India charges US with politicising World Bank

Briefing newsmen on the outcome of meetings between RBI governor Bimal Jalan with Wolfensohn and IMF managing director Michel Camdessus, the two senior officials said India has lost $ 1 billion in fiscal 1999 ending June 30, in World Bank group loans blocked by these sanctions.

Jalan is leading the Indian delegation to the interim and development committees of the IMF and World Bank. Jalan pointed out in the meetings that despite the sanctions and the unavoidableimpact of the east Asian crisis, India managed to have low inflation and a high growth of six per cent, they said.

Stating that Indian projects worth $ 3 billion would have been cleared normally, they said the World Bank and International Development Assistance (IDA) projects for fiscal 1999 are expected to be $ 2 billion despite the fact that Wolfensohn managed to put the Andhra project under basic human needs.

For fiscal 2000, India has projects worth $ 3 billion but it is not clear how they will fare, the two officials pointed out. Jalan told both Wolfensohn and Camdessus that despite the Vajpayee government being voted out of office, it had managed to complete action on the central budget and the export policy and import policy which in some ways goes beyond the requirements of the World Trade Organisation, they said.

The Reserve Bank also announced a major decision on monetary and credit policy, they added. Wolfensohn, they said, was pleased to find that the disbursement ratio in India had risen to18 per cent during the year against the bank’s average of 15 per cent. About $ 1,440 million were disbursed during last Indian fiscal as against $ 1,395 million the previous year.

Acharya said there is near normalcy in international finance corporation operations in India. In answer to questions by Camdessus, Jalan said that reforms and initiatives are broadly on track in such areas as prudential norms. However, non performing assets, he said, are `certainly’ a continuing concern but, over time, these have been reduced.

Increasing the private sector’s role, Jalan said, will require Parliamentary action. But this could only be taken up only after the elections, Acharya said. Responding to questions on the opening up of the economy, Acharya said that 90 per cent of economy is open except in areas like free convertibility on capital account.

The extent of liberalisation is not realised by critics, he said. With a more supportive international environment, Govindarajan said, India can grow even faster thansix per cent. Acharya said there appears to be keen interest in Jalan’s proposal to authorise the IMF to issue special drawing rights temporarily to meet the crisis without having to worry where he would find the money. This would be withdrawn after the crisis is over and the country concerned has bought back its currency.

IMF chief hints at change in composition of its board

WASHINGTON: International Monetary Fund (IMF) chief Michel Camdessus has hinted at a change in the composition of the lending body’s board.

"Quotas are reviewed periodically according to various criteria and this will happen again according to the relative strength of the countries and the criteria determined," he told a press conference here Tuesday.

Rubin also called for a review of the military spending of countries by the fund and said, "the IMF should explore steps that would improve fund reporting and monitoring of military spending for countries in conflict or with fund programmes, especially as such spendingrelates to a country’s macro economic context and the composition of the government expenditure."

Camdessus also talked about IMF’s plans to sell some of its gold reserves to fund the poor indebted countries, but said the final decision would be taken by the executive board. There was a discussion in the committee about selling five million or more ounces of gold and then investing the proceeds to help fund a World Bank-IMF scheme aimed at easing the debt burden carried by the world’s poorest nations.