ADB calls on members for new funding talks

ADB calls on members for new funding talks

MANILA (Dow Jones): Sorely in need of new funding commitments, the Asian Development Bank wants its shareholder countries to start talks this year for the replenishment of the bank's cheap- loan facility to the region's poorest economies.

Opening the Manila-based development bank's 32nd annual meeting, ADB president Tadao Chino said the demand for funds from the ADF's concessional-loan window is growing, even from Asian countries that haven't been in the direct line of fire from the financial turmoil.

"I would like to request your support for launching negotiations this year for the next replenishment of the Asian Development Fund," Chino urged delegates from the bank's 57 shareholding member countries.

The Asian Development Fund, or ADF, which provides loans to the bank's poorest members at below market interest rates, has been severely depleted by adverse currency movements caused by the crisis - and particularly the yen's fall against the dollar, and the cost of tackling the crisis itself.

Despite $6.3 billion being pledged in 1997 to cover a four- year period, the fund has contracted to $4.7 billion.

Chino's speech didn't dwell at length on what is seen as one of most pressing needs for the bank, and made no mention of the funding levels being sought for the ADF replenishment. However, ADB officials have said they will be lobbying for 1997's commitment to be matched.

Other issues likely to be high on the agenda of the ADB's annual meeting, which ends Sunday, is the need for fresh capital and a review of the bank's capital adequacy because of the demands of Asia's economic crisis.

There is also concern over the possible impact on the bank's triple-A credit rating caused by a sharp increase in borrowing as it joined the international effort to help douse the region's financial fire.

Earlier this week, Moody's Investors Service said the ADB's Aaa/Prime-1 ratings of the ADB are buoyed by the bank's strong financial performance and capital structure.

But Moody's also noted the ADB's expansion of lending in response to the crisis "is straining its financial resources and has eroded its superior capital cushion relative to the other multilateral development banks."

Shortly after taking up the presidency in February, Chino, a former Japanese vice finance minister for international affairs, put the bank on a new policy course focusing primarily on its role to alleviate poverty.

"First and foremost, there is the challenge of poverty," Chino told delegates at the meeting, noting that Asia is still home to most of the world's poor.