role of adb
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CHAPTER 1
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The primary function of banks is to deal with money, one cannot
speak about give priority to those banking without referring to money.
Hence, it seems a must to understand money first. Otherwise many
misinterpretations may arise as the result. Interest and profit, although being
clear concepts, have been subjected to many misunderstandings. To be sure, let
me make them clear at the outset. Interest and profit are rewards to money andcapital investment respectively. In other words capital investment produces
profits and money produces interest. Furthermore it has constantly and
mistakenly written and quoted by some writers that the price of money is 1
(unity). One is the exchange rate of money with itself but the price of money is
interest (rate).
Asian Development Bank (ADB) is a multilateral development finance
institution dedicated to reducing poverty in Asia and the Pacific. It was
established in 1966. 63 member countries own ADB. Its members are 64, 46
from Asia and the Pacific and 18 from other parts of the globe. The
overarching goal of ADB is to reduce poverty. To achieve this, ADB supports
activities in its developing member countries to promote pro-poor economic
growth, inclusive social development, and good governance. Asian
Development Bank headquarter is in Manila. It has 26 other offices around theworld.
ADB takes into account in its activities three crosscutting themes:
private sector development, regional cooperation, and environmental
sustainability. ADB's principal tools are loans, guarantees, and technical
assistance, which it mainly provides to governments for specific projects and
programs.
For most of the 1990s, Pakistans economy has been in difficulty mainly
due to political instability, sectarian violence, weak governance, deep-rooted
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structural problems, and inappropriate policy responses. These have resulted in
unsustainable fiscal and current account deficits, a significant slowing down of
economic growth to two-thirds of its historical levels, double digit inflation,
stagnating industrial production and exports, and depletion of foreign exchange
reserves. After taking office in February 1997, the new Government moved
quickly to reverse the trend and initiate a program of economic reforms to
address both immediate macroeconomic stabilization requirements and longer
term structural adjustments, and free the economy from the low investment,
low savings, and low growth path of the nineties. This program paved the way
for the introduction of a comprehensive IMF Policy Framework Paper (PFP)
and Enhanced Structural Adjustment Facility (ESAF)/Extended Fund Facility
(EFF) in October 1997. The PFP encompasses critical reforms of the tax and
fiscal system, state-owned enterprises, financial markets, trade regime, and the
foreign exchange market. Concurrent with the structural policies of most
immediate macroeconomic impact, the PFP also includes reforms directed at
developing Pakistans human capital, raising productivity in key sectors,
protecting the environment, and promoting good governance. ESAF is
receiving substantial complementary support from other development partners,
particularly the Bank and the World Bank. The first review of the program was
successfully completed in March 1998. However, after Pakistans nuclear
testing in May 1998, the IMF program was held in abeyance and is being
renegotiated.
Macroeconomic performance during the first year of the ESAF/EFF
program (October 1997-June 1998) was generally encouraging. Partly as a
result of economic revival measures implemented by the Government and
because of strong agricultural growth due to favorable weather conditions,
Pakistans economy showed some signs of recovery during FY1997/98. Real
GDP growth during the fiscal year is projected at around 5.4 percent, a
significant improvement over the previous years 1.3 percent. Sustained growth
is, however, still severely constrained by a number of impediments rooted in
both demand and supply sides, and including weak investment, slow export
growth, and low productivity. Tight monetary and fiscal policies have led to a
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substantial reduction in inflation, to eight percent by the end of the 1997/98
fiscal year, a single digit growth for the first time since 1989/90.
Progress in reducing Pakistans budget deficit, the top priority formacroeconomic stabilization, has been mixed. The FY 1997/98 budget aimed
to reduce the consolidated fiscal deficit to 5 percent of GDP through a
combination of large expenditure containment and modest revenue growth.
Revenue collection was however disappointing, with tax collection by the
Central Board of Revenue (CBR) during the first half of the fiscal year falling
short of target by about $250 million. Slower than expected economic growth,
a sharp fall in imports, reduction in tax/tariff rates (as an economic revival
measure), and poor tax administration are the main causes of the shortfall. The
worsening financial position of Pakistans public sector corporations,
particularly the power utility companies WAPDA and KESC, is also severely
affecting fiscal operations and threatening macroeconomic stability. Despite a
weak revenue performance, the Government estimates that the FY1997/98
fiscal deficit will reduce to 5.4 percent of GDP.
ADB came with strong development approaches which will be later on
discussed in the project and these implementations really boosted Pakistan
economy.
This research analyzes the functioning of ADB and its role in the
economic development especially in Third World Countries. This research will
be helpful to policy maters, researchers and students in this field.
1.2 PUROPOSE OF THE STUDY
1. To gather relevant information to interpret and analyze it in a useful
manner to understand the proposed topic.
2. To analyze the role and contribution of ADB in the Economic
Development of third world countries.
3. To provide conclusion and suggestions based on analysis.
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1.3 METHODOLOGY OF THE RESEARCH
This would be basically a basic research i.e. to enhance knowledge
about Role of ADB in Development of Pakistan; the data would be mainly
secondary in nature and will be collected through journals, books, and
internet and from other already published materials
1.4 SCOPE OF THE STUDY
The core of this work is centered on how ADB can play its vital role in
the assistance of developmental projects in Pakistan. The global view of the
ADB and its development attempting some definitions of its assistance used inits classification. There after, we examine the different programs run under
ADB, their budgeted and actual costs incurred and finally make our conclusion
and suggestions.
It can also provide assistance to students seeking information regarding
role of central banks in Islamic finance
1.5 SCHEME OF THE REPORT
This project is organized into 6 chapters. Chapter 1 is about
introduction. Chapter 2 explains the various view of different views people is
know as the literature review. Chapter 3 gives Purpose and Functions of ADB.
Chapter 4 is about the analysis of ADB. Chapter 5 is the findings. Chapter 6 is
about the conclusion and suggestions.
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CHAPTER 2
LITERATURE REVIEW
Over the years, Asian Development Bank have played a significant role
in economic and social transformation in Asia and the Pacific- boosting
economic growth, fostering social development, and helping improve the
quality of life for millions of people. Asian development bank provide loans,
Technical Assistance, and Grants to its member countries. ADB approved 11
loans totaling US$709.2 million for seven projects to Pakistan. ADB has also
approved twenty-three technical assistance grants totaling US$28.9 million.
Cumulative ADB lending to Pakistan as of 31 December 2004 was US$14.3
billion. Recently ADB has approved $ 1 billion for the reconstruction and
rehabilitation of the earthquake affected people.
Accounting period of ADB ends on 31 December. So the data in reports
are as of December 2004. A large part of the Asian Development Bank's data is
available at its web site and Depository libraries.
2.1 ADB Loans for Projects in Pakistan:
ADB approved 11 loans totaling US$709.2 million for seven projects in
the following sectors.
1. Assistance for sustainable livelihood improvement in Punjab;
2. Multisector rehabilitation in AJK;
3. Public resource management in Balochistan;
4. Technical education and vocational training in Balochistan;
5. Technical education and vocational training in NWFP;
6. Devolved social services in Punjab; and
7. Road development and sub regional connectivity in NWFP.
The details of the above Project along with their respective loan amountare given in table 2.1
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2.2 TECHNICAL ASSISTANCE (TA)
ADB has three types of TA activity:
1. Project preparatory technical assistance (PPTA) to prepare a project
loan, a program loan, or a sector loan for financing by the ADD and
other external sources;
2. Advisory technical assistance (ADTA) to finance, for example,
institution building or sector-, policy-, and issues-oriented studies; and
3. Regional technical assistance (RETA) for any of the activities covered
in (i) and (ii) involving more than one member country. ADB deems anytechnical assistance projected funded for under $150,000 a small-scale
technical assistance (SSTA).
ADB's public communications policy calls for TA reports to be made
publicly available no later than upon approval.
Table 2.1: Details of the Projects Along with their respective amounts
(SMillion)
Project Name ADF OCR Total
1. Sustainable livelihood in Barani AreaProject(Punjab)
41.0 41.0
2. Balochistan Resource Management Program 23.0 11.0 133.0
3. Decentralized Social Service (Punjab) 75.0 75.0 150.0
4. Restructuring of Technical Education andVocational System NWFP
11.0 11.0
5. Restructuring of Technical Education andVocational Balochistan
16.0 16.0
6. NWFP Road Development Sector andRegional Connectivity
5.0 296.2 301.2
7. Multisector Rehabilitation Project in AJK 57.0 57.0
Total 228.0 481.2 709.2
Technical Assistance Reports
A technical assistance (TA) report is a recommendation to the Board or
President depending on the amount of assistance) to finance a technical
assistance project.
