THE Master PRESS MONDAY, MAY 8, 1978. No contribution to fund

Press, 8 May 1978, Page 20

THE Master PRESS MONDAY, MAY 8, 1978. No contribution to fund

New Zealand's refusal to pay a share of the Asian Development Fund was announced by the Prime Minister, Mr Muldoon, when he was in Vienna for the annual meeting of the Asian Development Bank. This will not greatly affect the establishment of the fund, for which the bank is seeking $2 billion. New Zealand was expected to pay about S 4 million as its share. Instead, the money will be spent on bilateral aid. Already most of New Zealand’s aid is given bilaterally, and about 80 per cent goes to the Pacific and South-East Asia, only 16 per cent of it through multilateral organisations.

The reasons Mr Muldoon gave for not contributing seem perplexing. He has criticised the A.D.B. because some of the money lent by the bank goes to developed countries. Although Mr Muldoon holds that a disproportionate amount is spent in this way, what the bank can do about it is hard to see. If the bank lends money to a country and that country decides that it wants Japanese or American goods because they suit the specifications, or are cheaper, it is hardly the bank's job to tell the country to shop elsewhere. Such an instruction might be justified if the country which took a bank loan were seen to be squandering the money by buying at prices considerably higher than the going world price. Why should a country be blamed for buying where prices are cheapest?

Donor countries often want their aid tied so that the recipient country has to obtain the goods or services from the donor. This is the way a great deal of New Zealand’s aid has been given. New Zealand firms have benefited from

this form of giving aid. Presumably by giving the $4 million bilaterally some benefit will be returned to New Zealand. What is not clear, however, is why the Prime Minister blames the bank for New Zealand’s not reaping benefits directly. What may be happening is that the big donors to the A.D.B. have been imposing conditions on their continued contributions. On the face of it that seems unlikely.

The A.D.B. is now 11 years old and has 23 client countries which may borrow from it. Other countries, of which New Zealand is one, contribute to it. The bank, sometimes accused of being capitalist, is, however, used by Vietnam and Laos as well as by Singapore and South Korea. Western Samoa, Tonga, and Fiji—all recipients of New Zealand aid—are members and have had loans approved by the A.D.B. One of the bank’s problems is well illustrated by two of these countries, Western Samoa and Tonga. They have not taken advantage of their loans. The amount of money disbursed by the bank falls far short of the loans approved. The more highly developed economies, such as Singapore and South Korea, are better able to take up the approved loans than are many of the poorer countries. The answer to the quest for having more A.D.B. money spent in New Zealand probably does not lie in direction from the bank but in the willingness and capability of New Zealand firms to tender their goods or services when the contracts are advertised. The least that the Government can do is to make sure that information on A.D.B. contracts, or World Bank contracts, is readily available to New Zealand firms if the firms are not showing an interest themselves.