ADB doubles capital to $48 billion but debate persists
ADB doubles capital to $48 billion but debate persists
MANILA (AFP): The Asian Development Bank (ADB) yesterday
announced formal approval of a 100 percent general capital
increase to about US$48 billion, but a North-South dispute over
policy reform is far from over.
China, which opposes U.S.-backed new loan conditions such as
"good governance," abstained from a postal vote among 55 ADB
members, while war-torn Afghanistan failed to cast its ballot,
bank spokesman Maurice Bauche said.
On the basis of voting rights, the capital hike was approved
by 93.9 percent.
The China-U.S. tiff coincided with U.S. threats to strip
Beijing of low-tariff privileges unless it cleans up its human
rights record, but indications are that Washington will soon
renew the Asian giant's "most favored nation" status.
Developing countries led by China and India consider the
linkage of lending to non-financial benchmarks as "cultural
imperialism," although other multilaterals such as the World Bank
have already put it on their agenda.
The Manila-based bank's president Mitsuo Sato earlier said the
capital increase could be good for eight-to-10 years.
Bauche said this would "depend on the annual lending levels
and the reflows."
Earlier this year the bank, under pressure from western
donors, promised a "spring cleaning" to weed out bad projects and
improve quality of lending, which is expected to slow from annual
growth rates of about seven percent.
Bauche said the new policies -- including greater emphasis on
social and environmental projects -- will continue to be
discussed by the ADB's 12-member executive board, but no date was
set for a resolution.
The capital increase had been a contentious issue at the May 3
to May 5 annual meeting in Nice, France, but all developing
countries except China in the end backed the augmentation because
of pressing capital needs.
The discussions on new conditionalities are expected to spill
over to the negotiations for a replenishment of the Asian
Development Fund (ADF), a soft-loan window reserved for the
poorest members like Bangladesh and Pakistan.
The ADF, set at $4.2 billion from 1992-95, requires a much
larger outlay from donors than the capital increase, which has a
paid-in portion of two percent.