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2.2.1 Technical Assistance to Pakistan
ADB has approved twenty-three technical assistance grants totaling
US$28.9 million to Pakistan. These are listed in table 2.2.
Table 2.2: ADB's Technical Assistance to Pakistan
S. No Project Name Division TA Type Amount
1 Balochistan Rural Development andDrought Mitigation
SAAE Projects 600.0
2 Sindh Costal and inland CommunityDevelopment Project
SAAE Projects 650.0
3 Water Sector Irrigation Development SAAE ID 300.0
4 Renewable Energy Development SAEN PP 550.0
5 Supporting Public Resource ManagementReforms in Balochistan
SAGF ID 400.0
6 Punjab Resource Management Reforms(Subprogram 2)
SAGF ID 250.0
7 Strengthening Coordination and Alignmentof Government Operations to Devaluation
PRM ID 450.0
8Strengthening Procedures to Reduce Delaysin Startup of Development
PRM ID 450.0
9 Capacity Building of Alternative EnergyDevelopment Boar
SAEN AO 150.0
10 Implementation of Police Reforms in Punjab PRM ID 950.0
11 National Primary Education FunctionalLiteracy for Rural Women in SelectedBarani Areas of Punjab
SAAE ID 400.0
12 Sindh Basic Urban Services SASS Projects 795.0
13 Balochistan Devolved Social Services SASS Projects 400.0
14 Capacity Building for EnvironmentManagement in Sindh
SASS Projects 400.0
15 Coordination of Devolved Social servicesPrograms
SASS ID 150.0
16 Mobilization of Grassroots Stakeholders forPro-Poor Social service Delivery
PRM ID 400.0
17 Determents and Drivers of PovertyReduction and ADB's Contribution in Rural
Pakistan
PRM ID 400.0
18 Transport Sector Support SATC ID 290.0
19 Coordination of Devolved Social servicesProgram (Supplementary)
SASS ID 130.0
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20 Punjab Devolved Social services Program SASS ID 20000.0
21 SSTA for Facility PPP Initiative in NationalHighway Department
SATC Projects 150.0
22 Improving Governance in the Non-ProfitSector of Pakistan
PRM AND 240.0
Total 28605.0
Table 2.3: Breakdown of Cumulative ADB lending to Pakistan, as of 31
December 2004
Sector Loan
(number)
Loan
Amount (US$
million)
%
Energy 46 3,062.0 21.5
Agriculture and Natural Resources 49 2,977.1 20.9
Finance 25 1,878.0 13.2
Transport and Communications 19 1,604.9 11.3
Multisector 22 1,344.5 9.4
Industry and Trade 1 39 1 1,290.4 9.0
Law, Economic Management, andPublic Policy
12 987.0 6.9
Education 12 501.1 3.5
Water Supply, Sanitation, and WasteManagement
8 384.5 2.7
Health, Nutrition, andSocial Protection
7 229.4 1.6
TOTAL 239 14,258.9 100.0
2.3 OVERVIEW OF ADB ASSISTANCE
As of 31 December 2004, ADB's total loan commitment to the Pakistan
since commencement of its operations in 1968, comprised 239 public sector
loans amounting to $14.3 billion, out of which $7.4 billion (51.7 percent) is
from the Ordinary Capital Resources (OCR) and $6.9 billion (48.3 percent) is
from the Asian Development Fund (ADF). Out of 239 loans, 61 loans covering
51 projects with net loan amount totaling $4.9 billion are ongoing. Of the total
loan amount of $4.9 billion, 42 percent is from ADF.
As of 31 December 2004, the sectoral composition of ADB's assistance
to Pakistan was 21.5 percent for energy sector, 20.9 percent for the agriculture
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& natural resources, 13.2 percent for finance sector, 11.3 percent for transport
and communications, 9.4 percent for multisector, 9.0 percent for industry and
trade, 6.9 percent for Law, Economic Management, and Public Policy, 3.5
percent for education, 2.7 percent for water supply, sanitation, and waste
management, and 1.6 percent for Health, Nutrition, and social
protection(Figure 1).
A cumulative of 293 technical assistance (TA) projects has been
approved by ADB for Pakistan with a total amount of $138.65 million as of 31
December 2004. Presently, there are 62 TAs under implementation with a total
amount $53.6 million.
2.3.1 Social Sectors
ADB has provided assistance for the Social Action Program for a total
of $300 million. In addition, ADB has financed primary education projects
with special emphasis on education for girls, improving the service delivery by
providing assistance for teacher training projects and contributed to skills
development by financing technical and vocational education projects.
2.3.2 Energy Sector
ADB has provided 46 loans totaling $3062.0 million for Energy Sector
Development. It is 21.5% of the total loans. Its assistance has been for
improving the technical efficiency of the energy sector as well as for financing
critical investments in both the Karachi Electric Supply Corporation (KESC)
and the Water and Power Development Authority (WAPDA). As shown in pie
chart ADB has provided the most amounts for Energy Sector.
2.3.3 Agriculture Sector
ADB has provided program and project assistance with the objectives of
reforming the policy framework, ensuring greater role for the private sector and
increasing agricultural productivity. ADB has provided 49 loans totaling
$2977.1 million for Agriculture Sector.
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2.3.4 Irrigation Sector
Irrigation plays an important role in agriculture sector. Realizing the
fact, ADB has provided assistance for such major irrigation initiatives asChasma Right Bank Irrigation Project in North West Frontier Province
(NWFP) and Punjab [Stage III, approved in 1991], Pat Feeder Canal Project in
Balochistan [approved in 1985], and the construction of the Pehur High-Level
Canal in NWFP [approved in 1993]. ADB has also provided assistance for on-
farm water management projects, forestry sector projects, and for the National
Drainage Program.
2.3.5 Transport Sector
Transport is the backbone of economy. Roads network is essential for
boosting the economy. ADB has provided assistance for the development of
farm to market roads m all the four provinces of Pakistan, as well as for
rehabilitation of the provincial road network. ADB has provided 19 loans
totaling $1604.9 million for the development of transport and communication
sector development. It has also announced $ 1 billion assistance for theearthquake effected areas. The Government of Pakistan will determine how
much to allocate for the transport and communication sector. Support has also
been provided for strengthening the road sector institutions, such as the
communication and works departments and for developing an appropriate
regulatory mechanism.
2.3.6 Finance and Industry Sectors
ADB has provided lines of foreign exchange credit for the private sector
industrial development, and of late for the reform of the trade regime under the
ongoing Trade, Export Promotion, and Industry Program Loan. To facilitate
private sector access to foreign exchange for exports, the ADB has recently
approved the Small and Medium Enterprises Trade Enhancement Facility.
ADB has provided 25 loans totaling $ 1878.0 million for the development of
finance sector.
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Under its recently completed Capital Market Development Program
Loan, ADB assistance facilitated the reforms of the capital market and
strengthening of the regulatory environment.
2.3.7 Education Sector
ADB has completed several major projects in education sector. While
other are in progress. It has provided 12 loans totaling $501.1 million. It is
3.5% of total loan.
2.3.8 Technical Assistance
The grant technical assistance provided by ADB has mainly been for
capacity building and institutional development. In addition, it has also
supported various in-country and foreign training programs for public and
private sector institutions.
2.3.9 Decentralized Service Delivery Study
Submissions are invited from individuals working with federal,
provincial or district governments in Pakistan, NGOs, academic institutions
and donor agencies to contribute to a series of short, published "Issues and
Options Notes" that look at emerging concerns and difficulties posed by
devolution, with an emphasis on pragmatic, immediate steps that could be
taken to promote better service delivery by districts and tehsils.
2.4 ADB'S MAJOR PROJECTS IN PAKISTAN
Asian Development Bank has provided assistance for several major
projects. Some of these Projects are discussed in detail in the preceding
chapters. Here these Projects are listed according to their sectorial composition.
