U.S. govt pushes ADB lending program<\/p>\n
HONG KONG (Dow Jones): During the Asian financial crisis,
\nmultilateral institutions offered bail-out money with conditions
\nto ensure economic reforms were being adopted by some countries.<\/p>\n
Now, the U.S. wants to see results before the lending is made,
\nand it sees an opportunity to do so with Asia's poorest
\ncountries.<\/p>\n
The policy push comes ahead of a next week's formal request by
\nthe Asian Development Bank for US$6.3 billion in new financial
\npledges from the Japan, the U.S. and the bank's other rich donor
\nnations.<\/p>\n
The Manila-based bank says the money is needed before the end
\nof next year to ensure it can continue to provide long-term, low-
\ninterest loans through its Asian Development Fund.<\/p>\n
\"The timing is particularly important now because it deals
\nwith the consequences of the Asian financial crisis. The
\nconsequences are that poverty has increased in Asia,\" John
\nLintjer, ADB vice president in charge of finance and
\nadministration, told Dow Jones Newswires.<\/p>\n
Japan, the ADB's leading shareholder, is \"supporting
\nrigorously the replenishment exercise,\" said ADB director Naoyuki
\nShinohara.<\/p>\n
The ADB's soft loans historically make up a quarter to a third
\nof the bank's total annual lending and provide much-needed
\nsupport to its poorest member countries. But as two of the
\nbiggest past recipients - Pakistan and Indonesia - have shown in
\nrecent years, rampant corruption often stands alongside poverty.<\/p>\n
In that regard, Linda Tsao Yang, the U.S. ambassador to the
\nADB, has withheld her support for the ADB's fund-raising
\ninitiative because she said the U.S. government wants more
\nassurance that lending will actually be effective, rather than
\nsquandered.<\/p>\n
She said she wants the bank to come up with basic guidelines
\nto ensure its loans provide maximum impact.<\/p>\n
The plan she described is similar to the International
\nMonetary Fund's new Contingent Credit Lines, where countries with
\na recognized track record of good performance would be deemed
\neligible for crisis-relief from the Washington-based organization
\nbefore the outbreak of a problem.<\/p>\n
But Yang's plan relates specifically to countries with weak
\neconomies and high poverty, which she suggested may be getting
\nmoney too easily from the ADB.<\/p>\n
\"It does not do the borrowing country any good to merely pour
\nin the money because it has to be repaid 20-30 years down the
\nroad,\" she said. \"Just being poor does not mean you are entitled
\nto concessionary funds. It's performance, performance,
\nperformance.\"<\/p>\n
A fellow ADB director suggested Yang is being too idealistic.<\/p>\n
\"Some degree of flexibility is important. We can't just
\ndisregard countries when they have governance problems,\" he said.<\/p>\n
Yang acknowledged the poorest countries should almost always
\nbe provided with a basic, need-based amount of soft loans.<\/p>\n
But, she added, any additional funding should be taken into
\naccount how well a borrowing nation has applied the funds it has
\nalready received. The government should be rewarded for meeting
\nbenchmark criteria, such as how much poverty has been reduced or
\nwhether the environment was improved.
\n\"We want to think positively, not in a punitive way,\" she said.<\/p>\n
Lintjer of the ADB said the bank's lending decisions have
\ntraditionally been \"rather qualitative in nature, not
\nquantitative.\"<\/p>\n
And while he said the bank may introduce more \"performance-
\nbased\" lending criteria, even putting together mathematical
\nformulas for benchmarks would require judgment calls.<\/p>\n
\"Formulation of performance-based lending might be very useful
\nto our work, as an instrument,\" but not likely as a full
\nsubstitute for decision-making capability of its professionals,
\nhe said.<\/p>\n
Meanwhile, the ADB director who asked not to be named said the
\nU.S. is \"very eager to talk about policy issues, but it's quite
\nnatural that they are cautious\" about pledging new money since
\nWashington is already behind on payments made under past pledges
\nto the ADB.<\/p>\n
Yang has often said the U.S. failure's to pay its dues has
\nreduced her ability to push an agenda. She retires next month
\nafter six years as the U.S. director of the ADB and will be
\nsucceeded by her deputy, Cinnamon Dornsife.<\/p>\n
The ADB's request for replenishment of the development fund
\npool will be formally made Oct. 13-14 in Brisbane, Australia, at
\na meeting led by ADB President Tadao Chino.<\/p>\n
Since becoming ADB president early this year, Chino has sought
\nto refocus the bank on poverty alleviation programs.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/us-govt-pushes-adb-lending-program-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}