Mr. PASSMAN. When I say soft, I am talking about soft repay. ments. Very soft, are they not? Mr. HIRSCHTRITT. Yes, sir. Mr. PASSMAN. I wish I could borrow money on that basis. I could enjoy it for a long time. I would never live to see the day that much of it would have to be paid back. Unfortunately, I am not eligible. INTEREST RATE What is the prevailing interest rate of the World Bank now? Mr. MERCHANT. Six percent, sir. I should qualify that, sir, by saying that is to the normal borrower. There is a category of clients or members of the World Bank which is denominated by the Bank management as market eligible countries, and they are ones who can satisfy at least a part of their foreign capital for development purposes in the normal banking market. They pay a differential, depending on the terms, of approximately 1 percent more than the rate that the Bank charges to its normal borrowers. Mr. PASSMAN. But 6 percent would be about the prevailing rate? Mr. MERCHANT. Yes, sir; for the great majority of the World Bank loans. POSSIBLE CHANGES IN IDA CREDIT TERMS Mr. PASSMAN. Does that action indicate any necessity for IDA also to increase its interest rate on grants or credits or loans to the underdeveloped countries? Mr. MERCHANT. Mr. Chairman, the three-quarters of a percent that IDA charges is considered and described, not as interest, but as a service charge to cover the administrative expense. So, I do not think that an analogy to the Bank would be considered as calling for a change. Mr. PASSMAN. Of course, this is only administered by the World Bank. We do not think of this as actually the World Bank capital, do we? Mr. MERCHANT. It is administered by the World Bank staff. Mr. PASSMAN. But what we refer to as the No. 2 window of the World Bank, where extremely soft loans are made, and it is understood these loans will be interest free, regardless of the prevailing rate of interest of other agencies, and the three-quarters of 1 percent is for servicing, if you want to call it that, the loans rather than an interest rate as such, is that correct? Mr. MERCHANT. This has been the policy so far. Mr. PASSMAN. Presently, regardless of what the prevailing interest rates may be, you do not foresee any changes in this operation? Mr. MERCHANT. Not as of today. I would make one point, Mr. Chairman, with your permission. Mr. PASSMAN. Certainly. LOAN CRITERIA Mr. MERCHANT. That is, the terms are concessional or soft or lenient; extremely liberal. The economic criteria, the banking criteria in order to qualify a loan under IDA for a credit are really identical with the economic criteria imposed by the Bank on a loan from the World Bank. TOTAL U.S. FOREIGN AID BUDGET Mr. PASSMAN. I do not think you have a Congressman or a Congress, present, past, or future, who will ever be able to put all this together. You wonderful administrators have just one of the foreign aid items to administer, IDA, and are able to master all of the details and answer all the questions. The committee must try to put it all together. It has been so fragmentized in so many different accounts, I repeat, I do not think a Member of Congress actually, if he spent all of his time on it, could ever understand the purpose in having it so fragmentized. The administration's request for foreign aid thus far for fiscal 1967 is $8,048,349,000, and that is purely foreign aid. There is another category that would bring it up an additional billion dollars. We are talking about pure foreign aid. The $8,048,349,000 request does not include funds contained in the Department of Defense budget estimate for Vietnam and other free-world forces in South Vietnam. We are not even including the Atomic Energy Commission overseas, the State Department's migrants and refugees program, the Ryukyu Islands, education of foreign students, the purely military construction overseas, and the contributions to international organizations. We are leaving all that out. I am talking about pure, rank foreign aid. The President of the United States says he is asking for only $3,385 million for foreign aid. If he would ever study the details that we get up that show the total amount of foreign aid that is requested in 10 or 15 different bills, I think some heads would roll. I cannot believe that the President of the United States realized that the 15 requests amount to that much, unless he is willing to argue that your arm is not a part of your body. When you get the transcript, have a look at this. Mr. MERCHANT. I certainly will. Mr. PASSMAN. Then you will know why at least one member of this committee is critical of the aid program. I am going to put this table in the record at this point so you may have an opportunity to see for yourself the total amount of aid. It frightens me. (The information follows:) Foreign aid funds requested to date in 1966 [As indicated in President's January budget or in subsequent requests] 1. Foreign Assistance Act, fiscal year 1967 2. Reimbursements and receipts, and use of deobligated funds. 3. Foreign Assistance Act, supplemental request for fiscal year 1966 and prior fiscal years.. 4. Military assistance advisory groups 5. Export-Import Bank (long-term loans). 6. Public Law 480 (agricultural commodities). 7. Inter-American Development Bank.. 8. International Development Association.. 9. Asian Development Bank. 10. Peace Corps--- Subtotal, foreign aid funds requested to date--- OTHER FOREIGN AID REQUESTS 11. Export-Import Bank (regular operations). 14. Educational (foreign and other students). 16. Migrants and refugees.. 