January 31, 2003	Friday	Ziqa’ad 27, 1423

MANILA, Jan 30: The Asian Development Bank (ADB) is to substantially increase its share of funding for projects in developing member countries to help them tide over fiscal and other financial constraints, officials said.

The Manila-based bank’s funding share has been between 40 and 80pc of the cost of projects since 1998.

Effective January 1, 2003, ADB’s minimum share would rise to 65pc but the ceiling would remain largely unchanged, Ann Quon, the bank’s director of external relations, told AFP on Thursday.

“The bottomline is that ADB is now able to provide a larger proportion of project cost-financing than done previously,” she said.

Although the change applies only to new project loans, it will be a welcome relief to nearly 33 countries banking on the ADB for funding of projects ranging from micro-finance banking to sewage systems.

Compared with other multilateral financial institutions, such as the World Bank and the Japan Bank for International Cooperation, the ADB gives the smallest funding share for projects.

“The new ruling will now narrow the difference between ADB and the other multilateral financial institutions in terms of percentage of project share funding,” Quon said.

In devising the change, the ADB also considered the tighter fiscal situation in the region and the “lingering” effects of the Asian financial crisis in 1997/8 and the subsequent Russian financial crisis, she added.

Last year, ADB lent a total of 5.7bn dollars by taking stakes in 76 projects, mostly in Asia, including in Afghanistan where it resumed operations for the first time in 23 years. ADB’s loan value is expected to increase substantially in 2003 with its higher share in project funding.

The ADB’s project cost-sharing limits are based largely on a country’s per capita GNP and external debt repayment capacity, officials said.

Under the new criteria, Quon said, ADB would shoulder 65 per cent of project costs — from 40pc previously — in the Philippines, Fiji, Kazakhstan, Malaysia, Thailand, Turkmenistan and Uzbekistan.

The bank’s funding limit would be raised to 75pc from 70pc in Azerbaijan, Bangladesh, Marshall islands, Federated States of Micronesia, Pakistan, Sri Lanka, Tonga and Vietnam.

ADB would, however, maintain its 80pc funding limit in Afghanistan, Bhutan, Cambodia, Kiribati, Kyrgyzstan, Laos, Maldives, Mongolia, Myanmar, Nepal, Samoa, Solomon Islands, Tajikistan and Vanuatu.

The bank’s largest borrowers last year were India at about $1.2 bilion, Pakistan at $1.1bn.—AFP