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Cooperation with Japan: Japan Fund for Poverty Reduction (2000)

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I. Introduction

1. Asia has developed over the last three decades in a way that has been referred to as a miracle. This benefited many poor people and reduced the extent of poverty significantly in many countries. But the number of poor people has not been decreasing fast enough. There are still some 900 million people, nearly two-thirds of the world's poor living in Asia. The adverse impact of the recent financial crisis that initially hit the poor in East and Southeast Asia, and then spread to other parts of the Asian and Pacific Region, has not only slowed the pace of poverty reduction, but also resulted in a considerable increase in the number of the poor.

2. In 1999, as a part of a plan to assist the crisis-affected countries in Asia, the Government of Japan (the Government) supported the Asian Currency Crisis Support Facility administered by the Asian Development Bank (ADB). Economic recovery has begun in some countries in the Region. But it will take quite some time before the fruits of economic recovery reach those people who are most severely hit by the financial crisis and socially vulnerable, and still increasing number of poor people in the Region need urgent assistance.

3. ADB has always had a prior concern to reduce poverty in the Region and has played an important role in helping to reduce poverty. But poverty persists, Asia remains the center of the world's concern for poverty reduction, and this has prompted ADB to adopt poverty reduction as its overarching goal. To achieve this goal, ADB prepared a new Poverty Reduction Strategy¹ that was unanimously approved by the Board of Directors on 9 November 1999. The strategy is based on three pillars: promoting pro-poor growth, social development, and good governance.

4. ADB will reorient projects so they have more impact on poverty reduction, investing more in essential services for the poor, and especially for vulnerable groups who were most severely hit by the financial crisis, including women and children. Future projects will be designed to either accelerate pro-poor growth or to focus directly on reducing poverty. All these new initiatives, which are aimed at addressing the most urgent task of reducing poverty, will require swift implementation with innovative approaches.

5. The Government, in recognition that fighting poverty in the Region that has been affected by the financial crisis, is an urgent task of ADB, is prepared to make available a contribution of 10 billion Japanese yen (approximately US$90 million) for the Japan Fund for Poverty Reduction (JFPR) in the year 2000 to ADB. This contribution is viewed by the Government as both urgent and limited in duration. The contribution will finance, on a grant basis, activities that specifically target the poor.

6. This paper outlines the proposed cooperation arrangements between the Government and ADB concerning the initial contribution of ¥10 billion and any further contribution by the Government to the JFPR.

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