limited, Crocker-Citizens National Bank, The First Pennsylvania Banking and Trust Company, Grace National Bank of New York, and Continental Illinois National Bank and Trust Company of Chicago. INDUSTRY-DEVELOPMENT FINANCE ,'i'f- COMPANY $14 million 51/2% Bank loan of June 30, 1965, to the Industrialization Fund. The Industrialization Fund provides finan- cial assistance to small and medium-sized 77 private enterprises in Finland. Established Since it was established in 1950 as the growing at an annual average rate of about in 1954, it was reorganized by its Finnish Government's principal instrument for im- 11%sincethe early 1950'sandisexpected shareholders in 1963 with the collaboration proving economic conditions in Southern to continue to increase at this rate into the and financial assistance of the Bank and Italy, the Cassa per il Mezzogiorno has early 1970's. The Carregado thermal plant the International Finance Corporation. In made available the equivalent of $2.8 bil- is part of a program to provide the gen- the following 15 months, the Fund made lion for the development of the South. eratingcapacityrequiredtokeeppacewith 119 long-term loansand oneequityinvest- Seven earlier Bank loans totaling $298 demand, particularly from Portugal's ex- ment totaling about $14 million; the invest- million have assisted the Cassa program. panding industries. Furthermore, it is the ment was part of a joint transaction with At first the Cassa's investments were first large thermal plant to be built since I FC. mainly in agriculture and transportation, the Portuguese authorities decided to The Fund's lending has been directed but since the late 1950's increasing em- include major thermal sources in their toward support of the newer industries in phasis has been given to promoting power development program in order to keeping with the Government's policy of industry with the result that industrial supplement and balance the predomi- encouraging industry to diversify in order investment has risen sharply and many nantly hydroelectric system. A loan of $5 to create new employment opportunities factors favor further growth. million made by the Bank to ETP in 1963 for labortransferringfrom agriculture, and The primary channels for medium and for a 150,000-kilowatt thermal plant near to modernize manufacturing units so that long-term lending to industry under the Oporto also included funds for preliminary Finnish goods will be better able to com- Cassa program are three special credit engineering studies of the Carregado pete with foreign products abroad and in institutes: Istituto per lo Sviluppo Econo- plant. The total estimated cost of the Finland, as import duties are reduced in mico dell'ltalia Meridionale (ISVEIMER), project is $25 million. accordance with Finland's 1961 agreement Istituto Regionale per if Finanziamento Participations totaling $750,000: by Manu- with the European Free Trade Association. alle Industrie in Sicilia (IRFIS) and Credito facturers National Bankof Detroit, Crocker- Over half the Fund's loans were for the Industriale Sardo (CIS). ISVEIMER oper- Citizens National Bank, Detroit Bank and mnetals, furniture-making and textile in- ates on the Italian mainland, IRFIS in Trust Company, Fidelity-Philadelphia Trust dustries.The bulkoftheremainderwasfor Sicily, and CIS in Sardinia. Between 1953 Company, The Marine Trust Company of food processing, non-metallic mineral and 1964 the institutes approved more Western New York, Meadow Brook National products, printing and publishing, chemi- than 5,000 loans for a total equivalent to Bank, The Northern Trust Company, Ver- cals, electrical machinery, paper, and foot- $1.3 billion. Industrial lending under four einsbank in Hamburg, and Girard Trust wear industries. of the earlier Bank loans was channeled Bank. Applications for the Fund's financial through the institutes and provided $90.8 assistance totaled more than twice the million to 21 enterprises, mainly producers OTHER ACTIVITIES - A five-man mission to amount of the new resources of about of chemicals, fertilizers and cement. advise on development financing, organ- $16 million provided at the time of its Since mid-1964, ISVEIMER, IRFIS and ized jointly by the World Bank and the reorganization, reflecting the dynamism of CIS have been finding it difficult to obtain International Monetary Fund, completed the private industrial sector and the par- enough funds to achieve their desired rate its assignment and submitted its report ticular need of the smaller companies for of lending. Loans requiring over $200 mil- to the Government. The mission concen- long-term finance. In view of this demand, lion have been approved by the institutes trated chiefly on tax reform, budgetary the Fund's pattern of lending is expected but have not been signed because of policy, the capital market and the bank- to continue along the lines of the recent lack of funds. This year's Bank loan, which ing system. past. The Bank loan will enable the Fund will be re-lent by the Cassa to the insti- to meet nearly half its expected require- tutes, will cover part of this financing gap. SPAIN ments for additional funds until mid-1967. It will assist in financing about 150 indus- TRANSPORTATION-RAILWAYS In addition, the Fund has arranged to raise trial projects for which the institutes are $65 million 20-year 51/2% Bank loan of during the next year the equivalent of prepared to make loans as soon as funds July 31, 1964, to the Red Nacional de Jos $7.8 million from Finnish sources. are available. Ferrocarriles Espai5oles (RENFE). The schedule of the Fund's repayments Participation totaling $50,000: by Bay- RENFE, the Spanish railroad authority, to the Ban,k will be subject to adjustment erische Hypotheken- und Wechselbank. has undertaken a 10-year modernization from time to time so that they will corre- program (1964-73) that will require an spond approximately