World Bank Gets Tough Over Unused Credit

the Bank, which saw disbursements rise to a record level of $19 billion in the 1996 fiscal year, is taking a much closer look at fund utilisation as part of a strategy to optimise its resources.

Kaji said the Bank was trying to devise either country or system-specific responses to unblock project finance. On the flow side, the Bank has set up a quality assurance group for real time project audits.

The Bank's growing determination to get tough with countries that are slow to utilise financing is likely to be felt in India. Bank officials have expressed dissatisfaction with the unused disbursements in the country, forcing the government to take a fresh look at the problem.

 

The Bank's concern over unutilised disbursements is linked to its desire to have adequate resources to cushion any future needs. the International Develop-ment Association (IDA), in particular, is a source of slight uneasiness for the institution's officials. Only half the projected $22 billion in IDA funding over the next three years will come from donor countries with repayments, past contributions and the Bank making up the shortfall.

This does not provide room for new borrowers or new situations, Kaji said, emphasising that the Bank's reserves had to be in a comfortable position to make up any shortfalls in IDA contributions.

India was the largest borrower of IDA credits in the fiscal year 1996, receiving $1.3 billion in soft funds, followed by Vietnam with $502 million and China with $480 million. The year''s total IDA disbursements amounted to $5.88 billion.

China was the Bank's biggest borrower, with loans of $2.49 billion. It was followed by Russia, which borrowed $1.8 billion and Argentina $1.5 billion. The Bank and IDA made new loan commitments of $21.5 billion for 256 projects during the year. The new commitments come even as the Bank is refashioning its role. Private investment flows to developing flows are reaching record levels, even as official development aid, at $59 billion, dropped to its lowest point in 23 years last year.