2.4.1 Agricultural Research Projects
1. Agribusiness Development Project
2. Decentralization Support Program
3. Infrastructure Development
4. Agriculture Sector Program II
5. Forestry Sector Project
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2.4.2 Social Sector Projects
1. Capital Market Development Program
2. Punjab Devolved Social Services Program3. North-West Frontier Province Barani Area Development Project, Phase
Balochistan Devolved Social Services Program
4. Earthquake Emergency Assistance Project
5. National Drainage Sector Project
6. Social Action Program (Sector) Project II
7. Sustainable Livelihoods in Barani Areas Project
8. Sindh Rural Development Project
2.4.3 Educational Sector Projects
1. Balochistan Devolved Social Services Program
2. Restructuring of the Technical Education and Vocational TrainingSystem Project (Balochistan Province)
3. Restructuring of the Technical Education and Vocational TrainingSystem Project (North-West Frontier Province)
4. Decentralized Elementary Education Project
5. Science Education Sector Project, Second
6. Girls Primary School Sector Project, Second
7. Technical Education Project
8. Restructuring of the Technical Education and Vocational TrainingSystem Project (Balochistan Province)
9. Restructuring of the Technical Education and Vocational TrainingSystem Project (North-West Frontier Province)
2.4.4 Energy Sector Development Projects
1. Energy Sector Restructuring Program
2. Ghazi Barotha Hydropower Project
3. Proposed Loan to Laraib Energy Limited for the New Bong EscapeHydropower Project in the Islamic Republic of Pakistan
4. Infrastructure Development
2.4.5 Finance and Industry Sectors Projects
1. Punjab Resource Management Program2. Financial (Non bank) Markets and Governance Program
3. Financial Sector Intermediation Loan
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4. Strengthening Regulation, Enforcement and Governance of FinancialMarkets
5. Small and Medium Enterprise Trade Enhancement Finance
6. Trade, Export Promotion, and Industry Program
7. Micro finance Sector Development
8. Balochistan Resource Management Program
9. Rural Finance Sector Development Program
2.4.6 Governance
1. Earthquake Emergency Assistance Project
2. Balochistan Devolved Social Services Program
3. Strengthening Regulation, Enforcement and Governance of FinancialMarkets
2.4.7 Health, Nutrition, and Population Sector Projects
1. Balochistan Devolved Social Services Program
2. Reproductive Health Project
3. Women's Health Project
4. Punjab Devolved Social Services Program
5. Sindh Devolved Social Services Program
2.4.8 Irrigation and Drainage
1. Punjab Farmer-Managed Irrigation Project
2. Malakand Rural Development Project
3. Flood Protection Sector Project, Second
4. Dera Ghazi Khan Rural Development Project
5. Bahawalpur Rural Development Project
6. National Drainage Sector Project
2.4.9 Multisector Projects
1. Earthquake Emergency Assistance Project
2. Multisector Rehabilitation and Improvement Project for Azad Jammuand Kashmir
3. Private Sector Development and Finance
4. Infrastructure Development
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2.4.10 Rehabilitation
Multisector Rehabilitation and Improvement Project for Azad Jammu
and Kashmir
2.4.11 Roads (Operation and Maintenance)
Earthquake Emergency Assistance Project North-West Frontier
Province Road Development Sector and Subregional Connectivity
Project
2.4.12 Roads, Railways and Highways
1. Infrastructure Development2. Balochistan Road Development Sector Project
3. Punjab Road Development Sector Project
4. Rural Access Roads Project
5. Transport and Communications Infrastructure Development
5. Railways' Infrastructure Development
2.4.13 Sectors / Sectoral Development
1. Micro finance Sector Development2.4.14 URBAN DEVELOPMENT AND HOUSING PROJECTS
1. Southern Punjab Basic Urban Services Project
2. North-West Frontier Province Urban Development Sector Project
2.4.15 Water Resource Management Projects \
1. Infrastructure Development
2.4.16 Water Supply Projects
1. Punjab Community Water Supply & Sanitation Sector Project
2. Balochistan Devolved Social Services Program
3. Korangi Wastewater Management Project
2.4.17 Technical Assistance
1. Punjab Resource Management Program (Subprogram 2)
2.4.18 Others
1. Punjab Resource Management Program (Subprogram 2)
2. Sustainable Livelihoods in Barani Areas Project
1. Access to Justice System Program
2. Ports, Waterways, & Shipping Infrastructure Development Project
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CHAPTER 3
3.1.1 Purpose and Functions
The purpose of the Bank is to foster economic growth and co-operation
in the region of Asia and Far East (hereinafter referred to as the "region") and
to contribute to the acceleration of the process of economic development of the
developing member countries in the region, collectively and individually. To
fulfill its purpose, the Bank shall have the following functions:
i. To promote investment in the region of public and private capital for
development purposes;
ii. To utilize the resources at its disposal for financing development of the
developing member countries in the region, giving priority to those
regional, sub-regional projects and programmes which will contribute
most effectively to the harmonious economic growth of the region as a
whole, and having special regard to the needs of the smaller or less
developed member countries in the region;
iii. To meet requests from members in the region to assist them in the
coordination of their development policies and plans with a view to
achieving better utilization of their resources, making their economies
more complementary, and promoting the orderly expansion of their
foreign trade, in particular, intra-regional trade;
iv. To provide technical assistance for the preparation, financing and
execution of development projects and programmes, including the
formulation of specific project proposals;
v. To co-operate, in such manner as the Bank may deem appropriate with
the United Nations, its organs and subsidiary bodies and with public
international organizations and other international institutions, as well as
national entities whether public or private, which are concerned with the
investment of development funds in the region, and to interest suchinstitutions and entities in new opportunities for investment and
assistance; and
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vi. To undertake such other activities and provide such other services as
may advance its purpose.
3.1.2 Considerations for Project LendingADB provides project-lending assistance based upon the following
considerations
Economic viability, technical feasibility, and financial soundness
Effect on development activity in the country concerned
Contribution to the removal of economic bottlenecks
Capacity of the borrowing country to service additional external debt
Introduction of new technologies to raise productivity
Expansion of job opportunities
Strengthening of institutions according to criteria of good governance
Integration of environmental and social considerations into ADB projects
3.1.3 Membership
1. Membership in the Bank shall be open to:
i. Members and associate members of the United Nations Economic
Commission for Asia and the Far East; and
ii. Other regional countries and non-regional developed countries, which
are members of the United Nations or of any of its specialized agencies.
2. Countries eligible for membership under paragraph 1 of this Article
which do not become members in accordance with Article 64 of this
Agreement may be admitted, under such terms and conditions as the
Bank may determine, to membership in the Bank upon the affirmative
vote of two-thirds of the total number of Governors, representing not less
than three-fourths of the total voting power of the members.
3. In the case of associate members of the United Nations Economic
Commission for Asia and the Far East which are not responsible for the
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conduct of their international relations, application for membership in the
Bank shall be presented by the member of the Bank responsible for the
international relations of the applicant and accompanied by an
undertaking by such member that, until the applicant itself assumes such
responsibility, the member shall be responsible for all obligations that
may be incurred by the applicant by reason of admission to membership
in the Bank and enjoyment of the benefits of such membership.
Member Countries of Asian Development Bank
In 1966, when Asian Development Bank was established, it had 31
members. Over the years its membership has grown to 64, listed in table 1.1,
both within and outside the Asian and Pacific region.
3.2 CAPITAL STRUCTURE OF ADB
3.2.1 Authorized Capital
According to the Article of ADB
The authorized capital stock of the Bank shall be one billion dollars
($1,000,000,000) in terms of United States dollars of the weight and
fineness in effect on 31 January 1966. The authorized capital stock shall
be divided into one hundred thousand (100,000) shares having a par
value of ten thousand dollars ($10,000) each, which shall be available for
subscription only by members in accordance with the provisions of
Charter of ADB. The original authorized capital stock shall be divided
into paid-in shares and callable shares. Shares having an aggregate parvalue of five hundred million dollars ($500,000,000) shall be paid-in
shares, and shares having an aggregate par value of five hundred million
dollars ($500,000,000) shall be callable shares. The authorized capital
stock of the Bank may be increased by the Board of Governors, at such
time and under such terms and conditions as it may deem advisable, by a
vote of two-thirds of the total number of Governors, representing not less
than three-fourths of the total voting power of the members.
3.2.2 Subscription of Shares
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Each member shall subscribe to shares of the capital stock of the Bank.