to the borrowers' re- PORTUGAL investment of some $1 billion and pro- payments to the Fund. The schedule will ELECTRIC POWER vides for the reorganization and improve- provide for full repayment of the Bank loan $15 million 20-year 51/2% Bank loan of ment of many phases of RENFE's opera- by June 1, 1982. April29, 1965, toEmpresa Termoelectrica tions as well. The Bank loan will finance IFC COMMITMENT * $799,357 in loan and Portuguesa, S.A.R.L. (ETP). about a third of the investments planned share capital for Huhtamaki-yhtyma Oy to This loan will assist in financing the first for the first two years of the program, help expand pharmaceuticals production, stage of the Carregado thermal power 1964-65. It will be used to acquire diesel plant near Lisbon. The plant will have an shunting locomotives, passenger and GREECE initial generating capacity of 125,000 kilo- freight cars, ties and switches, machine IFC COMMITMENT.$1,501,672 in loanand watts and is designed for an ultimate tools, signaling and communication sharecapitalfor"Titan" CementCompany, capacity of 500,000 kilowatts. Power from equipment, and equipment for marshal- S.A., to expand and modernize a cement the plant will be fed into the national power ling yards. plant near Athens. transmission network. When the first stage The Spanish railways comprise some ITALY of the plant comes into operation in mid- 8,125 route-miles and carry an important INDUSTRY 1967, the total generating capacity of part of the nation's freight and passenger $100 million 15-year 61/4% Bank loan of Portugal's primary system will be about traffic. They transport large quantities of June 28, 1965, to the Cassa per il 1.5 million kilowatts. coal, mineral ores, oil, fertilizers, cement, Mezzogiorno. Power demand in Portugal has been sugar and grain in long distance traffic. 78 In the last three years freight and passen- World Bank loan made in 1952 and ex- mined bythe needsof lDB'sborrowers.As ger rail traffic increased at annual rates of panded with the assistance of an IDA credit IDB's clients repay their loans, the IDB will approximately 6% and 15% respectively, made in 1963. in turn repay the Government. with freight traffic averaging 4.5 billion ton- The Qukurova plain is one of the most miles annually. Largely because of its important agricultural regions in Turkey. OTHER ACTIVITIES a In March 1965, the antiquated facilities, however, RENFE has Nearly a third of the country's cotton crop appraisal of the country's economic po- incurred substantial operating losses. is grown there and processed locally in Track must be renewed, obsolete steam lo- many yarn, textile and cottonseed oil mills. sition and prospects for further develop- comotives and overage passenger and Over 70% of the Company's power sales ment. The 16-man mission included freight cars must be replaced, uneconomic are to these and other processing in- economists and specialists in agriculture, lines discontinued, and workshops and dustries. In Hatay Province the chief de- irrigation, electric power, transportation, marshalling yards newly built or moder- mand for power comes from industrial manpower, industry, minerals and petro- nized. The 10-year program is the most plants and from the activities of the port of leum and industrial management. It is now comprehensive to be undertaken by the Iskenderun. The additional power from the preparingitsreport. railways and is based on the recommenda- Qukurova system will relieve the acute The preliminary phase of a power study, tions of a Bank general survey mission shortage of powerthat has prevailed there. to which the Bank contributed $29,557, which visited Spain in 1961 at the request The Government of Turkey will relend was completed in February 1965. of the Spanish Government. With the the proceeds of the IDA credit to the YUGOSLAVIA planned reduction in costs and improve- Qukurova Electric Company for a term of TRANSPORTATION-RAILWAYS ment in equipment, it is expected that 25 years, including a five-year period of $70 million 25-year 5½/2% Bank loan of RENFE will be able to eliminate its substan- grace, with interest at 51/2%. December 11, 1964, to the tial operating deficit within several years Yugoslav Investment Bank. and to earn a net return by the end of the INDUSTRY-DEVELOPMENT FINANCE The Yugoslav railways form the backbone program. COMPANY of the country's transportation system, Participations totaling $1,175,000: by the $5 million IDA credit of August 31, 1964. carrying more than 70% of the freight and New York Agency of the Bank of Montreal, $10 million IDA credit of April 1, 1965. 60% of passenger traffic. The railways are Deutsche Bank A.G., Commerzbank A.G., Both credits are to replenish the foreign carrying out a seven-year program to im- Dresdner Bank A.G., Bayerische Hypothe- exchange resources of the Industrial De- prove efficiency and increase capacity to ken- und Wechselbank, and Vereinsbank velopment Bank of Turkey (IDB), a pri- enablethemtohandletheincreasedtraffic in Hamburg. vately owned institution which finances which, by 1970, is expected to have risen IFC COMMITMENTS * $291,911 supple- private industrial enterprises in Turkey. by more than a third for freight and a mental investment in share capital of The IDB came into being in 1950 and was fourth for passengers. The Bank loan will Banco del Desarrollo Econ6mico Espafiol one of the first development finance com- assist in financing items of highest priority S.A., a privately owned development fi- panies to be established with the assist- in this program-electrification and a mod- nance company. ance of the World Bank. Since then it has ern signalling system on three mainlines $225,444 supplemental investment in received financial assistance from all three and the construction of new marshalling sharecapitalofFabrica Espaniola Magnetos of the World Bank group of institutions: yards at Belgrade, Zagreb, Ljubljana