US embassy cable - 02ROME2382

REPORT OF SEVENTY-FIFTH SESSION OF IFAD'S EXECUTIVE BOARD.

Identifier: 02ROME2382
Wikileaks: View 02ROME2382 at Wikileaks.org
Origin: Embassy Rome
Created: 2002-05-15 14:54:00
Classification: UNCLASSIFIED
Tags: AORC EAID IFAD EAID AORC IFAD EAID AORC IFAD EAID AORC IFAD EAID AORC IFAD EAID AORC IFAD
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 06 ROME 002382 
 
SIPDIS 
 
TREASURY FOR WSCHUERCH, MJASKOWIAK 
USDA FOR FAS/LYNN REICH AND DAVID WINKELMAN 
STATE FOR IO/EDA ROSE BERSTEIN 
USAID FOR AA/PPC;DAA/G/EGAD;AFS 
 
FROM FODAG 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02382  01 OF 06  151509Z 
 
E.O. 12958:  N/A 
TAGS: AORC, EAID, IFAD, EAID AORC, IFAD, EAID AORC, IFAD, EAID AORC, IFAD, EAID AORC, IFAD, EAID AORC, IFAD 
SUBJECT:  REPORT OF SEVENTY-FIFTH SESSION OF IFAD'S 
EXECUTIVE BOARD. 
 
 
1.  SUMMARY: THE SEVENTY-FIFTH SESSION OF THE EXECUTIVE 
BOARD OF THE INTERNATIONAL FUND FOR AGRICULTURAL DEVELOPMENT 
(IFAD) MET IN ROME CONDUCTED THEIR SEVENTY-FIFTH SESSION IN 
ROME, APRIL 22-23, 2002.  MARK JASKOWIAK (DIRECTOR, OFFICE 
OF SPECIALIZED DEVELOPMENT INSTITUTIONS, U.S. DEPARTMENT OF 
TREASURY) REPRESENTED THE UNITED STATES AS EXECUTIVE 
DIRECTOR.  KEY DECISIONS MADE BY THE EXECUTIVE BOARD DURING 
THIS SESSION INCLUDED THE APPROVAL OF SIX PROGRAMS/PROJECTS 
AND SEVEN GRANT PROPOSALS TOTALING USD $121.4M (WITH THE 
U.S. AND CANADA ABSTAINING ON A LOAN TO HAITI), APPROVAL OF 
THE USE OF THE ADVANCE COMMITMENT AUTHORITY FOR UP TO USD 
$106.2M, APPROVAL OF THE DRAWDOWN OF IFAD IV AND V MEMBER 
CONTRIBUTIONS, ON A VOLUNTARY BASIS,  OF UP TO USD $330.5M 
TO MEET LOAN AND GRANT DISBURSEMENTS IN 2002, THE 
REAPPOINTMENT OF PRICEWATERHOUSECOOPERS AS THE EXTERNAL 
AUDITORS FOR THE NEXT FIVE YEARS AND , APPROVAL OF A SDR 
12.4M CONTRIBUTION TOWARDS THE REDUCTION OF ETHIOPIA'S DEBT 
TO IFAD UNDER HIPC.  END SUMMARY. 
 
FINANCIAL MATTERS 
----------------- 
 
2.  STATUS OF CONTRIBUTIONS TO THE FIFTH REPLENISHMENT OF 
IFAD'S RESOURCES.  THE FIFTH REPLENISHMENT WAS DECLARED 
EFFECTIVE ON SEPTEMBER 7, 2001.  SINCE THEN, INSTRUMENTS OF 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02382  01 OF 06  151509Z 
CONTRIBUTION AND PAYMENTS MADE AGAINST PLEDGES NOT SUPPORTED 
BY INSTRUMENTS OF CONTRIBUTION AMOUNT TO 71 PERCENT OF THE 
REVISED TOTAL PLEDGES OF USD $442.5M MADE UNDER THE FIFTH 
REPLENISHMENT.  THE U.S. PAID IN CASH ITS LAST USD $5M 
PAYMENT DUE UNDER IFAD-4 IN MID-APRIL 2001.  THE U.S. HAS 
RECEIVED CONGRESSIONAL APPROVAL OF THE FULL FY02 
APPROPRIATIONS REQUEST OF USD $20M (USD $15M IS FOR IFAD V) 
AND HAS REQUESTED USD $15M IN APPROPRIATIONS FOR FY03. 
 
3.  INVESTMENT PORTFOLIO.  A REPORT ON IFAD'S INVESTMENT 
PORTFOLIO FOR 2001 AND FOR THE FIRST QUARTER OF 2002 WAS 
REVIEWED BY THE BOARD.  IN 2001, IFAD SUSTAINED A USD $42.9M 
LOSS IN ITS NET INVESTMENT INCOME STEMMING PRIMARILY FROM 
REALIZED/UNREALIZED LOSSES IN ITS EQUITY INVESTMENTS.  THE 
EQUITY PORTFOLIO REGISTERED A USD $100.3M LOSS FOR THE YEAR, 
FUELED BY USD $87M IN REALIZED LOSSES AND USD $21M 
UNREALIZED LOSSES.  DIVIDEND INCOME OF USD $13M HELPED 
SLIGHTLY TO COUNTER THIS POOR PERFORMANCE, AND INCOME FROM 
FIXED INCOME INSTRUMENTS CONTRIBUTED USD $57.3M IN EARNINGS. 
HOWEVER, INCOME FROM GLOBAL GOVERNMENT BONDS WAS MODEST AS 
MARKETS STARTED TO DISCOUNT AN ECONOMIC RECOVERY.  BY END- 
2001, IFAD'S INVESTMENT PORTFOLIO HAD DECREASED FROM $2.07B 
AT END-2000 TO $1.97B.  WHILE THE AGGREGATE LOSS ON 
INVESTMENTS IN 2001 REPRESENTED A NET RATE OF RETURN OF - 
2.26 PERCENT, RETURNS FOR THE FIRST QUARTER OF 2002 SHOWED A 
POSITIVE ANNUALIZED RETURN OF 2.10 PERCENT. 
 
