Catalog

	Table of Contents
p. 28 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 VI. Development through Partnership VII. ADF Resources: Portfolio Management and Performance VIII. The Strategy for Implementing ADF VIII A. General Strategy and Partnership B. Implementing ADB’s Poverty Reduction Strategy C. Performance-Based Allocation System for ADF Resources D. Governance Action Plan E. Development of the Private Sector F. Infectious Diseases including HIV/AIDS G. Core Labor Standards H. Gender and Development I. Environment J. Cooperation Among DMCs K. Money Laundering L. Drug Trafficking M. Improving Evaluation and the Linkage to Planning Operations N. Redesign of Operational Business Processes and Portfolio Management O. Strengthening Resident Missions P. Strengthening ADB’s Institutional Capacity 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 : VIII. The Strategy for Implementing ADF VIII

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D. Governance Action Plan

63. Donors emphasized that issues of good governance are multifaceted, combining economic and political dimensions, and lie at the core of ADF borrowers’ efforts at poverty reduction and sustainable development. Processes that promote good governance benefit the overall population, including the poor. However, these processes often benefit the poor more than those in the higher income levels as they empower the poor to take advantage of opportunities opened up by sustainable development.

64. Donors noted and endorsed ADB’s position, learned through experience, that good governance processes are more likely to succeed if the political realities underlying governance problems are also taken into account. ADB has learned that political and economic aspects of governance are inseparable and cannot be addressed in abstract. ADB’s policy on governance is consistent with this view, as it recognizes that ADB can take into account demonstrable and direct economic effects of noneconomic factors as part of the economic considerations on which it must base its decisions. ADB’s poverty reduction strategy, of which good governance is a main pillar, recognizes poverty as an “unacceptable human condition” thereby recognizing the rights of every person to decent living conditions. ADB’s policies on NGOs and participation are inextricably weaved with the rights of assembly, expression, and association. Freedom of access to information is also inseparable from the transparency requirements of good governance.

65. Donors emphasized that good decision-making processes can not be exempted from accountability for outcomes. ADB believes that policy mistakes and economic inefficiencies associated with them are, indeed, capable of subverting sustainable development. For example, decisions made by public officials in terms of the magnitude of unproductive expenditure, as part of the strategic allocation of public resources, directly affect availability of resources for poverty reduction. For this reason, ADB’s action plan includes steps to review the level and trends in public expenditure, including non-productive expenditure and spending on social programs.

66. Because of the centrality of governance issues in sustainable development efforts, Donors agreed that DMCs’ commitment to governance reforms and to combat corruption should be recognized. Donors recommended that any new ADB policy on a performance-based allocation system for ADF resources must include governance as a central criterion of a performance rating to determine future ADF lending to a DMC.

67. Donors noted that ADB’s role as a major development institution in the Region meant that ADB will be required to enhance its efforts to maintain its key position in the area of governance reforms focused on poverty reduction, and in leading the fight against corruption. In this regard, Donors noted ADB’s intention that governance activities become increasingly focused on those areas that can disproportionately benefit the poor in a demonstrable manner. Donors supported the ambitious medium-term agenda and the Action Plan for ADB’s governance activities (see Appendix 6), and viewed favorably ADB’s emphasis on poverty reduction as the overarching objective of governance reforms.

68. In its Action Plan, ADB eyes activities to enhance governance quality in the DMCs by conducting rigorous and structured studies to analyze governance issues in individual DMCs and the risks they pose, and consider ways to focus these activities on areas that will disproportionately benefit the poor. The analysis will pay particular attention to: transparency in budget preparation, trends in nonproductive government expenditures and spending on social sector programs, opportunities for and degree of participation in development processes, prevalence of the rule of law, success in fighting corruption, and factors inhibiting public access to information. These studies will form the basis for formulating strategies and programs to address the key governance issues identified, together with relevant performance indicators. This whole structure will also inform the level and sectoral composition of ADB assistance to a DMC.

69. To help elevate good governance to the top level of the development agenda in the Region, ADB shall begin in 2001 a regional program of governance initiatives aimed at promoting the four elements of good governance (i.e., accountability, participation, predictability and transparency) in the DMCs’ antipoverty programs. ADB shall also promote a regional network on governance comprising representatives from governments, civil society, private sector, and aid agencies, to build a consensus on relevant benchmarks, codes of conduct and indicators of good governance, and review progress in achieving better governance in the Region. Further, as part of its Action Plan, ADB will be at the forefront of efforts in the Region to fight corruption and coordinate governance work of MDBs and other aid agencies. In that development context, ADB shall further strengthen its internal capacity for governance operations by providing governance specialists in all operational departments, developing governance and institutional databases on each DMC, and providing staff with training and toolkits for effectively addressing governance issues in project design. ADB shall also ensure that there is effective monitoring of the implementation of its Action Plan by presenting to the Board in the first quarter of 2001 a work program on governance with measurable and monitorable actions and targets for the year, and beginning 2002 an annual report with information on achievements against the actions and targets in the work program, lessons learned, and the work program for the next year.

70. Donors recommended full and timely implementation of the Governance Action Plan in ADF VIII.

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