Each subscription to the original authorized capital stock shall be for paid-in
shares and callable shares in equal parts. The initial number of shares to be
subscribed by countries which become members in accordance with Article 64
of this Agreement shall be that set forth in Annex A hereof. The initial number
of shares to be subscribed by countries that are admitted to membership in
accordance with paragraph 2 of Article 3 of this Agreement shall be determined
by the Board of Governors; provided, however, that no such subscription shall
be authorized which would have the effect of reducing the percentage of capital
Table 3.1: Member Countries of Asian Development Bank
Subscribed Capital Voting Power
Members Year
Joined
Number of
Shares
Percent of
Total
Number of
Votes
Percent of
Regional
Percent of
Total
Regional Members
Afghanistan 1966 1,195 0.034 14,904 0.522 0.340
Armenia 2005 10,557 0.301 24,266 0.850 0.553
I Australia 1966 204,740 5.834 218,449 7.654 4.979
Azerbaijan 1999 15,736 0.448 29,445 1.032 0.671
Bangladesh 1973 36,128 1.029 49,837 1.746 1.136
Bhutan 1982 220 0.006 13,929 0.488 0.317
Cambodia 1966 1,750 0.050 15,459 0.542 0.352
China 1986 228,000 6.496 241,709 8.469 5.510
Cook Islands 1976 94 0.003 13,803 0.484 0.315
Fiji Islands 1970 2,406 0.069 16,115 0.565 0.367
Hong Kong, China 1969 19,270 0.549 32,979 1.156 0.752
India 1966 224,010 6.383 237,719 8.329 5.419
Indonesia 1966 192,700 5.490 206,409 7.232 4.705
Japan 1966 552,210 15.734 565,91 11.8.829 12.900
Kazakhstan 1994 28,536 0.813 42,245 1.480 0.963
Kiribati 1974 142 0.004 13,851 0.485 0.316
Korea, Republic of 1966 178,246 5.079 191,955 6.726 4.375
Kyrgyz Republic 1994 10,582 0.302 24,291 0.851 0.554
Lao PDR 1966 492 0.014 14,201 0.498 0.324
Malaysia 1966 96,350 2.745 110,059 3.856 2.509
Maldives 1978 142 0.004 13,851 0.485 0.316Marshall Islands 1990 94 0.003 13,803 0.484 0.315
Micronesia,Federated States of
1990 142 0.004 13,851 0.485 0.316
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Mongolia 1991 532 0.015 14,241 0.499 0.325
Subscribed Capital Voting Power
Members Year Joined Number of
Shares
Percent
of Total
Number of
Votes
Percent of
Regional
Percent of
Total
Regional Members
Myanmar 1973 19,270 0.549 32,979 1.156 0.752
Nauru 1991 142 0.004 13,851 0.485 0.316
Nepal 1966 5,202 0.148 18,911 0.663 0.431
New Zealand 1966 54,340 1.548 68,049 2.384 1.551
Pakistan 1966 77,080 2.196 90,789 3.181 2.069Palau 2003 114 0.003 13,823 0.484 0.315
Papua NewGuinea
1971 3,320 0.095 17,029 0.597 0.388
Philippines 1966 84,304 2.402 98,013 3.434 2.234
Samoa 1966 116 0.003 13,825 0.484 0.315
Singapore 1966 12,040 0.343 25,749 0.902 0.587
Solomonslands
1973 236 0.007 13,945 0.489 0.318
Sri Lanka 1966 20,520 0.585 34,229 1.199 0.780
Taipei, China 1966 38,540 1.098 52,249 1.831 1.191
Tajikistan 1998 10,134 0.289 23,843 0.835 0.543
Thailand 1966 48,174 1.373 61,883 2.168 1.411
Timor-Lestc 2002 350 0.010 14,059 0.493 0.320
Tonga 1972 142 0.004 13,851 0.485 0.316
Turkmenistan 2000 8,958 0.255 22,667 0.794 0.517
Tuvalu 1993 50 0.001 13,759 0.482 0.314
Jzbekistan 1995 23,834 0.679 37,543 1.315 0.856
Vanuatu 1981 236 0.007 13,945 0.489 0.318
Viet Nam 1966 12,076 0.344 25,785 0.903 0.588
Total Regional 2,223,452 63.351 2,854,066 100.000 65.056
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Non Regional Member Countries
Subscribed Capital Voting Power
Members Year
Joined
Number of
Shares
Percent of
Total
Number of
Votes
Percent of
Regional
Percent
of Total
Non-regional Members
| Austria 1966 12,040 0.343 25,749 1.680 0.587
| Belgium 1966 12,040 0.343 25,749 1.680 0.587
Canada 1966 185,086 5.274 198,795 12.967 4.531
Denmark 1966 12,040 0.343 25,749 1.680 0.587
Finland 1966 12,040 0.343 25,749 1.680 0.587
France 1970 82,356 2.347 96,065 6.266 2.190
Germany 1966 153,068 4.361 166,777 10.879 3.802
Italy 1966 63,950 1.822 77,659 5.066 1.770
Luxembourg 2003 12,040 0.343 25,749 1.680 0.587
The Netherlands 1966 36,294 1.034 50,003 3.262 1.140
Norway 1966 12,040 0.343 25,749 1.680 0.587
Portugal 2002 12,040 0.343 25,749 1.680 0.587
Spain 1986 12,040 0.343 25,749 1.680 0.587
Sweden 1966 12,040 0.343 25,749 1.680 0.587
Switzerland 1967 20,650 0.588 34,359 2.241 0.783Turkey 1991 12,040 0.343 25,749 1.680 0.587
United Kingdom 1966 72,262 2.059 85,971 5.608 1.960
United States 1966 552,210 15.734 565,919 36.915 12.900
Total Non-Regional
1,286,276 36.649 1,533,038 100.000 34.944
Grand Total 3,509,728 100.000 4,387,104 100.000
Stock held by regional members below sixty (60) per cent of the total subscribedcapital stock.
1. The Board of Governors shall at intervals of not less than five (5) yearsreview the capital stock of the Bank. In case of an increase in the
authorized capital stock, each member shall have a reasonable
opportunity to subscribe, under such terms and conditions as the Board
of Governors shall determine, to a proportion of the increase of stock
equivalent to the proportion which its stock theretofore subscribed bears
to the total subscribed capital stock immediately prior to such increase;
provided, however, that the foregoing provision shall not apply in
respect of any increase or portion of an increase in the authorized capital
stock intended solely to give effect to determinations of the Board of
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Governors under paragraphs 1 and 3 of this Article. No member shall be
obligated to subscribe to any part of an increase of capital slock.
2. The Board of Governors may, at the request of a member, increase thesubscription of such member on such terms and conditions as the Board
may determine; provided, however, that no such increase in the
subscription of any member shall be authorized which would have the
effect of reducing the percentage of capital stock held by regional
members below sixty (60) per cent of the total subscribed capital stock.
The Board of Governors shall pay special regard to the request of any
regional member having less than six (6) per cent of the subscribed
capital stock to increase its proportionate share thereof.
3. Shares of stock initially subscribed by members shall be issued at par.
Other shares shall be issued at par unless the Board of Governors by a
vote of a majority of the total number of Governors, representing a
majority of the total voting power of the members, decides in special
circumstances to issue them on other terms.
4. Shares of stock shall not be pledged or encumbered in any manner
whatsoever, and they shall not be transferable except to the Bank in
accordance with Chapter VII of this Agreement.
5. The liability of the members on shares shall be limited to the unpaid
portion of their issue price.
6. No member shall be liable, by reason of its membership, for obligations
of the Bank.
3.2.3 Payment of Subscriptions
Payment of the amount initially subscribed by each Signatory to this
Agreement (Agreement refers to" Agreement Establishing the Asian
Development Bank) which becomes a member in accordance with Article 64
to the paid-in capital stock of the Bank shall be made in five (5) installments, of
twenty (20) per cent each of such amount.
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i. Each member shall pay the first installment within thirty (30) days after
entry into force of this Agreement, or on or before the date of deposit on
its behalf of its instrument of ratification or acceptance in accordance
with paragraph 1 of Article 64.
ii. The second installment shall become due one (1) year from the entry
into force of this Agreement.
iii. The remaining three (3) installments shall each become due successively
one (1) year from the date on which the preceding installment becomes
due.
1. Of each installment for the payment of initial subscriptions to the
original paid-in capital stock:
a. Fifty (50) per cent shall be paid in gold or convertible currency; and
b. Fifty (50) per cent in the currency of the member.
2. The Bank shall accept from any member promissory notes or other
obligations issued by the Government of the member, or by the
depository designated by such member, in lieu of the amount to be paid
in the currency of the member pursuant to paragraph 2 (b) of this
Article, provided such is not required by the Bank for the conduct of its
operations. Such notes or obligations shall be non-negotiable, non-
interest-bearing, and payable to the Bank at par value upon demand.
Subject to the provisions of paragraph 2(ii) of Article 24, demands upon
such notes or obligations payable in convertible currencies shall, over
reasonable periods of time, be uniform in percentage on all such notes or
obligations.
3. Each payment of a member in its own currency under paragraph 2(b) of
this Article shall be in such amount as the Bank, after such consultation
with the International Monetary Fund as the Bank may consider
necessary and utilizing the par value established with the International
Monetary Fund, if any, determines to be equivalent to the full value in
terms of dollars of the portion of the subscription being paid. The initial
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payment shall be in such amount as the member considers appropriate
hereunder but shall be subject to such adjustment, to be effected within
ninety (90) days of the date on which such payment was due, as the
Bank shall determine to be necessary to constitute the full dollar
equivalent of such payment.