4.  ALSO PRESENTED TO THE BOARD WAS A REPORT ON THE 
IMPLEMENTATION OF IFAD'S NEW INVESTMENT POLICY.  THIS 
DOCUMENT REPORTED ON THE STATUS OF IFAD'S INVESTMENT 
PORTFOLIO SINCE IMPLEMENTATION OF THE NEW PORTFOLIO 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02382  01 OF 06  151509Z 
INVESTMENT POLICY IN JANUARY 2002.  A KEY ACHIEVEMENT IS 
THAT IFAD'S FINANCIAL TEAM HAS CUT THE SHARE OF EQUITIES IN 
THE INVESTMENT PORTFOLIO TO ABOUT 18 PERCENT BY MARCH 12 AND 
IS PREPARED TO SELL OFF ADDITIONAL EQUITY WHEN MARKET 
CONDITIONS ARE FAVORABLE TO MEET THE TARGET CEILING OF 10 
PERCENT. THEY HAVE ALSO AMENDED INVESTMENT GUIDELINES FOR 
DIVERSIFIED FIXED-INCOME MANDATES TO REFLECT THE CREDIT 
FLOOR OF AA- MANDATED IN THE NEW INVESTMENT POLICY.  IN 
ADDITION, THE PAPER NOTES THAT THE POTENTIAL AVERAGE RATE OF 
RETURN ON THE NEW ASSET ALLOCATION HAS BEEN REDUCED FROM 7 
PERCENT UNDER THE PREVIOUS POLICY TO 5.6 PERCENT UNDER THE 
NEW POLICY. ALSO, THE EXPECTED VOLATILITY OF THE PORTFOLIO 
UNDER THE NEW POLICY HAS BEEN ALMOST HALVED FROM 8.2 TO 4.2 
PERCENT.  THE USDEL, AMONG OTHERS, COMPLIMENTED MANAGEMENT 
ON THE RAPID IMPLEMENTATION OF THIS NEW POLICY AND URGED 
DIVESTITURE TO THE 10 PERCENT TARGET AS QUICKLY AS MARKET 
CONDITIONS PERMIT THE MINIMIZATION/AVOIDANCE OF LOSSES. 
 
5.  RESOURCES AVAILABLE FOR COMMITMENT.  THE RESOURCES 
AVAILABLE FOR COMMITMENT WERE CONSIDERED AND THE BOARD 
APPROVED THE USE OF THE ADVANCE COMMITMENT AUTHORITY (ACA) 
FOR UP TO USD $106.2M.  WHILE RECOGNIZING THE PRESENT NEED 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ9478 
 
PAGE 01        ROME  02382  02 OF 06  151509Z 
ACTION IO-00 
 
INFO  LOG-00   NP-00    AF-00    AID-00   AMAD-00  CIAE-00  COME-00 
      CTME-00  DODE-00  ITCE-00  WHA-00   SRPP-00  EAP-00   EB-00 
      EXME-00  EUR-00   UTED-00  TEDE-00  INR-00   ITC-01   NEA-00 
      NSAE-00  OES-01   OIC-02   OMB-01   OPIC-01  SS-00    STR-00 
      TEST-00  SA-00    SAS-00     /006W 
                  ------------------AEDDC1  151514Z /38 
R 151454Z MAY 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 3742 
INFO USDA FAS WASHDC 2125 
USMISSION USUN NEW YORK 
DEPT OF TREASURY WASHDC 
AMEMBASSY PORT AU PRINCE 
AMEMBASSY NEW DELHI 
AMEMBASSY CAIRO 
AMEMBASSY ASMARA 
AMEMBASSY YAOUNDE 
AMEMBASSY VIENTIANE 
 
UNCLAS SECTION 02 OF 06 ROME 002382 
 
SIPDIS 
 
TREASURY FOR WSCHUERCH, MJASKOWIAK 
USDA FOR FAS/LYNN REICH AND DAVID WINKELMAN 
STATE FOR IO/EDA ROSE BERSTEIN 
USAID FOR AA/PPC;DAA/G/EGAD;AFS 
 
FROM FODAG 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02382  02 OF 06  151509Z 
 
E.O. 12958:  N/A 
TAGS:  AORC, IFAD, EAID 
SUBJECT:  REPORT OF SEVENTY-FIFTH SESSION OF IFAD'S 
EXECUTIVE BOARD. 
 
FOR ITS USE, THE USDEL ALONG WITH OTHER DELEGATIONS 
EXPRESSED CONCERN WITH OVERUSE OF ACA AND RECALLED THAT THE 
ORIGINAL INTENT OF ACA USAGE WAS TO COVER TEMPORARY 
SHORTFALLS.  USDEL SUPPORTS THE USE OF ACA ON A LIMITED 
BASIS, AS A SHORT-TERM BRIDGING TOOL TO BE USED PRUDENTLY. 
THE CEILING OF 3 YEARS OF REFLOWS SHOULD BE CONSIDERED A 
MAXIMUM FOR TEMPORARY EMERGENCIES AND NOT AN ALLOWANCE FOR 
REGULAR USAGE.  ALONG WITH OTHER DELEGATIONS, THE USDEL 
REQUESTED FROM MANAGEMENT THAT FUTURE DOCUMENTS INCLUDE MORE 
INFORMATION ON SOURCES AND USES OF ACA CALCULATIONS.  IFAD 
MANAGEMENT NOTED THAT THE FUND WAS ADDRESSING THE CURRENT 
ISSUE OF LIMITED RESOURCES BY BOTH USING ACA AND BY REDUCING 
THE LENDING PROGRAM (FROM THE USD $450M (REAL) TARGET). 
THIS ISSUE IS ALSO UNDER CONSIDERATION BY THE CONSULTATIVE 
GROUP FOR THE SIXTH REPLENISHMENT NEGOTIATIONS. 
 
