ADB Annual Report 2011

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• Publisher: Asian Development Bank
• Year: 2012
• Print ISBN: 9789290926283
• eBook ISBN: 9789290926290
• Topic: Economics
• Subtopic: International Economics
• Index: Economics

In 2011, the Asian Development Bank (ADB) approved $21.72 billion in financing operations, representing a 14.5% increase on 2010 financing, according to the latest Annual Report of the Board of Directors to the Board of Governors. The 2011 Annual Report highlights how ADB has helped developing member countries in Asia and the Pacific make progress toward inclusive growth. It includes a comprehensive discussion on ADB's operational, administrative, and financial activities in 2011, complete financial statements and opinions of the independent auditors, and a separate report on the activities of the Special Funds of ADB. It also contains chapters on regional, sectoral and thematic highlights.

1	Message from the President

Haruhiko Kuroda President and Chairman Board of Directors

Poverty reduction remains the greatest challenge for developing Asia and the Pacific. Although significant progress has been made in reducing income poverty, large pockets of deprivation remain, and disparities both within and across countries continue to grow.

Nearly half of Asia’s citizens—about 1.8 billion people—still live on less than $2 a day. Many reside in megacities with populations of over 10 million, where pollution compounds the problems associated with mass urbanization.

Low-income countries struggle to sustain economic growth and reduce poverty. At the same time, a substantial proportion of the region’s poor today live in middle-income countries. So while Asia’s rapid expansion over the past 2 decades has led to fewer people living in poverty, we are increasingly concerned that the benefits of economic growth have not been equally shared. Large gaps in income, services, and opportunities must be bridged, given that the region is far behind several key Millennium Development Goals targets.

Meanwhile, economic uncertainty still hovers over the global economy, and it has potential implications for ADB’s developing member countries. In 2011, many developing Asian economies were affected by slowing exports. Given the significantly increased role of Asia in the global economy, it is all the more imperative for the region to do everything in its power to foster sustainable and inclusive growth. To do this, Asia must rebalance its growth paradigm toward more reliance on domestic and regional demand, while still maintaining its openness within the global economy. In this way, Asia can also build its own markets and increasingly contribute to global growth.

To make the process of economic expansion more conducive to reducing poverty, ADB focuses on three primary strategic agendas: inclusive growth, environmentally sustainable growth, and regional integration. We support our developing member countries in pursuing these strategies with all the instruments at our disposal—from project finance and technical assistance to knowledge products and policy dialogue.

To help meet the region’s ongoing and emerging development challenges, ADB’s operations in 2011 grew to $21.72 billion. Of this total, $14.02 billion was financed by ADB and Special Funds, and $7.69 billion by cofinancing partners. ADB’s operations in 2011 addressed various development issues, including energy efficiency, urban infrastructure, road connectivity, regional cooperation, and education.

As demand for ADB’s assistance continues to grow, it is critical to ensure we mobilize the resources needed to respond. In 2011, ADB’s cofinancing operations continued to extend the impact of each dollar of development assistance, and support private sector development. Official cofinancing increased by 13.2% to $3.5 billion. Meanwhile, commercial cofinancing grew sharply from $2.3 billion in 2010 to $4.2 billion, and our private sector operations targeted support for critical infrastructure, small and medium-sized enterprises, and the promotion of renewable energy.

ADB assistance is particularly needed in our poorer member countries. To this end, the Asian Development Fund (ADF) XI replenishment was undertaken, and strong commitment was shown by donors. This is encouraging and vital for implementing our long-term strategy.

In addition to boosting resources, we must continue to improve our institutional effectiveness, development results, and operational efficiency. ADB’s ongoing transformation is a top priority. Given the size of the challenges and the limits on our resources, it is essential that we continue to reform ourselves to better respond to the needs and voices of all the stakeholders.

Since its founding in 1966, ADB has been driven by an inspiration and dedication to improving people’s lives in Asia and the Pacific. By targeting our investments wisely, in partnership with our developing member countries and other stakeholders, we can alleviate poverty and help create a world in which everyone can share in the benefits of sustained and inclusive growth.

ADB continues its endeavor toward a more results-oriented and transparent organization. We are now more selective in our operations to ensure a better alignment between clients’ needs and ADB’s strengths. The Public Communications Policy and the Accountability Mechanism will help ADB stay at the forefront of transparency and accountability. Measures to improve project performance and outcomes optimize our local presence and allow ADB to be more responsive to clients.

