Annual Report 2007

Overall, 2007 was a successful year for South Asia. The South Asia Department aimed to improve portfolio management, increase the size and improve the relevance of lending and nonlending operations, and introduce innovative and flexible financing instruments to its clients.

Efforts to adopt the managing for development results approach in all aspects of operations and build a strong operational knowledge base in South Asia were significantly expanded.

Lending was robust, surpassing previous levels and including significantly more new lending products and modes in the power, education, rural and urban infrastructure, and financial sectors. ADB approved 23 sovereign loan and Asian Development Fund grant projects for $2.8 billion (of which 11 were subprojects coming from multitranche financing facilities [MFFs], and 2 were blend loan and grant projects) and 1 nonsovereign public sec-tor loan for $10 million (Table 27). Cumulative lending for the region as of the end of 2007 amounted to $33.9 billion (Table 31). ADB’s assistance also included technical assistance of $36.9 million, four new MFFs of $1.7 billion, four grants from other sources of $21.5 million, and loans of $176.3 million through its private sector operations. ADB’s nonsovereign approvals in the region totaled $411.3 million (Statistical Annex 10).

REGIONAL COOPERATION

In line with the South Asia Regional Cooperation Strategy and Program (2006–2008), ADB continued to support three main regional cooperation initiatives: the South Asian Association for Regional Cooperation (SAARC), the South Asia Subregional Economic Cooperation (SASEC), and the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC).

ADB supported the SAARC Regional Multimodal Transport Study, whose recommendations were endorsed by the 14th SAARC Summit. ADB also provided technical assistance to generate policy dialogue for the regional energy market and helped build technical capacity within the SAARC Energy Center.

The Fourth SASEC Country Advisors’ Meeting was held at ADB headquarters in Manila on 4–5 June. Apart from the SASEC Information Highway Project, the first regional investment project undertaken jointly by four SASEC countries, ADB also supported SASEC initiatives to develop regional tourism, improve trans-port logistics, facilitate trade, and promote coopera-tion on the environment through technical assistance.

ADB supported the implementation of the BIMSTEC Transport Infrastructure and Logistics Study, which pro-posed the transport and logistics policy framework and strategies, and implementing mechanisms.

PORTFOLIO MANAGEMENT

ADB intensified its efforts in project administration and portfolio management, which significantly improved key portfolio indicators. New records were reached in disbursement ($2.0 billion, 48% better than in 2006; $1.5 billion of this total were disbursements under projects); contract awards and commitments ($2.1 bil-lion, a 26% increase over projections and close to the $2.3 billion achieved in 2006); and projects at risk were reduced to 9.7% from 12.3% in 2006 (Table 29).

In Bangladesh, earlier improvements in portfolio performance were sustained and even advanced in some areas through concerted effort and ADB’s engagement with the Government, and strong collaboration with development partners. Portfolio performance in India also improved markedly in project preparedness, project implementation, and capacity building, enabling increased award of contracts and faster disbursement.

In Nepal, specific actions focused on improving proj-ect readiness, harmonizing procurement, improving financial management, and rationalizing loan and technical assistance portfolios. Project implementation in Sri Lanka continued to face security challenges, but progress was made on several fronts in ongoing post-tsunami reconstruction and rehabilitation, as evidenced by increased contract awards.

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ADB assistance significantly improved key portfolio indicators