ADB agrees to replenish U.S$6.3b soft loan facility
ADB agrees to replenish U.S$6.3b soft loan facility
TOKYO (AFP): The Asian Development Bank (ADB) and its donor country members agreed yesterday to replenish the bank's soft- loan facility with US$6.3 billion, ADB president Mitsuo Sato said.
Sato said the United States agreed to contribute $400 million to the seventh four-year facility of the so-called Asian Development Fund (ADF) and pay off 237 million dollars in arrears to the sixth facility.
The United States had thrown negotiations into turmoil with a threat to cut its contribution by half, a move that in light of its arrears prompted some member countries to call for U.S. companies to be barred from ADB projects.
Donor countries agreed to contribute a total of $3 billion, down from $4.1 billion in the previous four-year facility.
The ADB increased its contribution from $1.9 billion previously to $3.3 billion to the seventh ADF facility running from 1997 to 2000, which will come from loan repayments and profits from its ordinary capital loans to members.
ADF facilities are used to provide interest-free loans of 30- to-40 years for projects such as roads and dams for the poorest members of the Manila-based development bank, such as Bangladesh.
Sato told a news conference that the seventh soft loan facility "took some time to conclude due to fiscal restraints in donor countries."
Japan is the largest contributor among donor countries with $1.02 billion. New contributors are Malaysia and Thailand with Malaysia providing $10 million and Thailand up to four million dollars, the ADB said.
South Korea significantly increased its contribution from $15 million under the previous facility to 54.3 million dollars, it added.
"Responding to calls from the more prosperous Asian economies to increase their assistance to the poorer nations in the region, the contributions of the regional donors will in effect reach 50 percent of the total replenishment," the Japanese president said.
Sato said there had been a feeling among members that "now that many Asian countries are going so well they should do more."
He said European donors had emphasized during negotiations the need for Asian members to carry more of the burden.
"There is a strong discussion coming from the European side that Asian member countries should increase their contributions in the spirit of so-called Asian solidarity," Sato said.
But Singapore was a notable standout among Asian donors, failing to make any contribution to the new facility.
"We will continue to have discussions with Singapore concentrating on the question of what can they do for us if they cannot make a contribution," Sato said, but the question of sanctions -- barring Singapore companies from ADB funded projects -- would be up to the bank's board of directors.
The ADB president said he expected Hong Kong to contribute to the new fund as it has in the past, notwithstanding the British colony's return to China on July 1. "At this stage they cannot confirm, but I'm fairly sure they will be increasing," Sato said. The contribution from Europe was lower than previously, but Sato said "given the fact that donors are facing more difficulties" he was "satisfied with the result."
"Their contribution declined a little bit but at the final stage many European countries said that they are quite prepared to make a supplementary contribution so I think in that sense the spirit of multilateralism is there."