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World Bank agrees to fund infrastructure development

The World Bank has accepted, in principle, the demand made by India and others that it should finance infrastructure development to remove a key constraint on growth and poverty alleviation in developing countries.

The development committee, the Bank's policy-making body, issued a statement on Tuesday after its day-long meeting in Washington, welcoming the work underway in the bank to promote private sector investment in infrastructure.

The committee asked the Bank to prepare an ''action programme'' on this subject for its next meeting in September in Hong Kong.

Later, World Bank President James D Wolfensohn told mediapersons that the developing countries would require an estimated $ 200 billion a year for a decade to build up their infrastructure, only 10 per cent of which would come from the private sector.

He said the Bank's action programme would be based on a comprehensive approach, taking into account all possible factors which go into the building of infrastructure.

Earlier, Finance Secretary Montek Singh Ahluwalia argued that while there was scope for expanding private sector investment, recent bank papers had acknowledged that ''public resources will continue to play an important role in funding projects, in particular, in infrastructure.'' He wanted expanded bank investment in infrastructure, both in public sector and in the private sector.

The Bank appreciated India's plea for raising the resources of the Multilateral Investment Guarantee Agency, to help it promote investment in the Third World.

The committee urged the MIGA board, together with other parties involved, to resolve in an expeditious manner the remaining issues on how best to obtain adequate resources for the MIGA and report to it at its next meeting in September in Hong Kong.

Ahluwalia said the MIGA had done a commendable job with its initial small capital of one billion dollars and it now required infusion of further capital to expand its activities.

UNI

Earlier story:
WB may double funds to India