Secretary KENNEDY. That is right. Senator MUNDT. And as long as you are in the position of responsi bility you would expect to do with these other agencies what the World Bank has done with this concept if the need arose. Secretary KENNEDY. I would use all the influence I know how to bring to bear. Senator MUNDT. Thank you, that is all, Mr. Chairman. Senator CASE. Thank you, Mr. Chairman. COUNTRY-BY-COUNTRY COMPARISON OF TOTAL LOANS I have no questions except this one, Mr. Secretary. I wonder if, for the record and I hope we can have it before we are asked to vote on this legislation, you would supply us with a table as follows: IDA started making loans in mid-1961. Could we have for each of the years 1961 through 1968 a table showing the amount each receiving country has gotten from International Bank loans, from IDA loans and grants, from American aid loans and grants, including food-for-peace and from other country loans and grants, and any other international or other agency loans or grants. And then, could we have for each of those years for each country a statement of its total national income and of its per capita income in dollars, in constant dollars? And then for purposes of final comparison could we have for typical Western countries the same figure of per capita income for each of those years, something that you would regard as a representative group for comparative purposes? Secretary KENNEDY. Very good. Senator CASE. I must say my request reflects a bit of despair because it is my understanding that, rather than improving things insofar as relations between the "have" and the "have not" countries is concerned, things have gotten worse. If this is not true I would like to know it, of course, and to have any comment on whatever the comparison shows. Thank you, Mr. Chairman. (The information referred to appears in the appendix, page 41.) The CHAIRMAN. Do you have any more questions? Senator GORE. Yes, please. Senator CASE. May I just say one further thing for the record? I do expect when the AID legislation comes before us, Mr. Chairman. to ask for similar explanation for the longer period in which AID programs have been underway. Secretary KENNEDY. I would like to make just one comment. We will be glad to furnish the information and I think it is pertinent and worthwhile. In response to the one part of your question about what has happened in some of the countries, I think the experience has been good in some, very poor in others, but we don't know what it would have been without this. The CHAIRMAN. Senator from Tennessee. SOFT LOANS QUESTIONED Senator GORE. Mr. Secretary, I would like the record to show, and would like you to know that I have been a constant supporter of lending programs that were realistically administered, loans made on a sound repayable basis. I have come increasingly to question the socalled soft loans for several reasons, which I will not go into now. The Congress is placed in a particular dilemma because yesterday President Nixon asked the Congress to cut from the budget funds for education, for acquisition of land for parks, national forests and recreation areas. He asked the Congress to reduce by $125 million funds for urban renewal; in one instance after another, from the Job Corps, for rehabilitation of ghetto areas in our desperately pressed urban areas, and today we are asked to consider giving $480 million for the soft loans of the International Development Association. Now, you don't have to run for reelection, but Congressmen do, and this is difficult to face. Would you, as a banker, realize that? Secretary KENNEDY. Yes, I would, Senator. I think that the budget is over all and has vast aspects to it. You have to establish priorities. We keep in business in every section of the country. Senator GORE. The priorities are what I am talking about. Secretary KENNEDY. Yes, and you can't just relate one figure as against another, and you have to take the whole program. You have to bear in mind that that is cutting against an overall budget figure. If you look at the total of the domestic programs in that budget, they are up $6.9 billion this year. Senator GORE. Yes, but your budget Secretary Kennedy. So the figures are up $6.9 billion. Senator GORE (continuing). But you have budgeted for soft loans for IDA, a contribution of $160 million for this year and you just advise us you are coming back for an amount as yet undetermined for a contribution to the Asian Development Bank. Secretary KENNEDY. That is right, sir. Senator GORE. Meanwhile there are thousands of domestic projects, applications for community facility loans which are being denied. Indeed there is a freeze on such loans. Secretary KENNEDY. Well, I think we have to keep in business in the international field as well as in the domestic field and the relationship, I think is very consistent one. Senator GORE. I know you just said that you can't measure one figure by another but I find my constituents have such capabilities. SCHEDULES FOR CALLABLE CAPITAL Senator COOPER. A minority report in the House-and also Senator Gore's suggestion-gives the impression, and