Catalog

	Table of Contents
p. 17 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 IV. ADB and ADF: Vision and Role V. ADB’S Framework for Poverty Reduction A. Pro-Poor Sustainable Economic Growth B. Social Development C. Good Governance 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 : V. ADB’S Framework for Poverty Reduction

---

C. Good Governance

26. Donors reaffirmed the framework’s emphasis on governance. Improved governance is critical to poverty reduction because it facilitates participatory, pro-poor policies as well as sound macroeconomic management and good corporate governance. Good governance encourages the transparent use of public and private funds, stimulates growth of the private sector, promotes effective delivery of public services, and helps establish the rule of law and promotes legal and judicial reforms. As the Asian crisis has shown, good governance is also essential to avoid or reduce the severity of economic crises in an era of increasing liberalization and globalization. Recognizing that the mandates of most MDBs require them to make decisions solely on economic and social grounds, Donors underscored the importance of interrelationships between political and economic issues in socio-economic development. Donors consider that certain issues such as democratization and respect for human rights, can also have important long-term implications for the capacity of a country to initiate and sustain programs for effective poverty reduction, economic adjustment and growth, and environmental sustainability. They stressed that governance is a broad-based concept intended to encompass all factors that impact on a country’s ability to assure sustained economic and social development and reduce poverty and noted that those factors should be addressed in a manner compatible with ADB’s Charter.⁵

27. Donors reaffirmed the framework’s conclusion that since the effective and efficient delivery of basic services by the public sector matters most to the poor, weak governance hurts them disproportionately, but that denial of basic services is not just a matter of lack of investment. Often, it is the result of (i) institutional structures that lack accountability, (ii) domination by local elites, (iii) widespread corruption, (iv) culturally determined and institutionally perpetuated inequality, (v) lack of participation by the poor, and (vi) absence of the rule of law governing private and public affairs. Where such problems exist, systemic changes are needed to move from bad governance to government accountable to the poor. Unless issues of inequality are tackled, it will be difficult to raise living standards of the poor. Action must proceed at two levels. Public administration and expenditure management at the national level must be strengthened. At the same time, responsibility for provision of public services should be devolved to the appropriate level of government. Finally, Donors reaffirmed that in achieving this objective, as well as in poverty reduction efforts generally, a diverse range of stakeholders must be involved, including national, subnational and local governments and representative assemblies at all levels. Apart from the government and the private sector, civil society institutions have an essential and therefore critically important role.

28. Donors concluded that the three pillars of ADB’s Poverty Reduction Strategy are mutually supportive and reinforcing. ADB’s commitment to pursue them and link them in the poorer DMCs with the participation and support of DMC stakeholders will ultimately determine the development effectiveness of ADF’s operations.

29. Donors recommended that ADB use its Poverty Reduction Strategy to govern the planning, implementation and evaluation of all ADF VIII-financed operations.

Back B. Social Development	Next VI. Development through Partnership