The ADB's conditions<\/p>\n
Loan conditions have always been one of the main bones of
\ncontention at the annual meetings of the Manila-based Asian
\nDevelopment Bank (ADB). The latest annual meeting which ended
\nyesterday was preoccupied with the current crisis over the
\ndramatic lack of funds, but also saw acrimony over what borrowing
\ncountries consider unreasonable conditions attached to ADB's
\nloans.<\/p>\n
The problem is not interest rates, nor the terms attached to
\nthe credits. The ADB's lending rates are always below market
\nrates even though its rates are based on its own cost of
\nborrowing. In fact, its soft-loan arm, the Asian Development
\nFund, specifically targets the poorest borrowers and charges no
\ninterest at all, only a token administration fee.<\/p>\n
What borrowers are complaining about is that the loans are
\nmade conditional on reform measures. These measures are often
\nsaid by borrowers to aggravate, rather than alleviate, their
\neconomic difficulties.<\/p>\n
However, ADB's donor members argue that the reforms or policy
\nmeasures required of borrowers are precisely what distinguishes
\nmultilateral banks like the ADB different from commercial banks.
\nThey contend that if borrowers wanted only money, they could
\nalways just go to the international money markets.<\/p>\n
It is of course true that multilateral development banks like
\nthe ADB and the World Bank perform their development mission
\nlargely through policy talks with borrowers. The Indonesian
\ngovernment, as one of the largest borrowers from both banks, has
\na lot of experience of intensive, vigorous policy debates with
\nthe executives of the banks during credit negotiations. The
\nannual meeting of the Consultative Group on Indonesia (CGI) in
\nParis, for instance, is essentially a round of policy talks
\nbetween Indonesia and its creditors.<\/p>\n
Borrowers and the ADB obviously have different priorities and
\nthus see things differently. For example, ADB executives
\nprescribe policy recommendations related to loan projects
\naccording to strictly economic criteria. But a sovereign borrower
\nwill tend to see things in terms of politics as well, taking into
\naccount its capacity to absorb the recommended reforms without
\nstrong public opposition.<\/p>\n
The problem, though, is that political and economic
\nconstraints differ from one country to another, while the ADB
\nserves many sovereign borrowers and tends to impose uniform
\npolicy conditions on borrowers, without taking into account the
\nsocial and economic complexities of specific countries.<\/p>\n
The ADB and its borrowers should therefore work harder to see
\neach other's point of view.<\/p>\n
On the one hand, borrowers must appreciate the blunt truth
\nthat projects may fail if the domestic economic environment is
\nnot right for it. Sound economic policies are essential for the
\nsuccess of both individual projects and development strategies in
\ngeneral.<\/p>\n
On the other hand, the ADB should also be more sensitive to
\nconditions -- and political realities -- in borrower countries.
\nThat requires the ADB to sharpen up its country strategy analysis
\nbecause comprehensive country strategies are vital to ensure
\nmaximum development impact for its loans.<\/p>\n
In policy talks the ADB should try to recognize the differing
\nobjectives of sovereign borrowers and avoid taking up dogmatic
\npositions. It should also avoid creating the impression among
\nsovereign borrowers that \"the ADB knows best\".<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/the-adbs-conditions-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}