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Annual Report 2004

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Special Funds

ADB is authorized by its Charter to establish and administer Special Funds. These are the Asian Development Fund; the Technical Assistance Special Fund; the Japan Special Fund (JSF), including the Asian Currency Crisis Support Facility (ACCSF); and the ADB Institute Special Fund (ADBISF). Financial statements for each fund are prepared in accordance with generally accepted accounting principles except for ADF's which are special purpose financial statements prepared in accordance with ADF Regulations.

Asian Development Fund

ADF is ADB's concessional financing window for DMCs with low per capita gross national products and limited debt repayment capacities. It is the only multilateral source of concessional assistance dedicated exclusively to reducing poverty and to improving the quality of life in Asia and the Pacific. Twenty-nine donor members (regional and nonregional) have contributed to the fund.

ADF IX. The eighth replenishment of the ADF (ADF IX), which covers the 4-year period 2005–2008, was authorized in August 2004 by Resolution No. 300 of the Board of Governors. Donors recommended a replenishment of $7.0 billion, consisting of $3.3 billion in new contributions from donors and $3.7 billion from internal resources based on the exchange rate specified in the Resolution. ADF IX features a new grant program that may represent up to 21% of its financing framework, including 3% as priority technical assistance. The grants in ADF IX will be used to ease some of the costs of external development finance in some of the poorest highly indebted countries and will assist poor countries in making the transition from conflict to peace and stability. They will also be used to combat HIV/AIDS and other infectious diseases.

ADF Loan Approvals, Disbursements, and Repayments. In 2004, 47 ADF loans totaling $1.2 billion were approved compared with 47 loans totaling $1.4 billion in 2003. Disbursements during 2004 totaled $1,055.1 million, a decrease of 6.5% from $1,128.1 million in 2003. At the end of the year, cumulative disbursements from ADF resources were $20.9 billion. Loan repayments during the year amounted to $390.2 million, and cumulative repayments were $2.7 billion. At year-end, outstanding ADF loans amounted to $21.6 billion.

Status of Loans. At the end of the year, 28 public sector loans to Myanmar were in nonaccrual status. The total of outstanding loans to Myanmar amounted to $515.3 million comprising about 2.4% of the total outstanding ADF loans.

Investment Portfolio Position. The ADF investment portfolio amounted to $5.6 billion on 31 December 2004 compared with $4.3 billion in 2003. About 35% of the portfolio was invested in bank deposits, and 65% was invested in fixed income securities. The annualized rate of return on ADF investments in 2004 was 3.4% compared with 3.5% in 2003. The portfolio was denominated in 10 currencies. Euros, pounds sterling, Australian dollars, and Canadian dollars accounted for 88% of the portfolio.

Technical Assistance Special Fund

Operations and Resource Position. Technical assistance commitments (approved and effective) decreased from $80.1 million in 2003 to $73.5 million in 2004 for 168 technical assistance projects made effective during the year. In 2004, $6.3 million ($10.1 million in 2003) representing completed and canceled technical assistance projects were written back as a reduction in technical assistance, and the corresponding undisbursed commitment was eliminated. Revenue from investments decreased from $5.3 million in 2003 to $5.0 million in 2004 despite the increase in the size of the investment portfolio because of lower yields in some capital markets. As a result, the uncommitted balance available for future commitments decreased from $104.1 million in 2003 to $99.2 million in 2004. The TASF contributed 41% of funding for all technical assistance approved in 2004.

At the end of the year, TASF investments stood at $240.4 million, up 5.2% from 2003. Other assets—due from banks, advances to consultants, and others—totaled $8.9 million. Accounts payable to OCR and others amounted to $52,000.

Japan Special Fund

Sector Activities. In 2004, the JSF financed 20% of the total amount of technical assistance approved by ADB including 38% of the total amount of project preparation technical assistance during the year. The breakdown of JSF approvals by sector is shown in Table 12.

ADB Institute Special Fund

The costs for operating the ADB Institute are met from the ADBISF which is administered by ADB in accordance with the Statute of ADB Institute. Japan made its ninth contribution in the amount of 1.4 billion yen ($13.1 million equivalent) in June 2004.

As of 31 December 2004, cumulative commitments amounted to 11.6 billion yen (about $96.2 million equivalent) excluding translation adjustments. Of the total contributions received, $80.1 million had been used by the end of the year mainly for research and capacity-building activities including organizing symposia, forums, and training; preparing research reports, publications, and websites; and for associated administrative expenses. The balance of net current assets excluding property, furniture, and equipment available for future projects and programs was about $16.1 million.

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