TNAG-1489-FCO40-2046-Hong-Kong-and-the-Asian-Development-Bank-1986 — Page 43

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We

to the development of its regional member countries. support him in that continuing endeavor, and are therefore happy to support his re-election.

I will not read the comment I had prepared on the important issue of the general economic situation facing the developing member countries as this has already been well covered by the Chairman and the President in their speeches yesterday, and by some earlier speakers today.

I should now like to make some brief comments on the global economic situation and, in particular, on the prospects for the Bank's own regional member countries. The past year has seen a slowdown in the economic growth of most developing countries, accompanied by increased budget deficits and the imposition of restrictive ceilings on new borrowings. The prospects for the coming year seem a little brighter. The recent dramatic fall in the oil price will lead to very significant savings of foreign exchange for oil importers. According to the 1984 Annual Report, Developing Member Countries imported US$35 billion worth of oil in 1984, since when prices have roughly halved. Some countries will also benefit from multiplier effects due to an increase in world demand. The net effect for certain large importers of oil may be an increase in GDP of a few percentage points. However, while the benefits of lower prices are spread amongst many importers, severe costs are concentrated on large net exporters. Movements of many commodity prices in the last year have been adverse, especially in the case of certain agricultural products which are particularly important exports from some of the larger member countries. Coconut and palm oil, jute, tea, bananas and copra have all fallen steeply in price over the past year. In that context, the Development Committee requested the IBRD to undertake a study on the market prospects of raw materials.

The effects of the slowdown of economic activity have contributed to the 15 per cent fall in the Bank's lending programme in 1985. The limited absorptive capacity in some countries, management constraints, and inefficient economic institutions (including some state enterprises) have been evident. We continue to believe that quantified targets, though useful, are less important than project quality, which must be given the highest priority. The Bank's operational policies and programmes should reflect the needs and priorities of its borrowing member countries. Its organization should be related to the most effective and efficient way of delivering that programme.