78883
                Summary of Oral History Transcript                  v1
                            Alter, Gerald


Interview conducted by Dr. Robert W. Oliver, California Institute of
Technology, on 1985-07-13




     Alter talks about first joining the Economics Staff of the Bank
then moving to the Western Hemisphere Department. His shifting
involvement from the preparation of country economic reports to
working on "Sector Analysis". The period '58-'64, when large missions
of 13 to14 people were sent to several countries and its members
contributing to the formulation, conclusions, and recommendations of
the final report. And, where projects which later became vehicles for
Bank loans, were identified in the investment program at an early
stage.


     In 1963 Alter became Director of the Western Hemisphere
Department and was more closely involved in the economic work specific
to that area. The Economic Committee was established around '64 and
later on a more formal committee was formed. Notes were kept of the
meetings, and analysis was done of the country economic reports. The
President relied on the minutes of the senior staff meetings. With
McNamara's arrival the Bank became much more involved in the study of
general problems of economic development as the Bank's non-country
directly related work expanded many fold.


     Alter briefly mentions the Staff-Loan Committee chaired by Burke
Knapp on whose recommendations Woods relied a great deal. The Woods
period's concern with obtaining an adequate volume of resources for
the Bank, especially for IDA. Black's main emphasis back in '61 on
creditworthiness and absorptive capacity. Alter discusses
creditworthiness, and how since 1975, the time he left the position of
Regional Vice President until the time of this interview (1985), the
countries of the Western Hemisphere have assumed a monumental volume
of additional debt. He adds that the Bank is precluded in its Articles
of Agreement from making basic lending decisions on political grounds,
but, in deciding on loans, it is not precluded from taking into
account what the policies of the country are, since there is an
intimate inter-relationship between the politics and economics of a
country.


     Alter also mentions the Bank's important contribution as an
institution in making its member governments more aware of the need
for good project analysis, preparation, and management. In terms of
the interrelationship between the Bank's pioneering economic work and
operational work in the Western Hemisphere, Alter was the first
professional economist working as such who became an Area Department
head. In '64-'68, he and some colleagues developed a lending approach
which progressively became more prevalent throughout the Bank,
particularly in the McNamara years. The Bank's close collaboration
with the Fund, particularly on exchange-rate matters. Alter talks
about shadow pricing of foreign exchange for countries and, how after
he became department head he came up with proposals for local currency
financing where he met with resistance from Woods who was in general
against Bank financing of local currency requirements. However, Alter
feels that Woods' opposition stemmed from certain Board members who
were important for him in mobilizing capital for IDA. After Alter left
the Vice Presidency of the Western Hemisphere Department, he became
assistant to Burke Knapp. Part of his job was to do policy studies on
local expenditure financing on which he prepared some operational
memoranda.


     Alter feels that during the last half of the Woods presidency the
Executive Directors took a more forceful stand about various issues
than they had done before. One of the disadvantages of IDA to the Bank
was its opening the door for governments asked to make IDA
replenishment funds available, to begin raising essentially political
questions about the Bank's relationships. It was during the Woods
years that the replenishment of IDA began to be a political problem.


     The '70s were the beginning of the Bank's policy on indexing, and
the Bank's preparedness to lend in particular sectors where there were
meaningful commitments to future policies. Alter briefly discusses how
under McNamara the Projects and Area Departments were merged into
Regional Departments with a Regional Vice President in charge, the
overall increase of the Bank's staff, and the expansion of its
operations.