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ADB to overhaul lending operation PDF Print E-mail
Wednesday, 12 March 2008

Agence France-Presse . Manila

The Asian Development Bank will overhaul its lending operations and focus on projects with higher chances of success, the Manila-based lender said in a paper released Monday.

The move comes as the ADB faces mounting demands from major donor nations to overhaul its operations amid growing disillusionment with its perceived slow pace of reform.

These concerns have already prompted the United Kingdom to withdraw a commitment to provide more funds, citing a ‘lack of significant progress on the reform agenda.’

Reform will be the key topic on the bank’s agenda when its board of governors meet in Spain in May to approve the draft long-term strategic framework to 2020, which is expected to revise strategic priorities.

‘It is clear that in the years ahead ADB will become a different institution in several important ways,’ said the bank, which says eradicating poverty in the world’s most populous region still remains its principal goal.

Under the draft framework, ‘ADB will focus on a limited number of issues of crucial importance to the region and of primary concern to all of its members,’ the paper said. ‘It will make deliberate decisions about the extent of its engagement and, for effectiveness reasons, commit major resources only to operational areas where results will be substantial within a reasonable period,’ it added.

The bank, formed in 1966 with Japan and the United States as its top subscribers, approved 7.4 billion dollars in loans and 242 million dollars of technical assistance in 2006. However the bank, which has traditionally been headed by a Japanese nominee, has been criticised by its First World, Western members over its lack of focus and for the limited effectiveness of some bank-funded projects. ‘ADB cannot meet all the development needs of Asia and Pacific region, and must make some critical operational choices on how to use its limited financial and institutional resources,’ it said.

The white paper said the proposed changes, which would reflect starting with the 2009 budget, were a recognition of the changing dynamics of Asia, which now accounts for more than 12.5 per cent of nominal global gross domestic product.

It said there has been a faster than expected economic growth in emerging economies, leading to large foreign exchange reserves and requiring less fund intermediation to Asia from capital-surplus western countries.

The number of Asians living on a dollar or less a day has been cut by 341 million over 15 years to 604 million in 2005, and the bank forecasts poverty incidence could fall to two per cent by 2020 from 18 per cent in 2005 if growth continues apace.

However, more than 1.5 billion people or more than half the region’s population still lived on two dollars a day or less, and the benefits of high growth have led to growing income disparities, while rapid urbanisation would put ‘severe strains on the environment.’

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