108. Donors reaffirmed the Board’s approval in December 1998 of a graduation policy for the
DMCs, whereby several ADF-only borrowers graduated to the status of blend borrowers and
several other DMCs graduated from ADF. Donors recommended continuation of eligibility as
applied to ADF VII for allocating resources in the planned ADF VIII period (2001–2004). Donors
also reaffirmed that small island DMCs faced special problems because of their size, location,
high transport costs, lack of natural resources, and limited creditworthiness.