U.S. opposition endangers ADB's concessional fund<\/p>\n
AUCKLAND (AFP): An Asian Development Bank (ADB) concessional
\nfund for Asia's poorest countries is in danger of running out
\nnext year following U.S. opposition to talks on replenishing it,
\na senior bank source said here yesterday.<\/p>\n
ADB President Mitsuo Sato met for two hours with the
\nrepresentatives of 23 donor countries on the eve of the bank's
\n28th annual meeting here in an effort to save the fast-shrinking
\nAsian Development Fund (ADF) from extinction.<\/p>\n
The source, who attended the meeting but asked not to be
\nnamed, said Sato wanted to know the position of each donor on
\ncommencing talks on replenishing the fund, currently at about
\nUS$1.6 billion and due to run out in 1996.<\/p>\n
Emerging Markets, the ADB conference newsletter, said the
\nluncheon meeting with Sato was to be kept secret, but that the
\nnews had leaked out to the media.<\/p>\n
The source said Sato and Western European donor countries
\nstressed the need for opening negotiations, possibly in
\nSeptember, but that U.S. representatives remained opposed to such
\ntalks \"at this time\" because of budgetary problems.<\/p>\n
The three-day meeting starting here Wednesday gathers central
\nbank governors, finance ministers and other senior officials from
\nthe 55 member nations of the Philippine-based ADB.<\/p>\n
Asked about the possibility the fund might be completely
\nscrapped, the source told AFP that, if the meeting with Sato was
\nto be a gauge, \"it could happen if the United States doesn't
\nchange its position.\"<\/p>\n
He added that this would be \"catastrophic\" for Asia's poorest
\ncountries, which still have to catch up with the region's robust
\neconomic growth.<\/p>\n
The ADF is directly sourced from the budget of industrialized
\nADB member countries such as the United States and Western
\nEurope. ADF funds are lent interest-free to poor Asian nations
\nwith a repayment period of up to 40 years and a token service
\ncharge of one percent a year.<\/p>\n
Negotiation<\/p>\n
\"It takes time to negotiate,\" the source said, adding that the
\ncurrent ADF fund was equivalent to only one year of loans. He
\nsaid the ADB might be forced to cut ADF concessional lending from
\nits present $1.2 billion a year if the fund was to be stretched
\nout.<\/p>\n
He said that in theory, a U.S. refusal to give more money to
\nthe ADF would not affect other donors, but had held them up from
\ncommitting funds.<\/p>\n
Western European nations would find it hard to justify to
\ntheir parliaments, as well as \"public opinion in their home
\ncountries,\" to give more money to the ADF if the second largest
\ndonor, the United States, is reluctant.<\/p>\n
The United States committed $680 million to the fund in 1992
\nbut actually paid only $243 million, or 36 percent, the bank
\nnewsletter said.<\/p>\n
Analysts said it would be harder now for the U.S.
\nadministration to get money for international aid because of the
\nRepublican-held Congress.<\/p>\n
The source said he expected a clash between the United States
\nand borrower countries during the three-day meeting as the poorer
\nnations were expected to push for the opening of the talks.<\/p>\n
He said the ADB was expected to discuss the issue of dwindling
\nloan volumes during the meeting.<\/p>\n
Overall ADB lending fell 29 percent to $3.7 billion last year
\nas a result of a shift in policy focus from project quantity to
\nquality, leading to stricter criteria in loan approvals.<\/p>",
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"sponsor": "Okusi Associates",
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