ADB study draws fresh fire

06/05/2007 | Anthony Rowley

Critics warn that plans for a new-look bank risk neglecting poverty alleviation

ADB governors yesterday delivered a generally harsh verdict on the report of the bank’s Eminent Persons Group (EPG) on the institution’s future role.

A common concern was that the “new ADB” proposed by the EPG to serve the needs of Asia’s middle income countries could end up neglecting the interests of the region’s poor.

“We are concerned that a ‘two-bank model’ is emerging in some thinking”, Christopher Pearce, Parliamentary Secretary to the Treasurer of Australia, said. “This could see Asian Development Fund countries [who make up the poorest borrowers from the ADB] relegated to lesser importance than their more prosperous neighbours.”

Kenneth Peel, the US deputy assistant Treasury secretary for International Development Finance and Debt, added his voice to this complaint. “The ADB should focus on how it can best serve the poorer countries that continue to need its help,” he said.

“This means not trying to be all things to all countries but instead identifying matches between ADB’s demonstrated capabilities and the critical development needs of the region,” he aded.

The EPG suggested that by the year 2020, most Asians would be living in “middle income countries” as the region emerges from poverty. The group argued that this New Asia would require a New ADB, focusing less on poverty and more on activities such as raising productivity and disseminating knowledge.

“The report paints a very optimistic picture of Asia’s future,” declared Charlotte Seymour-Smith, Director for Asia of the UK Department for International Development. France’s Temporary Alternate Governor, Ramon Fernandez, also described as “undoubtedly optimistic” the EPG “assumption that the Asia region should be out of poverty within a decade”.

Their concerns echoed those expressed by some Asian governors. Afghanistan finance minister Anwar Ul-Haq Ahady complained at earlier governors seminar that “only 10%” of the EPG report was devoted to Asia’s poor countries and that poverty in Asia is likely to be “much greater” in future than the report suggested.

The EPG’s work drew praise, however, from Karin Kortman, Germany’s parliamentary state secretary for the economic cooperation and development ministry. “The report presents a compelling case for the [...] ADB to undertake deep reform,” he said. But Kortman questioned the assumption that the ADB should “leave it to other organisations, for example the World Bank, to support less developed countries”.

Japan’s finance minister and ADB governor, Koji Omi, was largely neutral on the EPG report. The ADB should “continue to play a central role in infrastructure construction by extending loans to developing countries “, he said, and also support developing countries’ efforts to improve their investment climates.

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