17. Atomic Energy Commission (Euratom). Subtotal, other foreign aid requests to date.. 1 $3, 385, 962, 000 246, 887, 000 1 1 790, 000, 000 74, 000, 000 1, 330, 000, 000 1, 617, 000, 000 250, 000, 000 104, 000, 000 140, 000, 000 110, 500, 000 1 8,048, 349, 000 Grand total, foreign aid funds requested to date------ 1 9, 103, 259, 000 1 Does not include funds contained in Department of Defense budget estimates for Vietnamese and other free world forces in South Vietnam estimated to be Fiscal year 1966. Fiscal year 1967. $203, 700,000 633, 000, 000 EFFECT OF IDA OPERATIONS ON AMOUNT OF OTHER AID PROGRAMS Mr. PASSMAN. How much has the AID development loan appropriation gone down since we started contributing to IDA. Can any of you answer that question? Mr. MERCHANT. I do not have that figure. Mr. HIRSCHTRITT. I do not have available with me the proportion which went into the Development Loan Fund. Mr. PASSMAN. Or all other grant segments. You have that disguised under about four different captions. Mr. HIRSCHTRITT. They are all in the foreign aid bill. Mr. PASSMAN. Just limit it to the development loan appropriation. All the accounts change their names so often the committee hardly can keep up with them. We were told, if I remember correctly, that when we got IDA operating in a big way that would reduce the need for loan funds under bilateral programs. Do you get the point? Mr. MERCHANT. I think we can find these figures. Mr. PASSMAN. Would you have a look at that for us? (The information follows:) Mr. PASSMAN. At this time could you tell us the amount of undisbursed funds to the credit of IDA, Mr. Ambassador? Mr. MERCHANT. I have that here, sir. Mr. PASSMAN. Make it as of December 31, if you will. Mr. MERCHANT. The figure, Mr. Chairman, supplied by the Treasurer's Department of IDA shows undisbursed balances amounting to $637,400,000 out of total development credits signed, less cancellations, of $1.192 billion. Mr. PASSMAN. The actual disbursed portion would be $1.192 billion? Mr. MERCHANT. Those are the credits granted but not yet fully drawn down. Mr. PASSMAN. What I wanted was the undisbursed figure. Mr. MERCHANT. Undisbursed balances, $637,400,000 as of December 31, 1965. (Off the record.) IDA DISBURSEMENTS Mr. PASSMAN. Now give us the actual disbursements, the checks. which have been drawn and given to recipients against the total available, $1,676,500,000. Mr. MERCHANT. $555 million. (Off the record.) Mr. MERCHANT. $1,121 million, by my calculations, sir. Disbursements have been $555 million. The total available resources were $1,676 million. I subtract $555 million disbursed, and it leaves existing availabilities, part of which are obligated, of $1,121 million. I have rounded those figures. Mr. PASSMAN. So you actually have $1,121 million on hand undisbursed as of December 31, 1965, according to the figures you gave us. Mr. MERCHANT. That is right, although it includes funds being requested now that have been authorized but not appropriated and paid to IDA. Mr. PASSMAN. A portion of it is committed. We are talking about the undisbursed funds, because we are familiar with the obligation, deobligation, and reobligation privilege that you have. Mr. HIRSCHTRITT. Two-thirds are committed. Mr. PASSMAN. But committed does not necessarily mean that there will not be cancellations or revisions. Mr. HIRSCHTRITT. Not necessarily, but you would not expect too many cancellations. Mr. PASSMAN. You would not expect any while you are testifying for these funds, would you? Mr. HIRSCHTRITT. No; I stated what I expect. I do not expect too many. Mr. PASSMAN. But there could be, and it is impossible to determine the dollar amount. We want to be specific on this because we are putting together a table to show the amount of the new requests by the President for foreign aid, plus the amount of undisbursed funds. When we put the two together, it will show the amount that is available to be disbursed either tomorrow or at some other date. Is that clear? Mr. HIRSCHTRITT. That is clear. We will give you an exact figure, sir. (The information follows:) Undisbursed balances out of IDA funds actually paid in, as of Dec. 31, 1965 [In millions of dollars] Total available in convertible currencies including part I country pledges not due for payment until November 1966 and November 1967---Less part I country pledges not due for payment until November 1966 and November 1967 (appropriation of $104 million being requested to meet U.S. portion of November 1966 payment). Convertible funds actually paid in, as of Dec. 31, 1965.. Undisbursed balance of paid-in convertible funds, as of Dec. 31, 1, 676. 5 502. 2 1, 174. 3 555. 2 619. 1 NOTE.-At the assumed annual rate of disbursement of $350 million per year, the undisbursed balance of paid-in convertible funds as of Dec. 31, 1965, would cover disbursement requirements for 1.8 years in advance. By the time the $104 million now being requested is paid in the form of a letter of credit in November 1966, the "pipeline" would have been reduced to less than 1 year's requirements. ANNUAL RATE OF DISBURSEMENTS Mr. PASSMAN. Question No. 2: What is the annual rate of disbursements from the International Development Association? Mr. MERCHANT. Mr. Chairman, the disbursements by IDA in U.S. dollars or equivalents for fiscal year 1965 were $222 million. Mr. PASSMAN. Is that the total annual disbursements by IDA? Mr. MERCHANT. For fiscal year 1965. Mr. PASSMAN. If we accept that as being the average, then you have over 5 years' supply of money on hand. |