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Financial Management and Analysis of Projects

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Foreword

ADB’s Charter (the Agreement Establishing the Asian Development Bank, August 1966) places a clear fiduciary responsibility upon ADB to ensure that projects are financially viable and sustainable, that funds are used for their intended purpose and that the Borrower has the capacity to fulfill obligations under the loan agreements.

Financial management and analysis of ADB projects has been conducted since ADB was founded. To improve the uniformity, approach, and coverage of financial analysis, ADB issued Guidelines for the Preparation and Presentation of Financial Analysis in 1989. Over time, the Guidelines have been periodically reviewed and amended to reflect the changing environment in which ADB operates.

The Guidelines describe ADB's philosophy, policies, and approach to financial management of executing agencies and financial analysis of investment projects. They have been prepared for the benefit of ADB staff and consultants who evaluate financial management practices of executing agencies and undertake financial analysis of investment projects.

The new title—Financial Management and Analysis of Projects—reflects changes in ADB policies and procedures since 2000. In particular, it reflects renewed appreciation that sound financial management in executing agencies is a key determinant of financial sustainability.

ADB deals with countries and sectors that are at different stages of development and that have different resources, and capacities. Recognizing this, the Guidelines need to be applied in a realistic, practical, and flexible manner. ADB financial analysts and financial management specialists have the discretion to determine the extent to which the Guidelines will apply in particular circumstances.

The advice, directions and recommendations in the Guidelines should not be regarded as a substitute for initiative. ADB staff should always exercise resourcefulness and imagination in reaching sound professional judgments.

GEERT VAN DER LINDEN
Vice President
Knowledge Management and Sustainable Development
July 2005

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