and S.A., a producer of automotive equipment. $17.6 million from the Bank; $20 million Skoplje, and the improvement of existing from IDA, includingthisyear's credits; and yards at Nis and Doboj. The installations TURKEY $916,667 in share capital subscribed by will double the capacity ofthe lines serving ELECTRIC POWER the International Finance Corporation. the most heavily industrialized and popu- $24 million IDA credit of July 14, 1964. In its 14 years of operation the IDB has lated area of Yugoslavia and provide faster The credit will assist in financing a $43.5 financed a significant portion of private and safer service. The work should be million expansion program being carried industrial investment in Turkey. Bythe end completed by 1968 at a total cost of $185 out by the Cukurova Electric Company. of 1964 itsfinancial assistance totaled $80 million. The program will triple the Company's million: about $65 million in long-term The mainlines involved connect the six generating capacity, increasing the supply loans, $8.5 million in equity participations, largest cities-Belgrade, Zagreb, Sarajevo, of power to the Qukurova plain in southern and the balance in short-term credits. The Skoplje, Ljubljana and Rijeka, and the area Turkey and enabling the Company to ex- industries assisted included those produc- they serve encompasses about two-thirds tend its service area to adjacent Hatay ing food products, beverages, textiles, of the country's economy and half its Province. timber and wood products, rubber goods, population. In close proximity to the lines The projects included in the program chemicals, stone, earthenware, glass and are coal mines producing half the country's consist of the construction of a 50,000- ceramics, metal goods, machinery and total output, nearly all major steel works kilowatt steam plant near Mersin beside an mechanical materials. In addition to its and oil refineries, and leading producers of oil refinery which will supply its fuel, a financial operations, it has played an im- cement, fertilizer, lumber and agricultural 100,000-kilowatt hydroelectric plant on portant role in acquainting the industrial products. the Kadincik River some 30 miles from community with better techniques of in- The Yugoslav Investment Bank, the main Adana, and the construction of about 160 vestment planning and in raising the channel used by the Federal Government miles of transmission lines linking the new standards of business management. It has for foreign development loans, will relend stations to the existing system and extend- also helped to prepare the way for the the proceeds of the Bank loan to the ing it as far east as Iskenderun, Turkey's development of a capital market in Turkey agencies responsible for the execution of most important Mediterranean port. These and expects to devote more of its activities the project. installations will supplement the power to this task in the future. Participations totaling $575,000: by Girard from the Qukurova's existing 54,000-kilo- The Government of Turkey will relend Trust Bank, Bayerische Hypotheken- und watt Seyhan hydroelectric station near the proceeds of the credits to the IDB at Wechselbank, and The First Pennsylvania Adana which was built with the help of a 5Y/2% per annum and for periods deter- Banking and Trust Company. 79 ARGENTINA A mission organized by the Bank spent three months assisting the National Devel- opment Council in connection with a public investment program for 1965. Concurrent- ly, an economic mission appraised the po- sition and prospects of the economy and received the Government's 1965-69 devel- opment plan. IFC COMMITMENT - $2,500,000 in loan capi'al for La Papelera Argentina, S.A., a paper producer, to complete moderniza- tion and expansion program. BOLIVIA WESTERN HEMISPHERE ELECTRIC POWER $10 million IDA credit of July 24, 1964. $5 million IDA credit of July 24, 1964. These were the first operations by any of the World Bank group in Bolivia. They were made simultaneously with a loan of $3.5 million from the Inter-American Develop- '*v8A'- '! i ,| 1:'ment Bank (IDB) to assist in financing a $23.2 million electric power development sX(>, b;2t' ' 8 tii program which will increase the country's installed capacity by 38,000 kilowatts. In addition to relieving a critical power short- age, which has resulted in rationing in the principal cities, the program will provide Bolivia with a sound basis for power ex- f f # -l; F tm ; pansion in the future. The $10 million credit, together with the j r t r f } \ IDB credit, is being made available to the Empresa Nacional de Electricidad (ENDE), a company recently established by the Government to be responsible for Bolivia's power requirements, with the exception of those in the areas of the cities of La Paz ; P-t ; \ Xi .t*.and Oruro. The funds will be used by ENDE for the construction of a hydroelectric power plant on the Corani River with an initial capacity of 27,000 kilowatts. At first, ENDE's principal customers will be Cocha- bamba, the nation's second largest city, and mines in the Catavi area. Transmis- sion and distribution facilities will be built for this service, as well as an intercon- nection at Catavi between the system of ENDE and that of the Bolivian Power Com- pany Ltd. (BPC). ,-,------ '- = ! {! FBPC is now the largest power producer in Bolivia and serves La Paz, the capital, Oruro and the mines around Oruro. The IDA credit of $5 million is being made * 'l t,available to BPC for the construction of a hydroelectric plant at Chururaqui, with an initial capacity of 11,000 kilowatts. Trans- mission lines will be built to connect the plant with the La Paz system, and the distribution system in La Paz will be ex- tended. The Government is relending the proceeds of the credit to BPC for a period of 25 years, including a three-year grace period, with interest at 51/2% per annum. 80 f 4 E ii.