Distinguished Directors,

I would now like to summarize the discussions and highlight the decisions taken at this Session of the Executive Board.

The Executive Board began its review of the Fifth Replenishment of IFAD’s resources (document EB2001/72/R.2 and addendum) with an oral report on the completion of the Replenishment resolution on 20 February 2001. Directors particularly welcomed management’s intention, as a result of this completion, to examine the possibility of reverting back to the Fund’s normal lending level for 2001. The report on the Status of Contributions to the Fifth Replenishment of IFAD’s Resources (document EB2001/72/R.35) indicated that instruments of contribution deposited and payments made against pledges not supported by instruments of contribution amount so far to 13% of total pledges. There was general agreement that efforts should be made to ensure that all Member States deposit their instruments of contribution as soon as possible in order to expedite the effectiveness of the Fifth Replenishment. The Board also took note of the Status of Contributions to the Fourth Replenishment of IFAD’s Resources (document EB2001/72/R.3 and addendum).

The Board then reviewed the reports on IFAD’s investment portfolio, both for the year 2000 and for the first quarter of 2001 (documents EB2001/72/R.4 and EB2001/72/R.5, respectively). Directors expressed concern over the negative rates of return obtained in both periods. While recognizing that such fluctuations should be expected when investing in bonds and equities, there was a general consensus that sufficient factors existed to warrant an overall review of the Fund’s investment policies. These factors included timing – there is now four years of experience of diversification, and external conditions such as the perceived duration of the bear equities market.

Directors expressed appreciation of the informal seminar which had clarified not only investment policies but also the various elements of the Fund’s resources. Directors made many useful comments on the draft terms of reference of the expert group to be set up to review the Fund’s investment policies, as well as the process by which this review should be undertaken. It was suggested that the group advise the Fund on its investment approach, indicating the type of eligible instruments, asset allocation and risk level, as well as socially responsible investment policies. The group would also review the adequacy of internal monitoring and assessment procedures. The President invited the Convenors of the three Lists to meet with him as soon as possible after the Session to finalize the expert group’s terms of reference and the procedural aspects. In that way, the group can be established quickly with the aim of completing its work in time to allow recommendations to be made to the September session of the Board.

The Executive Board reviewed the Status Report on Principal and Interest Payments (document EB2001/72/R.6 and addendum) and noted that apart from the arrears of four long-outstanding cases for which no settlement plan had been possible, arrears from other borrowing countries have shown an improvement. Directors requested that future reports indicate how the Fund was pursuing those four specific cases.

The Board approved the twenty-second drawdown of Members’ contributions in 2001 (document EB2001/72/R.8) and the fourteenth drawdown from the Special Resources for Sub-Saharan Africa in 2001 (document EB2001/72/R.9). With respect to the drawdown of contributions, the Board noted that several countries were consulting with the Secretariat on separate arrangements for payment schedules during a transition period, as foreseen in the drawdown policy adopted in December 2000.

The Board also authorized the President to advance amounts to the Global Mechanism, from IFAD’s own resources (document EB2001/72/R.10), that might be necessary for its operations. These advances should not exceed the Mechanism’s annual budget and the Fund should recover all amounts advanced once the Global Mechanism receives funding from the United Nations Convention to Combat Desertification (CCD) Secretariat.

The Report of the Audit Committee on its seventy-second and seventy-third meetings (document EB2001/72/R.11) was presented by its Chairman. The Board endorsed the report and noted the Committee’s concerns regarding the proposal for a common services arrangement with FAO and WFP on investment. It also noted the Committee’s review of the internal audit function.

The Executive Board reviewed the audited financial statements of IFAD for 2000 (document EB2001/72/R.7), took note of the External Auditor’s clean report, and approved the recommendation to submit the financial statements to the Twenty-Fifth Session of the Governing Council for final approval.

Directors praised the Progress Report on the Project Portfolio (document EB2001/72/R.12) as an excellent report that responded to the Board’s request for emphasis on performance analysis. The Board was assured that management was giving due priority to impact assessment, particularly within its Process Re-engineering Programme, and that the Programme’s next Report would provide information on IFAD’s corporate position on impact management. The Board also wished to record its concern over the World Bank’s diminishing resource allocation to agricultural development. This also results in decreased cofinancing of IFAD projects in Africa.

Directors also welcomed the Annual Report on Evaluation (document EB2001/72/R.13). They encouraged management to continue to use the new approach to evaluation, finding it a constructive strategy for contributing to improving the performance of IFAD operations and policies. Directors that participated in the recent evaluation workshop and round table discussions held in Syria commended the work undertaken and the excellent opportunity it had presented for a dialogue on policy. Such opportunities should be replicated to the extent possible.

