Catalog

	Table of Contents
p. 28 of 32 BACK | NEXT I. Introduction II. Assessment of Past Performance III. Rationale and Role IV. Operational Strategy V. Operational Improvements A. Single Project Exposure Limit B. Providing for Smaller Interventions C. Conflicts of Interest D. Screening of Projects E. Streamlining of Business Processes F. Strengthened Risk Management G. Strengthened Management of Nonperforming Investments H. Private Sector Operations at Resident Missions I. Enhancing Technical Assistance for Private Sector Operations J. Active Outreach Marketing K. Establishment of a Financial Reporting System VI. Resource Requirements VII. Conclusions and Recommendations

Private Sector Operations: Strategic Directions and Review : V. Operational Improvements

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K. Establishment of a Financial Reporting System

104. To ensure sustainability, ADB needs to measure the financial performance of PSO. For this purpose, ADB will develop an appropriate accounting and financial reporting system for PSO.⁷³ As soon as the system is established, even though PSG is an integral part of ADB, a separate set of notional financial statements can be prepared for PSO. Based on such financial reports, ADB would be able to measure the financial performance of PSO independently from the public sector operations. This would, in essence, describe PSG as if it were a “mini bank” within ADB with its own balance sheet and income statement. With such notional financial statements in hand, ADB could then consider allocating a certain amount of its capital to support PSO lending, equity investment, and guarantee operations. (Under such a set up, PSG would use ADB’s actual cost of market borrowings as its imputed cost of funding.) The PSO mini bank would follow a set of financial policies similar to those of other MDBs with large private sector activities, e.g., EBRD, and IFC.

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