The World Bank go-go MONEY
NICHOLAS DAVENPORT
The annual meetings of the International Monetary Fund and the World Bank, which are being held in Washington this week, promised to be the most exciting in years. Usually they hang heavily in boredom, but this year the 1MF has to join in the battle for gold while. the World Bank has to deal with its new president, Mr Robert McNamara, the ex:Secretary -of Defence of the United States. Mr McNamara brings to the World Bank what the -`gg-go' managers brought to the unit trust movement— a quicker pace of dealing. He is -determined to bring in the funds much more quickly and to push them out much more .quickly to the developing and poorer nations. His first public speech—delivered on Tuesday—was a remark-
able tour de force. _
The new president found, on taking up office six months ago, a pretty bad state of morale. The rich nations were disenchanted with the performance, both political and e-conomic, of the developing nations, as well they might be. Although the goal of the so-called Development Decade—an annual rise in national incomes of the poorer countries of 5 per cent by 1970 —may yet be realised, the average increase in Africa and South Asia is at most 3f per cent and, casting its shadow over the whole scene, is 'the mushrooming cloud of the population explosion.' The annual growth of income per capita in Latin America is less than 2 per cent, in Africa only 1 per cent and in South Asia only f per cent. A doubling of per capita income in Latin America would take more than forty years, in Africa nearly seventy years and in South Asia nearly a century and a half.
Mr McNamara rightly came to the conclusion that the world must not tolerate such a snail's pace of development in its poorer half, even if the present Pope continues to forbid the pill in the Catholic countries. He quoted the wise Pope Paul's dictum 'Development is Peace.' Certainly, non-development is unrest and dis- content. The peasant, locked in his immemorial poverty, may be quiescent by nature but his political leaders will be stirring up hatred of the rich nations and the communist powers will be exploiting the growing unrest to their own political advantage. During the Development Decade so far, Mr McNamara observes, the richer countries of the world have added to their annual real- incomes a sum of about $400,000 million, which is far greater than the total annual incomes of the underdeveloped countries of Asia, Africa and Latin America. This sort of statistic will not be used by the communist movement as an advertisement for capitalism.
The population explosion in the poorer countries is, of course, caused as much by the drop in the death rate as by the rise in the birth rate but it is good to note that the World Bank is prepared to finance the facilities which member countries may require for the carrying out of family planning programmes and will join with the United Nations and other agencies In programmes of research to determine the most effective methods of family planning and of administering schemes of population con- trol. .
The richer countries, as the income figures reveal, have the resources for much greater aid, but for the moment the will is lacking. It is - great to hear. Mr McNamara say that under his presidency the World Bank will not share in the general paralysis which is afflicting aid efforts in so- many parts of the world. Ile is determined that. the World Bank group (which Includes the International Development Asso- ciation for soft loans and the International Finance- Corporation for private enterprise loans) will lend during the next five years twice as much as during the past five years. Last year the Bank had to climb down to $847 million and the los, which ran out of funds, to $106 million, but if the new president is -as good as his word the World Bank group will lend during the next fide ;Years tirice, as much as during the last five years and nearly as much as it lent since it began its operations: twenty-two years ago.
_b_Other words Mr McNamara is going to create a revolution. And he will do it, he says, by going to the capital markets of the rich countries and raising the money through bond issues. He -has already gone to the oil-rich Middle East and raised money there as well as in the more conventional markets of the us. and Germany. In the past ninety days the World Bank has raised more funds by borrow- ing ,fhah.in the whole of any calendar year in_ its history. This may not be as remarkable as it sounds, for Mr McNamara has been paying the market rate of interest and almost all the money raised returns quickly to the rich countries in payment for goods supplied. But it does demonstrate that in Mr McNamara the World Bank has got a dynamic go-go manager.
The new president also claims that he can ' boost the lending of the World Bank without lowering its quality, that the loans will be for projects as soundly based and as carefully evaluated as ever before. This I can well believe. The demand is enormous, especially in countries of Latin America and Africa where the Bank expects to double and treble respectively its rate of investment over the next five years. Mr McNamara mentions Indonesia in particular, a country where the Bank has never made a loan of any sort before. It is the sixth largest nation in the world, rich in natural resources and striving, he says, in the wake of terrible disasters, to set itself straight on the path to development. Without external help, which has already begun through the IDA, Indonesia, be says, faces certain disaster.
Not only is World Bank lending to double in volume and to shift geographically, but dramatic changes are to take place in sectors of investment. The greatest expansion will be seen in education and agriculture, especially agricul- ture. About two thirds of the people of the developing nations live on the soil; yet they 'have to import annually $4,000 million of food from the industrialised nations. Fortunately there has been a breakthrough in the production of new strains of wheat and rice and other crops and yields can be increased by three or five. We are on the brink, the president says, of an agricultural revolution as significant as the industrial.
Mr McNamara rightly pays tribute to his predecessor, Mr-George Woods, who first sug- gested a commission to survey the past and examine the future course for international aid. This commission has been set up under the chairmanship of Mr Lester Pearson, the former Prime Minister of Canada. But let us all pay tribute to the heartening work of the World Bank, a concept and enterprise of the capitalist West, which has been brilliantly organised and carried out by the international team in Wash- . ington. The only snag is that the load of interest payments bears too heavily on the poorer borrowers. Perhaps the brilliant new president will find some solution to this perennial problem of the capitalist aid system.
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