@/ BRAZIL million kilowatts. USELPA now has two which was made in 1948. The earlier loans ELECTRIC POWER plants with a combined capacity of totaling $61 million have helped to finance The two loans described below were the 145,000 kilowatts in operation, which plantswithacombined generatingcapacity first the Bank has made in Brazil since were financed in part by two previous of 589,000 kilowatts. Most of Chile's power 1959. They were for projects that will add Bank loans totaling $23.4 million. This demand is concentrated in the central nearly a million kilowatts to generating year's loan will be used for the 400,000- part of the country, where additional major capacity in the south central region, the kilowatt Xavantes plant and transmission capacity will be needed by 1970 and plans industrial heart of Brazil. The Bank has lines to connect it with the Sao Paulo sys- are being made for the necessary expan- already lent $208 million for the develop- tem. Xavantes has been under construc- sion. Public supplyof power in the sparsely ment of electric power in this region where tion for several years and is scheduled populated regions to the north and south industry uses over 75% of the power pro- for completion early in 1969 at a total is confined to a few cities and towns which duced. The Brazilian Government, with the estimated cost of $69.5 million. are served by isolated systems, mostly assistance of consultants working under Participations totaling $200,000: by Grace without adequate generating capacity. The a United Nations Special Fund grant for National Bank of New York, and Meadow loan made this year was largely to increase which the World Bank is Executing Agency, Brook National Bank. supplies in these areas. has been making an intensive study of the OTHER ACTIVITIES In October 1964, the Participations totaling $405,000: by pwrmarket in the region for the past Bank sent a 20-man mission to review and Meadow Brook National Bank, The Chase two years. They estimate that demand will appraise current economic conditions and Mnhationa Bank, ofrNew York,t Band , ThGFrste continue to grow at the rate of 10 to 11% future prospects and to study the Govern- Petionns yania BNk Trus Com p an per annum. To meet the demand through ment's economic development program PenyviaBkngndTutCmn. 1970, a short-term emergency program and policies. The mission's report was sub- OTHER ACTIVITIES .A Bank mission con- has been prepared, calling for a doubling mitted to the Government in March 1965. sisting of a member of the Bank's Develop- of power output by that time. The projects The scope of the UN Special Fund survey ment Advisory Service and officials of the being assisted by this year's loans are of of power development for South Central Bank of England and the Nederlandsche high priority within that program. Brazil, for which the Bank is Executing Bank completed a study of measures to Agency, was extended to include the use of make the Chilean capital market a more $57 million 25-year 5'/2% Bank loan of coal for thermal power generation and an efficient instrument in mobilizing domestic February 26, 1965, to Central Eletrica de evaluation of hydroelectric power sites. savings for development. The Bank's con- Furnas, S.A. (FURNAS). tribution to the cost was $122,000. The FURNAS was established in 1957 and is CHILE report of the mission was submitted to the owned principally by Centrais Eletricas ELECTRIC POWER Government in January 1965. Brasileiras S.A., a Federal Government $4.4 million 20-year 5'/2% Bank loan of The Bank's resident mission in Santiago holding company. The loan will assist in February 12, 1965, toEmpresaNacional completed its assignment in September financing the construction of the $90 mil- de Electricidad, S.A. (ENDESA) and 1964. lion Estreito project which will continue Corporacion de Fomento de la A technical representative of the Bank the development of the hydroelectric Producci6n (CORFO). continued to act as liaison with Chilean potential of the Rio Grande. The power- This loan will help to increase power sup- authorities, assisting in the execution of a house will be designed to contain six plies in three widely separated areas of highway construction and maintenance generating units, of which four with a com- Chile where the Government is carrying project for which an IDA credit and a Bank bined capacity of 533,000 kilowatts will be out programs to raise production and loan were made in 1961. installed initially. The Estreito plant will standards of living. A 3,400-kilowatt hydro- IFC COMMITMENTS * $100,000 supple- be located 100 miles downstream from electric unit is being installed in Antofagas- mental investment in share capital of the Furnas 900,000-kilowatt plant which ta, an important port in the north, the Cementos Bio-Bio S.A. was built with the help of a $73 million capital of a province rich in mineral re- $153,846 supplemental investment in Bank loan made in 1958. It will benefit sources and the site of newly established share capitalof FideosyAlimentosCarozzi, from the regulation of the flow of water industries. A 5,000-kilowatt gas turbine is S.A., a food products manufacturer. provided by the large reservoir at Furnas. beinginstalled in Punta Arenas, the largest Concurrently with the construction of the town in the extreme south of Chile, where COLOMBIA Estreito project, additions will be made to the development of oil resources in recent A Bank staff member took up his duties in the transmission network between the years has increased the level of economic October 1964 as Resident Representative. Furnas and Estreito plants and the prin- activity. A submarine cable will be laid to A member of the Bank's Development cipal consuming centers. connect the power system of Chiloe, an Advisory Service completed an assignment Particlpation totaling $100,000: Stock- island off the coast of the south-central of helping