6.  STATUS REPORT ON PRINCIPAL AND INTEREST PAYMENTS. 
IFAD'S TOTAL STOCK OF PAYMENT ARREARS (P PLUS +I) AMOUNTED 
TO USD $61.5M AT END-2001, CLIMBING TO USD $1.8M OVER END- 
2000.  MORE THAN HALF (53 PERCENT) OF ARREARS STILL STEM 
FROM AFRICA (PRIMARILY LIBERIA, SOMALIA, AND THE CONGO) AND 
25 PERCENT FROM CUBA.  CUBA, THE DEMOCRATIC REPUBLIC OF THE 
CONGO, LIBERIA AND SOMALIA ACCOUNT FOR 79 PERCENT OF THE 
TOTAL ARREARS.  IN LIGHT OF THE PROPOSED PROJECT FOR 
CAMEROON, A COUNTRY WITH AN ARREARS CLEARANCE PLAN, THE U.S. 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02382  02 OF 06  151509Z 
CHAIR SUGGESTED THAT THE BOARD MIGHT WANT TO CONSIDER, AT 
SOME LATER DATE, A STANDARD POLICY GUIDELINE ON LENDING TO 
COUNTRIES THAT HAVE ARREARS CLEARANCE PLANS, NOTING THAT THE 
CURRENT PRACTICE APPEARS TO BE CASE-BY-0CASE. 
 
7.  AUDITED FINANCIAL STATEMENTS OF IFAD FOR 2001.  THE 
EXECUTIVE BOARD REVIEWED IFAD'S AUDITED FINANCIAL STATEMENTS 
FOR 2001 (SEE INVESTMENT REPORT ABOVE).  THE BOARD APPROVED 
THE RECOMMENDATION TO SUBMIT THESE STATEMENTS TO THE TWENTY- 
SIXTH SESSION OF THE GOVERNING COUNCIL FOR FINAL APPROVAL. 
 
8.  REQUIREMENTS FOR THE TWENTY-THIRD DRAWDOWN OF MEMBERS' 
CONTRIBUTIONS IN 2002.  MANAGEMENT REQUESTED THE BOARD'S 
SUPPORT FOR THE DRAWDOWN OF USD $330.5 MILLION IN MAY 2002 
TO MEET 100 PERCENT OF PROJECTED LOAN AND GRANT 
DISBURSEMENTS FOR 2002.  TAKING INTO ACCOUNT AGREED 
SCHEDULES FOR INDIVIDUAL COUNTRIES, THIS REQUIRES DRAWING 
DOWN THE REMAINING 40.8 PERCENT OF IFAD-IV AND 61 PERCENT% 
OF IFAD-V CONTRIBUTIONS.  THE BOARD APPROVED THE AMOUNT OF 
UP TO USD $330.5M TO MEET LOAN AND GRANT DISBURSEMENTS IN 
2002.  THIS WILL BE DONE BY DRAWING DOWN FROM THE FOURTH AND 
FIFTH REPLENISHMENTS OR IN TERMS STIPULATED IN AGREEMENTS 
WITH INDIVIDUAL MEMBERS - MEANING THAT THE DRAW DOWNS ARE ON 
A VOLUNTARY BASIS WITH EACH MEMBER FREE TO ENTER INTO ITS 
OWN DRAWDOWN AGREEMENT.  THE USDEL MADE CLEAR IT WAS UNABLE 
TO AGREE TO THE DRAWDOWN SCHEDULE AS REQUESTED AT THIS TIME. 
 
9.  REPORT OF THE AUDIT COMMITTEE.  THE REPORT OF THE 
SEVENTY-SIXTH AND SEVENTY-SEVENTH MEETINGS OF THE AUDIT 
COMMITTEE WERE PRESENTED.  THE BOARD ENDORSED THE REPORT AND 
APPROVED THE COMMITTEE'S RECOMMENDATION REAPPOINTING 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02382  02 OF 06  151509Z 
PRICEWATERHOUSECOOPERS AS THE EXTERNAL AUDITORS FOR THE NEXT 
FIVE YEARS (SUBJECT TO SATISFACTORY PERFORMANCE).  THE AUDIT 
COMMITTEE IS CURRENTLY REVIEWING ITS MANDATE AND WILL, AFTER 
CONSULTATIONS WITH MANAGEMENT, SUBMIT PROPOSALS TO THE NEXT 
SESSION OF THE EXECUTIVE BOARD. 
 