4. Payment of the amount subscribed to the callable capital stock of the
Bank shall be subject to call only as and when required by the Bank to
meet its obligations incurred under sub-paragraphs (ii) and (iv) of
Article 11 on borrowings of funds for inclusion in its ordinary capital
resources or on guarantees chargeable to such resources.
5. In the event of the call referred to in paragraph 5 of this Article,
payment may be made at the option of the member in gold, convertible
currency or in the currency required to discharge the obligations of the
Bank for the purpose of which the call is made. Calls on unpaid
subscriptions shall be uniform in percentage on all callable shares.
6. The Bank shall determine the place for any payment under this Article,
provided that, until the inaugural meeting of its Board of Governors, the
payment of the first installment referred to in paragraph 1 of this Article
shall be made to the Secretary-General of the United Nations, as Trustee
for the Bank.
3. 3 ORDINARY CAPITAL RESOURCES
As used in this Agreement, the term "ordinary capital resources" of theBank shall include the following:
1. Authorized capital stock of the Bank, including both paid-in and callable
shares, subscribed pursuant to Article 5 of this Agreement, except such
part thereof as may be set aside into one or more Special Funds in
accordance with paragraph 1 (i) of Article 19 of this Agreement;
2. Funds raised by borrowings of the Bank by virtue of powers conferred by sub-paragraph (i) of Article 21 of this Agreement, to which the
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commitment to calls provided for in paragraph 5 of Article 6 of this
Agreement is applicable;
3. Funds received in repayment of loans or guarantees made with theresources indicated in (i) and (iii) of this Article;
4. Income derived from loans made from the aforementioned funds or from
guarantees to which the commitment to calls set forth in paragraph 5 of
Article 6 of this Agreement is applicable; and
5. Any other funds or income received by the Bank which do not form part
of its Special Funds resources referred to in Article 20 of thisAgreement.
3.4 FINANCIAL MANAGEMENT
Instruments
ADB provides different forms of assistance to governments and private
enterprises in its developing member countries based on a member's priorities.
The main instruments are:
1. Loans
2. Technical assistance
3. Grants
4. Guarantees
5. Equity investments
3.4.1 Loan and Grant Resources
Issuing bonds, recycling repayments, and receiving contributions from
members, finance ADBs operations. About 70% of the bank's cumulative
lending comes from its ordinary capital resources.
ADB also provides loans from its Special Funds resources. Among them
is the Asian Development Fund, which provides concessional loans to ADB's
least developed member countries. ADB also manages several trust funds and
channel financing of grants provided by bilateral donors.
3.4.2 Co-financing
For every dollar lent by ADB in 2004, an additional 46 cents was
mobilized from other official sources and commercial institutions.
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3.4.3 Technical Assistance
Technical assistance activities-funded through grants, loans, or both-
help maximize development impact.
In 2004, a total of 323 technical assistance activities, amounting to
US$197 million, were approved for
1. Preparing and executing projects and programs
2. Supporting advisory and operational activities in areas such as law,
economic management, public policy, agriculture and natural resources,
energy, finance, education, etc
3. Regional activities 1.5 Organizational Structure and Management of
Asian development Bank
The Bank have a Board of Governors, a Board of Directors, a President,
five Vice-Presidents (i.e. (i) Vice-president of Knowledge Management and
Sustainable Development, (ii) Vice-president of Operation 1, (iii) (iv) Vice-
president of Operation 2, (v) Vice-president of Finance and Administration)
and such other officers and staff.
3.5 Board of Governors
The Board of Governors is ADB's highest policy-making body and all
the powers of the Bank are vested in the Board of Governors. It is composed of
one representative from each member. Each member appoints one Governor
and one alternate and he or she serve at the pleasure of the appointing member.
The Board of Governors meets annually. At its annual meeting, the Board
appoints one of the Governors as Chairman who holds office until the election
of the next Chairman and the next annual meeting of the Board. The Board of
Governors elects the president of the Bank for a term of (5) five years.
According to the Charter of the Bank, all the power of institution are vested in
ABD's Board of Governors, which in turn delegate these power to the Board of
Directors except for those power reserved for the board of government in the
Charter.
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3.5.1 Voting Power of Members
The total voting power of each member consists of the sum of its basic
votes and proportional votes.
i. The basic votes of each member consists of such number of votes as
results from the equal distribution among all the members of twenty (20)
per cent of the aggregate sum of the basic votes and proportional votes
of all the members.
ii. The number of the proportional votes of each member shall be equal to
the number of shares of the capital stock of the Bank held by that
member.
The basic votes allotted to each member are 13701. Pakistan has 77080
shares of the capital stock of the bank. Thus Pakistan has 90789 votes (total
Pakistan voting power is 90789 votes= 77080 shares of capital stock + 13709
basic votes)
Japan and USA have the highest number of votes (i.e. 12.900 % of total)
each and Tuvalu has the lowest number of votes (0.314% of total votes).
3.5.2 Meetings of Board of Governors
1. The Board meets annually at such date and place as the Board may
determine. However, the Board of Directors may change the date and
place of the meeting when special circumstances or reasons arise to
justify such action.
2. The Board also holds special meetings when it so decides or when called
by the Board of Directors.
3. The President shall notify all members, by the most rapid possible
means, of the date and place of each meeting of the Board. Such
notifications must be dispatched at least sixty (60) days prior to the date
of an annual meeting and thirty (30) days prior to the date of a special
meeting
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4. A majority of the Governors shall constitute a quorum for any meeting
of the Board, provided such majority represents not less than two-thirds
of the total voting power of the members.
5. The Board may order the temporary adjournment of any meeting end its
resumption at a later date.
6. The President, Directors and their Alternates may attend any meeting of
the Board and participate therein. However, Directors and their
Alternates shall not be entitled to vote unless they are entitled to vote as
a Governor.
3.6 Board of Directors
The Board of Directors is composed of 12 Directors (each with an
Alternate), Governors of regional-members elect eight of those 12 directors and
the remaining four are elected by non-regional members. A director shall not
be a member of the Board of Governors. The Board of Governors elects the
Board of Directors every two years. Each director appoints one alternate who
has full powers to act for him when he is not present. Directors and alternates
shall be nationals of member countries. No two or more Directors may be of
the same nationality nor may any two or more alternates be of the same
nationality. The Board of Directors performs its duties full-time at the ADB
headquarters and holds formal and executive sessions regularly. The Directors
supervise ADB's financial statements, approve its administrative budget, and
review and approve all policy documents and all loan, equity, and technical
assistance operations.
The President chairs the Board of Directors and, under its guidance, conducts thebusiness of ADB.
3.6.1 Powers of Board of Directors
The Board of Directors is responsible for the direction of the general
operations of the Bank and, shall, in addition to the powers assigned to it
expressly by article, exercise all the powers delegated to it by the Board of
Governors.
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3.6.2 Election of Directors
As mention earlier, there are two types of directors I) Those representing
regional members; and ii) Those representing non-regional members
3.6.3 Election of Directors by Governors representing regional members:
1. Each Governor representing a regional member shall cast all votes of the
member he represents for a single person.
2. The seven (7) persons receiving the highest number of votes shall be
Directors, provided that he received ten percent of the total voting power
of regional members. If seven (7) persons are not elected at the first
ballot, a second ballot shall be held in which the person who received
the lowest number of votes in the preceding ballot shall be ineligible and
in which votes shall be cast only by:
a. Governors who voted in the preceding ballot for a person who is not
elected; and
b. Governors whose votes for a person who is elected are deemed to haveraised the votes cast for that person above eleven (11) per cent of the
total voting power of regional members.
3. If, after the second ballot, seven (7) persons are not elected, further
ballots shall be held in conformity with the principles and procedures laid down
in this Section, except that after six (6) persons are elected, the seventh may be
elected notwithstanding the provisions of paragraph (2) of this Section - by a
simple majority of the remaining votes of regional members. All such
remaining votes shall be deemed to have counted towards the election of the
seventh Director.
3.6.4 Election of Directors by Governors representing non-regional
members
1. Each Governor representing a non-regional member shall cast all votes
of the member he represents for a single person.
2. The three (3) persons receiving the highest number of votes shall be
Directors, except that no person who receives less than twenty-five (25)
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per cent of the total voting power of non-regional members shall be
considered as elected.
3. If three (3) persons are not elected at the first ballot, a second ballotshall be held in which the person who received the lowest number of
votes in the preceding ballot shall be ineligible and in which votes shall
be cast only by:
i. Governors who voted in the preceding ballot for a person who is not
elected; and
ii. Governors whose votes for a person, who is elected are deemed to haveraised the votes cast for that person above twenty-six (26) per cent of
the total voting power of non-regional members.
