Identifier
Created
Classification
Origin
02ROME2382
2002-05-15 14:54:00
UNCLASSIFIED
Embassy Rome
Cable title:  

REPORT OF SEVENTY-FIFTH SESSION OF IFAD'S

Tags:  AORC EAID IFAD 
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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.


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
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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

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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 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.

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.
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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
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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.

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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 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.

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
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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
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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

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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 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.

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)
--------------

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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
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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

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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 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.

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
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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 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.


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