RE-ENGINEERING PROGRAM 
---------------------- 
 
10.  A PROGRESS REPORT WAS REVIEWED CONCERNING THE PROGRAM 
TO RE-ENGINEER IFAD.  THE FOLLOWING FIVE IFAD BUSINESS 
PROCESSES ARE UNDERGOING REDESIGN AND STRENGTHENING OF THEIR 
OPERATIONS: STRATEGY AND FINANCE, HUMAN RESOURCES 
MANAGEMENT; INFORMATION TECHNOLOGY; SUPPORT SERVICES; AND 
KNOWLEDGE MANAGEMENT.  THE REPORT ALSO NOTED THAT THE 
DECISION ON THE AWARD OF A CONTRACT WITH A CONSULTING FIRM 
AS AN IMPLEMENTATION PARTNER IS SLATED TO BE MADE BY THE END 
OF MARCH 2002.  WHILE APPRECIATING THE DELINEATION OF THE 
DIFFERENT PROJECT COMPONENTS, MOST DIRECTORS BELIEVED THAT 
MORE DETAIL SHOULD BE PROVIDED IN FUTURE REPORTS, ESPECIALLY 
WITH RESPECT TO BUDGET ALLOCATIONS. 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ9482 
 
PAGE 01        ROME  02382  03 OF 06  151510Z 
ACTION IO-00 
 
INFO  LOG-00   NP-00    AF-00    AID-00   AMAD-00  CIAE-00  COME-00 
      CTME-00  DODE-00  ITCE-00  WHA-00   SRPP-00  EAP-00   EB-00 
      EXME-00  EUR-00   UTED-00  TEDE-00  INR-00   ITC-01   NEA-00 
      NSAE-00  OES-01   OIC-02   OMB-01   OPIC-01  SS-00    STR-00 
      TEST-00  SA-00    SAS-00     /006W 
                  ------------------AEDDE9  151514Z /38 
R 151454Z MAY 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 3743 
INFO USDA FAS WASHDC 2126 
USMISSION USUN NEW YORK 
DEPT OF TREASURY WASHDC 
AMEMBASSY PORT AU PRINCE 
AMEMBASSY NEW DELHI 
AMEMBASSY CAIRO 
AMEMBASSY ASMARA 
AMEMBASSY YAOUNDE 
AMEMBASSY VIENTIANE 
 
UNCLAS SECTION 03 OF 06 ROME 002382 
 
SIPDIS 
 
TREASURY FOR WSCHUERCH, MJASKOWIAK 
USDA FOR FAS/LYNN REICH AND DAVID WINKELMAN 
STATE FOR IO/EDA ROSE BERSTEIN 
USAID FOR AA/PPC;DAA/G/EGAD;AFS 
 
FROM FODAG 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02382  03 OF 06  151510Z 
 
E.O. 12958:  N/A 
TAGS:  AORC, IFAD, EAID 
SUBJECT:  REPORT OF SEVENTY-FIFTH SESSION OF IFAD'S 
EXECUTIVE BOARD. 
 
PROGRESS ON THE PROJECT PORTFOLIO 
--------------------------------- 
 
11.  THE REPORT ON IFAD'S PROGRESS PROVIDED A COMPREHENSIVE 
AND FAIRLY CANDID REVIEW OF THE PERFORMANCE OF IFAD'S 
CURRENT PROJECT PORTFOLIO WHICH STOOD AT 241 PROJECTS AT THE 
END OF 2001 AND TOTALED USD -$3.29B. SUB SAHARAN-AFRICAN 
COUNTRIES REMAIN THE LARGEST RECIPIENTS OF IFAD ASSISTANCE. 
THE REPORT INDICATED THAT THE PORTFOLIO'S SHARE OF 
"UNDERPERFORMING" PROJECTS REMAINS AT THE SAME STUBBORNLY 
HIGH LEVEL (25 PERCENT) AS IN PREVIOUS YEARS.  IT ATTRIBUTES 
THIS POOR PERFORMANCE TO EXOGENOUS SHOCKS SUCH AS POLITICAL 
UNREST AND CIVIL DISTURBANCE AS WELL AS THE AFTERMATH OF 
PERSISTENT DROUGHT IN THE NEAR EAST AND NORTH AFRICAN AND 
ASIAN REGIONS.  IT ALSO ACKNOWLEDGES THAT "WEAK PROJECT 
MANAGEMENT CAN GIVE RISE TO A HOST OF OTHER PROJECT 
IMPLEMENTATION PROBLEMS."  THE PAPER ADDS THAT IFAD'S LACK 
OF FIELD PRESENCE HAS FORCED ITS REGIONAL DIVISIONS TO 
SEARCH FOR WAYS TO COMPENSATE, ESPECIALLY THROUGH EXTENSIVE 
FOLLOW-UP MISSIONS, TECHNICAL ASSISTANCE GRANTS AND LOCAL 
AND INTERNATIONAL NGOS FOR PROJECT IMPLEMENTATION SUPPORT. 
AT PRESENT, UNOPS IS RESPONSIBLE FOR HANDLING THE 
ADMINISTRATION OF 55 PERCENT OF IFAD'S PORTFOLIO, FOLLOWED 
BY THE WORLD BANK AT 13 PERCENT WITH THE REST MANAGED BY 
COOPERATING INSTITUTIONS AND IFAD.  IN 2001, IFAD 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02382  03 OF 06  151510Z 
SUBSTANTIALLY BOLSTERED ITS CO-FINANCING ACTIVITIES WITH THE 
RECEIPT OF USD $270M IN CO-FINANCING, RESULTING IN A CO- 
FINANCING-TO-LOAN RATIO OF 67%, TWICE THE TARGET FOR 2001. 
THE PAPER ATTRIBUTES THE INCREASE IN CO-FINANCING TO A 
"SUCCESSFUL DRIVE TO DIVERSIFY PARTNERS" BUT REITERATES THAT 
IFAD'S LACK OF FIELD PRESENCE HAS HAMPERED IT FROM TAPPING 
MORE CO-FINANCING.  FINALLY, THE DOCUMENT SUMMARIZES THE 
OUTCOMES OF 23 OF THE 33 PROJECTS WHICH WERE COMPLETED IN 
2001 IN THE FORM OF PROJECT COMPLETION REPORTS AND ASSERTS 
THAT "MOST PROJECTS ACHIEVED THEIR STATED DEVELOPMENT 
OBJECTIVES OF INCREASING INCOME AND RAISING PRODUCTION AND 
PRODUCTIVITY."  THE REPORT IS A HELPFUL GUIDE TO ASSESSING 
IFAD'S PROJECT PERFORMANCE, ESPECIALLY WITH THE SYSTEMATIC 
STRUCTURED FRAMEWORK.  THE USDEL STATED ASSERTED THAT THE 
LOGISTICAL FRAMEWORK TECHNIQUE AND THE ASSOCIATED MANAGEMENT 
AND EVALUATION SET-UP FOR MEASURING AND REPORTING PROJECT 
IMPACT WILL HELP DELIVER EVEN MORE PRECISE ASSESSMENTS OF 
PROJECT OUTCOMES, AND SHOULD CONTINUE TO BE REFINED AND 
IMPROVED. 
 
