TNAG-0340-FCO40-376-Aid-to-Hong-Kong-from-UK-1972 — Page 76

GENERAL GUIDANCE FOR THE CHANNELLING OF AID THROUGH DEVELOPMENT BANKS AND INSTITUTIONS

AID 249/217/01

1. Geographical Departments have previously been given little policy guidance

on the provision of aid through recipient Governments to development banks

and other similar institutions, which has resulted in the rather haphazard

development of this form of aid. Development banks are likely to play an

increasingly important role in the aid programme and the purpose of this note,

which has been prepared in consultation with the Economic Planning Staff, is to

provide broad guidelines for use by Geographical Departments in evaluating

development banks and evolving country policy on the provision of aid through

them.

Definition of Development Banks

2.

For the purposes of this note "development banks" should be taken to cover

all sub-regional and national on-lending institutions which invest in development

projects. They will generally be statutory bodies, and where a bank has private

shareholders to whom it pays dividends particular care will need to be taken

over the terms of on-lending by Governments - see paragraph 13 below.

:

Emphasis on Aid through Development Banks

3. The ODA should be actively looking for ways of increasing this form of aid,

because it:-

i. should help us to weigh more effectively the developmental value

of continued investment in government infrastructure against the

developmental value of increased aid to other sectors of the economy,

including, in particular, local manufacture in the private sector.

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