U.S. opposition endangers ADB's concessional fund
U.S. opposition endangers ADB's concessional fund
AUCKLAND (AFP): An Asian Development Bank (ADB) concessional
fund for Asia's poorest countries is in danger of running out
next year following U.S. opposition to talks on replenishing it,
a senior bank source said here yesterday.
ADB President Mitsuo Sato met for two hours with the
representatives of 23 donor countries on the eve of the bank's
28th annual meeting here in an effort to save the fast-shrinking
Asian Development Fund (ADF) from extinction.
The source, who attended the meeting but asked not to be
named, said Sato wanted to know the position of each donor on
commencing talks on replenishing the fund, currently at about
US$1.6 billion and due to run out in 1996.
Emerging Markets, the ADB conference newsletter, said the
luncheon meeting with Sato was to be kept secret, but that the
news had leaked out to the media.
The source said Sato and Western European donor countries
stressed the need for opening negotiations, possibly in
September, but that U.S. representatives remained opposed to such
talks "at this time" because of budgetary problems.
The three-day meeting starting here Wednesday gathers central
bank governors, finance ministers and other senior officials from
the 55 member nations of the Philippine-based ADB.
Asked about the possibility the fund might be completely
scrapped, the source told AFP that, if the meeting with Sato was
to be a gauge, "it could happen if the United States doesn't
change its position."
He added that this would be "catastrophic" for Asia's poorest
countries, which still have to catch up with the region's robust
economic growth.
The ADF is directly sourced from the budget of industrialized
ADB member countries such as the United States and Western
Europe. ADF funds are lent interest-free to poor Asian nations
with a repayment period of up to 40 years and a token service
charge of one percent a year.
Negotiation
"It takes time to negotiate," the source said, adding that the
current ADF fund was equivalent to only one year of loans. He
said the ADB might be forced to cut ADF concessional lending from
its present $1.2 billion a year if the fund was to be stretched
out.
He said that in theory, a U.S. refusal to give more money to
the ADF would not affect other donors, but had held them up from
committing funds.
Western European nations would find it hard to justify to
their parliaments, as well as "public opinion in their home
countries," to give more money to the ADF if the second largest
donor, the United States, is reluctant.
The United States committed $680 million to the fund in 1992
but actually paid only $243 million, or 36 percent, the bank
newsletter said.
Analysts said it would be harder now for the U.S.
administration to get money for international aid because of the
Republican-held Congress.
The source said he expected a clash between the United States
and borrower countries during the three-day meeting as the poorer
nations were expected to push for the opening of the talks.
He said the ADB was expected to discuss the issue of dwindling
loan volumes during the meeting.
Overall ADB lending fell 29 percent to $3.7 billion last year
as a result of a shift in policy focus from project quantity to
quality, leading to stricter criteria in loan approvals.