ANNUAL REPORT ON EVALUATION 
--------------------------- 
 
12.  THIS REPORT PROPOSED A NEW METHODOLOGY TO BOLSTER 
IFAD'S CAPACITY TO ASSESS PROJECT IMPACT.  THE METHODOLOGY 
CONSISTS OF A SET OF EVALUATION CRITERIA AND A DEFINITION OF 
RURAL POVERTY IMPACT.  THE USDEL SUPPORTED THE PROPOSED 
METHODOLOGY TO USE COMMON CRITERIA ACROSS EVALUATIONS, 
ENSURING THAT THE IMPACT OF THE PROJECTS IS SYSTEMATICALLY 
ASSESSED AND RESULTS ARE COMPARABLE ACROSS PROJECTS.  IN 
ADDITION, THE OFFICE OF EVALUATIONS ALSO PROPOSED, AS A 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02382  03 OF 06  151510Z 
PRIORITY FOR 2002, TO "CONTRIBUTE TO THE ONGOING DEBATE ON 
IFAD'S FIELD PRESENCE."  THE DOCUMENT NOTES THAT IFAD'S 
SUPERVISORY MISSIONS, ITS MAIN TOOL FOR PROJECT 
IMPLEMENTATION, ARE NOT PERCEIVED AS AN EFFECTIVE PROVIDER 
OF IMPLEMENTATION SUPPORT.  AS ITS CONTRIBUTION TO THIS 
ISSUE, THE EVALUATION OFFICE THIS YEAR WILL CONDUCT AN 
EVALUATION OF IFAD'S SUPERVISORY ARRANGEMENTS, INCLUDING AN 
ANALYSIS OF THE QUALITY OF AND APPROACHES TO SUPERVISION. 
SEVERAL DELEGATIONS ALONG WITH IFAD MANAGEMENT BELIEVE THAT 
A VERY LIMITED FIELD PRESENCE INHIBITS ITS ABILITY TO 
SUPERVISE AND IMPLEMENT PROJECTS.  THE EXISTING ARRANGEMENT 
OF UTILIZING UNOPS, THE WORLD BANK AND OTHER COOPERATING 
INSTITUTIONS FOR A GREAT DEAL OF IFAD'S PROJECT SUPERVISION 
CLEARLY MEANS THAT IFAD PROJECTS MAY NOT BE IMPLEMENTED 
EXACTLY ACCORDING TO IFAD STANDARDS.   U.S. STRONGLY 
CAUTIONED THAT THE ISSUE OF INTRODUCING MORE IFAD FIELD 
PRESENCE NEEDS TO BE VERY CAREFULLY CONSIDERED SINCE IT 
WOULD HAVE A MAJOR IMPACT ON IFAD'S IDENTITY AND FUNCTIONS 
AS AN INSTITUTION, AND THAT ANY PROPOSED CHANGE WOULD HAVE 
TO BE CONSIDERED BY THE BOARD OF GOVERNORS. 
 
13.  DIRECTORS ALSO DISCUSSED THE OVERALL ROLE OF THE 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ9484 
 
PAGE 01        ROME  02382  04 OF 06  151510Z 
ACTION IO-00 
 
INFO  LOG-00   NP-00    AF-00    AID-00   AMAD-00  CIAE-00  COME-00 
      CTME-00  DODE-00  ITCE-00  WHA-00   SRPP-00  EAP-00   EB-00 
      EXME-00  EUR-00   UTED-00  TEDE-00  INR-00   ITC-01   NEA-00 
      NSAE-00  OES-01   OIC-02   OMB-01   OPIC-01  SS-00    STR-00 
      TEST-00  SA-00    SAS-00     /006W 
                  ------------------AEDE00  151515Z /38 
R 151454Z MAY 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 3744 
INFO USDA FAS WASHDC 2127 
USMISSION USUN NEW YORK 
DEPT OF TREASURY WASHDC 
AMEMBASSY PORT AU PRINCE 
AMEMBASSY NEW DELHI 
AMEMBASSY CAIRO 
AMEMBASSY ASMARA 
AMEMBASSY YAOUNDE 
AMEMBASSY VIENTIANE 
 
UNCLAS SECTION 04 OF 06 ROME 002382 
 
SIPDIS 
 
TREASURY FOR WSCHUERCH, MJASKOWIAK 
USDA FOR FAS/LYNN REICH AND DAVID WINKELMAN 
STATE FOR IO/EDA ROSE BERSTEIN 
USAID FOR AA/PPC;DAA/G/EGAD;AFS 
 
FROM FODAG 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02382  04 OF 06  151510Z 
 
E.O. 12958:  N/A 
TAGS:  AORC, IFAD, EAID 
SUBJECT:  REPORT OF SEVENTY-FIFTH SESSION OF IFAD'S 
EXECUTIVE BOARD. 
 
