Catalog

	Table of Contents
p. 8 of 53 BACK | NEXT Executive Summary Summary of Conclusions and Recommendations by ADF Donors ADF VIII: Requests for Midterm Policy Reviews and Reports I. Introduction II. The International Development Goals III. Poverty in Developing Asia A. Poverty Reduction and Poor Countries in Asia B. The Asian Financial Crisis C. The Heavily Indebted Poor Countries IV. ADB and ADF: Vision and Role V. ADB’S Framework for Poverty Reduction VI. Development through Partnership VII. ADF Resources: Portfolio Management and Performance VIII. The Strategy for Implementing ADF VIII IX. Planned Lending in ADF VIII X. Financing Framework for ADF VIII XI. Issues for Policy Review XII. Midterm Review of ADF VIII

ADF VIII Donor's Report: Fighting Poverty in Asia : III. Poverty in Developing Asia

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B. The Asian Financial Crisis

10. Donors agreed that the 1997-1998 Asian financial crisis had major and pervasive negative economic and social impacts in countries in this Region. Donors agreed that the financial crisis offered lessons for all DMCs. Donors concluded that the Asian financial crisis, as well as recent reemergence from the crisis in several DMCs, has shown that economic and financial liberalization is a double-edged sword: it rewards good policies but punishes bad ones. Nevertheless, Donors also concluded that the difficulties that crisis-affected economies have experienced are not grounds for inaction by the poorer DMCs or for adopting measures that will retard the liberalization process across the Region.

11. Donors agreed that the financial crisis underlined the devastating social effects of economic crises. Effective social policy can ease the task of adjustment during times of crisis, helping to build support for necessary reforms and ensuring that the burden of adjustment does not fall disproportionately on the most vulnerable groups in society. However, effective social policies, particularly during crisis and post-crisis periods, are subject to a number of constraints. Resources available for social programs are limited, so policy makers must make difficult choices between safeguarding immediate social welfare and ensuring the adjustment necessary to restore confidence and promote stable growth. Donors recognized that a sound system of social protection is likely to involve a number of components to meet the needs of different groups. The optimal design generally depends on the structure of the needs, and on existing schemes and on institutional structures. It is particularly hard to introduce new schemes in the midst of a crisis. Thus, during noncrisis periods, the various parts of a social protection system must be designed that have the institutional capability to be quickly expanded in response to a shock.

12. Donors recognized that as a consequence of the crisis, ADB joined with the Bretton Woods institutions to provide large amounts of quick-disbursing financial assistance to crisis-affected economies. Donors recognize that at times of crisis, ADB has a comparative advantage in helping analyze some of the causes and potential economic and social impacts, and in devising means of assistance to support efforts of DMCs to overcome the crisis, particularly through financial sector restructuring and providing assistance to the social sectors. However, Donors also noted that the amounts of assistance provided resulted in a significant deterioration in ADB’s key financial indicators. Therefore, during the ADF VIII period which is expected to be a crisis-recovery period, ADB should plan to return to prudential, policy-based levels for key financial indicators.

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