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Regions and Countries Country Partnership Strategy Document
Country Strategy and Program Update 2007-2008: People's Republic of China
III. Portfolio Management IssuesA. Portfolio Performance23. As of 31 December 2005, ADB has approved 115 loans totaling $16.24 billion. Of these, 41 loans for $7.32 billion were ongoing. Seven public sector loans were approved in 2005 for $1.48 billion and one private sector loan was approved for $20.72 million. As of 31 December 2005, 483 TA projects for $257.1 million had been approved for the PRC, of which 93 TAs for $54.6 million were under implementation (including 33 TAs amounting to $18.33 million approved in 2005). The PRC portfolio has continued to perform well. The number of projects “at risk” decreased from four in 2003 to none in 2004 and 2005. Of the 41 ongoing projects, one was “highly satisfactory” and the rest were “satisfactory”. 24. ADB assistance has provided PRC in the transport sector to help promote sustainable economic growth and reduce poverty. This is being achieved by improving road transport efficiency and improving the access of rural villages to income-generating opportunities and social services. Underserved, less developed and poor areas are being connected by railways to help create the conditions necessary for developing local resources, and generating employment to raise living standards. ADB has also focused on improving the urban environment, public health, and quality of life for urban residents through improving waste water management and supply of potable water, construction and rehabilitation of sewer networks, and strengthening water resource management. 25. A notable recent assistance in the energy sector has been the introduction of latest technologies in coal mine methane and coalbed methane production, capture, and utilization. Such assistance will improve mine safety, reduce greenhouse gas emissions, and improve the environment. ADB is supporting one such project in Shanxi, and another in Liaoning. Both projects have benefited from CDM by selling carbon emission reductions. B. Performance Monitoring and Evaluation26. The PRC portfolio has continued to be one of ADB’s best, with no projects “at risk” in recent years. Contract award performance improved significantly in 2005, with contract awards amounting to $1.39 billion—double the 2004 amount. The contract award ratio in 2005 was 33.4% compared with the 2004 figure of 19.1%. The disbursement ratio improved to 19.7% in 2005 compared with the 2004 figure of 17.7%. Compliance with submission of audited financial statements improved in 2005, with only 3.7% (one project) complying late compared with 5.3% in 2004. Compliance with loan covenants for almost all projects was rated “satisfactory” or “highly satisfactory”. Project start-up delays are slightly above the ADB-wide average and continue to be a problem area in the portfolio. 27. The profile of the portfolio is expected to change in the coming years. While transport projects will still dominate ADB’s operations in the PRC, the share of agriculture and natural resources sector and social sector will increase substantially, considering the Government’s priority for developing rural areas in the 11th FYP. Meanwhile, sector lending, MFF, and other modalities under the Innovation and Efficiency Initiatives will be used for new projects, which may include a number of small projects in far-flung areas. These changes will improve project implementation in future. 28. The future challenges call for more efforts to improve project impacts, particularly to implement result-based projects targeted at the rural economy. Measures taken to build a knowledge base in project administration and portfolio management in PRCM include (i) delegating about 50% of ADB’s PRC portfolio and delegation of disbursement functions to PRCM; (ii) focusing more on results and/or impacts during project implementation; (iii) developing the capacity of executing and implementing agencies (EAs and IAs) with the help of PRCM staff resources; (iv) emphasizing feedback from the country portfolio review to country programming and TA/loan processing for improving project design; (v) strengthening the EA–PRCM relationship; (vi) making PRCM a focal point for portfolio management; and (vii) strengthening consultation with other donors to share project implementation experiences and lessons learned. 29. The portfolio performance monitoring and evaluation, through the country portfolio review mission (CPRM), is crucial to enhance the efficiency of project implementation. The CPRM findings and recommendations result in the Government–ADB action plan to improve ADB’s PRC portfolio performance. The linkage between CPRM and the CSP—to reflect portfolio performance review findings in the country programming process—is being discussed. The 2006 CPRM will be conducted in August 2006 and focus on improving efficiency for project implementation, including using project readiness filters, strengthening institutional arrangements for project implementation, and developing a strategy for capacity development of EAs/IAs including creating a conducive environment for transfer of knowledge. ____________________
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