A McNamara prod for generosity from 'have' nations
Robert S. McNamara, the outgoing president of the World Bank, showed Tuesday that a lame duck can still quack. Making his 13th and final annual meeting address to the governors of that institution, Mr. McNamara promised to be "particularly frank and candid" -- and was so.
International civil servants are usually circumspect in talking about their bosses -- in this case, the more than 135 nations that are members of the World Bank.
But Mr. McNamara was blunt. He agreed with former Secretary of State Cyrus Vance, who last June termed "disgraceful" the level of US foreign aid. He named actual countries in discussing development planning mistakes. And he sounded something like a women's liberation leader in noting the additional educational and other help that women need to enhance their already important role in economic development, views that would not be popular in some Muslim nations.
The former US defense secretary also sounded grim in his evaluation of the economic situation of the developing nations. Global economic prospects, he said, have "seriously deteriorated" since the 1979 annual meeting of the World Bank in Belgrade. The oil-importing countries are going to have "a very difficult time" in the immediate years ahead, he said. The average annual per capita growth of these countries could drop in the next five years to 1.8 percent, from 2.7 percent in the 1970s and 3.1 percent in the 1960s.
"More depressing still is the outlook for the 1.1 billion people who live in the poorest countries," he went on. "Their already desperately lower per capita income, less than $220 a year, is likely to grow by no more than 1 percent a year -- an average of only $2 or $3 per individual.
"There would even be negative growth for the 141 million people in the low-income countries of sub-Saharan Africa."
Mr. McNamara has been acting like a Dutch uncle for some years now, at each opportunity lecturing the industrial world on the need to be more generous in their treatment of the poor countries. It hasn't had much effect on foreign-aid levels.
Official development assistance from all noncommunist well-to-do countries, in constant 1980 dollars, has increased from $18 billion in 1970 to $24.6 billion this year. But that aid was 0.34 percent of combined gross national product in 1970 and remains that percentage this year.
Moreover, the atmosphere for foreign aid in many industrial nations remains poor. The legislators and the people may not be fully aware of how much has been learned over the past two decades about economic development. World Bank officials and others know better how to get their money to help the really poor and not just the elites in the developing nations.
Whatever, Mr. McNamara has determined that the World Bank itself must enlarge its role further in development financing. He has already increased the bank's loans enormously in his years as president. In constant 1980 dollars, the annual disbursements of the bank were $3.1 billion on average in the fiscal years from 1964 to 1968. These outlays have grown to $6.1 billion by 1980.
The working plan of the executive directors of the bank calls for disbursements in current dollars to reach $14.2 billion by fiscal 1985. Assuming 7.5 percent annual inflation, the bank's real lending would grow 5 percent a year.
But inflation has been running more than 7.5 percent. So Mr. McNamara spoke of the need for stepping up the pace further.
Besides, he said, the developing countries must adjust their economies to the higher oil prices, they must step up their investment in energy development, and the bank must lend to its new member, China.
Mr. McNamara said the bank's lending for so-called "structural adjustment" to the higher cost of oil could increase from $600-800 million this fiscal year to been for specific projects or development programs. Structural adjustment loans are new.
The World Bank, Mr. McNamara went on, should also step up its lending for energy development -- another $12 billion above the $13 billion already planned for the 1981-85 period.
And China with its nearly billion people could need "several billion dollars per year."
Where is the World Bank going to get such huge amounts of additional money, particularly when the well- to-do nations are struggling with budgetary constraints?
Mr. McNamara suggested three possibilities:
* Increase the bank's lending authority.
At present, the bank's total disbursed and outstanding loans cannot exceed its total subscribed capital and reserves. That capital is provided by its members -- about $85 billion when a current increase in capital is completed. (Only 7.5 percent of that is actually paid in; the rest is "callable" if needed.)
Large commercial banks, Mr. McNamara noted, commonly have a capital-to-risk-asset ratio of less than 6 percent, or about 20 to 1. "And yet none of these banks," he said, "have the [World Bank's] repayment record; none of them rely on such long-term sources of funds; and none has such a strong liquidity position."
* Organize a separately capitalized affiliate to finance new energy resources.
The necessary equity capital could come from World Bank profits and from member governments, though not necessarily from all member governments or in the same proportions as in the World Bank.
* Increase the subscribed capital but without adding paid-in capital.This was done in 1960.
The World Bank is already the world's largest and most influential development institution. Mr. McNamara, who leaves his post at the end of next June, wants the bank to have even more funds to help the vast numbers of remaining poor.
"What these countless millions of the poor need and want," he concluded, "is what each of us needs and wants: the well-being of those they love; a better future for their children; an end to injustice; and a beginning of hope."