Foreword

Twenty-five years

Taking stock and looking forward

The OPEC Fund for International Development observed the 25th anniversary of its founding this year. Typically, the anniversary called for reflection: a review of the period past, stocktaking of the present and planning for the immediate future.

Anniversaries of this kind invariably invite questions of assessment: which, among multiple accomplishments, could be deemed paramount or most valued by the concerned institution.

The ranking of accomplishments and apportionment of values are difficult, especially in a context where each achievement has its own merit. In any case, we believe in all modesty that the job of deciding which projects of the OPEC Fund are best or most valuable should rest not with us, but with those for whom the projects were erected in the first place. The beneficiaries live with the projects; they own the projects and are thus in the better position to highlight their merits and demerits.

Still, an achievement or other, a milestone or another, representative of the cumulative work of the Fund could be flagged, at least in an attempt to explain the growing appreciation of the institution by cooperating partner countries and organizations.

The OPEC Fund has done well in 25 unbroken years: Thanks to the generous support of member countries, the Fund has kept to its mandated mission, reached out to millions of needy across the world and demonstrated the unambiguous commitment of OPEC nations to South-South cooperation and the ideals of solidarity among developing countries. The OPEC Fund attaches special importance to this long-standing commitment of member countries and to their sustained, selfless willingness to continue to provide the means to promote economic and social progress in fellow developing countries.

The Fund is privileged and grateful that member countries have remained unequivocal in their backing of what the institution stands for. It is against the backdrop of this support that the Fund has done rather well with its charge of channeling collective OPEC assistance to other developing countries. As always, it is important to recall that the recipient countries are not necessarily worse off, in terms of financial and economic resources, than the OPEC states providing the assistance. Even through the 1980s, which was a difficult decade for development, our member countries continued with their assistance programs, when other donors were curtailing aid budgets in response to economic constraints.

OPEC Fund aid to the developing countries of the world made an auspicious start, soon after the formal inauguration of the institution in 1976. The assistance went via several channels. Apart from direct lending and grant assistance to the beneficiary countries themselves, the Fund made substantial contributions to the resources of other international organizations whose work benefited these countries, notably the International Fund for Agricultural Development and the International Monetary Fund. The Fund played a role in the establishment of a number of other agencies of equal importance to developing countries; among them the Amsterdam-based Common Fund for Commodities, the International Development Law Institute in Rome and the African Fertilizer Development Center in Harare, Zimbabwe, to mention only three.

Certainly, part of the strength of the institution has been - apart from the lasting support of member countries - its strong resource base and the goodwill of beneficiary countries. A diversified and long-established network of cooperating agencies, including sister institutions (notably the Saudi Fund for Development, the Kuwait Fund, the Islamic Development Bank, BADEA, the former Venezuelan Investment Fund (now BANDES), the Abu Dhabi Fund and several of the other bilateral and multilateral aid institutions) has also been helpful.

The goodwill we enjoy with beneficiary countries (which now number 109 developing countries in Africa, Asia, Latin America, the Caribbean, the Middle East and Europe) is worth highlighting: Conscious of the fact that the OPEC decision to support their development was a demonstration of solidarity, the beneficiary countries have sought to accept this hand of friendship with reciprocal care. They have consistently shown a willingness to work with the OPEC Fund, ensuring that the Fund is accorded priority in domestic decisions regarding development cooperation. They are flexible, on their part, and they tailor their needs to match the (financial) allocations obtainable from us.

They appreciate that the Fund imposes no conditionalities on its lending; and that Fund development assistance is untied, giving beneficiaries the necessary latitude to purchase goods and services from the best possible source, resulting in greater value of aid. Nor do we impose our policy preferences on recipient countries; on the contrary, the Fund listens and responds to their expressed needs and priorities. We definitely look forward to many more years of fruitful relationship with our beneficiary countries.

The readiness of the Fund's member countries to enable the institution to respond to the changing needs of its beneficiaries has placed it in a key position to participate in development financing. Thus the Fund has opened a private sector window in answer to the request of its cooperating countries for assistance to their private sector, which is increasingly becoming a priority in their development plans. The OPEC Fund sees this new facility, which is additional to its traditional public sector window, as a clear indication of its ability to stay relevant and to adapt easily to currents and new thinking in development cooperation.

The Fund has for many years drawn attention to the debt burden which has constituted a major constraint on the development prospects of the poor countries. It was therefore no surprise that it not only embraced the Heavily Indebted Poor Countries (HIPC) Initiative but also joined in its design.

Only this year, the Fund launched an HIV/AIDS Special Account, to facilitate contributions to the global campaign against the HIV/AIDS pandemic.

Undoubtedly, the next 25 years will bring their own challenges. Already, with the beginning of the new century, a few new problems have surfaced, supplementing some of the older difficulties, which have refused to go away. In recent times, the international community has seen a spate of job losses, company closures, fewer opportunities for teeming populations in developing countries and a slide in global output and demand. One can only hope that these will ebb in the years ahead, although at this point in time, they remain worrisome for all. They hold implications for growth, employment and poverty reduction strategies.

Nevertheless, we still anticipate the next 25 years with optimism. The OPEC Fund proposes to continue to broaden the partnerships it has built over the years. The Fund will keep its focus on issues of vital concern to cooperating countries. It will retain its strong sense of identity and its flexible mode of operation; two of the attributes, which have helped it to weather many storms.

We look forward, as well, to partner countries continuing with measures to strengthen their economies, reduce inflation, implement reforms and create an enabling environment for beneficial economic activity. We hope they would continue with a framework that lays the foundation for sustained growth. There is no reason why prolonged economic under-performance should be the fate of any country.

In conclusion, I should avail myself of the opportunity of this Annual Report to again thank, most sincerely, our member countries and policy-making bodies for the robust support they have continued to accord the OPEC Fund. We have managed to accomplish all of the above, not because we are better placed than the rest of the development fraternity, but precisely because of this backing.

Y. Seyyid Abdulai

Director-General