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p. 39 of 95 BACK | NEXT Message from the Chairman of the Board of Directors Members, Capital Stock and Voting Power The Record Abbreviations 2004 in Review: Board of Directors' Report Special Theme: The Changing Face of the Microfinance Industry: Building Financial Systems for the Poor Part 1: Institutional Effectiveness Part 2: Poverty Reduction Strategic Priorities Pro-Poor, Sustainable Economic Growth Inclusive Social Development Governance for Effective Policies and Institutions Thematic Priorities Regional Perspectives East and Central Asia Mekong The Pacific South Asia Southeast Asia Part 3: Financial Statements: Management's Discussion and Analysis

Annual Report 2004 : Part 2: Poverty Reduction : Strategic Priorities

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Governance for Effective Policies and Institutions

The policy Governance: Sound Development Management adopted in 1995 committed ADB to support DMC efforts to institutionalize good governance. The policy defines four aspects of sound governance: accountability (that officials are answerable to the entity from which they derive their authority, that work has been conducted according to agreed rules and standards, and that work is reported fairly and accurately); participation (allowing public employees a role in decision making; empowering citizens, especially the poor, by promoting their rights to access and to secure control over basic entitlements that allow them to earn a living); predictability (fair and consistent application of laws, regulations, and policies); and transparency (low cost, understandable, relevant information made available to citizens to promote effective accountability and clarity about laws, regulations, and policies). ADB's medium-term agenda and action plan for 2000–2004 is the basis for the implementation of the governance policy. A cluster of policies approved since 1995 further broadened ADB's governance work to include the participation of civil society (1997), law and policy reform (1998), anticorruption policies (1998), procurement (1999), and anti-money laundering (2003).

ADB began a comprehensive review of the governance policy in 2004 that will continue in 2005. As part of this, a review of the anticorruption policy is being conducted in conjunction with the Office of the Auditor General. A desk study and internal and external consultations were done in 2004 and a medium-term agenda and action plan for 2005–2009 will be prepared based on the review's recommendations.

Law and Policy Reform and the Rule of Law

In 2004, ADB continued its program of technical assistance and loans in support of law and policy reform and the rule of law. This program focused on access to justice for the poor, judicial reform, administrative law, corporate governance, antimoney laundering, secured transactions and insolvency law reform, and legal training. Toolkits developed in 2004 help to mainstream law and policy reform through CSPs and CSP updates (CSPUs).

Country Governance Assessments

Country governance assessments (CGAs) were carried out in cooperation with individual DMCs to systematically assess the quality of governance and to strengthen the link between the quality of governance and the levels and composition of assistance. During 2004, assessments were initiated for Afghanistan, Azerbaijan, India, Lao PDR, Nepal, Palau, Sri Lanka, and Uzbekistan. CGAs were published for Indonesia, Mongolia, and the Pacific. CGAs improve CSPs and the contents of loan and technical assistance pipelines. In 2004, attention was given to operationalizing CGAs in CSP/CSPUs, particularly by supporting governance as an area of strategic focus.

Governance Portfolio

In 2004, 10 loans were classified as law, economic management, and public policy (core governance) for a total of $578.0 million (compared with $299.5 million in 2003). Also, 39 advisory technical assistance projects were approved totaling $22.7 million ($20.3 million in 2003). Some advisory technical assistance projects were funded by the Governance Cooperation Fund that was established by the governments of Canada, Denmark, and Norway, and administered by ADB. In addition, 15 loans were classified as thematic governance (financial and economic governance, public governance, civil society participation, and anticorruption).

ADB–Organisation for Economic Co-operation and Development (OECD) Anticorruption Action Plan for Asia and the Pacific

Since 1999, the ADB-OECD anticorruption initiative has promoted regional cooperation in the fight against corruption. The initiative aims to foster both regional and country-specific policy reforms tailored to policy priorities identified by the endorsing countries and provides the means by which governments, international organizations, and other partners can review progress. It further assists participating countries in building sustainable legal and institutional frameworks to combat corruption by implementing the standards and principles in its action plans. In 2004, the following occurred

1. The fifth meeting of the steering group of the initiative was held at ADB headquarters in July in conjunction with the second master training seminar on curbing corruption in public procurement.
2. Palau and Viet Nam became the 22nd and 23rd members of the steering group.
3. The medium-term strategy and work plan for 2004–2006 were approved.
4. A book comparing the legal and institutional frameworks of anticorruption policies of endorsing countries was published.

Local Governance and Service Delivery to the Poor

A technical assistance project (i) studied the policies and practices adopted by local governments in participating DMCs to improve responsiveness in delivering services and to share the findings, good practices, and lessons in the region and (ii) gave local governments the opportunity to learn from international good practices at the Regional Seminar and Learning Event on Local Governance and Pro-Poor Service Delivery held in February. It was a unique learning opportunity for national and local government practitioners and civil society advocates to share experiences and to improve the quality of and access to public services in their localities. ADB Institute and the United Nations Capital Development Fund helped with the event. The seminar produced case studies on international good practices and a practical learning guide for local government practitioners involved in continuous service improvement (see www.adb.org/Documents/Events/2003/Reg_Seminar_Loc_Gov_Service_Delivery_Poor/).

Public Administration Networks

ADB supports the establishment of a network of schools and institutes of public administration in Asia and the Pacific to build and enhance their capacities and those of research organizations and think tanks to enable them to transform their governments into agents of good governance. In December 2004, the Network of Asia-Pacific Schools and Institutes of Public Administration and Governance was launched at an international conference in Kuala Lumpur, Malaysia. The conference provided a venue for educators and practitioners to share expertise and experiences on the role public administration plays in promoting good governance and alleviating poverty. It was conducted in partnership with the National Institute of Public Administration in Malaysia and brought together 234 public administration experts, civil servants, academics, trainers, and researchers from Asia and the Pacific and beyond. Further, a total of 110 individuals representing 92 institutions from 25 different countries attended the network's first business meeting where an interim steering committee was established.

Cambodia Public Financial Management Reform Program

In 2004, ADB and the World Bank facilitated preparation of a public financial management reform program to be operationalized through a consolidated action plan and phased over 3–5 years based on four realistic and achievable reform platforms. The program builds on the findings of the 2003 joint Government of Cambodia/ADB/World Bank public expenditure review. The objective of the review was to assist the government to assess public service performance and the efficiency of public expenditure planning. A second feature was to facilitate assessment of performance in finance and line ministries and to formulate capacity development action plans. Government leadership is provided through the national reform committee and secretariat chaired by the minister of economy and finance. A donor secretariat ensures well-coordinated external assistance, including pooled funding for technical assistance. Joint performance reviews and follow-up actions are based on well-defined capacity development outcomes at each phase of reform.

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