International Bank for Reconstruction and Development      87317
                  International Development Association
                     International Finance Corporation
                Multilateral Investment Guarantee Agency
                        FOR OFFICIAL USE ONLY
                        CONFIDENTIAL
                                                                        EDS97-405
                                                                 {Month Day, Year}


Board Meeting of Thursday, November 6, 1997
Statement by Godfrey Gaoseb
                COLOMBIA: Country Assistance Strategy

    Colombia’s implementation of its economic program since the last
CAS in 1993 has had mixed results, partly because of circumstances
which were beyond the country’s control, including a weather related
shortfall in coffee production. In spite of this weaker-than-expected
performance, the authorities are determined to place the economy on a
stronger growth path and, together with the country’s development
partners, are putting in place strategies and relevant mechanisms that
will assist them in meeting their development objectives.

    We therefore have no problem in lending our strong support to this
CAS which is candid (particularly in para 19 which discusses progress
towards meeting the objectives of the last CAS), and has enough
flexibility built into it to allow both the Bank and the Colombian
authorities to make appropriate adjustments to a changing environment.

     We also welcome the extensive consultative process that the Bank
and the Colombian authorities have undertaken with the various
stakeholders, the results of which are partly refelcted in the current
CAS.   We believe that in an environment with divergent political and
economic    interests,  especially   with   elections   pending,   the
consultative process minimizes the chances of some stakeholders
disowning the economic programs at a late date, since they have been
party to the discussions. We encourage the Bank to continue with this
process not only in context of the CAS, but also in relation to public
expenditure reviews, if the authorities in a given country are willing
to undertake the reviews in such a manner.

    The six strategic priorities noted in para (iii) of the summary,
as well as the lending scenarios are acceptable to us, and we can
endorse them. However, we think that the Bank has to move cautiously
on the issue of promoting peace and development through a focus on the
socio-economic determinants of violence.    This is in many ways an
unchartered course for the Bank as it places it precariously on the
political edge, while at the same time we realize that engaging in
such activities would also help to address poverty reduction and
social development issues.   We would urge management to collaborate
with those institutions, perhaps in the    UN system, that have wider
experience in dealing with these issues, or engage in pilot testing
programs in this area by utilizing the Bank’s new Learning and
Innovation Loans (LIL) as noted in para 38.    Additionally, since the
                                  2


Bank has now decided to launch programs in this area, we would also
encourage management to undertake similar operations in countries
which may have similar conditions, provided that a consultative
process, similar to that undertaken in Colombia, is conducted.

    On the development of human capital, we commend both the Colombian
authorities and the Bank for including this important issue in the CAS
process.   In an environment of high political and social tension, as
well as high unemployment rates, particularly for the rural poor and
the youth, instituting programs for human resources development would
also help to address poverty issues.      We hope, however, that the
private sector will be involved in the setting of priorities in this
area, especially in programs affecting vocational education since it
is well placed to identify future skills requirements for the economy.

    The changing role of the state as Colombia accelerates its
decentralization program calls for capacity and institution building
at the local level.    We hope that the EDI will play a role in the
training of local cadres, and that NGOs will also be afforded
opportunities to make a contribution.

    We agree with the CAS’s position that reform of the financial
sector is crucial to Colombia’s development process, particularly if
the private sector is to play its role as the engine of growth.     In
particular, enabling the small and medium scale enterprises to raise
term financing at reasonable costs would afford this subsector to play
a more active role than it has done in the past, thus contributing
substantially to the national economy.     As for the Bank Group, we
believe that this is one area where Bank/IFC collaboration is already
yielding substantial results.

    Finally, the CAS places appropriate emphasis on the promotion of
rural development. Given that there are still high poverty levels in
the rural areas, we think that the strategy for the sector, as well as
the instruments, such as the Agriculture Technology projects, selected
to address the issues in the sector, are appropriate.      However, we
would have liked to see rural NGO groups play a greater role in this
sector.   We would appreciate receiving some comments on this issue.