if I am wrong you correct me, that we are going to spend $160 million this fiscal year, $160 million the next fiscal year, $160 million the third fiscal year in this program. Now, the money that will be appropriated is much less than that, isn't it? Secretary KENNEDY. Well, not actually. We will not spend this amount. This takes time for this to go through, as you indicate, and it will probably be over a much longer period of time. Senator COOPER. If you do, you in effect give a letter of credit, as funds are needed then appropriations would be called for. But to be honest about it so we are not fooling anybody on either side, I believe that you should make available to the committee as best as you can, schedules by which you could estimate that the $480 million would call for actual appropriated funds. Secretary KENNEDY. We estimate expenditure for this year at $30 million. Senator CoOPER. How much? Secretary KENNEDY. To be expended-the appropriation will be for the full amount. Senator COOPER. How much? Secretary KENNEDY. $30 million expended-the appropriation will be larger. Senator COOPER. Mr. Chairman, if you could possibly lay out that budget estimate inquiry by year of the actual appropriations to be required. Secretary KENNEDY. It will be an estimate, but we can supply it. (The information referred to follows:) 1 Assumes that the balance-of-payments safeguards are not waived by the United States during this period. DEBT SERVICE BURDENS Senator COOPER. You have, I note, an estimate you say is about $30 million annually, is that correct, but can you give to the committee what the debt service burden is on the countries by reason of IDA loans? Secretary KENNEDY. Yes. Senator COOPER. Is there any country now in default on this three-quarters of 1 percent? Secretary KENNEDY. None. Senator COOPER. Service interest. Secretary KENNEDY. None in default on the service charge. (The information referred to follows:) Total payments by IDA borrowers of the 4 of 1% service charge on outstanding IDA credits currently amount to approximately $10.7 million. Repayments of principal will rise gradually over the next few years as the ten-year grace period runs out on credits extended in IDA's early years. On credits outstanding of December 31, 1968, annual repayments of principal will reach a peak of about $27.4 million over the period 1990-2010. IDA LOANS FOR AGRICULTURE Senator COOPER. I think you stated, someone stated, we are now directing these loans more toward agriculture and to build up food production. Won't you submit to the committee a list of those loans and what countries? Secretary KENNEDY. We will be glad to do that. Senator COOPER. Thank you. (The information referred to follows:) IDA credits for agriculture [In millions of U.S. dollars] Fiscal years 1960-61: 1. Sudan: Roseires irrigation_-_ Fiscal years 1961-62: 1. China: Irrigation- 2. India: U.P. irrigation... 3. Pakistan: Dacca irrigation_. 4. India: Shetrunji irrigation. 13. 0 3. 7 6. 0 1. 0 4. 5 5. India: Salandi irrigation_ 8.0 6. India: Punjab irrigation_ 10. 0 Senator GORE. Senator Cooper, since you raised the question of this being an annual appropriation and not a spending budget. The same statement you make with respect to the commitments in this bill for the projects for which authorization and commitments would be made, would be true of a commitment to a loan program for a water project in Auburn, Ky. The money would not be spent in developing water projects in Auburn, Ky., the day after the loan was approved. We have an expenditure budget. But here you have a commitment of $160 million for each of the ensuing fiscal years. Now, the appropriation with respect thereto is pro forma, and this is a commitment. It amounts to an appropriation of funds. Indeed the Congress doesn't look twice when a commitment is made under this kind of backdoor financing, the committee feels that it is committed and it is automatic, a pro forma rule. So what we are really talking about here is the same and identical manner as public works programs in the budget. Indeed this figure will appear in the President's budget and will be acted upon on that basis. So we are talking about a distinetion without a difference. HOW IDA RAISES FUNDS Senator CASE. Well, there is some difference, is there not, some control over the actual spending which doesn't exist in normal appropriations. For example, is not your financing often done by borrowing against these national commitments rather than by taking the money down from the countries' treasuries themselves? Is this not true or am I wrong about this. Would you give us an idea of how the bank actually raises its funds? The CHAIRMAN. Are you talking about the Bank or IDA? The CHAIRMAN. IDA really isn't a bank, it is an agency for dispensing of funds at very low interest and very low, soft terms. The Bank itself, of course, raises vast sums by selling bonds. Senator CASE. And against national commitments, and that practice. is not followed by IDA. The CHAIRMAN. IDA doesn't sell bonds, does it, Mr. Secretary? It never sells bonds. It isn't intended to sell bonds. |