EVALUATION COMMITTEE AND ITS PROCEDURES FOR REPORTING TO THE 
EXECUTIVE BOARD.  REGARDING THE INDEPENDENCE OF IFAD'S 
EVALUATION FUNCTION, MANAGEMENT WILL PROVIDE TO THE 
EVALUATION COMMITTEE INFORMATION CONCERNING THE PRACTICE IN 
OTHER INTERNATIONAL ORGANIZATIONS ON REPORTING EVALUATION 
RESULTS TO THEIR GOVERNING BODIES, ESPECIALLY IN LIGHT OF 
THE U.S. PROPOSAL ( IN THE REPLENISHMENT DISCUSSIONS) TO 
ESTABLISH INDEPENDENT MANAGEMENT AND EVALUATION FUNCTIONS. 
 
REPORT ON IFAD'S PARTICIPATION IN THE HIPC DEBT INITIATIVE 
--------------------------------------------- ------------- 
 
14.  THE BOARD APPROVED A SDR 12.4M CONTRIBUTION IN NPV 
TERMS TOWARDS THE REDUCTION OF ETHIOPIA'S DEBT TO IFAD AND 
TOOK NOTE THAT THE IFAD PRESIDENT WILL TRANSFER FROM 
INTERNAL RESOURCES TO THE TRUST FUND ACCOUNT THE EQUIVALENT 
OF USD $14M AND USD $27M IN 2002 AND 2003, RESPECTIVELY, AS 
AND WHEN REQUIRED.  WITH RESPECT TO THE POSSIBILITY OF 
RESOURCES FOR IFAD FROM THE WORLD BANK HIPC TRUST FUND, 
USDEL CAUTIONED AGAINST HIGH EXPECTATIONS IN LIGHT OF THE 
FUNDS EXISTING USD $700M DEFICIT. 
 
COUNTRY STRATEGIC OPPORTUNITIES PAPER (COSOP) 
--------------------------------------------- 
 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02382  04 OF 06  151510Z 
15.  THE BOARD CONSIDERED COSOPS FOR THE ARAB REPUBLIC OF 
EGYPT AND THE REPUBLIC OF PERU.  BOTH POSITIVE AND NEGATIVE 
COMMENTS WERE MADE ON THESE DOCUMENTS - MOST NEGATIVE 
STEMMING FROM A MISUNDERSTANDING OF THE PURPOSE OF A COSOP. 
DURING DISCUSSIONS IT WAS SUGGESTED THAT A WORKSHOP WITH 
BOARD DIRECTORS MIGHT BE APPROPRIATE TO REVIEW BOTH THE 
STRUCTURE AND PURPOSE OF COSOPS.  THE USDEL, IN AN EFFORT TO 
PROVIDE A MORE CLEAR UNDERSTANDING OF THIS PROCESS, 
EXPRESSED A WILLINGNESS TO ARRANGE A WORKSHOP FOR DIRECTORS 
TO REVIEW BOTH THE STRUCTURE AND PURPOSE OF COSOPS AS 
DISCUSSED IN THE DECEMBER BOARD MEETING. THE USDEL 
REITERATED THAT THE COSOP SHOULD FOCUS ON IFAD'S PROJECTED 
LENDING SCENARIO IN THE COUNTRY AND PROVIDE ALTERNATIVE 
SCENARIOS. 
 
PROJECT/PROGRAM PROPOSALS FOR CONSIDERATION 
------------------------------------------- 
 
16.  THE BOARD APPROVED SIX PROGRAMS AND PROJECTS:  1) 
CAMEROON - COMMUNITY DEVELOPMENT SUPPORT PROJECT, 2) ERITREA 
- GASH BARKA LIVESTOCK AND AGRICULTURAL DEVELOPMENT PROJECT, 
3) INDIA - ORISSA TRIBAL EMPOWERMENT AND LIVELIHOODS 
PROGRAM, 4) LAOS - OUDOXAI COMMUNITY INITIATIVES SUPPORT 
PROJECT, 5) HAITI - PRODUCTIVE INITIATIVES SUPPORT PROGRAM 
IN RURAL AREAS, AND 6) EGYPT- WEST NOUBARIA RURAL 
DEVELOPMENT PROJECT.  THE LOANS FOR THE PROGRAMS IN HAITI 
AND INDIA WERE FORMULATED AND APPROVED UNDER THE FLEXIBLE 
LENDING MECHANISM.  THE USDEL SUPPORTED ALL PROGRAMS EXCEPT 
HAITI.  BECAUSE OF A U.S. POLICY WITH REGARDS TO ASSISTANCE 
TO HAITI, THE USDEL (ALONG WITH CANADA) ABSTAINED FROM 
VOTING ON THIS PROGRAM.  USDEL EXPRESSED CONCERN THAT WITH 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02382  04 OF 06  151510Z 
HAITI'S CURRENT MACROECONOMIC MANAGEMENT AND GOVERNANCE 
CONDITIONS WOULD MAKE IT DIFFICULT TO IMPLEMENT A 10-YEAR 
LOAN - A LONG TERM COMMITMENT OF THIS NATURE IS 
INAPPROPRIATE AT THIS TIME.  IFAD MANAGEMENT AND STAFF 
EXPRESSED THEIR SUPPORT OF THE LOAN STATING THAT OTHER LOANS 
ARE CURRENTLY BEING IMPLEMENTED IN NEIGHBORING DOMINICAN 
REPUBLIC.  ARGENTINA AND MEXICO INDICATED THEIR SUPPORT FOR 
THE PROPOSAL, CITING AN URGENT NEED FOR ASSISTANCE.  USDEL 
INDICATED TO IFAD STAFF THAT GEOGRAPHIC PROXIMITY TO OTHER 
COUNTRIES DOES NOT INDICATE THE POTENTIAL FOR A SUCCESSFUL 
PROGRAM, AND THAT SHARING AN ISLAND WITH THE DOMINICAN 
REPUBLIC DOES NOT IMPROVE MACROECONOMIC MANAGEMENT AND 
GOVERNANCE CONDITIONS IN HAITI. 
 
