World Bank freezes aid to India over nuclear tests

WASHINGTON, May 26 Kyodo - The World Bank on Tuesday froze an 865 million dollar loan package to India as sanction over the nuclear tests the country carried out earlier this month. The bank said the package -- three World Bank loans and one International Finance Corporation (IFC) loan -- was put on hold ''in response to requests from several executive directors.'' The decision to suspend the loans appears to reflect the displeasure of the Japanese and U.S. governments over the nuclear tests, informed sources said. The United States is the largest capital contributor to the World Bank and Japan the second largest. The World Bank said consideration of the loans will be resumed at a date yet to be determined. The package features a 130 million dollar credit line to finance India's energy program, 450 million dollars for expansion of India's localized power grids into a national network, and 275 million dollars to improve highways. There was also a 10 million dollar IFC loan for an Indian business firm. World Bank President James Wolfensohn has indicated his strong disaffection with the nuclear tests, a World Bank official said. India has been the largest recipient of World Bank loans. The balance of outstanding World Bank credits to that country stands at 48.8 billion dollars, including loans that have been approved by the bank but not disbursed. The World Bank earlier this year approved a planned disbursement worth a total of 1.1 billion dollars.