4. In determining whether the votes cast by a Governor shall be deemed to
have raised the total number of votes for any person above twenty-six
(26) per cent, the said twenty-six (26) per cent shall be deemed to
include, first, the votes of the Governor casting the highest number of
votes for that person, and then, in diminishing order, the votes of each
Governor casting the next highest number until twenty-six (26) per cent
is attained.
5. Any Governor, part of whose votes must be counted in order to raise the
votes cast for any person above twenty-five (25) per cent, shall be
considered as casting all his votes for that person even if the total
number of votes cast for that person thereby exceeds twenty-six (26) per
cent. If, after the second ballot, three (3) persons are not elected, further
ballots shall be held in conformity with the principles and procedures
laid down in this Section, except that after two (2) persons are elected, a
third may be elected - provided that subscriptions from non-regional
members shall have reached a minimum total of three hundred forty-five
million dollars ($345,000,000) and notwithstanding the provisions of
paragraph (2) of this Section - by a simple majority of the remaining
votes.
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3.7 DEPARTMENTS, OFFICES, AND MISSIONS OF ASIAN
DEVELOPMENT BANK
ADB's field offices include resident and regional missions, a country
office, a liaison office, and representative offices.
Each support ADB's objective of reducing poverty by strengthening
representation in its regional and non-regional members, and by providing
broader and more direct access to its constituencies.
3.7.1 Resident Missions
The resident missions provide the primary operational interface between
ADB and the host DMC. The missions help implement ADB's goal of reducing
poverty and related strategic objectives in the DMCs and enhance policy
dialogue with the DMCs. They are the recognized intellectual resource and
knowledge base on development issues in the DMCs. The resident missions
also
1. Create strong partnerships with DMC development stakeholders,including governments, the private sector, and civil society
2. Enhance ADB's responsiveness to local needs and issues
3. Take the lead in aid coordination where possible
4. Promote Sub-regional Corporation.
Work of Resident Mission
The work of the resident missions is grouped into two broad categories:standardand
Specific functions
Standard functions: Standard functions are those that the resident missions
perform as ADB's principal representatives in the field:
1. Promoting relationships with government, civil society, and the privatesector
2. Engaging in policy dialogue and support
3. Reporting on country activities
4. Coordinating aid
5. Assisting in external relations and information dissemination.
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Specific functions
The specific functions carried out by the missions relate to delivering
and implementing ADD projects. More complex and resource intensive, these
functions include
1. Country programming
2. Project and technical assistance processing
3. Portfolio management and project administration
4. Economic and sector work and analyses
3.7.2 Important Departments and Offices
Budget, Personnel and Management Systems Department
The Budget, Personnel and Management Systems Department (BPMSD)
determines, allocates, manages, and administers the Bank's budgetary
provisions for financial and human resources. The department also designs and
assesses the organization and systems within which these resources are brought
together to carry out the broad range of Bank activities. It develops and
operates personnel programs.
Central Operations Services Office
The Central Operations Services Office (COSO) is responsible for
central planning, monitoring, and coordinating project processing and
administration work programs, and for identifying and resolving procedural
and institutional problems being experienced with the Bank's projects. It
provides advisory services on procurement of goods and services and use of
consultants, it also prepares guidelines, loan administration manuals, project
administration instructions, and other operational documents
Economics and Research Department
ERD delivers four basic products: ideas, instruments, instructions, and
informal connections.
Ideas: Knowledge Generation and Dissemination
Its immersion in countries in the Asian and Pacific region makes ADB akey knowledge bank for the developing countries in the region. ERD publishes
the results of empirical research carried out within the Department and other
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departments in ADB. ERD distributes its publications to over 1,000 libraries
and institutions worldwide. ERD also conducts seminars, workshops, and
conferences meant to share country experiences, state-of-the-art knowledge,
and progress on ongoing projects.
Office of the Auditor General
The Office of the Auditor General (OAG) consists of a Financial,
Administrative and Information Systems Division (OAGF) and an Integrity
Division (OAGI) reporting to the Auditor General. The Auditor General reports
directly to the President. The Audit Committee of the Board of Directors
reviews OAG's activities.
Office of the General Counsel
The Office of the General Counsel (OGC) provides advice and
assistance to the President, the Board of Governors, the Board of Directors, and
various departments and offices of the Bank on legal matters relating to the
organization, administration, finance, policies, and operations of the Bank.
3.8 PAKISTAN AND ASIAN DEVELOPMENT BANK
3.8.1 Pakistan Resident Mission
The Pakistan Resident Mission (PRM) located in Islamabad, Pakistan,
started its operation in 1989. PRM's primary role is to:
1. Initiate and maintain policy dialogue with the Government of Pakistan
on issues relevant to ADB's operations in Pakistan
2. Prepare the Country Strategy and Program (CSP) for Pakistan and itsannual updates, and initiate and monitor the progress of the Poverty
Reduction Partnership Agreement with the Government
3. Plan and prepare ADB's economic and sector work for Pakistan
including Country Economic Review (2001), Pakistan Economic
Update, Poverty Assessment
4. Maintain and strengthen working relations with the Government, civil
society, private sector and development partners
5. Strengthen project processing and portfolio management
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6. Process and implement a selected number of technical assistance
7. Assist the executing agencies in complying with ADB procedures on
procurement and disbursement
8. Promote external relations and disseminate information about ADB and
its operations, including publication of regular PRM Newsletter
9. Undertake other activities from participating in HQ project processing
missions to provide back-up operational support, donor coordination,
and sub regional cooperation. ThePakistan Resident Mission (PRM) is
organized into three operational units;
1. Country Policy Operations (CPO) Unit,
2. The Results Management & Development Effectiveness Unit And
3. Two supporting operations units-Disbursement Unit and Finance and
Administration Unit. Country Policy Operations Unit: The Country
Policy Operations Unit is responsible for;
4. Preparing Country Strategy and Program (CSP) and its annual updates
(CSPUs);
5. Carrying out programming tasks and conducting country programming
6. Taking the lead role in economic and sector work relating to Pakistan
including input in the processing and implementation of policy-based
operations.
7. Providing assistance in the processing of country assistance including
loans and Tas.
8. Supporting work and initiatives on sub-regional cooperation.
9. Supporting donors coordination.
Results Management & Development Effectiveness Unit
The Results Management & Development Effectiveness Unit is
responsible for;
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1. Assessing the performances of portfolio of ADB-financed projects in
Pakistan.
2. Identifying country-specific and sector-specific portfolio and projectperformance issues and analyzing underlying reasons.
3. Formulating measures to improve portfolio and project performances
with emphasis on increased development effectiveness.
4. Building result-based management capacity for project implementation
in the government and
5. Carrying-out administration of delegated projects and assisting
Headquarters in administering non-delegated projects.
Governance Unit
The Governance Unit is responsible for:
1. Preparing and overseeing ADB's support to Pakistan's governance
reforms, including devolution, gender and social development, access to
justice, and civil society - state relations.
2. Assisting preparation of technical assistance and loan projects to ensure
consistency with ADB policy commitments on governance, civil society
participation, gender and social development.
3. Effectively administering and implementing delegated loan and
technical assistance projects.
4. Networking with partners in civil society, research and policy
institutions and government to support improved quality and relevance
of ADB's operations to poverty reduction in Pakistan.
Supporting Unit
There are two supporting operations units;
3. Disbursement Unit and
4. Finance and Administration Unit.
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Disbursement Unit
The Disbursement Unit is responsible for:
1. Processing disbursement claims for all Pakistan Loans in accordance
with ADB guidelines and local regulations
2. Monitoring Contract Awards and Disbursement achievements and
communicating with Project staff, HQ and Federal and Provincial
Governments.
3. Training Implementing Agencies' staff on Disbursement Guidelines of
ADB for smooth disbursement of funds.
4. Coordinating its activities with Federal and Provincial Ministries of
Finance, Implementing Agencies, ADB Controller's office and Result
Management and Development Effectives Unit.
5. Fielding Review Missions to monitor and improve compliance of
Disbursement Guidelines of ADB, and take remedial action.
6. Handling all internal/ external queries pertaining to disbursement or
lending and borrowing issues.
Finance and Admin Unit
The Finance and Admin Unit is responsible for:
1. Providing support to the office operations in the fields of financial
accounting and management, personnel functions and administration,
including security.
2. Handling financial functions of PRM operations, including financial
transactions of administrative expenses, business travel, training, capital
expenditure, and TA-related expenses.
