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Annual Report 2004 : Part 3: Financial Statements: Management's Discussion and Analysis
Trust Funds Managed by ADBIn addition to OCR and the Special Funds, ADB also manages and administers the Japan Scholarship Program (JSP), the Japan Fund for Poverty Reduction (JFPR), the Japan Fund for Information and Communication Technology (JFICT), and channel financing arrangements of a number of trust funds provided by bilateral donors to support technical assistance and soft components of loans. These funds do not form part of ADB's own resources. Japan Scholarship ProgramThe JSP was established in 1988 to provide an opportunity for well-qualified citizens of DMCs to undertake postgraduate studies in economics, management, science, and technology, and other development-related fields at selected educational institutions in Asia and the Pacific. The JSP is funded by Japan and administered by ADB. Currently, 20 institutions in 10 countries participate. Between 1988 and 2004, Japan contributed $68.3 million. A total of 1,780 scholarships has been awarded to recipients from 34 members. Of the total, 1,442 have already completed their courses. Women have received 548 scholarships. The number of new scholarships awarded annually grew from 49 in 1988 to 157 in 2004 (see www.adb.org/JSP).
Channel Financing ArrangementsOfficial grant cofinancing plays a vital role in ADB operations, particularly in view of the continuing constraints on TASF and ADF resources. These grant funds support technical assistance and finance mostly soft components of loan projects. Most grants are provided by bilateral donors under channel financing arrangements (CFAs). ADB acts as administrator of the funds and applies its own guidelines and procedures in recruiting consultants, making disbursements, and supervising projects. Under a CFA, the donor enters into a comprehensive agreement with ADB whereby the donor provides an untied grant fund to be administered by ADB, but the fund does not become part of ADB's own resources. The donor indicates its preferred sectors and recipient countries. ADB regularly provides a list and description of proposed technical assistance projects that satisfy the donor's preferences, and they agree on the specific activities to be financed. Funds provided under a CFA are usually transferred to an interest-bearing account and may also be invested by ADB pending disbursement. Donors are provided with regular financial statements and progress reports on the use of the funds. ADB is responsible for project preparation, processing, and administration. CFAs may be replenished with additional funds at the donor's discretion. The primary advantage of CFAs is that funding for several individual technical assistance projects may be provided under a single agreement. Accordingly, they minimize the need for detailed negotiations on a case-by-case basis and foster administrative efficiency. The first CFA was negotiated in 1980. Since then, ADB has entered into CFAs with the following bilateral development partners: Australia, Belgium, Canada, Denmark, Finland, France, Italy, the Netherlands, New Zealand, Norway, Spain, Sweden, Switzerland, and United Kingdom. In 2004, Finland replenished its fund, Italy made new contributions to establish a second trust fund, and Australia cofinanced six projects with its fund. In addition to the traditional type of CFA which may be used for several sectors, thematic CFAs with bilateral agencies have increased sharply in recent years in such areas as renewable energy, climate change, poverty reduction, governance, water, gender and development, and poverty and environment. Several thematic CFAs have been packaged as umbrella facilities to allow more than one donor to contribute. In 2004, ADB and its partners established two new cooperative funds: the Cooperation Fund in Support of Managing for Development Results with an initial contribution from Canada followed by a contribution from the Netherlands and the Cooperation Fund for Regional Trade and Financial Security Initiative with initial contributions from Australia, Japan, and United States. As of 31 December 2004, cumulative contributions committed amounted to $237.0 million ($221.9 million in 2003) and 289 projects (219 in 2003) amounting to $157.1 million ($116.8 million in 2003). Recently, mobilizing grant funds has been explored with private sector entities. During 2004, ADB successfully obtained funds from several private sector entities mostly to cofinance regional technical assistance projects in the environment sector.
Japan Fund for Poverty ReductionThe JFPR was established in May 2000 as a trust fund to support poverty reduction and social development activities that can add substantial value to ADB projects. Since 2000, Japan has contributed $326.9 million in total. To date, $146 million for 53 projects have been approved of which 15 projects valued at $29.9 million were approved in 2004 (see www.adb.org/JFPR and Table 32 in the Statistical Annex).
Japan Fund for Information and Communication TechnologyThe JFICT was established in July 2001 to assist DMCs in bridging the digital divide to help reduce poverty. The JFICT had an initial contribution of 1.3 billion yen (approximately $10.7 million) for a 3-year period. The JFICT was originally scheduled to close by 31 July 2004 but was extended by 1 year to accommodate new proposals. To date, $7.03 million for 8 projects have been approved for implementation (see www.adb.org/Documents/others/CLICK/R21_03.pdf).
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