the Cauca Valley Corporation holms Enskilda Bank is taking part of the region, with that of the mainland. Funds (CVC) organize its department for regional first maturity. are also included for the expansion of planning, particularly for industrial de- transmission and distribution facilities velopment; another member of the Service $22.5 million 25-year 51/2% Bank loan of throughout the country, and for services continued in residence as General Eco- February 26, 1965, to Usinas Eletricas do and equipmentneeded tocarryoutstudies nomic Adviser to CVC. Paranapanema (USELPA). looking toward the continuing expansion A Bank staff member was stationed in USELPA was organized in 1953 as an of power supplies in Chile. Bogota to assist in the planning and execu- autonomous power agency of the State of This was the first World Bank loan made tion of highway development programs in Sao Paulo to develop and operate the in support of the new investment and de- Colombia and Ecuador. hydroelectric power potential of the velopment program of the Chilean Govern- Paranapanema River, which along a ment. The loan itself is the fourth in a IFC COMMITMENT . $1,017,254 supple- course of 181 miles has a potential of a series of power loans to Chile, the first of mental investment in the form of a 81 $1 million line of credit to a food products make an important contribution to political MEXICO manufacturer, Industrias Alimenticias and administrative integration ofthecoun- TRANSPORTATION-ROADS Noel, S.A. (formerly Fabrica de Galletas y try's northern and southern regions $32 million 20-year 51/2% Bank loan of Confites Noel, S.A.), and 25,000 shares between which transport is slow and February 4, 1965, to Caminos y Puentes of the company with a value of $17,254, costly. It will also result in a sharp reduc- Federales de Ingresos y Servicios Conexos, received as a commitment fee. tion in transport costs. The total cost of and Nacional Financiera, S.A. the project is estimated at the equivalent For many years Mexico has been improv- COSTA RICA of $23.6 million. The Inter-American ing the quality of its highway network and A United Nations Special Fund study of Development Bank has also lent $9.5 mil- extending it to provide for safer, faster and ports, railways and associated highways, lion for this project. more convenient movement of freight and for which the Bank acted as Executing Participation totaling $90,000: by Bank passenger motor vehicles which now num- Agency, was completed. of America National Trust and Savings ber about a million. The country now has Association. about 30,000 miles of surfaced roads. DOMINICAN REPUBLIC Where traffic is especially heavy or the lack A Bank staff member who was resident JAMAICA of bridges and ferries act as a bottleneck, adviser on development problems, and an TRANSPORTATION-ROADS limited access toll roads and bridges are economist who joined him in October $5.5 million 25-year 51/2% Bank loan of being built. Earlier Bank loans totaling 1964, completed their assignments. April 8, 1965, to Jamaica. $95.5 million have assisted Mexico's high- The Bank has agreed to act as Executing This was the Bank's first loan to Jamaica. way program; the funds are being used for Agency for a United Nations Special Fund It will help to finance the improvement of the construction or improvement of about feasibility study looking toward the expan- three road sections which are part of the 5,000 miles of roads throughout the sion and diversification of agricultural pro- main thoroughfare from Kingston, the country and for the construction of new duction through development of the irri- capital, to the north and west of Jamaica. toll facilities. gation and power facilities of the Yaque The roads are among the most heavily This year's loan will assist the further del Norte and the Yaque del Sur river traveled in Jamaica and their improvement extension of the toll transport system in basins. will relieve congestion, speed up travel the central part of Mexico where the time, and sharply reduce transport costs. growth of urban areas has generated a ECUADOR A 15-mile, four-lane road will be built demand for fast intercity bus and truck The Bank's advisory assistance to Ecua- between Kingston and Spanish Town, the services and the increase in the number of dor's National Institute of Electrification third largest city. The second road will be vehicles has overloaded regular highways. in preparing the basis for a national elec- a two-lane road between Spanish Town The project includes the construction of trification plan was concluded. The Bank and Bog Walk, a distance of about 71/2 four new toll roads, totaling 88 miles, three contributed $220,000 toward the foreign miles, and the third road will extend about toll bridges, and additional lanes on an exchange costs. four miles from Moneague, north of Bog existing 130-mile road that is partly toll Walk, to Crescent Park. and partly free, the acquisition of account- HONDURAS Jamaica has a relatively extensive road ingequipmentand of miscellaneous equip- TRANSPORTATION-ROADS network, of which 924 miles are main ment for the operation of toll booths. The $6 million 25-year 51/2% Bank loan of roads connecting all the major towns and new toll facilities will relieve congestion February 2, 1965, to Honduras. importantagricultural and industrialareas. and provide faster service on sections of $3.5 million IDA credit of February 2, 1965. The standards to which the roads were the main routes leading from Mexico City The Bank loan and IDA credit will finance originally constructed, however, are be- northward to Guadalajara and eastward to- 40% of the cost of building a 202-mile, coming inadequate for today's type and ward Veracruz, the country's main port. A two-lane, all-weather road, called the volume of traffic. Between 1953 and 1963, further benefit will be that some of the North Road, which will