ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

A+| A| A-

The South Bank Proposal-Is OPEC Participation Critical

The South Bank Proposal Is OPEC Participation Critical? I S G ACCORDING to an UNCTAD study, completed around mid-1983 at the request of the Group of 77, a South Bank, ie, a bank of and for the developing countries, is needed and is possible. The study suggests that the proposed bank should have a total capital of $38 billion, of which $ 4.8 billion would be paid-up capital and the rest on cal] in case it is needed to meet the bank's obligations. Callable capital performs a guarantee function. It is suggested that of the paid-up capital, it would be desirable if $ 1.5 billion consisted of convertible foreign exchange; the rest would be contributed in local currency which should be for use by the bank without restrictions except for convertibility. Assuming a very conservative gearing rate of 1:1 between capital and: loam; raised by the bank, the bank should be ab.e to mobilise additional funds from the private capital market. With the capital resources it can thus command, the proposed bank, it is suggested, could ''make a significant contribution to the developing countries' growth, diversification and mutual co-operation". In specific terms, three sets of activities are envisaged for the proposed South Bank: (1) stimulating and helping to finance joint ventures and extending export credit; (2) extending balance of payments support, and (.3) providing support to payments and credit arrangements of developing countries and commodity stabilisation finance. By undertaking these activities, the bank would be able to not only promote and help streamline economic co-operation among developing countries but also fill some of the gaps in the present structure of international finance, gaps that particularly affect developing countries adversely.

Dear reader,

To continue reading, become a subscriber.

Explore our attractive subscription offers.

Click here

Comments

(-) Hide

EPW looks forward to your comments. Please note that comments are moderated as per our comments policy. They may take some time to appear. A comment, if suitable, may be selected for publication in the Letters pages of EPW.

Back to Top