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.