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."