INTERNATIONAL DEVELOPMENT ASSOCIATION BILL

Order for Second Reading read.

6.52 p.m.

The Parliamentary Secretary to the Minister for Finance (Mr Low Por Tuck): Mr Speaker, Sir, I beg to move, "That, the Bill be now read a Second time."

The best known and effective international agency providing long-term development finance and expert economic assistance to countries has been the International Bank for Reconstruction and Development, known more simply as the World Bank. Its loan and other operations in the immediate postwar period have helped to set many countries on their way to economic recovery from the aftermath of war. The major economic problem and challenge to the world today is the development of the less developed countries in Asia and Africa. In seeking to provide development finance to these less developed countries, the World Bank is at, times circumscribed by certain provisions in its Articles of Agreement. For instance, the Bank would only make loans for specific revenue producing projects, and it also requires loans to be repaid in strong currencies.

Therefore, to meet more specifically the needs of less developed countries, a new body called the International Development Association has been formed. By 15th September, less than a week ago, its Articles of Association would have been signed by representatives of member Governments whose subscriptions would have totalled more than 65 per cent of its overall initial capital of $3,000 million. The purposes of the Association are to promote economic development, increase productivity and thus raise standards of living in the less developed areas of the world included within the Association's membership.

How would it carry out its stated aims and in what ways would it be different from its older partner, the World Bank? Firstly, the Association would seek to provide long-term development loans at low rates of interest or even free of interest. Secondly, the Association would shape its financing to meet actual needs of countries as they arise. For example, though the Association is required to finance specific projects, which is a criterion based on the sound and tried principles of the World Bank, provisions in its Articles allow the Association to finance any projects which are of high developmental priority, that is, projects which will make an important contribution to development of areas whether or not such projects are revenue producing or directly productive. Therefore, projects such as water supply, sanitation or pilot housing which would not qualify for finance from the World Bank, would be eligible for financing by the Association. Thirdly, in the case of loans from its freely convertible fund of currencies, repayment can be either wholly or partly made in local currencies. This is of advantage to borrowing countries which are faced with the balance of payments problem. Thus, though the Association has been formed on the sound principles of its older associate, the World Bank, the Association would be a more liberal and flexible international financing agency.

Membership of the Association is open only to World Bank members. However, as Singapore is a territory where international relations are the responsibility of the United Kingdom Government, she would have access to the resources of the Association under section 3 of Article XI of its Agreement, which provides that -

`By its signature of this Agreement, each Government accepts it both on its own behalf and in respect of all territories for whose international relations such Government is responsible except those which are excluded by such Government by written notice to the Association.'

The only obligations falling on a territory whose international relations are the responsibility of a member Government, namely, the U.K. Government in our case, are those of giving the Association the immunities and privileges set out in Article VIII of the Agreement.

The International Development Association Bill has been introduced to so grant the Association the privileges and immunities as set out in the Schedule to the Bill. The immunities and privileges, which are proposed to be given to the Association, are the normal immunities and privileges granted to international agencies, as honourable Members may well see from the Schedule.

Mr Speaker, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole Assembly.

Assembly immediately resolved itself into a Committee on the Bill - [Mr Low Por Tuck].

Bill considered in Committee; reported without amendment; read a Third time and passed.