Examination of Witnesses (Questions 60
- 79)
MR MYLES
WICKSTEAD, MR
BARRIE IRETON
AND MS
MARGARET CUND
THURSDAY 22 JULY 1999
60. Right.
(Mr Wickstead) There is not much time left.
61. No.
(Mr Wickstead) I doubt very much whether we are going
to get beyond the stage maybe of having a preliminary look at
some options by that stage at the end of September.
62. That will be a very important paper.
(Mr Wickstead) It will be, yes.
63. Could we have a look at it when it is produced?
(Mr Wickstead) Yes, I am sure. There will certainly
be a paper produced for Ministers to consider at the Development
Committee meeting, I am confident of that.
64. I think the Committee would like to see
that. We are considering what we should be doing in the private
sector area.
(Mr Wickstead) Yes.
65. That will probably inform our views very
well.
(Mr Wickstead) Yes.
66. When you talk about capital adequacy, you
are talking about capital adequacy for IFC but not for the World
Bank?
(Mr Wickstead) It is a separate issue but we expect
also that the paper will be produced for the Annual Meeting on
the World Bank's capital adequacy. My expectation—I do not
know what the recommendations will be—my expectation at
this stage is that the conclusion will be that no increase in
the World Bank's capital is required at this time but it is something
that will need to be kept under review over the next couple of
years for two reasons, I think. One is because the worst of the
crisis in East Asia and elsewhere seems to have happened and be
behind us. The second reason is that with the IMF quota increase
there is an instrument there for providing liquidity support to
countries in crisis which was not there to the same extent before.
It should be possible for the Bank to step back, as we are encouraging
it to do, to step back from providing what amounts basically to
balance of payment support even with some conditions attached.
67. That is interesting. The World Bank adequacy
depends upon, of course, the return flow to the Bank, does it
not?
(Mr Ireton) Yes.
68. The World Bank ought to be fairly bomb proof
on its capital adequacy.
(Mr Ireton) It is certainly, I hope, bomb proof. Certainly
you cannot look at capital adequacy without firstly taking stock
of what one expects the role of the Bank, IBRD, to be in the coming
years and the sort of scale of borrowing one might anticipate
it being required to make.
69. Yes.
(Mr Ireton) But then, as you say, linking it to its
net income. There are ways that net income can be increased through
charges and of course annually net income is used for certain
purposes. The more it is used for immediate development purposes,
such as contributions to IDA or HIPC, then of course the less
is put into the balance sheet to increase reserves.
70. This is what many people do not see.
(Mr Ireton) All these things need to be looked at
together in order to come to a sort of view as to what is required
on this. A very similar, if I may say, exercise we are about to
go through in deciding the capital development of the CDC.
71. Yes.
(Mr Ireton) Certainly would be for CDC.
Chairman: Good. Can we move on then, Tony Worthington
is going to ask you questions on research programmes.
Mr Worthington
72. In the DFID report there is reference to
collaborative research programmes being undertaken jointly by
the World Bank and DFID, what is the outcome of that?
(Mr Ireton) Sorry, Chairman, I think without checking,
this is the reference to the—
73. Between trade and policy, sorry.
(Mr Wickstead) This is specifically a contribution
of up to three million pounds that DFID have agreed to make available.
You are quite right, I think the confusion was that the unit which
deals with trade policy issues is located in the Development Economic
and Research part of the World Bank. This is very specifically
to encourage the Bank to become involved in preparing developing
countries for a role in the forthcoming trade round, to provide
them with advice, to help them enhance their capacity so that
they are able to participate in that because, as we all recognise,
getting the trade regime right can have a very profound influence
over their own development prospects.
74. In what form is that research appearing?
Is it a publication?
(Mr Wickstead) No, it is to fund a number of different
specific activities that the Bank will undertake. I think they
are not strongly defined at this stage because this is a process
that will take place over two or three years but might, for example,
take the form of the Bank organising seminars for Ministers from
developing countries to bring them together to discuss the implications
of particular proposals coming forward in the trade round.
75. This is a very important piece of work.
(Mr Wickstead) Yes.
76. Speed is of the essence, is it not? The
Seattle Round will start October/November.
(Mr Ireton) That will set the framework.
77. Yes, it will set the framework.
(Mr Ireton) It is in that context—
78. Yes, but it is the framework which is really
rather important, is it not?
(Mr Wickstead) Yes. I think we expect the trade round
to spread over three years or so so, I think it will be work that
goes on during that three year period and the nature of it will
depend on how the round goes, how it develops, what the sorts
of issues are.
79. It is sort of action research?
(Mr Wickstead) Yes.
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