132/YOUR MONEY OR YOUR LIFE!
The Bank is a profitable undertaking. Between 1988 and 1991 its
annual operating surplus systematically hit the S1 billion mark; in
1992, it was SI.65 billion; by 1993, it had reserves totalling
S14 billion.
SPRING 1997 AND THE URGENT NEED TO LOAN
In the spring of 199 7, according to one of its Belgian administrators,
Luc Hubloue, unless the Bank urgently used its surplus of inactive
capital, it would be faced with the threat of a major scaling down of
its operations. According to Hubloue, the World Bank had a lot of
unused lending capacity. 'The World Bank should become more
attractive in order to "activate" remaining funds' (Agence Belga, 28
April 1997).
Hubloue suggested a number of ways for using the international
financial body's resources in a more productive fashion in order to
face up to increased competition from the commercial banks.
He argued that the Bank should be willing to co-finance projects,
primarily in those countries that already have access to private
capital. Such loans could be made within the framework of
investment programmes drawn up by the target country - thereby
reducing the Bank's project preparation time. He pointed out that
project preparation was a long and complex process that often lasted
two years. So long, he said, that some countries - such as Brazil -
preferred dealing with commercial banks, even when their interest
rates were higher.
A few months later, though, the capital of the IMF and World Bank
combined would not be enough to stave off financial catastrophe
in Asia.
SUMMER 1997: YET ANOTHER FINANCIAL CRISIS
1982, Mexican debt crisis. 1994, second Mexican crisis. 1997, crisis
unfolds in East and Southeast Asia. On each occasion, the World
Bank was unable to foresee the outbreak of crisis. Just as Thailand
and three other Asian 'dragons' began to feel the effects of the crisis,
the World Bank had this to say about them in its 1997 report on
global debt: