1. At its Sixth ~l Meetil1g, actJ.n8 on t.~ rocameda:t1cnot ~ BJa1U of D1rectOrs,- tre ~ of (k1'[eff"L'i""5 adopted Reso1u-t1m tb. 62 .. which 8Ut~ ~ estab~ ot 2. few ~islF\Dn to be called ~ As1an Devel~a-it PLn'xi, arK1 0.1tl1.ned ~basic 1r1ncJ.pls8 mioh 8!X)u1d .govern the P\m arx1 its resources.'!be Resolutia1 Ca1t8l;>lates that tt:e l'eDJrceS o.f the Purx! W1ll prm-C4~ be ~ v81 t%oan car1tr11xJt1a'8 ~ch DBY be rece.1 v8d trCD~'-':-a. jn 8IOJr1t8 a.~ ~ tenns to be BUtoor1Z«1 by the 8;)ard otGo'i~:l.°ILI 8 ~ tjme to t~ . 'b Resolution does mt p.srport toestab11ah the rew F\n1: rattEr, it const1 tutes an agreSJEnt 1n~1ple t1m.t the Furd SOO1ld be e8t3.b11shed ~ ar¥1 an aut~t1alto tJIe ~ to eettle with potential ca1tr1hltars BrJ"ei"@aI8"i\;8 torD1l1z1ng res~s tor tb! F\n1. m1 ~ ~ establis}mB1t ot'thei\.v1!. Ift:e arrar~aj"",S will be subject to appz'0V81 by the :Bc8rd or(b...,~"'IaJ~.

2. With the 88s1atance ot Sir Jam a-.adwick, ~cjal Adviserto the President. consultations ha.ve been 1Eld with representativesor fEyAl~ u&Ij)er ca1rJtries to t«)1'}( a1t JD1tu8ll.v acceptable arrar:p-Derlt8 tor a DX)bllizat1a1 or re~ tcr ~ InqX)sed new ~.~ ~!-11~~t1a1 ~ be d&sigred. .1n ~ first 1nstance, to D8ett~ ~ t 8 conceS81ore.1 leming requ1r8lents .f'a' the peria1 1973 to

1975 . At Meet1r@B 1n \-bsh~a1 1n Sept8lfJer 1972, I.aI1a1 :in March

1:1 See the Report of tm Board otentitled "Review or ~~ ~ I~ Asian Devel~i'Jt Pln1 II (Doc. 1

AS~ DEVELOP~NT BANK

"56-'7320 J~ 1973

~~! T?:4.Tm'J CP ~u.s FOR'nm ASIAJf IE,VFJ.t)Ht&fr BANK

. D1rectors to the Bo8rd of Gowrr~

8rI5. ~al tar- Eatabl18tJ8'1t of'816-9 or 10 ~ 1973).

1913 am t.~la 1..'1~11913. which ~ra att~ed by a11oost alldeveloped 1Y8ItJers,- t.~ tBve been :Intensive discussions corx:ern-1ng t~ tot:ll annL11t of an in! tial resource IIDbillzat1on. the allo-cation of this 5rD.lnt aDa'1g 1ni1v1dual cootribUtors. ani tre ~upon ~ch contritut1ons \OJld be nade to the F\Jni.

3. In these d1.sC'lSsions, a basis for resource I1X>bil1zat1onhas been developed \'1h1ch a large lISjarity of the participants atthe M3..111la rtfeeting in1icated tmt tmy coold auppoI't. tIOtl.'9ver,~ 1."Jportant pote'lt1al contrib1tor, wlDse partwi~tion L"l theI'eSOU't'Ce loobll1zatioo is essential if the: at'rangenents in the fonDpresently ~sed are to becane effective, Wicated that it neededfurther t1n-= to uniertak'3 necessary .internal consultations before itcould support the arrangalX!nts. In these circ\.U'lStances, it w.s thevie1'f of 'the rrteet:ing that wll1le presentation of proposed 8I~ntsto the BoaIU of Directors &nJld m'OCeed, Eoaro discussion of thesep!'OpOaals Jnig.1oJt appropr~tely be deferred for a reaBOnable t1Jl:e,~ng a clcarer urnerstazIl1rJ; of t~ position of t1:at mJ or parti-ci~: see paragroaphs 16 arx1 17 below.

4. AccozU1ngly, the President row sutInits tor considerationof tb! Boa.rU of D1J'oectors a. d-TOaf't Report of too Board of Directorsto the Boaro o.f Govl3mOrs am two draft Resolutions of t.~ BoaIU ofGoverrm-s (refeI'I'ed to in thiB ~ as the 'F.1rst ani Secaxi Reso-lutions respectively). These dOCtlDents incorporate the resourcembilization arr8ngaf1rf!1ts p-""Oposed arxi ~s1onally agreed at theIfm11la Meetrng.

~l~ of the ~ SCheIrIe

5. '!be ar"rangeTlcnts contS1i>late a 1TOb1lize.tion of resanocestOl" conc~ssion&.l lend:!.nf during the ~r1OO ot three years em1rIg31 ~er 1975, in a total amount equivalent to US$525,OOO,OOO.'lh18 aD¥)unt has been ~located ~ all t~ &mk' B developed BBJi>ercountr'J.es, a1 .:1 basis which \\QS initially ~oBed by Sir JohnChadW".J.Ck after discussions in tl1e OOJntries ~erned, ~ whichw:1.th ~ adjusttrSnts \ti8.B fa.md to be acceptable to a¥:>st of thepartic1pe."1ts in t~ Po1an1la fo'eeting. b .lnd1v1~ cootriwt1onstl&l9 arrived at for each developed rIJanber Cwntry ovcr the three-year period ere set out in the first colU1l1 of the Table of Coo-tr1ootia1S a-ctactm to th9 F1rst Resolutia'l.

2/ France U:d1cated t1"..at it \65 not in a position to participateTh ~ 1n1tiaJ. m:>b1l1zation, at least at the ~sent t~. am didnot atterxl tOO Meet~. AustrJB. ani SWsden. While a.~l'8 theMeetil:6S, expressed a sjmilar position regard~ ~ic1pa.t1on tothat of France.

2

6. The ~1l1zat1on of resources 1«)U1d take t-":e tann ot aPI'Ogi;~~ ~ consistq of t~ stages:

(a) Contributions m9de far the first stage of the~-;DIB \OQ11d be 1n an BIIKXmt equivaleilt totw-th1rds of the overa U c<X1tr1butial pI'OPC8edfor the nemer for the M1 tln'Be-ye:1r pericx1.Each such contribution \«X11d be mede on a:'befcaoe 30 J ~ 197 4 ~ or alch later date as the8:)3rd of Directors nny detenDine, cni 'M)~ be~le Jon full (in a ll11p aDD or by installJB1ts)mt later tten 30 J~ 1975. It ~U be JX)ss1blefor the ~ of' Dirc.--ctors ~ at tre request of'the contributing nenber ~ to agree to tbe nen-ber's contr1OOt100 u.~ the fJ.rst stage of t}-~pr~-"CIliI.:: being tied to proour8raent or gocxis ~services .fran the Ca'lt~b.1tor' s terri tor1es .'lba total mIDJnt \C11ch \«J.11d be mbli1zed ~the Nrst stage ~ if all developed ue:ber c0un-tries participate, would be $350,000,000.

(b) Cootri00t1ons for ~ secord ~ of the pro-gi."'SaIu-= \'IOU1d bc for ~ rBIa~ ~-thlrd orthe arIDU-Ylt allocated to too nBTt>C'I's. ~se 000-tr11xltia'lS \«>uld be PBie at or before 30 J1ma1975 or such 12.ter date as the Boerd of DirectorsIrE.y detenn1ne ~ am wo~ be pa,yablC :in t\1l1 rotlater than ~1 ~h 1976. 'n1e Board of Directorswould not be aut}X)rized to accopt any ~ res-triction for contrib.1t1a18 unier the seconi stageof the progralm'le. ~ total a1nJnt It¥:>bil::.zed~ tre secorJi st~ 1Q.11d be $175,OOO~OOO.

1. ~ pl'Ogl'alrlJe outljned aOOve 1«)U]d be inc;J!"{X)reted in tM:>Resolutions of the ~ or Gov~ aut~1'Z.lnG tr.e Bank to acceptcontr1b.1t1ans for tm first azn secaKi st3geS respective!.,' J am set-ting out ftlrther specific provisions re1at~ to the lX'OCedJre torIIIa1dng contributions J tm t9n'1S gJwm:1,ng SJ.ch contrlwtions. ard~ ~r 1n which they l~u1d be i:&Yable. 'I!:lese Resol'Jt1<X1S ~ theiK'qIOBed te7t of which 1S ~ed to this P'!)8r~ ~ be a1tIII1ttedto tm ~ of Ooveroors as a package, to be adopt~ toge~.CamI1brents to cootrlbute urv:ier the First Resolution 'o'8\Xlld beoarse.ft'ect1veJ ard the ~ F\m 1«)Uld be ~ to be establishOO, WS1ttE total of a1c.~ carmibrents race1ved by t1E &ink arrDJrIts to atleast US$260.000.JOOO. (i.e., about 75% or t-J'Ie tot:1J. aDnmt autlD"izedurx1er t.1ote First Resolutioo). Caml1 tnelts to ca1triOOte \Jrxier theSeca'K1 Resolution "1Ql1d bec~ et'fect1ve wte1 t-~ tots! of such CaD-m1'b1ents received artnmts to at l~ US$130,OOO.OOO. ?ro\"1s1on isnede 1n the Resolutions for a msnber to IJBke Cawm1tment5 for bothstages in a s~e 1nstI'\J12nt.

3

~1tlc Features of the ~~ Sc1:sne

8. /mnmt to be rot)b1llzed. In Resolution}i). 62) tre !X)Broof Governors :indicated tret contrib.1tions to the fEW Furn ~ bedes1gr81 to ;JroViCe the &lnk, 1n t~ t1rst 1nstame, w1t.~ resourcesfor too corOlct of calCess1ona1 le~ operations clJr~ tM ttreeyears errl1ng 31 Dece!'1ber 1975, am urged potential cootributors tocooperate with the Bank 1n settling DUtuaily acceptable ~ntbfor mb1l1~ re8Q.trC13S ~equate to achiew this obj ective. '!hetotal anX>unt of US$525"OOO,OOO which ~ be autoorized ~r thepresent ~se.ls ms been det~ after ~ 1nto eccamt, ont~ o~ Wd, the needs of the :tank' s deve1ap1ng DEI'iber camtriesarxi the operationU 3Tx1 adm1n1strat1ve capability which the Bank !asdeveloped, am , on th:! ott:er, t1:e calls a].:I'eady being nade upa1 fX)ten-tla1 ca'ltriwtors for aid t'urxis. ~ ach1~-ar1Si1t of too target ~depems , oo~.ever. upon t1:e willjngness of ell developed JrsIi>er CaJn-trias to contr1b.1te tre1r ~WI:=1ate stare.

9. /IIK>unt of Inhv1dua1 Allocat1a18. ~ Tablef' of Ca'ltr.L~-t1a18 :in the draft ?esoll1t1ans have been devel~ jn oonsultat1a:1nth camtries partic1patL~ in the Speclal Fun1s I'eoetings. AltOOughtoo relative ffiiP arxl re~t1.vc capital nre of mst potentlal contr1-rotors W9.S taken into acCOlL"1t, in other casP8 t~ stBre is based UPCZlt~ amounced intent10ns of the caltributor ('3.8 m ~ case of Japsn)or the contriwt1.on actually Jmde already by t~ COr1t.('iOOtor (38 int~ case of Mtzerlarx1. ~ 'l'3ble of contribUt1ons haS, therefore.been developed 13rgely on a.., ad ooc basis am ooes not necessarilycoost1tute an appropriate precedB'lt tor future repl~stIDent 3Ct1a1S.:'tbrecwr) it 1£s been necess9.rV to 1nclme e.1l~timm for threecountries tr1.trout the bcnef'1t of t.~1r p:l1:'tic1pation 1n the &'"'gC>tia-t1a1S. reo aBrt>er is obligated to Dake a ca1tr1wtioo; rot ~ Bank'0J1d oot be autooriz.ed urnr eit1"er Resolution to accept 3."1 a:rJlmt!'ran any contributor ~1h1ch 18 less than that specL.f'1ec1 1n wch Reso-lutial.

10. Cred1tjIIg Arr~ements. 1o1an.v contributors will need toobtain parl18JiEntary autOOrlzat1a\ before trey can nBke caD'I1b'81tsto t!'le rew Furn. Accoro~. eVe'1 if tre Pl"CP088.ls arc adq>ted inthe rer future, 1t 1s oot ant1cJ.pa.ted that the ~te ~unt ofcontrib1tla-m neceSSc'lrY to JD2.ke tt:s t'lrst stage of t..~ p--roogr:--ilu~effective can be achieved bef:Jre tm ~ly PSJrt of 19711. Mea..~Jtoo ~ 1s in \n'ogef'lt need ot re~s to ~le 1.t to ca1t1nle itscalCessiona.1 1eOOing operatia'lS. In reCI"1@:nlt1a1 of this, provis1alhas been nme In t1:»3 F1rst Resolution tor ca1tr1b.Itors, by an appro-priate declaration .!I.t the t~ of depositing Instru:1Ients of Contr1bu-tioo for the ~tl Furn. to credit to tmir cootr.i.bJtions 9rJy sromtMlich they have contributed to t-~ ~t1-P\1r1X)8e SpecUl F~ after31 Decerber 1972. '!he effcct or such 3 ~13rat1on is ttat. upont1:»3 canjng into effect of t1:»3 camd.12:B'lt. t!1e resources credited

-

will be ~.i~""J:'ed to the rew F\1rn as ISrt of tm ca1tr1but1a1, ~will tte'eafter be gaven-s] by tre Resulations of the Furd. To date,fQJr contributors - Fir.lard. J~) tlor'fn.y am SW1t~lani - \Q11d

have ~ right to take a1vant~ of this ?l'Ovision.~ It is ~thit other countries will fW it JX)ss1ble to nnke J.nteI'jJn cmtriN-tions to the K11ti-PurpoBe Special F\m }n'1ar to t~ caning into~tion of t~ neo,r Fl.u"n.

11. Currency Provisions. .tIJnmts at cootr1b.1tla1S are ex-pressed in -t~r U!iIt-err--sf:ates do~'\rS.. but the individual con-trib1t1on camlitlle'1ts will be made (am subBeq\1ently ~) in theCQ'Itrib1tor's currency.. at t~ rate of exc.~ to UnitOO States(jQl]ars usOO for transla.t1on pUI1)Ose8 by the Ba."1k 1n its booI=s ofacco.mt at the date the Resolut1ors are ~opted. ~ effect of thisis to .fix &1.t the ootset ~ rI.IIi)er of ~ts of lBt~ c~y tobe ca1triwtOO by each paI'tic1~.t~ CQU!1try.. mioh will mt ttm'e-after be sunj ect to any ne..intenance of w.lue in ten.m of gold or intemB of -:'.ny otlmo CurTency. 'n)9 IrOIX>nl ttat 1m1v1dual l:D1ti""iOO-tions stX>uld mt be govenBi by a uaJntPname of value provia1cxl .-8~ Slbj ect of considerable discussion at tM ~U1gS in ID~ani in Manila.. arxl differing v1eta ~ expressed. EventU2.1ly, itte.8 agreed t1I!.t ~ 1n view .1nter a1jD, of ~ertajnt1o8 CQ'lCem.1ng thet'\1ture structure of' the interrVlt1~ ~cry system ~ the stepss.1re1:'dy taken by Salle potent1e.1 contributors to obtain 1nterrXll au-ttmoimtj on for cmtriWtio:1S, too (rqX)~ contained In t~ draftResolutions Ca11d 'De accepted. '!his 8greai:I:-nt wg.s rcached (Xl theexpress understar¥1ing th..~ the pro~ r¥JW ~sed .,uld rot ca1S-t1tute a precedent for ruture replenistJrEnts of t.~ Asian DevelopoontFlnl. Participents 1n the ~ ~1ng al~ DDde it clear th!.t t~procedure ~uld oot be a precedent for t..~1r psrticipat1on 1n ot~r1nteml t 1 anal 1nst 1 tut 100s .

12 . Provision for :'1a1 ver of U~. One or the baSic 1r1n-ciples accepted by t}H! BoaM of G()W!'r¥)rB tor ~ l8W Furd is thatcontr1b.1tions to ~ PIm stnJld ~ available, on a reciprocal basis,to f'jmrJce procUI.'8'IS-;.t 1n contriblltor ~8 am developing rrsrbercountries of the Benk. Provis1o."l'tBS also tme 1n Resolution No. 62,m~ver-, for the Board of GoV"'"-rrXJrS to aut}X)r1ze depaI-tures t'ran this

.3/ At the Sixth Arn1'1l ~t1..":@', ~, the GovCff.:iX' for Japanannounced th..~t subJect to approval of t~ Japanese Diet, the JapaneseGovemJlE'nt was prepared to corltribute ~t a:e-third or the $525m1ll1on target (which c<rres:pon1s to the stare cont~Jated fcr Japanin the attached Resolutions) 1n 51d1tion to the n2 billion cootribu-t1C11 already DBde this year.

5

prJ.miple. In ~ draft ResolutiCX1S row In"q)Osed, tM Board orQc-.verrX>r8 ~~ authorize t~ Board of Directors L"1 exceptia'l81cases J at the request of tho ~levant cootritutor, to ~ to waivetM appl1cat100 of tte reciprocal unty1..""Jg :fon111la to :J. cootriblt1a1\n1er the first stage of t.~ PT"t)gr:~-.~. ~ Slob 'fBiver ~ be ~-sible for the secord stege of the f,ii"iJgi:-a.WR:. ~ eI"tect of tMsept'Ov1sions is tmt a contzo1butor Imy tie the first two-thirds or itstotal COl1'Cr1WtJ.OO to pI'OCUI'eIlSlt of J.ts o.-l ~ ~ services.

13. The propose.l to ~v1de tro t'eSO\noCe nr:>bll.1zation effort.into two stages, the first of which nay be tied, e~ 0ur1ng the&cussions at tM IQ'da'1 MeetJ,ng. It 18 spec1.t"1ca1ly des~ toaccar.-~te the ~sitiCK1 of the United states. ~ch Ms .I!.~obta1nsd legislatJ.ve authorization am is current;ly seekjng appro-prUtion for a contrJ.bution of $100 m1.J l1on to the au1k' s SpecialFunis, 00 an 1rI1.t1:;illy tied basis. 'b!:Z'O~ ot' acceot~ t100resources mto the ~ F\Jrn gives rise to s1~cant problens 1nprinciple an1 in prac-c1ce, am it 1i8S onl.v with great reluctance thatthJ.s feature \e.S mtro<1uced into the arrsr~s. Neve:wtreles8 J

g1~ the jJItJart~e of sec~ part1ci~ia'1 1n t.}}9 F\Jrn 1'1'a1 theQltset of all mf)j or developed camtries, it -.e.s coos1de~-:o.:l that thisfeature could be sccepted as a tI'8nS1t1alal neasure to't'sros the earlyach1evenent of the obje:.tive or a brotK1ly-bRsed BlxlllUtually ~1edFlm.

14. ~1atic:r.s or the~. The F1rst Resolut1on autoorizesthe brd of ~tOr3 -to~ ReguJatia18 to gO""lerrl tm .f\.1R1 am t~~etratia'l o.f its N&."IUrceS. ~ ~tia1S w1U ~~tethe basic pr:1rX)ip1es set oot In Reeo1utioo~. 62. am Will ca1ta1nalch other pX'O\r1SJ alS as a..""e ~essary or ~jate for the etf'1.-cient adrninJ strat1cn of t~ ~. Deposit or an Instr\.BrEnt of Can-tr1b1t1on as specified in th3 Re~lutlons 'fill constitute acceptanceby the ~er of tne oppl::r-atian of the ~1at1ons to its contribu-tion. Effectively. therefore, t~ ~tia'lS cOl'.st1tute a stateTCntby the B3.nk ox" the terns ~n which it 18 pr'ep&red to ddm1n18t4Jr CQ1-tr1.b.ltlam. which wtet1 accept~ by :l c<XItr1butar (by t1:e act of de~siting an Instruoont of ContribltiO'l) ~e So cattractual ob~t1a'lbe~ the cootrlbutor aiD the &u'1k. ~ systen erIVlsaged is s1m11arin ~a1n respects to too systen of bilateral contr1'cut100 agrgeDSltsIn'eVailing at tre present tine; rot; tt2 s1gn11'J.carJt d1f':f'~ is thatt~ tems govemj~ all C<Xltr1blt1<X1S wi] 1 be identical, except to t~extent that the authaJo1zing Reso1ut1ons J;'Cm1t V8~1at1oos fran alecontribution to ~the1'.. e.g., w1t..~ regard to instaJJnl!nts, am 1n ~~l1cation of tM ~iprocal untY1l18 f~.

15. ~11sl1Jelt of the ~. me pjrst Resolution In''Ov:1destJBt the new FWx1 "smll be c'eenEd to be established" am tm Regula-tions smll cane into operat ion \cI1en Instrtme11"s of Ca1tr1Wtion inan am-egate aDDJnt of at least 1]$$260,000,000 mve been deposited

6

with tile amk. ~ Fum is rot J thereforo J establ1stm by act100 ofthe ~ 1tse1.f: it 1s establ1she1 by t1:e act1a1S o.f contributors 1nCaIm1tt~ a certain aDnJnt o.f JJIrey to too Bank for ~str3.t1a'l111 ~ FurIi. It is considered ttat this ~ch is coos1sts1t withArt1cla 19.1(11) o.f the Articles ot Agr~aitJ 1It11ch ~ ~ 8mkto accept t~ ~stration of ~o1al FLn1s 'bolt mkes 00 specificstl~t1on as to ~ SUM Speclal Ftms should CaE into existence.b Reeolut100 rurt~ prov1des tmt tM total mrwnt necessary toestablish t~ Funi sOOuld be received by 30 J~ 197 4 J unless thebrd of ~rs Slbsequent1y establist:es am~ date. InstNrBnteof Cootrib.1tia'l 1n respect of tre f1rst stage or tm prQgI.'SIim ~arc deposited prior to tm date t1'e Purxl i8 establle1m will becar.eeffective on the date of establish1k:nt. 'nX>se received after thatdate will beCaIe effective ~-1at-ely ~ ~p's1t with the &tnk.

Puture Actia1

16. It is of critical ~~e to tm PBnk's Ca'lCeBs1a18llen1~ opel'e,t1ons that t1:e first stage of the reSO\n'Ce mbll1zat1ons1n1ld becam effective am the r:sw Fum cars .into ~5te'lCe in t~first mlf of '1974. To achieve this target, it will be rKJCessary fortm autoorimtioo of tre ~ of Gov&z.TDL~ to be obtained for the~~nts as: soon as poss1b1e~ to be 1n tjme far apprvpz-;:1atelegis1a ti ve arxV cr budgetary act ion by ca1tr1b.1tOt'S.

17. I."1 t..'-)ese c1rcllnstaroes, it ms the COMensus of the l"an1laMeetil]g that ~ B%Tangerrents' set rot jn the ~ Resolutions8tn11d be subnitted to tm &:erd or DireCtors even tOOugh a .r1mlam official olar1t1C3.tiC11 or t1E posit1a1 of the United Statesregarding these arrang~s is still a~ted. It was ~her theview at tm M')!li1a M6et~ t:tat tm ne.tt£or ~ be braJght IJI1 tar~ action ~ an appr---opr:ll3.te 1rrJ1cat1a'1 of United States sup-vc-:=i;is received, ~fully within the ~xt ~ or ttnoee JlD'lths. If Blch~cation is rot rece1ved~ a. further reeting of potentlal contributorswill tave to be convened to review tM s1tuatioo.

18. In the rreont1ne t Bank starr are ~~ for considera-tion of the Baaro revised dre.ft R~!l~tia18 for the ~W Fun1 ~ basedupal tOOse issued to the ~ 00 11 DecaDber 1972 as 'fkJrldng Paper3-72. &mk staff 2.I'6 also stlKiy:1rlg ~ a{I~" late arr&~a1i;8for the transfer to the new Furnt upon its estab11shnantt or reSa1rceSat present aan1n1stered in tm Itblti-PurpoBe Special F\m t ottmo thantoose whic.'1 will be credited to ~ 00I~.Aob1torr8 share :in ~ initialresource oobll1zation as described in pa1'B~ 10 above. It 18 hopedto fOImUlFJ.te rec~t1ons tor ~ actl.a'l 1n this regard t ~ topresent t~se to the Boaro 1n t1:e ~ future.

7