They maintain the increased risk these loans carry for the bank should not cause concern in the market because the bank has a reputation for prudent management and clear financial statements.

The annual report of the 181-nation organisation, released yesterday, said structural adjustment loans increased from $350 million in 1996 to $8.2 billion in the fiscal year that ended June 30. This represents 39 per cent of total bank loans compared with 9 per cent for 1997 and 2 per cent for 1996.

Governments use structure loans to make changes in how they operate. The loans are different from ones for development projects such as improving or building schools or roads.

Mark Malloch Brown, the bank's vice president for external affairs, said the structural adjustment loans complement the role of the bank'ssister institution, the International Monetary Fund (IMF). The IMF has provided emergency multi-billion dollar rescue packages for troubled economies in Asia and Russia.

We do not see (a relationship) between structural lending and an ATM,'' Malloch Brown said, using the American term for an automatic cash machine. We see it as consistent with our mission'' to alleviate poverty. We're more like an annuity or investment fund than a cash card.''

Mr Brown also pointed out that $5 billion of the $8.2 billion in structural loans went to South Korea as part of a record $58 billion IMF rescue package.

Malloch Brown said he did not expect credit agencies that rate banks' risks to lower their ranking of the World Bank because we have a reputation for prudent financing and the transparency of our financial statements. The markets have no cause for alarm.''

The bank's annual report said lending increased 49.3 per cent in fiscal 1998 to a record $28.59 billion up from $20 billion in 1997, due to quick responseto the Asian crisis and stronger demand from clients.

But lending by the International Development Association, the arm of the bank that makes nominal interest loans to poor countries, fell 4.6 per cent to $5.7 billion compared with the record level of $5.98 billion last year.

The largest borrowers in fiscal 1998 were Korea, China, India, Mexico, Russia, Brazil, Argentina, Pakistan, Indonesia and Ethiopia.