'Integrated plan of action' outlined at World Bank meeting in Seoul.

"Integrated plan of action' outlined at World Bank meeting in Seoul

An "integrated plan of action' to alleviate the global debt crisis was outlined by World Bank President A.W. Clausen at the close of the annual meetings of the Boards of Governors of the Bank and the International Monetary Fund in Seoul, Republic of Korea (8-11 October).

Mr. Clausen said the "four partners' of the plan--who he identified as the Governments of indebted and industrial countries, multilateral lending institutions and commercial banks--must agree on a strategy to "solve the [debt] problems and then act in close collaboration to implement it'.

According to Mr. Clausen, the Governments of indebted countries must implement adjustment programmes and after fiscal balance is restored, must ensure that structural changes are made so that they can resume accelerated growth and restore credit-worthiness. The multilateral development banks must strengthen their support for second-phase programmes of adjustment. World Bank Governors from the industrial countries, he said, had strongly endorsed the need for such an integrated approach.

Mr. Clausen said that the "four partners' must collaborate to help deal with the difficulties of the poorest developing countries--especially those faced by the countries in sub-Saharan Africa--in their struggle to lay the foundations of growth and alleviate their poverty.

The world was standing on the threshold of an economic transition from recovery to sustained growth over the next five years, Mr. Clausen said. "Our task in the years ahead is not merely to resume growth, not merely to assure that this growth is on a sound, sustainable basis, important though that is,' he said. Growth must be accompanied by programmes to alleviate poverty. Investment in productive facilities and infrastructure must be accompanied by investment in education and social services.

Annual Reports

According to the 1985 report of the World Bank, economic stagnation in many developing countries and uncertainty in financial markets affected the Bank's operations in the fiscal year ending 30 June 1985. Lending commitments by the International Bank for Reconstruction and Development (IBRD) declined compared to fiscal year 1984, as did total credits approved by the International Development Association in fiscal year 1985. IBRD disbursements, net income and net borrowings all set new records.

"By the dismal standards of the early 1980s', the report stated, "1984 was a good year for developing countries, whose output increased by 3.8 per cent'. At the same time, regional performance varied greatly. African countries suffered continued declines in gross domestic product, Latin American countries managed some increase after declines in 1982 and 1983, and Asian countries enjoyed continued growth.

Protectionism and the threat of more trade restrictions were "a major concern' to developing countries, "as many continued to carry the burden of high interest rates and the added burden of adjustment,' the report stated.

World Bank Executive Directors focussed attention on actions to reverse the economic decline of sub-Saharan Africa. A Special Facility to support programmes for sub-Saharan Africa began operation on 1 July 1985, having mobilized more than $1.1 billion in additional resources to be committed over a three-year period.

An affiliate of the World Bank, the International Finance Corporation (IFC) noted in its 1985 annual report that during the fiscal year ending 30 June 1985, net investments for private business ventures in developing countries increased by 55 per cent over the previous year, reaching an all-time high of $610 million.

Sir William Ryrie, IFC Executive Vice-President, said "I think this is ample evidence that even though many developing countries are facing difficult economic conditions, there are good investment opportunities there.'

The IFC, the world's leading multilateral agency financing private sector business in developing countries, syndicated an additional $327 million of loans into the international capital markets, so that its investments for the year totalled $937 million, up from $696 million the previous year. Investments were approved for 75 business ventures in 38 developing countries. IFC estimated the total capital costs of these ventures to be about $2.8 billion.