Since its founding in 1966, ADB has been driven by an inspiration and dedication to improving people’s lives in Asia and the Pacific. By targeting our investments wisely, in partnership with our developing member countries and other stakeholders, we can alleviate poverty and help create a world in which everyone can share in the benefits of sustained and inclusive growth.

 

2	Board of Directors

HIGHLIGHTS

•New Public Communications Policy approved.

•Policy-based lending reviewed.

•Project design facility established.

•Results framework refined.

•Liquidity policy reviewed.

•Mainstreaming nonsovereign public sector financing approved.

•Maturity-based loan pricing for sovereign lending introduced.

Asian Development Bank (ADB) loans, grants, equity investments, technical assistance, and guarantees—including cofinancing—totaled $21.7 billion in 2011. While continuing to direct the implementation of ADB’s long-term strategic plan, Strategy 2020, the Board actively promoted an agenda of rapid but sustainable and inclusive growth in all ADB operations.

The Board of Directors is responsible for the overall direction of ADB operations, including the approval of policies, loans, grants, and guarantees. As their representative, the Board plays a vital role in ensuring that ADB shareholders’ guidance is implemented.

Rapid growth in Asia and the Pacific in recent decades has led to a dramatic reduction in poverty, but inequalities remain and have worsened in a number of countries. In 2011, the Board continued to direct the implementation of Strategy 2020—the long-term strategic framework that charts the course for ADB to become an even more effective development institution and meet the region’s development challenges. To this end, the Board’s priorities included promoting rapid but sustainable and inclusive growth, improving ADB’s portfolio management, and enhancing human resources management.

Reflecting ADB’s strategic direction, the Board focused in particular on capacity development, private sector development, good governance, knowledge management, food security, gender equity, environmental sustainability, and regional cooperation and partnerships. The Board also provided comments and suggestions on operational plans for the water and finance sectors. To support regional integration, it approved an equity contribution of $150 million for the innovative Association of Southeast Asian Nations Infrastructure Fund.¹

To improve ADB’s development effectiveness, the Board approved a new policy on ADB’s policy-based lending. This includes mainstreaming programmatic budget support and improving crisis response instruments. The Board also approved mainstreaming nonsovereign public sector financing. By enabling direct financial assistance to subsovereign entities, the new modality will help support decentralization processes in Asia and the Pacific.

To reaffirm ADB’s commitment to inclusion, transparency, and accountability, the Board approved a new Public Communications Policy. This revised policy, which refines disclosure requirements for ADB documents, aims to enhance stakeholders’ trust in and ability to engage with ADB, thereby increasing the effectiveness of ADB operations. The Board also approved refinements to ADB’s corporate results framework and suggested areas to consider during the 2012 comprehensive review.

Working to improve portfolio performance, the Board approved the establishment of a project design facility on a pilot basis to provide quick-disbursing resources for the formulation of projects, allowing for detailed engineering design and broader project and program preparatory work.

The Board reviewed ADB’s liquidity policy and considered a comprehensive review of the competitiveness of compensation for national and administrative staff. It also reviewed ADB’s sovereign loan charges for ordinary capital resources lending, leading to the introduction of maturity-based loan pricing.

The review of the Accountability Mechanism, initiated in 2010, continued during the year. The mechanism provides a forum where people adversely affected by ADB-assisted projects can be heard, seek solutions to their problems, and report ADB’s alleged noncompliance with its operational policies and procedures. ADB expects the review to be completed in 2012.

The Board facilitated the election process of the President, resulting in the Board of Governors electing Haruhiko Kuroda as ADB President and Chairman of the Board of Directors for another term of 5 years, starting 24 November. The Board approved the appointments of Stephen Groff and Thierry de Longuemar as vice-presidents and a new role for Vice-President Bindu Lohani overseeing knowledge management and sustainable development. It also approved the appointment of Vinod Thomas as director general of the Independent Evaluation Department (IED).

AT A GLANCE

•New Public Communications Policy approved.

•Haruhik...

Table of contents

• Front Cover
• Title Page
• Copyright Page
• Contents
• The Recored
• 1 Message from the President
• 2 Board of Directors
• 3 Policy and Strategy Overview
• 4 Delivering an Effective Organization
• 5 Sector and Thematic Highlights
• 6 Generating and Sharing Knowledge
• 7 Financing Operations
• 8 Central and West Asia
• 9 East Asia
• 10 Pacific
• 11 South Asia
• 12 Southeast Asia
• 13 Nonsovereign Operations
• 14 Human Resources, Finance, and Administration
• 15 Appendixes
• ADB Contact Addresses
• Back Cover