World Bank loans

Had Mr. Gary Gentry (The Jakarta Post, May 6, 1996) been as assiduous a reader of financial news as he is of my letters he would have known that: The finance ministry is paying back the World Bank's loans in advance because they have a higher interest, an average of 7.07 percent. Under bilateral arrangements Indonesia's loans have an average of 2 percent interest.

Had he been really interested in finance he would also have known the results of some "donations": In its report in 1989, the World Bank admitted to receiving US$2.6 billion more in interest rates and principal payments from developing countries in that year to the end of June 1989 than it disbursed in new loans. And according to The Economist, (Feb. 11, 1989) the multilateral agencies have become net takers of money from Latin America. Commercial banks lent $6 billion in new loans to the continent in 1988, but extracted more in interest -- about $26 billion.

More on export promotion. In 1960 the International Development Association (IDA) was established offering soft loans. The funds came from 19 rich countries lead by the U.S., and would be lent to countries with annual per capita incomes of less than $375. In the next 12 years IDA lent $4.4 billion. Its funds had to be replenished every three years and Congress kept insisting that IDA use more American goods. "During the 1960s U.S. authorities were adopting a series of measures to reduce the flow of dollars to foreign central banks. Foreign recipients of economic aid were obliged to spend money on U.S. goods, even though foreign goods were cheaper." Aliber, Robert Z., The International Money Game, New York, Basic Books, Inc. 1976.

OSVALDO COELHO

Bandung, West Java