3. Preparing the annual, midyear and revised budgets and allocations,
monitoring and controlling the expenditures and ensuring cost
effectiveness and adherence to laid down policies and procedures
4. Advising the Country Director on personnel functions, covering
recruitment of staff and various staff actions
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5. Monitoring and evaluating overall security situation in country,
participating in security meetings at the UN, and based on that plus own
assessments, issues
6. Overseeing necessary work involved in physical expansion of PRM
Office
7. Providing support to AFRM in a number of areas, including transport,
procurement of equipment and supplies.
A cumulative of 293 technical assistance (TA) projects has been
approved by ADB for Pakistan with a total amount of $138.65 million as of 31December 2004. Presently, there are 62 TAs under implementation with a total
amount $53.6 million.
3.8.2 Voting power of Pakistan
Pakistan is the ninth largest shareholder in ADB among its regional
members. Overall, Pakistan is the 13th largest shareholder.
Table 3.2 Pakistan's Number of Share and voting power
Number of shares held: 77,080 (2.203% of total shares)
Votes: 3.21% of total regionalmembership)
90,965 (2.08% of total membership,
Overall capital subscription: US$1. 19 billion
Paid-in capital subscription: US$83. 55 million
3.8.3 Contributions to Special Funds Resources
Pakistan has contributed to the Technical Assistance Special Fund
(TASF), which provides grants to borrowing members to help prepare projects
and undertake technical or policy studies.
Contributions to the TASF (committed): | US$1.60 million
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CHAPTER 4
ANALYSIS OF ASIAN DEVELOPMENT BANK
ASSISTANCE
The aim of this study is to analyze The role of ADB in Pakistan
Development. In order to analyze the required topic of the study, the
improvement in quality of life is the criteria. Although, several other factors
also contributed in improving the quality of life. But those factors cannot be
isolated.
For analytical study following projects were selected from allover
Pakistan to give a comprehensive view of the ADB role.
4.1 ANALYSIS OF ADB ASSISTANCE FOR IMPROVING BASIC
EDUCATION
ADB's main human development objective is to reduce poverty by
improving the health, living standards, and livelihood of people in its DMCs.
Strengthening institutions; building capacity; reforming policy; and providing
loans and technical assistance in education, health and nutrition, water supply
and sanitation, and urban sectors.
No country or region has done well in reducing poverty without first
providing widespread basic education and health services. Education helps to
empower the poor, to enhance their income-earning potential, and to improve
the quality of their lives. Without basic education-without basic skills and
knowledge-the poor lack the tools essential for breaking the poverty cycle.People with basic education are more productive and more likely to earn higher
incomes. Where attention has been paid to educating women, multiple benefits
have been obtained: educated women have lower fertility rates, produce less
children and their children have lower infant mortality rates; and educated
mothers are more likely to use health services and to send their children to
school.
Children from poor families are less likely to attend or to complete
school and, as adults, these children will be less likely to improve their quality
of life or that of their own children. The poor child-who was malnourished as
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an infant-may have diminished learning ability, may suffer from chronic
disease, and therefore may be unable to benefit fully from schooling. A child
from a poor family is less likely to receive appropriate stimulation and
encouragement at home and may find the transition from home to school more
difficult. Early childhood development programs ensure adequate nutrition and
health care, help compensate for disadvantaged home environments, and lay
the foundation for better performance at school.
ADB and education: Work continued in 1999 on preparing an updated
education sector policy paper to assess ADB's evolving role in education, with
particular attention to education's role in reducing poverty. Of all types of
education, primary education is clearly the most important for poverty
reduction. But even when this is available and successfully completed by the
poor, their transition to higher education and training is limited. Strategies for
education and poverty reduction must identify ways to ensure equity of access
to education beyond the basic levels. As poor adults are likely to have had no
access to education in their childhood or to have dropped out of school early,
investing in adult and community education programs (designed to teach basic
literacy, transfer essential knowledge in health and nutrition, and provide
entrepreneurial and income-enhancement skills) is warranted. Enrollment of
the poor in both higher education and skills development programs must be
encouraged. However, entry qualifications often require completion of lower
levels of education that are often not completed by the poor. Because books
and supplies are expensive, the cost of such programs is usually beyond the
means of the poor, even when tuition is provided free. The opportunity cost of
attending post-basic education training in terms of income foregone is higher
for the poor, whose immediate income is needed by the family. ADB-assisted
programs in higher education and skills development support programs to
enhance equity of access to higher levels of education and training for the poor
through the provision of vouchers and scholarships, and develop alternative
means of delivering and assessing skills training and higher education. Policy
dialogue with governments and capacity building are needed to put in place
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pro-poor policies and pro-poor resource allocation mechanisms. ADB's
Projects for Improving the Education in Pakistan
Asian development Bank has provided loans and grants for several projects toPakistan for the improvement of educational sector, increasing the literacy rate
in Pakistan.
4.1.1 Analysis of Teacher Training Project Basic Data about the
project
1. Loan Number: 1210-PAK (SF)
2. Project Title: Teacher Training
3. Executing Agency:i. Federal Ministry of Education (MOE); and
ii. Provincial education departments (PEDs) of
Balochistan, North-West Frontier, Punjab, and Sindh.
4. Amount of Loan: $52.1 millionsource: (Pakistan economic update, ADB website and Ministry of finance
website)
Project Description
In spite of impressive economic growth in the previous two decades,
Pakistan in the early 1990s had some of the world's lowest social indicators.
Out of 160 developing countries, Pakistan ranked 120th and suffered from
widespread poverty and low quality of life. Annual population growth rate was
3.1%; infant mortality rate, 107 per 1,000 live births; life expectancy, 55 years;
overall illiteracy rate, 69% (85% for women); and primary-school enrolment
was very low (less than 50%), particularly for females. In 1992, theGovernment of Pakistan launched the Social Action Program (1992-1995) to
emphasize human resource development, which is essential to promote
economic development, reduce poverty, and improve social well-being. The
program allocates resources for universal primary education to increase the
literacy rate to about 80% by the end of the decade. Government of Pakistan
also adopted the National Education Policy in the 1990s.
This policy reflected issues identified in the 1988 studies that strengthened the
rationale for the Teacher Training Project (TTP). In 1990, ADB provided
project preparatory technical assistance (TA) to prepare a detailed proposal for
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the TTP. Principal stakeholders, policymakers, administrators, and
beneficiaries at a national conference in Islamabad reviewed the TA findings in
1992, and recommendations incorporated to improve the project design.
Objectives of Teacher Training Program
The objectives of TTP included the following:
1. An expanded teacher training system to solve the teacher shortage,
which at appraisal was estimated to reach 525,800 by 2000 (234,600 for
primary schools; 96,100 for middle schools; and 195,100 for secondary
schools);
2. Improved quality of teacher training programs, which at appraisal were
dominated by the 9-month primary teacher training certificate (PTC)
training course and the 12- month certificate of teaching (CT) course,
and which, after over 25 years, had become obsolete; and
3. Improve planning, management, and efficiency of teacher training
institution (TTIs), which were under multiple chains of command and
responsibilities at the federal and provincial levels.
Anticipated Benefits
Anticipated benefits upon project completion included the following:
i. Training for over 160,000 teachers, of whom at least 60% would be
women; staff development through overseas fellowship and in-country
training for about 5,000 Ministry of Education (MOE) and provincial
education department (FED) senior staff and officials involved inteacher training;
ii. Improvement of 59 TTIs; and
iii. Establishment of six new TTIs to
a. Increase training capacity, quality, and research;
b. Increase access to teacher training in disadvantaged rural areas,
especially for women;
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c. Improve the quality of methodologies and teaching environment
in TTIs;
d. Strengthen planning and management.
Project Cost and Financing
The total project cost at appraisal was estimated at $71.3 million.
Table 4.1: Project Cost($ Million)
Cost Appraisal Estimate Actual
Foreign Exchange cost 13.5 7.3
Local Currency Cost 57.8 19.4
Total 71.3 26.7
Source: (Pakistan economic update, ADB website and Ministry of financewebsite)
ADB provided a loan of$52.1 million and Government of Pakistan
committed $19.2 million for local currency costs. The loan approved on 15
December 1992 and declared effective on 14 October 1993, was to cover the
entire foreign exchange costs of $13.5 million, and part ($38.6 million
equivalent) of the total local currency costs. The actual project cost was $26.7
million, including $21.4 million financed by an ADB loan and $5.3 million by
Government of Pakistan. After five loan cancellations amounting to $29.7
million, the loan account was finally closed on 18 July 2002. No major changes
were made to the project scope during implementation, including the midterm
review, although changes to the project schedule were required due to longdelays.
