Countries and Regions

	Table of Contents
p. 21 of 21 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies IV. Subregional Economic Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - People's Republic of China

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IX. Local Cost Financing

105. ADB operational experience in the PRC, a Group B2 country, shows that domestic resources have consistently been used to meet a large portion of the financing requirements of ADB-assisted projects. ADB loans, on the average, have accounted for about one third of the total project cost requirements. This is far below the maximum percentage that ADB policies allow. The use of the proceeds of ADB loans for local cost financing (LCF) has been limited. As of 31 December 1999, of the slightly less than $10 $9.6 billion total ADB lending to PRC, only $398 million (4 percent) was used for LCF including local cost financing of $158 million under the Northeast Flood Damage Rehabilitation Project. LCF for that project was justified on the basis of the difficulty of local governments, particularly in the poverty counties, in raising additional financial resources for rehabilitation purposes, given that the huge required expenditures for rehabilitation and the income of these local governments have decreased substantially by the damages of the floods. The provision of LCF for the Northeast Flood Damage Rehabilitation Project was consistent with ADB’s policy on Rehabilitation Assistance After Disasters and was an exception to the general principle of ADB not providing LCF for PRC. No LCF is anticipated for the loans shown in program. However, minimal use of LCF may be considered for projects located in the less developed central and western regions to address social development and environmental concerns.

Back VIII. Economic and Sector Work Program	Country Assistance Plans - People's Republic of China