Policy Overview

ADB continued to manage several Special Funds in 2006: the Asian Development Fund; Technical Assistance Special Fund; Japan Special Fund, including the Asian Currency Crisis Support Facility; ADB Institute Special Fund; Asian Tsunami Fund; and Pakistan Earthquake Fund.

In addition, ADB also managed and administered the Japan Scholarship Program, Japan Fund for Poverty Reduction, Japan Fund for Information and Communication Technology, and channel financing arrangements of a number of cooperation funds provided by bilateral donors to support technical assistance and soft components of loans. The cooperation funds supplement ADB’s regular resources and help it respond more effectively to the needs of its developing member countries.

ADB administered 34 funds financed by its member countries, of which 20 were single-donor funds and 14 multi-donor thematic funds. The thematic funds supplement ADB funding in priority thematic areas, such as poverty reduction, governance, gender, HIV/AIDS, natural disasters, and others. The 34 funds include the Asian tsunami and Pakistan earthquake special funds, established in 2005 as Special Funds with ADB as the initial sole contributor but with the possibility for other donors to join. Subsequently, external donors joined these funds, agreeing to ADB’s administration of their respective contributions.

Four single-donor trust funds were established in 2006. The Republic of Korea contributed $20 million to the e-Asia and Knowledge Partnership Fund. The ADB–Australia South Asia Development Partnership Facility was set up with an initial Australian contribution of $8.5 million equivalent. Luxembourg made an initial commitment of $1.8 million to the Financial Sector Development Partnership Fund. Denmark contributed $3.6 million equivalent to the Second Cooperation Fund for Renewable Energy and Energy Efficiency in Rural Areas.

In addition, ADB approved the Water Financing Partnership Facility, which will accept resources from bilateral, multilateral, and corporate sources to boost ADB’s water financing program in its developing member countries. Such resources may be provided through project-specific loans, grants, guarantees, or other forms of assistance. In response to the need for significant investments needed in the water sector and recommendations made by the independent panel that reviewed the implementation of ADB’s water policy, ADB announced, at the fourth World Water Forum in March 2006, the Water Financing Program 2006–2010. The program seeks to make water a core investment area for ADB. Under the program, ADB proposes to double its water investments to over $2 billion annually, combined with reforms and capacity building.

Some existing funds were replenished during the year. Spain contributed $30.0 million equivalent to the multi-donor Asia Pacific Carbon Fund. Finland provided the equivalent of $5.5 million to the Pakistan Earthquake Fund and Norway contributed to the fund through a swap-to-development modality by converting $20.0 million equivalent in outstanding loan repayment obligations into a grant to be administered by ADB. Ireland joined ADB and the Governance Cooperation Fund in 2006, contributing $1.0 million equivalent to the fund. It also contributed $1.0 million to the Gender and Development Cooperation Fund. The Canadian Cooperation Fund on Climate Change was replenished with the equivalent of about $200,000.