Catalog

	Table of Contents
p. 46 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 IX. Planned Lending in ADF VIII X. Financing Framework for ADF VIII A. Financial Management: B. Burden Sharing and Replenishment Size C. Financing Technical Assistance XI. Issues for Policy Review XII. Midterm Review of ADF VIII

ADF VIII Donor's Report: Fighting Poverty in Asia : X. Financing Framework for ADF VIII

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B. Burden Sharing and Replenishment Size

117. Donors emphasized that the fundamental principle underpinning ADF replenishments should continue to be fair burden sharing through which Donors are expected to contribute according to their relative position globally and/or within the Region. The principle of fair burden sharing has provided a disciplined framework for undertaking ADF replenishments and continues to be highly relevant. Donors felt that the principle of fair burden sharing can be applied at three levels: pledge at the conclusion of a replenishment negotiation, installment payment or deposit of promissory notes to generate operational commitment authority, and encashment of promissory notes in a timely and appropriate manner.

118. Burden sharing discussions have been a regular feature of ADF negotiations. Donors agreed to share the cost of the replenishment in a way that balances the demand for a sense of fairness or equity (as measured by accepted burden sharing indicators) and the desire for adequate funding of the legitimate prioritized concessional needs of ADF borrowers. They acknowledged that burden sharing at the time of pledge is based on negotiated shares, with some Donors taking on more than their “fair” shares reflecting their particular budgetary circumstances and development assistance priorities. The second aspect of fair burden sharing is timely installment or deposit of promissory notes. These notes constitute the financial commitment of Donors to the replenishment. Ideally, the burden sharing agreed at the time of the pledge should be reflected in installment payments or the deposit of promissory notes. Donors felt that any violation undermines the burden sharing principles agreed upon as well as operational planning. The third aspect of fair burden sharing, i.e., encashment of promissory notes, relates to actual cash outflows for Donors. Fair burden sharing is ensured by the notes being encashed pro rata on demand. Donors regretted that some of them had put restrictions on note encashments related to their budgetary planning. These restrictions impact negatively on fair burden sharing. Further, they seriously undermined the financial planning of ADF.

1. Burden Sharing Pledge

119. Donors considered the burden sharing arrangements in ADF VII as the starting point for determining their burden shares for ADF VIII. They had adopted a planned basic burden share of 53:47 between nonregional and regional Donors for ADF VII and expected that it would be 50:50 for ADF VIII. While some Donors increased their burden shares in ADF VIII, most Donors maintained their ADF VII burden shares. Portugal and Singapore are new Donors to ADF. Donors generally agreed that 50:50 burden sharing between regional and nonregional Donors should be a target for the medium-term, possibly starting with the next replenishment

120. Against this background, Donors wished to ensure that along with commitment authority on the basis of existing resources, the Donor replenishment must be adequate in size and must be achieved within an acceptable burden sharing arrangement. The Donors recommended that the ADF VIII Donor contributions should reach $2.905 billion (including encashment schedule, and reflecting proposed burden-shared contribution by Hong Kong, China). Contributions shown in Table 3 reflect the agreement among Donors.

121. The Donors agreed that they could denominate their contributions in their national currency, another convertible currency, or in SDRs. To establish the equivalence of value among different currencies, Donors agreed to use the average daily exchange rate for 1 October 1999 to 31 March 2000.