ADB meeting to focus on Asian poverty

ADB meeting to focus on Asian poverty

Erin Prelypchan, Reuters, Shanghai

The Asian Development Bank holds its 35th annual meeting this week in China's booming commercial hub of Shanghai, the country's richest city whose smart bridges and newly clean riverfront are testament to hundreds of millions of dollars in ADB loans.

China's growing success in sucking in private sector capital has hemmed its need for ADB funds. But its triumphs will likely spur calls by the multilateral agency for faster and deeper structural reform in less developed corners of Asia.

Afghan reconstruction, currency swaps, trade pacts, and keeping the Asian economic recovery on the boil will be among other hot topics for the 3,000 delegates due in Shanghai.

The 60-member ADB board, which includes 43 Asia Pacific finance officials, will also discuss a U.S. proposal to increase aid given to needy nations as grants, as opposed to loans.

The Manila-based ADB has forecast growth in developing Asia of about 4.8 percent this year and 5.8 percent in 2003, well down from an average annual 7.7 percent in the 1980s and 8.1 percent in the first half of the 1990s.

But while much of the region crawls out of a global economic slowdown amid lingering bad debt problems from the 1997-98 Asian crisis, coastal Chinese cities like Shanghai are flush with glittering skyscrapers, bustling streets and thriving ports.

Shanghai saw GDP growth of more than 10 percent last year and is the main entry point for China's US$40 billion-plus in annual foreign investment.

The ADB sees China's GDP growing 7.0 percent in 2002, a dizzying rate so appealing to foreign investors that Asia's finance ministers and central bankers will want to know how to emulate or weather it.

Shanghai's glitter will not distract ADB President Tadao Chino from his campaign on Asian poverty, which he has termed the "single, overarching goal" of the multilateral agency.

Japan will likely use the conference to pledge fresh funds to the ADB antipoverty trust which Tokyo launched in 2000 with a donation of 10 billion yen ($78.6 million).

Afghanistan will also feature highly. The ADB has pledged $500 million over two-and-a-half years in assistance for the reconstruction of the war-ravaged country.

The assistance programmer will focus on the crippled farm sector, education, roads and power generation. A $200 million ADB loan is expected to be processed by late August with disbursement soon after.

Bruised by the 1997-1998 Asian financial crisis, finance ministers of the 10-member Association of Southeast Asian Nations (ASEAN) plus Japan, South Korea and China will likely use a meeting on Friday to strengthen a network of currency swaps.

The Chiang Mai Initiative, signed in May 2000, sees currency swaps as a defense against future speculative attacks. Japan has already signed bilateral swaps with Thailand, China, Malaysia, South Korea and the Philippines.

ASEAN groups Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

China's economic juggernaut will be hard for delegates to ignore when they meet in Shanghai's showpiece financial hub of Pudong, whose striking office towers and broad avenues were muddy farmland only 12 years ago.

China's relative political stability, low labor costs and the world's biggest market of 1.3 billion people suck in half of developing Asia's foreign direct investment, economists estimate.