link the capital, the number of motor vehicles increased roads will encourage new economic activi- Tegucigalpa, with San Pedro Sula, the from about 19,000 to 72,000, an annual ties to spread away from Mexico City, thus country's most important commercial increase of 15%, and substantial traffic reducing urban congestion and the costs center. The North Road has been given growth can be expected in the future.The of supplying public services and facilities highest priority in the national and the roadsbeingimprovedwith Bankassistance to the city's rapidly growing population. Central American Regional Highway in- were given priority in a survey recently The project is scheduled for completion in vestment programs. It will be part of the undertaken of Jamaica's highway system. four years at a total estimated cost of $78 transcontinental route running across the The project is scheduled for completion in million. Central American Isthmus from Puerto 1970 at a total estimated cost of $11 Participations totaling $2,533,000: by Cortes on the Atlantic Ocean to the Inter- million. Girard Trust Bank, State Street Bank and American Highway at the Golfo de Fonseca Participations totaling $282.000: by the Trust Company, Compagnie de Gestion et on the Pacific. The links in the north from New York Branch of Barclays Bank, D.C.O., de Banque, S.A., The Northern Trust Com- San Pedro Sula to Puerto Cortes, and in and the New York Agency of The Bank of pany, National Bank of Commerce of Seat- the south from Tegucigalpa to the Inter- Nova Scotia. tle, The National Shawmut Bank of Boston, American Highway were built or improved The American Express Company, Inc., Wa- with the assistance of an earlier World OTHER ACTIVITIES .The Bank has agreed chovia Bank and Trust Company, Bank of Bank loan. to allocate $200,000 to help meet the America National Trust and Savings As- In addition to benefiting international foreign exchange costs of a feasibility sociation, Meadow Brook National Bank, travel, the North Road will traverse the study of an urban expressway in the Kings- Banco de Ponce, Fidelity-Philadelphia most heavily populated part of Honduras ton area. Trust Company, Grace National Bank of and a zone in which most of the country's In January 1965, a Bank staff member New York, Banque Lambert, S.C.S., Crock- industry is located, as well as about a was assigned as Project Preparation Ad- er-Citizens National Bank, and The First quarter of the farmland. The road will viser to the Government. Pennsylvania BankingandTrustCompany. 82 IFC COMMITMENT - $6,446,250 in Com- PERU The loan will assist the third stage of the pafnia Fundidora de Fierro y Acero de Mon- AGRICULTURE-FARM CREDIT San Lorenzo project for the irrigation and terrey, S.A., to assist in financing an ex- $15 million 15-year 5'/2% Bank loan of settlement of once arid land on the coast pansion of steel production. $6,100,000 June 3, 1965, to the Banco de Fomento of northern Peru-an area which may even- in the form of an underwriting commit- Agropecuario del PerO. tually involve about 125,000 acres. The ment in connection with a new issue of TheBancoisthemajorsourceofagricultur- project brings together irrigation, farm shares by the company; $346,250 in the al credit in Peru and has been an impor- credit and a wide range of technical serv- form of share capital resulting from IFC's tantfactorin the increasingoutputof crops ices for the purpose of increasing the out- exercise of rights as a shareholder of the for both domestic and foreign markets in put of food and cash crops, both for do- company to subscribe to the new share recent years. Three earlier Bank loans to- mestic consumption and export. Besides issue. taling $15 million have assisted the Ban- raising farm income and improving stand- NICARAGUA co's lending program and this year's loan ards of living in its own area, the San NICARAGUA BnhsaedtatsEetg will provide halfthefunds required through Lorenzo project is serving as a model for The Bank has agreed to act as Executing March 1967 for the Banco's medium and similar developments in other parts of Agency for a United Nations Special Fund logtrlan.Ainheps,heBk Pru highway and port survey of the Southern long-term loans. As in the past, the Bank Peru. funds will be used for such defined de- In the first stage the Government built Atlantic Coast. velopment purposes as farm water sup- works to supplement water from the Piura PANAMA plies, land improvement, agricultural ma- River for irrigation. The second stage, The assignment of a Bank resident ad- chinery, livestock, fencing, tree and planta- which was assisted by an $18 million Bank viser on budgetary and planning problems tion crops, processing and storage facilities loan, consisted of enlarging these works was completed in June 1965. and farm buildings, for the irrigation, development and settle- Continuation of farm credit from the ment of the San Lorenzo area. Since then PARAGUAY Banco is essential tothe implementation of about 35,600 acres have been developed TRANSPORTATION-ROADS the Government's agricultural policies for and settled. $2.2 million 25-year 51/2% Bank loan of meefing the economic needs of the coun- The third stage consists of the develop- December 16, 1964, to Paraguay. try. Per capita food consumption is rising ment and settlement during 1965-67 of In 1961 IDA extended a creditof $6 million with more and better food supplies and some 44,000 acres and the further im- to Paraguay for the improvement of 190 improved wage levels. While agricultural provement of lands already settled. Funds miles of the highway linking Asunci6n, the products comprise about a third of total from the loan will be made available for capital, to Encarnacion, the second largest exports, Peru is still importing substantial medium and long-term credits to farmers city, and for the improvement of mainte- quantities of such foodstuffsasdairyprod- for