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p. 5 of 5 BACK | NEXT Introduction Review of ADB's Policies on cost-Sharing Limit The Other MDB's Policies on cost-Sharing Limit Proposed Revision of Cost-Sharing Limits Conclusion and Recommendation

Review of Cost-Sharing Limits for Projects Financing as an Element of ADB's 1998 Graduation Policy

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V. Conclusions and Recommendations

29. ADB needs to revise upward its cost-sharing limits, taking into consideration similar policies and practices of other MDBs, because (i) many DMCs’ in the Asia and Pacific region are still recovering from the Asian financial crisis or the Russian financial crisis and their economies are weaker than prior to the crises, particularly for some Group B2 and Group C countries, and these economies are constrained by tight fiscal positions; (ii) ADB’s operations have changed, with increased emphasis on poverty reduction and social development;¹³ and (iii) there are large differences in cost-sharing limits for Group B2 and Group C countries between ADB and the World Bank.

30. Therefore, It is recommended that

1. ADB applies cost-sharing limits under the 1998 graduation policy as follows: a cost-sharing limit of 80% for Group A countries,¹⁴ 75% for Group B1 countries, 70% for Group B2 countries, and 65% for Group C countries;
2. the above revised cost-sharing limits will take effective from 1 January 2003 and apply only to new project loans for which formal loan negotiations are completed on or after 1 January 2003.

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