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p. 15 of 18 BACK | NEXT Executive Summary I. Introduction II. Long-Term Vision and Strategy for ADF III. Operational Priorites IV. Use of ADF VII Resources to Date V. Financial Management A. Long-Term Strategy for Financing ADF B. ADF Resource Management C. ADF VII Financing Structure and Burden Sharing VI. Conclusions

Asian Development Fund VII: Progress Report (1999) : V. Financial Management

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A. Long-Term Strategy for Financing ADF

55. ADF VII provides the Bank with an opportunity to begin defining a long-term strategy for financing its concessional operations. In this regard, the long-term objective is that ADF will become progressively self-financing. To this end, the Bank must maintain its present capacity to mobilize concessional resources through multilateral replenishments that are equitable and sustainable, and strengthen the financial planning framework for ADF. Donors recommended that the major elements of the long-term strategy include:

1. maximizing of commitment authority from nondonor resources²⁰ in a prudent and sustainable manner;
2. broadening and strengthening the donor resource base; and
3. identifying and adopting a replenishment structure that reflects the constraints facing the multilateral assistance system and is compatible with (i) and (ii) in strengthening the Bank's capacity to mobilize concessional resources from internal and external sources.

56. In that context, starting in ADF VII, priority is given to maximizing the Bank's internal capacity to generate additional commitment authority through nondonor resources in a prudent and sustainable manner. Further, the synergy between donor and nondonor resources is being strengthened in order to increase the volume of commitment authority from nondonor resources by adopting techniques that will increase:

1. the volume of nondonor resources; and
2. the efficiency with which nondonor resources are used to generate commitment authority.

The adoption of these techniques should proceed prudently to ensure that they are compatible with maintaining and strengthening the Bank's developmental mandate and financial integrity as a whole over the long run. In so doing, donors recognized the need to introduce a new planning framework for the financial management of ADF resources. Donors appreciated that the initiatives in financial management to be undertaken during the ADF VII period, together with continued and substantial donor support over the next half a generation, would ensure that replenishments by donors will represent only one of the major sources of funds used to finance the Bank's concessional operations. The Bank remains fully committed to this long-term strategy for financing ADF.

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