World Bank

Coming to the World Bank, it is well-known that the establishment of that institution was more or less an afterthought. The British who were the brain behind Bretton Woods were mainly interested in the Fund and the Bank was added on more as a temptation held out to the Soviet Union and other East European countries to join the interest of reconstruction of their war-ravaged economies. There was hardly any thought given at that time to what might be entailed in a process of development for two thirds of mankind.

The developing world was the colonial world at the time and had little say in drawing up the Charter of the World Bank. And yet even today after 25 years when the vast majority of the Membership of the Bank consists of countries which were never represented at the Bretton Woods, vital and important issues are decided in the Bank Board by a reference to some ill-considered provisions in the Bank Charter. Thus we are told as if it is part of some Holy Writ that only project financing is proper and that non-project financing is to be undertaken only in exceptional circumstances. What is even worse, international tendering even extending to civil works and construction jobs in building roads or dams or irrigation canals is considered the corner stone of the Bank philosophy. The absurd length to which this doctrine is carried was illustrated recently when I believe in the case of one Commonwealth country even the construction of primary school building had to be submitted for international tendering.

Sir, I feel rather strongly on this because there is a danger that our multilateral institutions will become the instrument for the pursuit of the commercial and political interests of their richer Members.

There is now a growing feeling that aid from multilateral agencies is better than bilateral aid, but if multilateralisation of aid results only in the pursuit of the same bilateral policies by the richer countries with the added authority of an international institution, I am not sure that we could have succeeded in doing anything more than replacing King Log by King Stork.

We are grateful once again to Canada and the U. K. for making advance contributions to IDA to make up for the delay in the US contribution. But the fact that the third replenishment has faced the same difficulties as the second one lead to the conclusion that something needs to be done to remove the present uncertainty and put the funding of IDA on a firmer and continuing basis. That is why we favour the link between SDRs and development finance. Some scheme should be devised to lower the rates of interest on bank loans. UNCTAD III then would be in vain if it cannot settle some of these issues, including some definite code of conduct on the level and terms of bilateral aid and some definite norms for genuine debt relief by bringing the terms of all past loans on par with the norms now accepted or with the present practice if it happens to be better.