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Tue, May 08, 2007 - Page 10 News List

ADB fails to agree on reforms

FORGING A NEW ROLE The Asian Development Bank's original aim was to tap markets for developing economies. Now it wants a greater role in fostering economic cooperation


Members of Greenpeace's youth climate campaign group ''Solar Generation'' stage an anti-pollution demonstration in sumo wrestler costumes at the Asian Development Bank's annual meeting in Kyoto, Japan, yesterday.


The Asian Development Bank (ADB) faces an uncertain future after failing to reach a consensus on how to reform in response to Asia's rapid but increasingly uneven economic growth.

The ADB wrapped up its annual meeting yesterday amid disquiet among many members about proposals for the multilateral lending institution to focus more on the needs of middle-income countries in the region.

While delegates were generally in favour of an overhaul to ensure the bank's continued relevance, many urged the ADB not to lose sight of its original mandate to lift millions of Asians out of poverty.

"While a larger number of countries in the region will become middle-income countries, some will remain low-income countries," Cambodia's ADB governor, Keat Chhon, warned a session of the bank's 67 member countries.

"There will still be a significant number of poor in the region. Our view is that the ADB should continue to focus on poverty alleviation in these low-income economies until this mission is accomplished," he said.

David Adeang, the governor for Nauru who spoke on behalf of the Pacific developing nations, also urged the ADB not to abandon the most fragile nations.

"The ADB still has a vital role to play in helping its poorest members achieve the conditions necessary for economic growth and alleviation of poverty. We cannot overlook those small, vulnerable and weakly performing states that are heavily dependent on expert advice and support from the ADB," he said.

The four-decade-old ADB is looking to forge a new role for itself, predicting that, thanks to Asia's rapid export-driven growth, most countries in the region will have escaped widespread poverty by 2020.

The ADB's main aim when it was set up in 1966 was to tap capital markets to raise funds for developing Asian economies unable to do so themselves.

Now the ADB is looking to play a greater role in fostering regional economic cooperation and knowledge creation.

It also aims to focus its investment more on telecommunications networks, new roads and other infrastructure, and on clean energy projects to try to reduce rising greenhouse gas emissions.

An outside panel of experts appointed by the bank last month urged the ADB to radically transform itself but some of its proposals, such as for the bank to manage a part of Asia's foreign exchange reserves, have met with resistance.

The US and European nations joined some of Asia's poorest nations in pressuring the development bank to not to scale down the fight against poverty.

"The ADB needs to strengthen its internal commitment to poverty reduction and the challenges facing low-income countries," said Sweden's head delegate Johanna Brismar Skoog.

"Poverty and inequality still persist in low and middle-income countries alike," added Austria's acting governor Marcus Heinz.

"We believe that the ADB must address this issue in a much more pro-active way than suggested in the [experts'] report," he said.

The US has even suggested that the ADB should prepare to wind up its activities once its job is done, warning the lender against trying to step on the toes of other multilateral institutions or the private sector.

The ADB has also come under fire from environmentalists who accuse it of contributing to global climate change through its funding of coal-fired power plants.

"Supporting renewable energies without phasing out coal is only half of the solution to climate change ... the climate cannot be half saved," Greenpeace climate campaigner Athena Ballesteros said.

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