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p. 1 of 6 BACK | NEXT I. Introduction II. Regional Development and Strategic Context III. "Existing Instruments and Market Changes IV. Innovation and Pilot Concepts V. Implementation VI. Recommendation

Pilot Financing Instruments and Modalities

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I. Introduction

1. The purpose of this paper is to introduce, on a pilot basis, several new financial instruments and modalities. The proposals aim to strengthen ADB’s capacity to mobilize development finance and knowledge for its developing member countries (DMC) by reinforcing the flexibility and client orientation of its financial products. The proposals are also designed to make ADB more compatible with existing and evolving market practices, and to help ADB work better with its development partners and the private sector.

2. This paper is one of several being prepared under the Innovation and Efficiency Initiative (IEI),¹ launched in November 2003. IEI aims to improve ADB’s business model by removing bottlenecks that constrain its capacity to respond better and more quickly to its clients. The proposals and recommendations contained in this and other IEI papers represent important steps toward achieving the objectives and goals of ADB’s corporate strategic agenda.

3. Section II of the paper briefly explains the regional development context, which underscores the urgency for ADB to strengthen its role as a development financier for the region. Section III summarizes ADB’s existing financial instruments and modalities, and provides a brief account of the key shortcomings in their application. Section IV outlines the pilot concepts, some of which require an exemption from, or changes to, ADB’s operating policies. Section V focuses on some operational implications, especially on risk evaluation and risk management and the conditions necessary for ADB staff to work with the proposed pilot concepts.

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