Malaysia’s World Bank loans
Dr Mahathir Mohamad
The accusation that I wrote to the World Bank asking for loans is baseless. But Malaysia had been borrowing project loans from the World Bank since 1958.
The last negotiations for the loans were made in 1997. These were for projects in:
a) Education sector US$244 million (RM756 million)
b) Social sector US$60 million
c) Technical sector US$100 million
The currency crisis also began in 1997. Naturally the loans were not approved until 1999 when the crisis was over. The usual sequence is for application for a loan to be made, followed by negotiations. Approval would be given by the bank later.
The World Bank wanted Malaysia to request for loans to tide over the crisis like the other countries affected by currency trading. The loans would be conditional upon Malaysia following IMF advice on economic management. It is well-known that Malaysia refused to seek IMF or World Bank help because the so-called help would worsen the financial situation. Instead, in 1998 Malaysia imposed currency control which helped it to recover.
In June 1998 (before currency control and while Anwar Ibrahim was still Minister of Finance) a loan for US$300 million was signed with the World Bank for:
a) Fund for Food Programme
b) Higher Education Loan Fund
c) Microcredit Programme
By 31st March 1999 a loan of US$100 million was signed for Technical Assistance and for overcoming Y2K problems. However, this loan was stopped after drawing down US$11.94 million.
Of the US$244 million Education Project which was approved in March 1999, payment was ordered to be stopped after US$216.7 million was drawn down.
Of the Social Sector loan of US$60 million, approved in March 1999, only US$600,000 was drawn down before it was stopped.
As the whole world knows, Anwar was reported in the press and foreign magazines for implementing the IMF policy without the IMF loans. He raised interest rates, reduced the period for declaring loans non-performing from six months to three months, reduced budget allocation to ministries so as to achieve a budget surplus, etc.
Although he did not oppose currency controls, his appointees as governor and deputy governor of Bank Negara refused to implement the policy and resigned. Tan Sri Zeti Akhtar Aziz was then appointed as Governor of Bank Negara Malaysia.
As stated above, Malaysia stopped the draw down on loans negotiated with the World Bank in 1997 and June 1998. This did not stop Malaysia from recovering from the crisis.
At no time did I write a letter or verbally request for loans from the World Bank. If Anwar can show evidence that I did, he should. Failing that he should swear on the Quran in a mosque that he knows what he says is true. I am prepared to swear that I never asked for loans from the World Bank. — chedet.co.cc
* Tun Dr Mahathir Mohamad was prime minister from 1981 to 2003
