Sun, May 06, 2007 page11

• ADB's overhaul of anti-poverty drive draws flak

  UNDER FIRE Critics say that apart from being too costly, the change does not address problems such as the growing disparity between rich and poor

  • AP
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  The Asian Development Bank (ADB) began an ambitious overhaul of its poverty-fighting mission yesterday under fire from the region's poorest nations who say the agency is ignoring widespread hardships in an attempt to remain relevant to an increasingly wealthy Asia.

  The debate strikes at the heart of one of the world's premier development banks, which was chartered four decades ago to end poverty though promoting growth, but has come under pressure to reinvent itself in line with projections that about 90 percent of the region's people will be "middle income" by 2020.

  Under review are the recommendations made last month by a blue-ribbon panel of experts on how to update the ADB. They include shifting the focus from poverty alleviation to sustainable growth, an emphasis on environmental friendly development and a reliance on Asian capital instead of money from rich countries.

  "It is necessary for the ADB to be reborn," said Supachai Panitchpakdi, chair of the committee.

  Rethinking at the bank, which was chartered four decades ago to fight poverty through economic growth, comes as 3,000 delegates from the ADB's 67 member governments meet in Kyoto for the bank's annual meeting.

  The breakneck economic development that the bank helped spur with its loans has unleashed a wave of environmental woes the bank is now trying to reverse. It has also lifted millions from poverty, which is forcing the bank to update its primary focus from poverty alleviation to sustainable development.

  "It is quite clear that it can't be the same ADB," ADB Managing Director General Rajat Nag said on Friday. "The paradigm has changed and we have got to change as well."

  But delegates from some of the region's poorest countries are afraid they will be left behind, while attention turns to sustaining the rapid growth of countries like China and India, which have grabbed headlines.

  "The ADB needs to continue to enhance its engagement with the poorest," said Anwar-ul-Haq Ahadi, ADB governor from Afghanistan. He said growth in Asia's so-called emerging markets has bypassed countries like his.

  About half of the region's population was living on less than US$1 a day in 1970, but it was less than 19 percent by 2003, according to the ADB. Over the years, Asia has turned from a debtor region to one with US$3.1 trillion of foreign currency reserves, about 62 percent of the world's total.

  By 2020, Asia is expected to account for 45 percent of global GDP and one-third of international trade.

  "Never before has such a populous and diverse region made so much economic progress in such a short time," Supachai said.

  The ADB advisory panel has called for the bank to change by connecting borrowers with regional lenders instead of simply channeling capital into the region from outside. The bank should also focus less on fighting poverty and more on supporting faster and more inclusive economic growth, it said.

  But critics say the change overlooks problems such as the growing disparity between rich and poor and rural and urban areas. They also worry that expanding the ADB's mission could bring it into competition with the World Bank or the IMF, or be prohibitively costly.

  Others say poverty will still be a persistent problem long into the future, despite big advances. Nag said an estimated 1.9 billion Asians will still be living on under US$2 a day by 2015.

  The ADB was established in 1966 with 31 members and gets most of its funding from issuing bonds and from the contributions of its members governments. Major borrowers include China, Indonesia, Pakistan and Vietnam, with most of the money traditionally going toward agriculture and rural development.

  "I don't think that has been emphasized enough," Ahadi said. "I think that is a little worrisome."

  The ADB is expected to adopt a new plan for its future before next year's annual meeting in Madrid, Spain. The bank approved some US$7.4 billion in loans last year, up 28 percent from the year before.
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