Representatives of the United States and other nations contributing to the World Bank's concessional branch, the International Development Association, agreed yesterday at a meeting in The Hague that negotiations to continue the IDA for another three years would begin some time this fall.
Funds for IDA have been pledged only through fiscal 1983, the last year of a period known as "IDA-6," referring to the sixth three-year period since the IDA program was started. The prospects for an "IDA-7" have been in doubt because the U.S. Congress has been falling behind in delivering the monies that had been promised for IDA-6.
Other major countries have also faced budgetary difficulties because of worldwide recession and high unemployment.
Bank officials were pleasantly surprised by the decision at The Hague to take up the question of IDA-7 as early as this fall. They credit the Versailles summit declaration for U.S. assent. The declaration by President Reagan and the other summit leaders said, among other things, that "we see a need for special temporary arrangements to overcome funding problems for IDA-6, and for an early start to consideration of IDA-7."
Terms for IDA-7 are likely to be less generous than in the past, which allowed 50-year, no interest loans, with only a nominal service charge.
The U.S. shortfall in the IDA-6 period triggered reductions in contributions by other nations, whose shares are figured on a pro rata relationship to the U.S. commitment. Thus, a 27 percent drop in the U.S. contribution to IDA, from $1.1 billion in fiscal l982 to $700 million, cost IDA a total of $1.5 billion. The total pool of money available for concessional loans to poor countries dropped from a projected $4.1 billion to $2.6 billion. A comparable situation looms for fiscal 1983.
But the meeting at The Hague, among deputy ministers of the IDA contributors not only agreed on an early start for discussing IDA-7 (which would begin in fiscal 1984), but also obtained pledges from a reported 10 to 12 countries to make their full contributions for the final year of IDA-6, regardless of the fact that a full share will not be put up by the United States.
In addition to abandoning the pro-rata rule, these countries may be willing to put up extra money, in a special fund, to cover more of the gap caused by the United States, bank officials said. That possibility will get further attention at an IDA deputies meeting Sept. 4 in Toronto during the IMF-Bank annual meetings.