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A Review of the Policy on Supplementary Financing: Addressing Challenges and Broader Needs

The comprehensive revision of ADB’s policy on supplementary financing expands policy coverage to private sector operations and investment operations financed by Asian Development Fund grants, and provides more flexible and cost-effective approach to investment operation’s completion, restructuring, and scaling-up.

The revised policy will enhance development impact, improve responsiveness of ADB’s investment operations to borrowers’ evolving needs, and reduce transaction costs.

It will complement other ADB's initiatives and efforts aimed at strengthening the development effectiveness of ADB-financed operations.

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Contents

  1. Introduction
    1. Background and Rationale
    2. Objectives of the Policy Revision

  2. Experience of Supplementary Financing
    1. Current Policy
    2. Experience of Supplementary Financing of Cost Overruns
    3. Key Issues and Areas for Refinement

  3. Addressing New Challenges and Broader Needs

  4. Benefits, Costs and Risks of Introducing the Revised Policy
    1. Benefits
    2. Costs
    3. Risks

  5. Recommendations
    1. Supplementary Financing of Purely Price or Financing Arrangement Changes
    2. Supplementary Financing of Physical Changes within the Original Scope and/or Design, and Modified or Incremental Activities or Components

Appendixes

1.   Analysis of ADB's Experience in Supplementary Financing of Cost Overruns for ADB-Financed Projects from 1973 to 2004
2.   Supplementary Financing: Comparative Policies and Practices of Multilateral Development Banks
3.   Section A: Indicative Model of the Simplified Report and Recommendation of the President (RRP) for Supplementary Financing of Purely Price or Financing Arrangement Changes
      Section B: Indicative Model of the Simplified Report and Recommendation of the President (RRP) for Supplementary Financing of Physical Changes within Original Scope and/or Design, or Modified or Incremental Activities or Components
4.   Results Monitoring Framework for the Policy on Supplementary Financing