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countries whose ability to make effective use of capital exceeds their capacity to service loans extended on conventional terms. Repayment terms on carefully selected and prepared IDA development projects are therefore such as to impose less burden on the balance of payments of borrowing countries than conventional loans.

In the current 6-month period, five additional countries joined the Association, new credits totaling $128 million were authorized, and discussions continued on the proposal to increase the resources of the Association.

MEMBERSHIP, SUBSCRIPTIONS, AND RESOURCES

In the current 6-month period, five new members joined the IDA with subscriptions totaling $21.3 million: Brazil ($18.83 million), Ivory Coast ($1.01 million), Nepal ($0.5 million), Niger ($0.5 million), Upper Volta ($0.5 million). All of the new members are in the Part II membership group. Subscription payments by this group are made on the same installment basis as that required of Part I members, but only 10 percent is payable in convertible currencies, with the balance in the member's own currency. (The subscriptions of Part I countries are payable entirely in convertible currencies; all of these funds are usable by the IDA for development credits.) As of June 30, 1963, the IDA comprised 76 members-16 Part I members and 60 Part II members with total subscriptions equivalent to $968.8 million. (See table 11.) 29

For the second consecutive year,30 Sweden made a supplementary contribution to IDA resources; this year's contribution was in the Swedish kronor equivalent of $4,263,000. These funds are convertible and usable by the IDA for development credits without restriction. The two contributions by Sweden represent an increase of 100 percent in its initial subscription, thereby increasing Sweden's total contribution to the equivalent of $20.18 million.

IDA DEVELOPMENT CREDITS

As indicated in table 12,31 the IDA in the first half of 1963 authorized six credits totaling $128 million to assist in financing constructive projects in Ethiopia, India, Pakistan, and Turkey. This compares with credits of $132 million in the preceding 6-month period. Two credits to India totaling $87.5 million will assist in financing imports of materials and equipment needed during 1963 for the continuing expansion and modernization of the Indian Railways ($67.5 million) and in expanding electric power supplies in the State of Andhra Pradesh ($20 million). The IDA authorized two credits to Turkeyone for $20 million to finance the first stage of the Seyhan irrigation project, and one for $1.7 million to increase the supply of electric power on the Adana plain. The two remaining development credits consisted of a credit in the equivalent of $13.5 million to finance a

*Not reprinted here. See instead table B-1, appended to doc. II-69, ante. "See American Foreign Policy: Current Documents, 1962, p. 237. "Not reprinted here.

continuing program of road development in Ethiopia, and a credit in the equivalent of $5 million for a flood control project involving about 400,000 acres in East Pakistan.

In fiscal year 1963, the IDA approved 17 credits in the equivalent of $260 million to assist in financing development projects in 9 countries: El Salvador, Ethiopia, Haiti, India, Korea, Nicaragua, Pakistan, Tunisia, and Turkey. The greater part of this amount ($200 million) was authorized for transportation, electric power, and telecommunications projects.

Through the end of the period under review, the IDA approved 39 credits in the equivalent of $495 million in 18 member countries. (See table 13.) 32 The bulk of these funds were channeled into productive projects in 10 countries in Asia and Africa. A total of $289 million (58 percent) was approved for transportation and communication purposes, $127 million (26 percent) for irrigation, flood control and water supply projects, $58 million (12 percent) for power projects, $5 million for school construction in Tunisia, and $17 million for development of private industry in China, Pakistan, and Turkey.

PROPOSED INCREASE IN IDA RESOURCES

As indicated in the preceding Semiannual Report of the Council, the IDA Board of Governors, at its Annual Meeting in September 1962, requested the Executive Directors to consider the prospective financial requirements of the Association.33

The discussions begun shortly thereafter were continued during the period under review, and included bilateral conversations and negotiations on the broad outlines of a feasible proposal.

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

II-72

OPERATIONS OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION DURING THE PERIOD JULY 1-DECEMBER 31, 1963: Report of the National Advisory Council on International Monetary and Financial Problems, Submitted June 23, 1964 (Excerpt)34

THIRD ANNUAL MEETING

The Board of Governors of the International Development Association held its Third Annual Meeting in conjunction with the Annual

32 Not reprinted here; but see table 11 in doc. II-72, infra.

See American Foreign Policy: Current Documents, 1962, p. 238. 34H. Doc. 200, 88th Cong., pp. 18-21. Part V of the NAC report.

Meetings of the International Monetary Fund, the International Bank, and the International Finance Corporation.

