(Adds quotes, details on fund for poor, background) By Lesley Wroughton WASHINGTON, Sept 27 (Reuters) - The World Bank on Thursday cut the price it charges on its loans to emerging countries like China and Brazil by 25 basis points, the first reduction in nine years, bank President Robert Zoellick said. The move is part of the World Bank's strategy to simplify its pricing structure and increase its business with 79 states it classifies as middle-income countries, including China, India, Brazil, Russia, South Africa and Mexico. "The board agreed to vastly simplify and do away with most of the fees and waivers and just have an upfront commitment fee and a spread over our borrowing, which will enable us to cut prices back to 1998 levels," Zoellick told reporters. Zoellick also announced the World Bank would more than double to $3.5 billion its contribution to the International Development Association, the World Bank's facility that provides loans and grants to its poorest borrowers. Part of the World Bank's increased funding comes from its profitable private-sector arm, the International Finance Corp., which Zoellick said would be increasing its work in poor countries, particularly in Africa. The announcement comes as major donor countries negotiate new money to cover IDA's lending from 2009 through 2011. In addition, Zoellick said the bank had approved $100 million for an early-stage infrastructure fund for poor countries that would help spur economic development. By doubling the World Bank's contribution to the IDA, Zoellick is challenging donors to dig deeper in their pockets this time. "By boosting its IDA pledge by over 100 percent, the World Bank Group is putting its money where its mouth is," Zoellick said. "This should help us gain momentum as we urge donor countries to increase their commitment." KNOCKING ON CHINA'S DOOR The IDA is especially in need of a good dose of generosity since the Group of Eight industrialized nations agreed in 2005 to cancel the debts of 19 of the World Bank's poorest borrowers, which would leave the facility with a shortfall unless donors increase their contributions to the fund. Zoellick said he had held discussions with Chinese officials about possibly attending the next round of negotiations in Ireland in November with the aim of becoming a donor. Although rapidly expanding Chinese trade and investment are helping Africa grow, the extent of its aid is not known and traditional donors say it is important the money is used productively and does not push countries back into debt. "From the discussions I've had, I've had good signs of China starting to take part," he added. He said donors had not yet started talking numbers, but he hoped for a significant increase pledged by developed countries. "So we're putting ourselves in a leadership role here by putting numbers forward and some pretty aggressive stretch numbers," he added. Zoellick said he held talks with South African President Thabo Mbeki on the sidelines of the United Nations General Assembly in New York this week, who pledged to increase his country's contribution to the fund by 30 percent. "I and others will be urging developed countries to step forward over the course of coming weeks and months, and I feel I have a strong hand to do so since our increase is well over 100 percent," he said.
