The World Bank and International Monetary Fund (IMF) are undertaking "a major effort" to cushion the economic impact of the Persian Gulf crisis on as many as 100 member nations, Alexander Shakow, the World Bank's director for external affairs, said yesterday.
The discussions on increased assistance have begun only within the past few days, but the topic is likely to be the principal, although unplanned, agenda item for the annual meeting of the World Bank and IMF that begins in Washington on Sept. 25, as well as for the Group of Seven industrial nations, which will meet here Sept. 22.
Administration officials, who have been making a highly publicized effort to get major allies to share the costs of containing Iraq, said yesterday they are eager for help from the World Bank and IMF, but they do not expect that the multilateral institutions can act quickly enough to meet emergency needs this year.
They anticipate, however, that the World Bank and IMF will be able to make a contribution to a total of $7 billion to $8 billion that is estimated to be needed for extra economic assistance to poor countries in 1991. This sum is in addition to $3.5 billion that the United States is seeking to collect for these countries this year entirely from bilateral sources, including Saudi Arabia, Germany, Japan and South Korea.
On their recent trips to solicit contributions from America's major allies, Secretary of State James A. Baker III and Treasury Secretary Nicholas F. Brady suggested that the World Bank and IMF coordinate the economic assistance effort next year.
The $10.5 billion to $11 billion over the two-year period is in addition to $18 billion in military "burden-sharing" that Baker said he is attempting to secure from major allies this year and next -- $6 billion this year, and $12 billion for 1991.
Shakow said the rise in the price of oil triggered by the Iraqi invasion of Kuwait and the retaliatory U.N. sanctions had created "severe" problems for most countries, except the handful of Third World nations that also export crude oil.
A number of Middle East countries -- Jordan, Egypt and Turkey, for example -- have been hit especially hard because they had been major trading partners of Iraq and also benefited from money earned by their nationals working in Kuwait or Iraq and sent back home.
Also severly affected are Eastern European countries that depended on Iraq for oil, and Asian nations, including India, Pakistan and Bangladesh, that also relied on large remittances from workers in Iraq and Kuwait.
Shakow said that as a development institution, the World Bank's main focus is on financing specific projects, but he indicated that one possibility lies in speeding consideration of loan applications.
World Bank officials said there is almost $3 billion in the "pipeline" for the so-called front-line nations of Jordan, Egypt and Turkey. These cover loan projects under active consideration of $265 million for Jordan, $716 million for Egypt and $1.9 billion for Turkey. Approval in normal situations could be a year away, officials said.
There is also $1.5 billion for Pakistan, $1.5 billion for Bangladesh and $4 billion for India in the World Bank pipeline. The IMF said it had no loan applications under discussion for any of these countries, and that the assistance effort had "not yet coalesced."
Before the crisis in the Persian Gulf erupted, the World Bank anticipated lending about $2 billion to $2.5 billion to Eastern European countries this year, and the IMF was committed to about an equal amount.
Coincidentally, the IMF yesterday issued its annual report, normally a rundown of major issues likely to dominate the upcoming joint meetings. But the report was completed on Aug. 1, the day before the Iraqi invasion of Kuwait.
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