GRANT PROPOSALS FOR CONSIDERATION 
--------------------------------- 
 
17.  THE BOARD APPROVED SEVEN GRANT PROPOSALS:  1) TECHNICAL 
ASSISTANCE GRANT FOR AGRICULTURAL RESEARCH AND TRAINING BY A 
CGIAR SUPPORTED INTERNATIONAL CENTRECENTER, 2) TECHNICAL 
ASSISTANCE GRANT FOR AGRICULTURAL RESEARCH AND TRAINING BY A 
NON-CGIAR SUPPORTED INTERNATIONAL CENTERCENTRE, 3) TECHNICAL 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ9486 
 
PAGE 01        ROME  02382  05 OF 06  151511Z 
ACTION IO-00 
 
INFO  LOG-00   NP-00    AF-00    AID-00   AMAD-00  CIAE-00  COME-00 
      CTME-00  DODE-00  ITCE-00  WHA-00   SRPP-00  EAP-00   EB-00 
      EXME-00  EUR-00   UTED-00  TEDE-00  INR-00   ITC-01   NEA-00 
      NSAE-00  OES-01   OIC-02   OMB-01   OPIC-01  SS-00    STR-00 
      TEST-00  SA-00    SAS-00     /006W 
                  ------------------AEDE17  151515Z /38 
R 151454Z MAY 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 3745 
INFO USDA FAS WASHDC 2128 
USMISSION USUN NEW YORK 
DEPT OF TREASURY WASHDC 
AMEMBASSY PORT AU PRINCE 
AMEMBASSY NEW DELHI 
AMEMBASSY CAIRO 
AMEMBASSY ASMARA 
AMEMBASSY YAOUNDE 
AMEMBASSY VIENTIANE 
 
UNCLAS SECTION 05 OF 06 ROME 002382 
 
SIPDIS 
 
TREASURY FOR WSCHUERCH, MJASKOWIAK 
USDA FOR FAS/LYNN REICH AND DAVID WINKELMAN 
STATE FOR IO/EDA ROSE BERSTEIN 
USAID FOR AA/PPC;DAA/G/EGAD;AFS 
 
FROM FODAG 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02382  05 OF 06  151511Z 
 
E.O. 12958:  N/A 
TAGS:  AORC, IFAD, EAID 
SUBJECT:  REPORT OF SEVENTY-FIFTH SESSION OF IFAD'S 
EXECUTIVE BOARD. 
 
ASSISTANCE GRANT TO THE FOOD AND AGRICULTURE ORGANIZATION OF 
THE UNITED NATIONS FOR THE RURAL KNOWLEDGE NETWORK PILOT 
PROJECT FOR EAST AFRICA, 4) SECOND INSTALLMENT OF GRANT TO 
THE GLOBAL MECHANISM OF THE UNITED NATIONS CONVENTION TO 
COMBAT DESERTIFICATION IN THOSE COUNTRIES EXPERIENCING 
SERIOUS DROUGHT AND/OR DESERTIFICATION, PARTICULARLY IN 
AFRICA TO SUPPORT THE DEVELOPMENT AND IMPLEMENTATION OF 
ACTION PROGRAMS AND RELATED INITIATIVES, 5) PHASE II OF 
TECHNICAL ASSISTANCE GRANT TO THE INTERNATIONAL DEVELOPMENT 
RESEARCH CENTER FOR THE PROGRAM FOR ELECTRONIC NETWORKING 
FOR RURAL ASIA/PACIFIC PROJECTS, 6) PHASE III OF TECHNICAL 
ASSISTANCE GRANT TO THE INTERNATIONAL FARMING SYSTEMS 
RESEARCH METHODOLOGY NETWORK FOR THE FIDAMERICA NETWORK, AND 
7) PHASE II OF TECHNICAL ASSISTANCE GRANT TO THE INTER- 
AMERICAN INSTITUTE FOR COOPERATION ON AGRICULTURE FOR THE 
RURAL MICRO-ENTERPRISE SUPPORT PROGRAM IN LATIN AMERICA AND 
THE CARIBBEAN. 
 
FLEXIBLE LENDING MECHANISM (FLM) 
-------------------------------- 
 
18.  THE BOARD DISCUSSED THE USE OF FLM WITHIN THE CONTEXT 
OF ESTABLISHING MECHANISMS OF PROGRAM/PROJECT CONTROL AND 
STILL PROVIDING PROGRAMS WITH THE MAXIMUM FLEXIBILITY. AT 
THE SUGGESTION OF USDEL, THE BOARD WILL BE PRESENTED WITH A 
                       UNCLASSIFIED 
 
PAGE 03        ROME  02382  05 OF 06  151511Z 
REPORT ON THE STATUS OF PROJECTS FORMULATED UNDER THE FLM AT 
ITS NEXT SESSION.  THIS WILL BE THE FIRST BOARD DISCUSSION 
OF THE FLM PROGRAM SINCE IT WAS INITIATED IN 1998, AND THE 
U.S. HAS EXPRESSED CONCERN OVER ITS STRUCTURE AND USE SINCE 
THAT TIME. 
 
