Catalog

	Table of Contents
p. 28 of 29 BACK | NEXT Executive Summary I. Introduction II. Development Challenges III. Key Variables Influencing Development IV. External Assistance V. Review of ADB Assistance and Strategy VI. The New Pacific Strategy A. Broad Strategic Objectives of ADB B. Supporting Strategic Objectives C. Subregional Focus of the Strategy D. Regional Cooperation E. Operational Modalities F. Resource Requirements

A Pacific Strategy for the New Millennium : VI. The New Pacific Strategy

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E. Operational Modalities

104. Program Loans. Program loans, including sector development programs loans, will continue to have a prominent place in the assistance mix to provide ample support for reform-related efforts. Although several PDMCs have already launched major reform programs with ADB assistance, the adjustment process is expected to continue in many of these countries, although the objective may shift from crisis management and macroeconomic stabilization to the rationalization and improvement of public services. In certain countries, program lending will also help to provide seed funding for the establishment of trust funds to help sustain development activity, especially for geographically and economically disadvantaged populations.

105. Project Lending. This lending will continue to finance social and physical infrastructure, address poverty, and help provide enabling environments for private enterprise. In this regard, and particularly where government capacity is weak, project lending may also be applied to outsource vital services using innovative channels such as NGOs, churches, and the private sector.

106. Loans for Emergency Rehabilitation. These are provided after natural disasters or civil strife, which have become more common in the Pacific in recent years. This source of financing for reconstruction, based on an abbreviated processing schedule, has been an important mechanism for addressing the vulnerability associated with small island states. The availability of this lending facility represents a form of insurance that countries can tap when an unanticipated crisis occurs.

107. Technical Assistance Grants. In view of the importance of TA to address long-term policy reform and capacity building efforts, the availability of grant financing for TA is crucial, given the weak debt servicing capacities of most PDMCs and their reluctance to borrow for TA. TA grants will also be required to finance project preparation and feasibility analysis; in some circumstances, project preparation activities may involve pilot testing of an innovative approach, and using such experiences to build local capacity and design the supportive policy framework.

108. Regional TA. This TA will support adressing issues and concerns that cut across national boundaries or that are likely to require collaboration by several countries. This channel is also used to provide financial support to indigenous regional institutions or centers that are able to address priority issues in a systematic and efficient manner. Regional TA funds finance seminars, workshops, and training programs across the Pacific and make major contributions, not only to promoting PDMC dialogue, but also to developing a pool of local human resource talent that is becoming increasingly available within the region itself.

109. Performance-Based Lending. Because of the limited availability of funds for concessionary lending from the Asian Development Fund and to enhance aid effectiveness, ADB will adopt a mechanism for allocating scarce Asian Development Fund resources that will be responsive to country needs, provide an incentive for performance (particularly, impact on poverty reduction), and be tempered by absorptive capacity considerations. This means that, other things being equal, the PDMCs will be eligible for continued Asian Development Fund funding contingent on (i) a country having a low per capita income and large population, (ii) tangible progress in terms of policy and institutional reform and related implementation, and (iii) progress on management capacity and local financial (counterpart fund and recurrent cost) resources to facilitate absorption of external assistance.

110. Resident Missions. In line with ADB’s objective of enhancing the impact of its assistance and its responsiveness to client needs, ADB is reviewing the role of resident missions (RMs) in the Pacific region. Clearly, the RMs’ most important contribution will be to facilitate ADB operations in the individual PDMCs, to generate optimum development impact through strong local ownership, and to increase responsiveness by ADB. Although ADB is currently conducting an evaluation of various options, the future configuration of the RMs in the Pacific will include a separate resident mission in PNG (requiring the upgrading of the existing PNG extended mission), given the size of ADB operations in PNG. Two options for additional missions are currently being evaluated: (i) two or three subregional missions (e.g., one for the North Pacific, one for South Pacific, and maintaining the existing one in Vanuatu); or (ii) a single mission in a central location to cover most of the PDMCs. In weighing these options, several points are being considered: (i) while ADB provides broad-based assistance to the individual PDMCs (including for economic reform and structural adjustment), ADB’s loan portfolio per country is very small; (ii) while several of the PDMCs are geographically closely located, transportation facilities between them are quite limited; and (iii) there are likely to be significant budgetary and staffing (and skills mix) implications. As such, the proposal for additional RMs in the Pacific will need to weigh the option of having a large office with broader staff skills mix and range of functions in a central location, against the option of smaller offices with a more limited range of staff skills and operations.

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