Palm oil credit questioned

Thu, 20 Oct 1994 | Source: AFP

KUALA LUMPUR (AFP): Malaysia said yesterday it would ask the World Bank why Kuala Lumpur could not continue its credit scheme for palm oil buyers when the United States and Europe were allowed to provide other forms of farm credit.

"The World Bank thinks it is wrong for us to give credit. Developed countries can and we want to find out why we cannot," Prime Minister Mahathir Mohamad said.

Mahathir's remarks came a day after Primary Industries Minister Lim Keng Yaik threatened to pull out of the International Monetary Fund (IMF) if it insisted that its Palm Oil Credit and Payment Arrangement (POCPA) be subject to a three- month restrictions.

The IMF -- a World Bank affiliate -- had said that the period between settlement of balances should not exceed three months as it would give rise to exchange restrictions. POCPA facilities are repayable in two years.

Malaysia, the world's number one palm oil producer, had initiated the US$500 million scheme in 1991 to help cash-strapped countries buy its palm oil.

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