ADB annual meet to set path for Asia and itself
Like the WB and IMF, the ADB is being forced to re-examine its role in dealing with imbalances in the global economy.india Updated: May 03, 2006 11:28 IST
The Asian Development Bank (ADB) opened its annual meeting on Wednesday to set the course for strengthening the region's economies while trying to serve the often diverging interests of its 65 members.
Founded in 1966 with a mandate to elevate hundreds of millions of Asians from poverty, the ADB's members range from struggling Nepal and Bangladesh to booming China and India to its largest and most powerful donors, Japan and the United States.
The challenges of economic integration, high oil prices, protectionism, bird flu and Asia's huge infrastructure needs are high on the four-day agenda for finance officials, bankers and the rest of the 2,500 delegates in the Indian city of Hyderabad.
Calls for developing countries to help fix global imbalances through exchange rate flexibility will be in the spotlight on Thursday at a meeting of finance chiefs from Southeast Asian nations plus China, Japan and South Korea (ASEAN+3).
Japanese officials said the ASEAN+3 ministers will also discuss fine-tuning a six-year-old currency swap mechanism and expanding domestic debt markets -- both designed to ward off the kind of financial crisis that hit the region in 1997/98.
"Delegates will be looking at how to address poverty in the context of these challenges and a rapidly changing Asia and, in particular, how the ADB can respond to the region's changing needs," the bank said in a statement.
The ADB expects economic growth in Asia, not including Japan, of 7.2 per cent this year and 7 per cent in 2007 as China and other big exporters ride on robust global trade and electronics demand.
Time for a change
Like the World Bank and International Monetary Fund, the ADB is being forced to re-examine its role in dealing with imbalances in the global economy and the evolving demands of developing countries for finance, fiscal guidance and a stronger voice.
China and India, in particular, now have ready access to funding from international capital markets and want more innovative policies and faster decisions from the ADB, which gave members $6.95 billion in loans and grants for projects last year.
"We need to change further and substantially," the bank's president, Haruhiko Kuroda, said in a recent interview.
"For lower-income countries, financing will continue to be quite important," he said. "On the other hand, increasingly many middle-income countries need the value-added aspect."
Traditionally led by a Japanese president, the ADB has not been able to shake off criticism that it is too bureaucratic, too consensus-driven and too slow to react.
"It's like a Japanese company run by Indian bureaucrats," said one ADB staffer who asked not to be named.
When Kuroda, a former Japanese vice finance minister, came in as president in February 2005, he pledged a new spirit of transparency and responsiveness.
But sources at the ADB with high-level access said the pace of progress had been sluggish and told Reuters of friction between Kuroda and board members over the direction of policy.
Kuroda is outspoken about the need for economic and currency integration in Asia, similar to the European Union model, but some say the ADB is overstepping its bounds.
Other critics accuse the bank of being unaccountable and giving too much power to its richest members while imposing onerous conditions on those who borrow.
"The ADB, like the World Bank, has become the custodian of private investment and the promoter and protector of corporate interests and profits," said the People's Forum Against ADB, a coalition of nearly 100 groups holding protests in Hyderabad.