Sovereigns and Heads of State of OPEC Member Countries (MCs) do not meet regularly. However, when they do meet, the impact is felt beyond the confines of the Organization’s MCs and for decades too. Such meetings also, have the tendency to affect lives in a positive way.
This could be said to be the effect their first meeting in 1975 has had on the world’s poor countries through the OPEC Fund for International Development, (OFID). Established as a multilateral development finance institution to promote cooperation between Member States of OPEC and other developing countries, OFID was conceived at the Summit of the Sovereigns and Heads of State of the OPEC Member Countries (MCs) held in the Algerian capital, Algiers, in March 1975.
The Solemn Declaration, issued by the Summit, ‘reaffirmed the natural solidarity which unites OPEC MCs with other developing countries in their struggle to overcome under-development, and called for measures to strengthen cooperation with these countries.’
In this spirit, OFID was established in January 1976, as a collective financial facility to consolidate the assistance extended by its Member Countries namely Algeria, Gabon, Indonesia, Islamic Republic of Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates and Venezuela. OFID’s resources are additional to those already made available by OPEC MCs through a number of bilateral and multilateral channels. The resources of OFID consist mainly of voluntary contributions by OPEC MCs and income derived from OFID’s investments and loans (interest and service charges).
OFID’s operations were launched in August 1976 with initial resources of about $800 million. This amount has since then been replenished three times. It has also been further increased by the profits accruing to seven OPEC Member Countries through the sale of gold held by the International Monetary Fund (IMF).
Resources (31 December 2009)
$ million Contributions 1
All non-OPEC developing countries are, in principle, eligible for OFID assistance. However, the least developed and other low-income countries are accorded priority and, therefore, receive a larger share. Over the years, OFID has spread its financing to 125 countries, of which 51 are in Africa, 42 in Asia, 28 in Latin America and the Caribbean, and four in Europe.
In the public sector, OFID has implemented 16 lending programs since its inception. The 17th Lending Programme, approved for a three-year duration, became effective 1 January 2008. By the end of March 2010, a cumulative amount of $8,703m had been committed for 1,264 public sector loans, of which $5,221m had been disbursed. As of 1 January 2009, 74 per cent of outstanding loans were with Low Income countries and 50 per cent of all commitments were to Africa.
Under the Private Sector Facility established in 1998, 144 operations have been approved in support of private entities in Africa, Asia, Latin America and Europe. By the end of March 2010, $1,190m had been committed and $525m disbursed.
In 2006, a Trade Financing program was launched. By the end of March 2010, $578m in lines of credit and $619m in risk-sharing guarantees had been approved and $285m had been disbursed.
In the framework of grants, assistance is extended to social and humanitarian development operations through three regular grant programs; Technical Assistance, Research and Similar Activities and Emergency Relief Aid. OFID has also established special grant accounts to respond to specific global needs. These include grants for the establishment of the Common Fund for Commodities, in addition to a Special Account for HIV/AIDS Operations and a Special Account for Palestine. Intermittently, OFID extended special grants in support of contemporary issues, such as the grant for the establishment of IFAD and the food crisis in Africa. By the end of March 2010, 1,205 grants, amounting to $483m, had been extended.
In addition, OFID channeled $972m to two international institutions: it has channeled OPEC Members’ contributions to the initial capital and first replenishment of IFAD’s resources and made irrevocable transfers in the name of seven OPEC Members to the Trust Fund of the IMF. OFID’s total approved commitments (including grants and contributions to other institutions) as at the end of March 2010 stood at $11,926m.
For more on OFID, visit the website: http://www.ofid.org/
1 This amount excludes $972m in contributions from OPEC Member Countries channeled through the OPEC Fund to the International Fund for Agriculture (IFAD) and the IMF Trust Fund.