Catalog

	Table of Contents
p. 11 of 39 BACK | NEXT The Record Chairman’s Message Board of Directors' Report New and Revised Policies and Procedures Reforming to Remain Relevant Managing for Development Results Results in Country Strategies and Programs Project Performance Management Systems Global Agenda Innovation and Efficiency Initiative New Instruments and Modalities Other Policies and Strategies Performance-Based Allocation Policy Internal Initiatives Governing Structure Financing Operations 2005 in Figures Management Board of Directors Operations in 2005 East and Central Asia Mekong The Pacific South Asia Southeast Asia

New and Revised Policies and Procedures

New Instruments and Modalities

ADB is testing five new financing instruments and modalities to meet client needs in a more efficient and cost-effective manner. The new instruments will be implemented on a pilot basis for an initial period of 3 years, after which performance, suitability, and outcome will be evaluated. If found to be sound, relevant, and effective, they will be mainstreamed into ADB’s operational toolkit.

New country strategies and programs are being put together after extensive consultations, making them more inclusive and pro-poor

The new financing instruments are meant to be client-driven and easy to use. They follow ADB’s strategic framework, comply with ADB’s Charter, and are aligned with existing policies and procedures.

They are also designed to preserve the institution’s triple A credit rating. An independent Risk Management Unit was created in 2005 as a precondition for the pilot instruments, and to evaluate nonrecourse financing or nonsovereign finance transactions. This unit will cover public and private sector operations processed by regional departments, by the Private Sector Operations Department, or by joint teams.

The financing instruments include the following.

• A multitranche financing facility facility, , similar to a standby and noncontingent line of credit, relevant for both debt equity and guarantee finance. The facility targets mainly investment programs, large projects, and credit lines. Pilot testing began in 2005 with two transactions, one in India and another in Pakistan.
• Direct financing to subsovereign, quasi- quasisovereign, sovereign, and state-owned enterprises. This new instrument responds to the decentralization process taking place in the region and allows ADB to service a new set of clients.
• Local currency financing. This is now applicable to both public and private transactions. It addresses the potential mismatch between borrowing in foreign currency and having income streams in local currency. This is especially relevant in the case of public services, utilities, and infrastructure projects.
• Refinancing efinancing facility facility. This allows ADB to help with the restructuring and/or expansion of existing projects with inappropriate financing plans.
• New forms of cofinancing. ADB has seen increased interest from commercial financial institutions in both the private and public sectors to enter into risk-sharing agreements—cofinancing through active financial syndications and risk sharing with commercial financing partners. The new arrangements will expand cofinancing and partnership opportunities for all parties involved.

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