In his address to the Board of Governors, the President of the Association, George D. Woods, emphasized the importance of the proposed increase of $750 million in the freely usable resources of the IDA, over a 3-year period, in permitting the continuation of the Association's development assistance activities. Since the demand for IDA funds is expected to exceed the supply, Mr. Woods suggested that the policies of the Association should be kept under continuous review. The U.S. Alternate Governor of the IDA, George W. Ball, commented favorably on the proposed increase in resources and noted the IDA's vital role as an instrument through which economically advanced countries can make resources available to finance development on terms which will not unduly burden the repayment capacity of borrowing countries.

The Board of Governors adopted a resolution urging the member governments to give prompt consideration to the report of the Executive Directors recommending the provision of additional resources to the IDA.

The Board of Governors also reviewed the financial statements and audit report for the fiscal year ended June 30, 1963, and the administrative budget for the fiscal year ending June 30, 1964, and approved the terms and conditions of membership for Belgium, Jamaica, Kenya, and Luxembourg.

MEMBERSHIP AND SUBSCRIPTIONS

In the 6-month period under review, fourteen countries became members of the IDA-Algeria, Burundi, Central African Republic, Chad, Congo (Brazzaville), Congo (Léopoldville), Dahomey, Gabon, Laos, Malagasy Republic, Mali, Mauritania, Rwanda, and Ugandawith total subscriptions of $15.6 million. All of the new members are in the Part II membership group which consists of the IDA's developing member countries. These countries pay 10 percent of their total subscription in gold or freely convertible currencies and the balance in their own currency. The Part I countries, i.e., the economically advanced members which would be the contributors of the proposed new resources described below, pay their initial subscriptions entirely in gold or convertible currencies. Subscriptions are payable in five equal annual installments. The United States paid its fourth installment of $61,655,825 on November 8, 1963. As of December 31, 1963, the membership of the IDA comprised 90 members-16 Part I members and 74 Part II members-with total subscriptions of $984.4 million (see appendix table B-1).35

IDA DEVELOPMENT CREDITS

Credits authorized by the IDA in the second half of 1963 totaled the equivalent of $82.2 million, compared with the $128 million of credits approved in the preceding half-year. Of the total, $59 million (over 70 percent) was made available in 3 credits to assist in

25 Annexed to doc. II-69, ante.

financing water supply, sewerage, and irrigation projects in East Pakistan. Other credits included $8.5 million for highway improvement in Syria; $6.5 million to improve water supplies and increase agricultural production in Jordan; $4.6 million to assist the Government of Tanganyika to improve its secondary school system; and $3.6 million to help finance a program to improve and increase cattle production in Paraguay (see table 10).36 The total cost of these projects is estimated at the equivalent of approximately $150 million. Through December 31, 1963, as shown in table 11, a total of $577 million in development credits was approved, with the major portion TABLE 11.—IDA development credit commitments and disbursements, by area and country, through Dec. 31, 1963 [Expressed in millions of U.S. dollars]

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All credits so far extended have been made to member Governments or to the government of a territory of a member. Each credit is repayable in foreign exchange over 50 years, without interest, with amortization to begin after a 10-year grace period. A service charge of 34 of 1 percent per annum on amounts withdrawn and outstanding is intended to meet IDA's administrative costs.

2 Less than $50,000.

NOTE.-Detail will not necessarily add to totals due to rounding.

Source: International Development Association.

6 Not reprinted here.

($438 million) scheduled for 6 countries in Asia. Disbursements increased to $130 million. In terms of purpose, $256 million (44) percent) was approved for transportation projects, $133 million (23 percent) for agriculture and forestry, $63 million (11 percent) for water supply facilities, $58 million (10 percent) for electric power, with the balance channeled into communications, industry, and education.

PROPOSED ADDITIONAL RESOURCES

As indicated earlier,37 the Governors in September 1962 requested the Executive Directors to consider the prospective financial requirements of the IDA and to report thereon. In September 1963, the Executive Directors submitted a report to the Board of Governors which recommended an increase in the equivalent of $750 million in the freely usable resources of the IDA in order to permit the Association to continue to assist in promoting economic development in member countries which for balance-of-payments reasons are unable to borrow sufficient funds abroad on conventional terms. Subject to legislative or other necessary approval, the additional funds would be provided in three equal, annual installments of $250 million each, by 15 Part I economically advanced member countries together with Belgium and Luxembourg which have recently applied for membership. The first installment of the new resources would not be due until November 1965. The governments and the respective contributions are as follows:

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Except in the case of Belgium and Luxembourg, the new funds would be treated as additional contributions rather than subscrip*See American Foreign Policy: Current Documents, 1962, p. 238.

23 Membership of Belgium and Luxembourg was approved by a vote of the Governors completed on March 1, 1964, and these countries will become members upon completion of certain formalities. [Footnote in source text.]

"The Government of Kuwait subsequently decided to participate in the replenishment of IDA resources, with a contribution of $3.36 million, bringing the total to $753.36 million. [Footnote in source text.]

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