International Investment Bank
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International Investment Bank
An international bank of the socialist countries. It was formed in July 1970 to further the development of mutual economic cooperation among member countries and to promote concentration and coordination in the use of resources for capital construction. The bank was established by the Agreement on the Formation of the International Investment Bank, dated July 10, 1970. The members of the bank are Bulgaria, Cuba, Czechoslovakia, the German Democratic Republic, Hungary, Mongolia, Poland, Rumania, and the USSR. The bank is located in Moscow.
The statutory capital of the International Investment Bank was set at 1,052,600,000 transfer rubles, 70 percent in transfer rubles and 30 percent in freely convertible currency and gold. The quotas of the member countries were set on the basis of the volume of exports in their mutual commodity turnover. The bank also has a reserve capital fund and a special fund.
The highest body of the bank is the council, which consists of representatives of all member countries. Each country has one vote regardless of the amount of its contribution to the bank’s capital. A decision on questions of principle is considered adopted when there is unanimity of all council members, whereas for other questions a three-fourths majority is sufficient. The executive agency is the board of directors.
The principal task of the bank is to give long-term credits (maximum of 15 years) and medium-term credits (up to five years) to finance the international socialist division of labor, specialization and cooperation in production, and the expansion of the raw material and fuel base in the interests of particular countries and of the entire socialist community. Credit is granted primarily for installations that will operate at a high economic efficiency. The bank’s credits are planned and targeted, and they are given on a term basis. The bank charges 4-6 percent interest in transfer rubles.
In 1973 the bank established a special fund to give economic and technical assistance to the developing countries. The fund was set at 1 billion transfer rubles, 95 percent in transfer rubles and 5 percent in freely convertible currency. The bank uses the fund to grant credit for the construction of new enterprises in industry, agriculture, and other sectors of the economies of the developing countries and for the redesigning and modernization of existing enterprises. The International Investment Bank also attracts and invests capital in transfer rubles, the national currencies of the interested countries, freely convertible currency, and gold. It grants credit for the construction and modernization of installations in machine building, chemistry, motor vehicles, the electrical engineering industry, and transportation in the member countries. For 1971-72 the bank granted 26 loans with a total value equal to about 280 million transfer rubles (110 million was in freely convertible currency).
The International Investment Bank operates on a basis of full equality and respect for the sovereignty of all member countries. The bank is an open organization, and any country may become a member if it shares the goals and principles of the bank’s activity and is ready to assume the obligations contained in the 1970 agreement to form the bank and in the charter. Participation in the bank does not prevent member countries from implementing and developing financial and business relationships among themselves, with other countries, or with other international monetary and financial organizations.
In the Comprehensive Program of Socialist Economic Integration, adopted at the 25th session of the Council for Mutual Economic Assistance in July 1971, the principal paths and stages in the development of the long-term and medium-term credit system and of the International Investment Bank were outlined.
REFERENCESMezhdunarodnye organizatsii sotsialisticheskikh stran. Moscow, 1971.
Mnogostoronnee ekonomicheskoe sotrudnichestvo sotsialisticheskikh gosudarstv (collection of documents). Moscow, 1972.
Al’tshuler, A. B. Sotrudnichestvo sotsialisticheskikh gosudarstv: Raschety, kredity, pravo. Moscow, 1973. Chapter 9.
Sodruzhestvo sotsialisticheskoe (SEV: itogi iperspektivy). Moscow, 1973.
G. G. MAZANOV