on-farm investments which include nance on the primary road network Since ucts, cereals, meat and fruit. All these land development, housing, machinery, thneon the estimated cost ofetheoroad hSic could be produced locally in much greater breeding livestock and tree crops. In ad- then the estimated cost of the road has quantities with extension of cultivation to dition, the loan will finance the foreign ex- new lands and an increase in agricultural change costs ot heavy mechanical equip- $10.5 million. The Bank loan will provide productivity. The capital investment re- ment for the operation and maintenance the additional foreign exchange needed for quired for further agricultural develop- of irrigation facilities and service roads and Among the factors contributing to the ment considerably exceeds the farmers' for the leveling and ditching of land; a incram costwe factorsucontriingtelods t own financial resources and cannot be comprehensive drainage and salinity sur- increased cost were unprecedented floods carried on without agricultural credit. The vey of the entire project area; improve- that necessitated a redesign of major por- Banco provides this credit and also com- ment of experiment stations; a training tions of the road, calling for higher em- prehensive technical services in the course program for the maintenance of equip- bankment, enlarged drainage and bridge of its operations. Since Bank assistance ment; a study of marketing problems; and works, and other preventive measures, began in 1954, the Banco has made over services and equipmentfor vocational and Furthermore, tratfic had increased at a 14,400 medium and long-term loans to artisan schools. Bank funds will also be much faster rate than had been predicted some 6,000 farmers. It is estimated that used for a study looking toward steps for so that the road has to be built to higher the gross value of increased production on the further developmnent of water and re- standards throughout. The unexpectedly farms which had received creditamounted lated resources in the northwestern re- rapid growth of traffic gives premise, how- to $44 million in 1963. The three-year pro- gion of Peru. The total cost of the project ever, that savings to read users will be even gram being assisted by this loan will re- is estimated to be $29.8 million. greater than had been previously forecast, quire the equivalent of $30.4 million. Participations totaling $825,000: by First despite the increased costs. Participations totaling $750,000: by National City Bank, Irving Trust Company, The Asunci6n-Encarnaci6n highway Meadow Brook National Bank, Fidelity- Meadow Brook National Bank, The Citi- formspartofatrianglewhichencompasses Philadelphia Trust Company, First Wiscon- zens & Southern National Bank, The Ma- the most densely populated and potenia - sin National Bank of Milwaukee, National rine Trust Company of Western New York, development has been given top priority Bank of Detroit, The Philadelphia National Crocker-Citizens National Bank, and Grace byethelGoveent has ndeen surven top prity Bank, The First Pennsylvania Banking and National Bank of New York. by the Government and a survey is being Trust Company, First Western Bank and conducted by the United Nations Special Trust Company, Grace National Bank of Fund, with the World Bank as Executing York, and The Northern Trust OTHER ACTIVITIES .The Bank's Resident Agency, to determine a network of feeder CNeayr a Representative completed his assignment roads to open up the hinterland and thus ompany, in May 1965. increase the benefit of the trunk roads AGRICULTURE-LAND DEVELOPMENT The Bank has agreed to help finance forming part of the triangle. AND SETTLEMENT feasibility studies for three road construc- Participation totaling $60,000: by Bank of $11 million 20-year 51/2% Bank loan of tion projects at a total estimated cost to London and South America Limited. June 18, 1965, to Peru. the Bank of $300,000. 83 A consultant engaged by the Bank car- guay will have the required experience to This loan will assist in financing two roads, ried out a preliminary survey of the capital continue the development of their own both of which form part of the trunk high- market. His report was submitted to the properties and to extend advice to way link between central Venezuela and Government in October 1964. neighbors. the southwestern provinces, and two ex- A 19-man mission organized bythe Bank Participations totaling $100,000: by The pressways in the Caracas area. One of the to review the Government's economic de- First Pennsylvania BankingandTrustCom- highways will extend 128 miles from Bari- velopment program and policies complet- pany, and The Marine Midland Trust Com- nas to La Pedrera and will open up to de- ed its field work and is now preparing its pany of New York. velopment a large area with a rich agricul- report. tural and forest potential now accessible SURINAM VENEZUELA only by trails. The other highway will run ELECTRIC POWER 65 miles from La Pedrera to San Crist6bal, A transport study financed by the United $14 million 20-year 51/2% BanA loan of the marketingand communications center Nations Special Fund and for which the August 28, 1964, to Compaiia Anonima for southwestern Venezuela; it will also Bank is Executing Agency was begun in de Administracibn y Fomento connect with the road which serves the December 1964. El6ctrico (CADAFE). State of Apure, the most important cattle The UN Special Fund has authorized a CADAFE, a wholly owned subsidiary of the producing region in Venezuela. The ex- supplementaryallocation of $77,000 to ex- national development authority, Corpora- pressways will relieve the severe traffic tend the mineral survey for which the Bank ci6n Venezolana de Fomento (CVF), was congestion in Caracas. The focal point of is Executing Agency. The total allocation established in 1958 to extend power facili- the network