|
|
The CFC, an international organization based in Amsterdam, The
Netherlands, is one with which the OPEC Fund has cultivated a close relationship
since the former came into being in 1989. Indeed, prior to that juncture,
the OPEC Fund played an active part in negotiations held under the auspices
of UNCTAD which led to the conclusion by the international community of
the 1980 Agreement Establishing the Common Fund for Commodities.
That charter contains detailed provisions regarding the Common Fund's
objectives which, in essence, envisage that the agency serves as the main
vehicle for elaboration of the Integrated Program for Commodities adopted
by UNCTAD in 1976. In particular, the Common Fund has been set up to support,
through its First Account, buffer stocking operations undertaken
in the context of international commodity agreements. In addition, it
is empowered to finance, via its Second Account, commodity development
measures, other than stocking, designed to address structural imbalances
in markets and reinforce the long-term competitiveness and prospects of
commodities.
As far as the First Account is concerned, some policy decisions
have already been put in place to release some of its resources in support
of activities that are complementary to its principal mission. In particular,
such funds were utilized during the course of 1998 to enhance the efficiency
of marketing systems in a number of countries through the development
of warehousing and inventory credit. Another operation pursued in 1998
aimed at reinforcing the transparency of cocoa marketing within the framework
of a liberalized economy. In general, this program has been launched with
the objective of assisting the least developed and other countries in
their transition towards a free market economy.
In its meeting at the close of 1998, the Governing Council of the CFC adopted another significant policy for partial unraveling of the First Account and release from it of additional resources for financing operations. This was to permit the transfer to another window of some shares in the capital of that account for Second Account undertakings.
With regard to Second Account operations, this constitutes an area
where the CFC's exertions have been unrelenting since such activities
were launched in earnest in late 1991. By the end of 1998, the cumulative
worth of such projects had reached approximately $192 million, with operations
valued at $28 million approved in that year alone. The eight operations
undertaken in 1998 ranged from those involving soft commodities such as
generic cocoa promotion and jute based packaging to others concerning
hard ones like a zinc hot galvanizing scheme. Moreover, mindful of its
mandate, endeavors were made for the equitable spread of project sites
worldwide, with special emphasis on LDCs.
Waiting for the cotton buyer in Peru. Small producers are particularly vulnerable to abrupt declines in commodity prices.
|
|
It is noteworthy that the CFC has served as a catalyst in attracting funding from both private and public sources for all the operations it has promoted thus far. In this regard, the success rate for cofinancing participation has revolved around the half-way mark. It is also pertinent to observe that most of its operations have been financed with grants. The long-term perspective, however, is to increase gradually the loan component so as to come within the range or even match the level of grant funding. The policy parameters for attaining that objective were approved by the Governing Council during its 1998 session.
The year 1998 also witnessed progress in implementing the newly-launched
Five Year Action Plan. In addition to achieving results with regard
to activating the First Account, remarkable targets were also met
concerning other principal objectives laid out in the Plan. For instance,
at the beginning of the year as many as 32 commodities remained outside
the umbrella sponsorship of international commodity bodies, undoubtedly
a matter of concern to producers. Efforts made to address this have led
to the drastic reduction of the number of so-called "orphan commodities"
to 15 in the space of just 12 months. Moreover, four small-scale projects
under the newly introduced Fast Track Procedure were approved,
and a beginning was made on the use of the Project Preparation Facility.
Returning the focus to the inter-relationship between the CFC and the
OPEC Fund, this has manifested itself through various channels. For one,
the OPEC Fund has since 1981 committed a cumulative amount of $83.56 million
to bolster the CFC's capacity. Part of that endowment has been made available
to finance the First Account capital subscriptions of 35 LDCs totaling
$37.16 million. The remaining $46.4 million represent a voluntary contribution
to the Second Account. For another, there have been continuing
interactions at all levels between both agencies, with the OPEC Fund enjoying
observer status in both the Executive Board and Governing Council of the
Common Fund for Commodities.
|