Table 4.2 Financing plan of the Projects
Cost Appraisal Estimate Actual
Foreign Local Total Foreign Local Total
Implementation Costs
ADB-Financed 11.9 38.6 50.5 6.3 14.1 20.4
Borrower-Financed 0.0 19.2 19.2 0.0 5.3 5.3
Sub total 11.9 57.8 69.7 6.3 19.4 25.7
IDC Cost
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ADB-Financed 1.6 0.0 1.6 1.0 0.0 1.0
Borrower-Financed 0.0 0.0 0.0 0.0 0.0 0.0
Total 1.6 0.0 1.6 1.0 0.0 1.0
Source: (Pakistan economic update, ADB website and ministry of finance
website)
Performance of the Asian Development Bank
ADB generally handled approval, disbursement, and related project procedures
efficiently and on time. Fourteen review missions were conducted from 1995 to
2001. Although adequate staff time was provided for review missions, field
supervision of project activities to help FCU and PIUs solve their problems,
given the complexity of the umbrella-type design of the project, could have
been more effective. During project implementation, the review missions could
also have recommended further training of FCU and PIU staff in ADB's
procurement and disbursement procedures to expedite completion of project
components, and advised EAs to have funds reimbursed under advance action
and retroactive financing. ADB's performance was considered partlysatisfactory.
Efficacy in Achievement of Purpose
In general, TTP accomplished its overall objectives of capacity
expansion and increased access to training, as well as intermediate and long-
term goals of pre-service quality through the Dipl. Ed. course. Consistent with
the targets, the physical infrastructure was practically all completed and more
classrooms were constructed than planned. However, specific objectives such
as the provision and installation of electronic media equipment and laboratory
equipment, vehicles, furniture, curriculum and instructional material
development, in-service training, and TEMIS and BME were partly
accomplished. In other words, TTP is assessed as partly efficacious.
4.1.2 Analysis of Second Girls Primary School Project
Basic Data about project
1. Project Number: 27180
2. Loan Number: 1454(SF)
3. Country: Pakistan
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4. Loan Number: 1454-PAK(SF)
5. Project Title: Second Girls Primary School Sector Project
6. Executing Agency:
i. Ministry of Education (federal)ii. Department of Education (Balochistan)
iii. Department of Education (NWFP)
iv. Department of Education (Punjab)
v. Department of Education (Sindh)
7. Amount of Loan: SDR31, 178,000
Project Description
Pakistan has one of the highest rates of illiteracy in the region because
of limited access to education and lack of basic education facilities. Females,
especially in rural areas, are particularly disadvantaged, as the adult literacy
rate is considerably lower in rural areas than in urban areas, and illiteracy is
significantly higher among females than among males. The Asian Development
Bank (ADD), through the Primary Education (Girls) Sector Project 1,
supported the Government of Pakistan's (the Government's) long-term plan to
increase girls' participation in primary education by setting up communitymodel schools (CMSs) for girls in union councils. In the final phases of that
project, ADB responded to the Government's request for further assistance by
approving a project preparatory technical assistance (PPTA) to build on
experience and achievement under the earlier project, and prepare a detailed
proposal for the Second Girls Primary School Sector Project (the Project) in
close consultation and coordination with the Government, other aid agencies,
and expected beneficiaries.
Purpose of the Project
The Project was aimed at providing accessible and good-quality primary
education to increase the participation and retention rates of girls in rural areas.
The Project supported the government's long-term plan to expand primary
education for girls by establishing CMSs where they could receive good-
quality instruction and master the basic literacy skills needed for further
education and productive life.
Project Cost
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The total cost of the Project at appraisal was estimated at $ 78.8 million
equivalent comprising $ 10.1 million in foreign exchange cost of $ 68.7 million
equivalent in local currency cost. ADB approved a loan of $45.0 million from
its Special Fund to finance $7.6 million (76%) of the foreign exchange cost and
$37.3 million (54%) in local currency cost.
The ADB loan represented 57 % of the total project cost. The Organization of
Petroleum Exporting Countries Fund for International Development (OPEC
Fund) was to finance $16.0 million ($1.7 million of the foreign exchange cost
and $14.4 million of the local currency cost). The remaining $17.8 million,
comprising $0.8 million in foreign exchange cost and $17.0 million in local
currency cost, was to be shouldered by the Government through budgetary
allocations.
The actual project cost was $60.6 million $41.6 million in foreign
exchange cost 15 and $19.0 million equivalent in local currency cost. ADB
financed $37.1 million, OPEC Fund $11.3 million, and the Government $12.2
million equivalent. Local currency costs financed by ADB included primarily
civil works, furniture, IM, and staff development activities. The actual costs as
shown in the following Table 4.3 were lower than the appraisal estimate. Here
we do not discuss its reasons.
Table 4.3: Project Appraisal Estimate and Actual Cost ($ million)
Cost Appraisal Estimate Actual
Foreign Exchange cost 10.1 41.6
Local Currency Cost 68.7 19.0
Total 78.8 60.6
Source: ( Pakistan economic update, ADB website and Ministry of finance
website)
Breakdown by Project components
The amounts allocated to each component of the Project are shown in the table
below.
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Table 4.4: Breakdown by Project component
Component Appraisal Estimate Actual
Base Cost
Civil Work 39.3 36.4Furniture, Equipment, Vehicles, and Materials 13.8 4.1
Staff Development 2.9 0.8
Consulting Services 2.2 2.8
Community Participation 2.2 0.0
CMS staff Salaries 16.5 9.7
Salaries, Incentives, and O&B 1.9 1.5
Total Base Cost 77.2 55.3
Taxes and Duties 0.0 0.
Service Charges 1.6 0.8
Imprest Account 0.0 4.5
Total 78.8 60.6
Source: ( Pakistan economic update, ADB website and ministry of finance website)
Performance of the Asian Development Bank
ADB closely supervised and monitored the Project, and guided the EAs
in procurement. ADB approved contract awards on time and clarified
implementation issues raised by the EAs. In addition to regular review
missions, regular follow-up meetings were held with the project directors. As
required, joint review meetings with the project directors were also held to
discuss and resolve common implementation issues. The project directors
keenly appreciated this initiative taken by ADB. The Government appreciated
as well ADB's approval of a loan extension of 2 years and 10 months, to allow
for the implementation delays and the need to complete the large number of
civil works contracts. Throughout the implementation period, ADB maintained
a cordial relationship with the EAs, and its review missions supported the quick
resolution of outstanding constraints on project implementation.
Efficiency in Achievement of Purpose
In general, the Project accomplished its overall objectives of increased
access and enhanced institutional capacity. Consistent with the targets, the
physical infrastructure was practically completed and functioning with students
and staff, classrooms and TRRs were being used, and most of the SMCs were
in place, although not all were equally active. The PCR mission visited over
100 schools; nearly all were functioning, with average student enrollment near
designed capacity. The Project made improvements in the collection and
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analysis of data on student enrollment, dropout, and repetition rates; however,
this initiative could not be completed because the consulting firm did not field
the required consultants. The following key appraisal targets were met:
1. 75 new schools were built and 979 existing schools were upgraded.
Nearly all these school projects were completed and are functioning.
2. Furniture was procured for all 1,054 CMSs. Most of the furnishings are
in place and are being used.
3. Equipment and library books were procured, and IM were developed
under the Project.
4. Management and planning capacity at the central level and in the
provinces was strengthened. At the school level, SMCs were
established.
4.1.3 Analysis of Middle School Project
Basic Data
1. Loan Number: 1278-PAK (SF)2. Project Title: Middle School Project
3. Executing Agencies:
i. Ministry of Education, Federal
ii. Department of Education, Balochistan
iii. Department of Education, North-WestFrontier Province (NWFP)
iv. Department of Education, Sindh
4. Amount of Loan: $78 million estimated
Project Description
In 1992 the Government of Pakistan requested Asian Development
Bank (ADB) assistance to analyze issues, strategies, and options relating to
expanding and improving middle-school education, and to prepare a project
proposal to address issues identified. The Government confirmed its priority
for the project to the 1993 Country Programming Mission and requested that
ADB assistance be limited to the provinces of Balochistan, North-West
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Frontier Province (NWFP), and Sindh. The Punjab was excluded because the
World Bank was undertaking a similar project in Punjab.
Objectives of the Project
The rationale for the proposed intervention was that the Government
was improving access, quality, and supervision in primary schools with
external assistance, including from ADB.
The Middle School Project took note of two realities: the need to create
additional seats for the increased number of students projected to complete
primary school; and the importance of elementary education with a special
focus on girls' education. The Project thus aimed to:
i. Improve access to and participation in middle schooling in rural and
urban slum areas, especially for girls;
ii. Improve the quality of education, and increase student learning and
achievement;
iii. Strengthen the capacity to plan, implement, and maintain the schoolsystem.
To achiev