of the city and suburban ex- for the survey is now $827,000 and the ties to Venezuela's smaller cities and rural pressways in the Caracas area is a four- completion date has been extended to areas and to manage the separate power level interchange called "La Araha" (the June 30, 1966. systems acquired by CVF. It now has 14 Spider), on the western fringe of downtown URUGUAY regional administrations serving some 500 Caracas. The expressways being financed AGRICULTURE-LIVESTOCK PRODUCTION communities and rural areas. are two of the four which will converge at $12.7 million 15-year 51/2% Bank loan of Demand for power in Venezuela is ex- La Araria. One will be a six-lane divided March 30, 1965, to Uruguay. pected to grow at an annual rate of 14% highway, 2.4 miles long, and the other will Uruguay's chief natural resource is its ex- over the next five years, and CADAFE is be a four-lane divided highway 2.7 miles tensive area of native grassland which is currently engaged in a program to extend long. Construction of the four roads is used for the production of sheep and cat- and increase its service. The Bank loan will scheduled for completion in 3/2 years at a tle. Wool, meat, milk and by-products pro- assist in financing an extension of its trans- total estimated cost of $65 million. vide most of the country's export earnings. mission facilities. A high-voltage trans- The road system in Venezuela is by far Because of the importance of livestock to mission line, about 370 miles long, will be the most important means of transport. the Uruguayan economy, the Bank made erected to connect the Macagua power Since 1947 the public network has been a loan of $7 million in 1959 for a pilot proj- station on the Caroni River with a substa- more than tripled in length and now com- ect to increase production by demonstrat- tion near Caracas, several substations will prises about 17,500 miles, of which more ing the advantages of modern techniques be installed, and existing transmission fa- than 7,000 miles are paved. The roads be- of pasture improvementand management. cilities reinforced and interconnected. The ing built with the assistance of the Bank The three to fourfold increase in livestock project will enable CADAFE to realize sub- loan are of high priority in the Govern- production from the improved grasslands stantial economies by concentrating its ment's continuing road development pro- over that of native pastures has attracted generating activities upon its larger and gram which calls for an investment of the attention of farmers everywhere in the more efficient units, by pooling reserve nearly $600 million in 1965-68. country. About 1,400 farmers participated capacity, and advancing the retirement of Participations totaling $2,105,000: by in the program and improved 360,000 high-cost diesel units in areas to be served Girard Trust Bank, Continental Illinois Na- acres of pasture land. In addition, farmers by the interconnected systems. The esti- tional Bank and Trust Company of Chi- who cooperated with the program but ar- mated cost of the project is $19 million. cago, Bank of London and South America ranged their own financing, improved an Participations totaling $1,425,000: by the Ltd., The National Shawmut Bank of Bos- additional 170,000 acres. New York Agency of the Bank of London ton, The Chase Manhattan Bank, Manu- This year's loan will assist in financing and South America Ltd., Girard Trust facturers Hanover Trust Company, Mea- the second stage of the program which will Bank, Meadow Brook National Bank, The dow Brook National Bank, The Bank of require a total investment of $35 million American Express Company Inc., The New York, First National City Bank, Irving over a four-year period. In this stage, indi- Chase Manhattan Bank, the New York Trust Company, The Marine Midland Trust vidually supervised livestock development Agency of the Royal Bank of Canada, The Company of New York, Morgan Guaranty loans will provide 650,000 acres of im- Royal Bank of Canada Trust Company, Trust Company of New York, Fidelity-Phil- proved pastures on 2,600 medium-sized Continential Bank International, Bank of adelphia Trust Company, The First Na- farms. In addition, about 1,000 operators America National Trust and Savings Asso- tional Bank of Memphis, Bank of America of larger farms are expected to participate ciation, Fidelity-Philadelphia Trust Com- National Trust and Savings Association, on a cash basis to improve about 310,000 pany, Irving Trust Company, Manufac- The Bank of California National Associa- acres. As there are 37 million acres of na- turers Hanover Trust Company, The First tion, The First Pennsylvania Banking and tive grassland capable of similar improve- Pennsylvania Bankingand Trust Company, Trust Company, Crocker-Citizens National ment, the program points the way to pro- Crocker-Citizens National Bank, The Ma- Bank, and Grace National Bank of New found economic and social consequences rine Midland Trust Company of New York, New York. for the nation as a whole. The program is and Grace National Bank of New York. designed to improve only part of a large OTHER ACTIVITIES. In March 1965 the number of farms and not the total area of TRANSPORTATION-ROADS Bank organized a mission to review the a few, so in three years' time about a $30 million 20-year 51/2% Bank loan of country's 1965-68 Development Program. quarter of the grassland farmers of Uru- August28, 1964, to Venezuela. The mission has completed its field work. 84 WORLD BANK AND IDA HEADQUARTERS 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. Telephone: EXecutive 3-6360 NEW YORK OFFICE 20 Exchange Place New York, N.Y. 10005, U.S.A. Telephone: WHitehall 3-5400 EUROPEAN OFFICE 4 Ave. d'l6na Paris 16e, France Telephone: KLEber 25-10 LONDON OFFICE New Zealand House Haymarket London S. W. 1, England Telephone: WHitehall 3886-7 Cable Addresses World Bank: INTBAFRAD IDA: INDEVAS