PLANNED PROJECT ACTIVITIES 
-------------------------- 
 
19.  THIS DOCUMENT SUMMARIZES FIVE IFAD PROJECTS IN THE 
PIPELINE WHICH HAVE "REACHED AN ADVANCED STAGE OF DESIGN AND 
ARE LIKELY TO BE PRESENTED TO THE BOARD IN A FORTHCOMING 
SESSION.".   THEY ARE: 1) RURAL ENTERPRISES, PHASE II, 
GHANA, USD $14.5M, 2) RURAL FINANCIAL SERVICES PROGRAM, 
UGANDA, USD $22.5M, 3) ENVIRONMENTALLY SENSITIVE POVERTY 
ALLEVIATION, CHINA, USD $86M, 4) RURAL MICROENTERPRISE 
DEVELOPMENT, BRAZIL, USD $40, 5) AGRO-PASTORAL DEVELOPMENT, 
TUNISIA, USD $36M.  THE USDEL EXPRESSED A GENERIC CONCERN 
WITH EACH OF THESE PROPOSED PROJECTS THAT INFORMATION 
REGARDING THE EXTENT THAT IFAD'S PROJECT DESIGNERS HAVE 
COORDINATED WITH OTHER MULTILATERAL DEVELOPMENT BANKS 
ESPECIALLY WITH RESPECT TO BEST PRACTICES AND LESSONS 
LEARNED WOULD BE HELPFUL.  THE BOARD ALSO DECIDED TO REVIEW 
COSOPS FOR KENYA AND THE SUDAN AT ITS SEVENTY-SIXTH SESSION. 
 
IFAD/NGO EXTENDED COOPERATION PROGRAM (ECP) 
------------------------------------------- 
 
20.  THE BOARD NOTED THE PROGRESS REPORT ON ECP.  ACTIVITIES 
IN ECP FOR 2001 FOCUSED ON CAPACITY BUILDING OF 
BENEFICIARIES AND THEIR ORGANIZATIONS AS WELL AS 
                       UNCLASSIFIED 
 
PAGE 04        ROME  02382  05 OF 06  151511Z 
INSTITUTIONAL DEVELOPMENT TO ENABLE THE RURAL POOR TO 
IMPROVE THEIR LIVELIHOODS. 
 
IFAD ACTIVITIES IN THE WEST BANK AND GAZA 
----------------------------------------- 
 
21.  AT THE REQUEST OF THE DELEGATE OF SAUDI ARABIA, THE 
BOARD REVIEWED CURRENT OPERATIONS IN THE WEST BANK AND GAZA 
AND ADVISED MANAGEMENT TO RESUME AND INTENSIFY, AS SOON AS 
POSSIBLE, THE ONGOING AND PLANNED PROGRAM ACTIVITIES IN THE 
AREA. 
 
PROGRESS REPORT ON IFAD'S HEADQUARTERS BUILDING 
--------------------------------------------- -- 
 
22.  IFAD MANAGEMENT PROVIDED A VERBAL UPDATE ON THE 
RENOVATION WORK SCHEDULE FOR IFAD'S HEADQUARTERS BUILDING 
AND APPROVED THE DISCLOSURE, ON IFAD'S PUBLIC WEBSITE, OF 
DOCUMENTS THAT HAD BEEN APPROVED AT THIS SESSION. 
 
NEW SENIOR MANAGEMENT AT IFAD 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ9487 
 
PAGE 01        ROME  02382  06 OF 06  151511Z 
ACTION IO-00 
 
INFO  LOG-00   NP-00    AF-00    AID-00   AMAD-00  CIAE-00  COME-00 
      CTME-00  DODE-00  ITCE-00  WHA-00   SRPP-00  EAP-00   EB-00 
      EXME-00  EUR-00   UTED-00  TEDE-00  INR-00   ITC-01   NEA-00 
      NSAE-00  OES-01   OIC-02   OMB-01   OPIC-01  SS-00    STR-00 
      TEST-00  SA-00    SAS-00     /006W 
                  ------------------AEDE1B  151515Z /38 
R 151454Z MAY 02 
FM AMEMBASSY ROME 
TO SECSTATE WASHDC 3746 
INFO USDA FAS WASHDC 2129 
USMISSION USUN NEW YORK 
DEPT OF TREASURY WASHDC 
AMEMBASSY PORT AU PRINCE 
AMEMBASSY NEW DELHI 
AMEMBASSY CAIRO 
AMEMBASSY ASMARA 
AMEMBASSY YAOUNDE 
AMEMBASSY VIENTIANE 
 
UNCLAS SECTION 06 OF 06 ROME 002382 
 
SIPDIS 
 
TREASURY FOR WSCHUERCH, MJASKOWIAK 
USDA FOR FAS/LYNN REICH AND DAVID WINKELMAN 
STATE FOR IO/EDA ROSE BERSTEIN 
USAID FOR AA/PPC;DAA/G/EGAD;AFS 
 
FROM FODAG 
                       UNCLASSIFIED 
 
PAGE 02        ROME  02382  06 OF 06  151511Z 
 
E.O. 12958:  N/A 
TAGS:  AORC, IFAD, EAID 
SUBJECT:  REPORT OF SEVENTY-FIFTH SESSION OF IFAD'S 
EXECUTIVE BOARD. 
 
23.  IFAD PRESIDENT BAGE ANNOUNCED THE APPOINTMENT OF THE 
NEW VICE PRESIDENT, CYRIL ENWEZE (NIGERIA), AND THE NEW 
ASSISTANT PRESIDENT, PHRANG ROY (INDIA).  ENWEZE WILL HAVE 
RESPONSIBILITY FOR FINANCE AND HUMAN RESOURCES; ROY'S 
PORTFOLIO INCLUDES EXTERNAL AFFAIRS, ECONOMIC POLICY AND 
RESOURCE STRATEGY. HEILEMAN 
 
                       UNCLASSIFIED 
 
> 
 2002ROME02382 - Classification: UNCLASSIFIED 


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