The World Bank confirmed yesterday that it had apparently bowed to pressure from its richest members and intends to deny Beijing further access to its cheapest loans. Facing intense pressure from the 35 countries that supply funds to the International Development Association (IDA), World Bank president James Wolfensohn confirmed that Beijing would receive no further funds after June 30, 1999, when the next replenishment of the IDA is due to take place. IDA donor countries have long argued the mainland did not need to benefit from the association's loans, as it could command sufficient access to the international capital markets. Credits from IDA are highly preferential, and are repayable after 35 to 40 years. Funds lent through IDA carry no interest, but there is a commitment charge, set annually, within a range of zero to 0.5 per cent of the disbursed balance. The commitment charge is now at zero per cent. The removal of IDA eligibility, however, is not expected to affect Beijing's position as the World Bank's largest borrower. Officials said yesterday the mainland's exposure to lending from the World Bank's other loans arm, the International Bank for Reconstruction and Development (IBRD), was expected to increase. 'It looks as though at the end of the current IDA China will phase out IDA lending, largely as a result of the gross domestic product per capita of the country,' Mr Wolfensohn said. 'There are certain limits that we have and up to now we have had a mixture of IDA lending and IBRD lending because of the incidence of poverty in China. 'It would be my guess that the soft loans, the IDA loans, will phase out, but there is no indication at all that the level of lending from the IBRD will diminish,' he said. 'China is our largest borrower at the moment, and I would anticipate that for the foreseeable future it is likely to continue.' During the World Bank's financial year 1997, which ended on June 30, Beijing had 67 IDA credits, worth US$9.2 billion, and 117 IBRD loans, worth $19.1 billion. The IBRD lends only to credit-worthy borrowers, and only for projects which it deems will generate high rates of return. Mark Malloch-Brown, vice-president of external affairs at the bank, said it still felt that assistance could be given in the social sector and poverty-related areas. He said the social consequences of Beijing allowing millions to become unemployed as the loss-making state-owned enterprises were shut down, would be costly. This would probably be an area for future bank assistance, he said. The World Bank has made a further commitment to the mainland, by choosing it as one of 18 locations where a country unit will be established. The move is part of a $170 million plan to move overheads to frontline operations, and aims to shift the balance of the World Bank's budget towards 60 per cent accounting for frontline resources and 40 per cent from supporting activities.