MULTILATERAL DEVELOPMENT BANKS: THEIR ROLE IN LDC FINANCING

Created: 1/3/1985

OCR scan of the original document, errors are possible

DIRECTORATE OF INTELLIGENCE

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Multilateral Development Banks: Their Hole in LDC Financing

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Multilateral development banks (MDBs)the World Bank and the Inter-American, African, and Asian Development Banks play an important secondary role in LDC financing, holding aboutercent of total LDC debt. The distribution of these loans varies widely among individual countries and regions. The regional MDlls lend to countries that are In the same region as the bank, while the World Bank and its affiliates extend loanslobal basis. To date the largest individual country borrowers from the MDBsumulative basis have been Brazil, Colombia, India, Indonesia, Mexico, the Phi 1ippines, fouth Korea, Turkey, and Yugoslavia. Low income countries in Africa and Asia are most dependent on these loans, with one-third of their debt held by MDBs.

MDB loans favor specific sectors of the Third World economy. Agriculture continues toajor area of importance because of the promot ion of food self-sufficiency. Social programs and industrial projects are also major targets for MDB funds, while the energy sector has attracted more funds since the.

CONT if>ENTIAL NOflORN

Lending from official sourcesboth governments and MDBsIsreater role in the financial rescue packages that are being assembled for troubled debtors. Conntercial banks recently have stressed the need for greater official financing for LDCs such as Argentina and the Philippines because the banks are unwilling to be the only provider of funds* In addition.IMF has requested specific cotnmif official credits prior to approval of Fund assistance programs.