143. Current Economic Developments1
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DEPUTIES AGREE ON IDA REPLENISHMENT
The Deputies of the Part I member countries have reached agreement on the two major issues that have been delaying the second IDA replenishment for the past year. The amount of the replenishment was set at $1,200 million over a three-year period. The US is essentially getting what it wants, including balance-of-payments safeguards. Formal approval of the plan is expected in March.
[Page 428]Background
IDA, the affiliate of the IBRD which operates the so-called soft loan window, has been able to make no new commitments because of the inability of the Part I countries to agree on the second IDA replenishment. (The Part I countries are the 18 members that have contributed the bulk of usable resources available to IDA.) Last month, IBRD President Woods announced that he had made a new proposal for the replenishment of IDA’s resources which took into consideration the views of the contributing countries and on the basis of which he expected that an early agreement could be reached.2 He proposed that the amount of replenishment be set at $1,200 million, payable in three yearly installments of $400 million each. The first payment would be made in the fiscal year ending June 30, 1969. The funds provided would be for commitment during the period up to June 30, 1970.
President Woods’ proposal envisaged the continuation of IDA’s present policy of requiring full international competition for procurement of goods and services financed by IDA. In view of the present balance-of-payments difficulties of the US, provision was included that, for the three years ending June 30, 1971, IDA would call for payment only of that portion of the US contribution needed to finance procurement within the US.
Replenishment Plan
At a meeting in Washington February 19–21, the Deputies of the Part I donor countries agreed, despite France’s intransigence, on: a) a $400 million annual replenishment level for three years, and b) a deferment for at least three years for 100 percent of the US contribution not used for procurement in the US. (See page 11, November 21, 1967 issue.)3
The French insisted on cutting their allotted share to match a planned cutback in the US percent. This action, plus other minor shortfalls, thus far yields total commitments for the three years of slightly under $1,200 million, although IBRD President Woods expects to achieve the target fully by mid-March when the replenishment is to be formally approved. France, Austria, and Australia refused to permit accelerated drawings on their pledges as have the other Part I countries to accommodate the US deferment. Australia’s reason was balance of payments, Austria’s budgetary, and France’s political.
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- Source: Washington National Records Center, RG 59, E/CBA/REP Files: FRC 72 A 6248, Current Economic Developments. Limited Official Use. The source text comprises p. 3 of the issue.↩
- Woods’ proposal, announced on January 18, is summarized ibid., Issue No. 798, January 30, p. 19.↩
- This article, “No Decision Yet on IDA Replenishment,” ibid., Issue No. 793, November 21, 1967, pp. 11–13, mainly summarized a meeting of the Deputies at The Hague November 6–7.↩