The Executive Board reviewed the Resources Available for Commitment (document EB2001/72/R.14 and addendum) and approved the use of the Advance Commitment Authority (ACA) (document EB2001/72/INF.5) for an amount of up to USD 70 million. This will take account of the normal inflow of resources from loan repayments. At its September session, the Board will be provided with a comprehensive paper on the ACA, taking into account the issues raised at this Session.

The Board approved proposals under the Debt Initiative for Heavily Indebted Poor Countries (HIPC) for twelve countries (document EB2001/72/R.15). In so doing it also approved that the Guinea-Bissau and Niger arrears to IFAD be consolidated into their respective debt relief proposals. In the light of the overall amounts the Fund would now be foregoing as a result of its participation in the Debt Initiative and the consequent adverse effect on the Fund’s lending programme, Member States contributing to the World Bank Trust Fund were asked to earmark part of their contributions for IFAD. Alternatively, countries could contribute directly to IFAD Trust Fund for the HIPC Debt Initiative.

The Executive Board approved six programmes and projects; one each in Africa and Asia and two each in Latin America and the Caribbean and the Near East and North Africa. The programme loan for Sao Tome and Principe was formulated and approved under the flexible lending mechanism. The Board also approved the inclusion of a new project component in the Poverty Alleviation Project in Western Terai in Nepal; the extension of the effectiveness date of the loan for the Food Crops Intensification Project – Phase II in Haiti; and the change of IFAD direct supervision responsibility from the Matale Regional Economic Advancement Project in Sri Lanka to the Post-Crisis Programme for Participatory Integrated Development in Rainfed Areas in Indonesia. Eight technical assistance grants for agricultural research and training were also approved.

This Session was the first at which the Board reviewed a Country Strategic Opportunities Paper (COSOP), specifically the COSOP for the Federal Republic of Nigeria (document EB2001/72/R.29). There was a rich exchange of ideas and opinions on IFAD’s strategy in Nigeria, which will greatly assist us in finalizing the paper. Some Directors have already volunteered to provide us with further direct collaboration, in particular the distinguished Director for Nigeria. I am grateful for this and would wish to extend an invitation to all of you present today to take part in ensuring that this and future COSOPs reflect your views.

During the discussion, more general comments, and indeed some genuine concerns, were raised on the usefulness of the COSOP as a strategic tool and on the magnitude of its scope. I believe we all agree, however, that the Fund needs a framework for medium-term planning and that these papers provide us with the best opportunity. It is in this spirit that the Board has agreed to allow the year 2001 to be used as a learning process not only for finalizing the structure of COSOPs but also for the manner in which they will be reviewed together with project proposals.

In this respect the Board reviewed the Interim Procedure for the Review of COSOPs and Projects (document EB2001/72/R.36), together with the documents on Planned Project Activities (document EB2001/72/R.28 and addenda). It was decided that, for the remaining sessions in the year 2001, the Executive Board would review two COSOPs per session, which the Board itself would identify at its previous session. The Board would also identify which projects would be reviewed at its next session – and in the expeditious manner that was used at this Session. For the Seventy-Third Session of the Board it was decided to review the COSOPs and projects for India and Mozambique, and the project proposals for Algeria, Bangladesh, Lebanon, Malawi, Mauritania, Nigeria and Swaziland.

The Executive Board noted the Progress Report on the IFAD/NGO Extended Cooperation Programme (ECP) (document EB2001/72/R.31) and, in recognizing that ECP’s strategic importance for IFAD had significantly increased over the years, approved its revised operational procedures (document EB2001/72/R.30). The Board also took note of the Report on the Rural Poverty Report 2001, the World Food Summit: Five Years Later, and Follow-up to the Millennium Summit (document EB2001/72/R.32). With respect to the Rural Poverty Report 2001, Directors’ suggestions for the fullest dissemination of the Report were sought and we look forward to receiving your comments in this regard.

Finally, the Board took note of the oral report on IFAD’s headquarters building and approved the disclosure, on IFAD’s public website, of the documents that had been approved at this Session.

Distinguished Directors,

This brings me to the end of our business. Before I close the Session, however, I must take a moment to express my gratitude for the strong support that you conveyed to me at the start of the Session. May I also thank each and every one of you for the hard work dedicated to this Session and for helping to create the environment of genuine dialogue and collaboration that characterizes IFAD’s Executive Board. I am certain this will guarantee the success of our future work.

In closing, let me wish you all a happy and productive summer and, for those Directors who have come from outside Rome, a safe journey home.