Evaluation

Printer-friendly Version  Send to a Friend  Give Feedback

Annual Report on 2007 Portfolio Performance
Completed: 2008

This report presents data from ADB operations during 2007, along with trend analyses that for the most part cover the period 2003-2007. It also presents an assessment of ADB portfolio performance. It includes an analysis of delays in project implementation; findings and analysis of 2006 and 2007 design and monitoring frameworks (DMFs); and review of the project performance reporting (PPR) system.

  Summary of Findings

Sovereign Loan Operations:

• At the end of 2007, ADB’s sovereign loan portfolio consisted of 529 active loans, totaling $39.9 billion to finance 452 projects and programs.
• Seventy four loans were approved in 2007 to finance 61 sovereign projects and programs for a total amount of $9.24 billion which was 35.5% above the 2006 approvals.
• Loan sizes have increased steadily over the last 3 years.
• ADB’s assistance under the multitranche financing facility continued to expand.
• The major themes by volume of new lending in 2006 were: sustainable economic growth (85%), capacity development (45%), governance (31%), private sector development (23%), and inclusive social development (22%).
• The major sectors by volume of new lending in 2007 were: transport and communications (41%); multisector (17%); and law, economic management, public policy (13%).
• Cancellations of $1,328 million in 2007 exceeded the 5-year average of $881 million significantly.
• At the end of 2007, ADB’s operations departments rated 92% of all active sovereign loan projects/programs satisfactory or better in PPRs. Implementation progress was rated satisfactory in 88% of loans, and impact and outcomes were satisfactory for 96% of loans. The proportion of projects “at risk” was about 9%.

Technical Assistance Grants:

• At the end of 2007, the TA portfolio consisted of 898 ongoing TA operations approved for a total of $877.7 million.
• The composition of the portfolio by modality has changed little over the last 5 years, with advisory TA accounting for, on average, about 53% followed by regional TA with 25% and project preparatory TA with 22%. However, there was an alignment with the sector priorities set by ADB’s medium-term strategy II 2006-2008. There were more energy and multisector TA operations than before, and the share of TA resources allocated to the agriculture and natural resources sector decreased.
• The primary sources for TA have been ADB’s Technical Assistance Special Fund and the Japan Special Fund. In addition, a number of trust funds have been established with ADB by bilateral and other agencies to earmark TA resources for areas of special interest. Trust funds are now a major source of TA funding (41% in 2007).

Grant Portfolio:

• By the end of 2007, ADB had administered 252 operations funded by grants, with funds coming from 20 different sources. Thirty-nine grant projects in 16 developing member countries (DMCs) for $672.7 million were approved in 2007.
• The largest contributors to the grant portfolio were the ADF IX (31.7%), Asian Tsunami Fund (17.4%), DFID (9.7%), Netherlands (9.2%), Japan Fund for Poverty Reduction (8.0%), and European Commission (5.9%).
• Agriculture and natural resources; multisector; and health, nutrition, and social protection were the leading sectors in terms of number of grants and collectively accounted for 72% of all grants. This is the reverse of the loan portfolio.
• Twenty-three countries have received grants from ADB.
• Grants were included in ADB’s PPR database, starting in September 2007. Of the 98 grant projects being monitored as of the end of 2007, three were rated highly satisfactory, 94 satisfactory, one partly satisfactory, and one unsatisfactory.

Private Sector Investments:

• More than 50% of the total approved private sector operations transactions since the start of ADB’s private sector operations in 1983 occurred during 2003-2007. By the end of 2007, ADB had approved 223 private sector investments in 20 DMCs spread across all five of ADB’s regions, plus 45 regional investments. The corresponding net commitments totaled $7,633 million, an increase of 16% over 2006.
• ADB’s total private sector portfolio exposure reached an all-time record of $3,036 million at the end of 2007—an increase of 79% over 2 years from $1,692 million at the end of 2005. The portfolio exposure was 45% in infrastructure; 36% in the financial sector; 16% in funds and capital markets; and 3% in agriculture, manufacturing, and other projects.
• During 2007, private sector investments worth $1,716 million were approved for 26 companies in 13 DMCs, plus one regional company.
• At year-end 2007, Private Sector Operations Department’s portfolio of investments was performing better than a year earlier.
• From 2006 to 2007, the number of companies in arrears decreased from five to three and the arrears in loan payments decreased from $40.3 million to $17.8 million.

Key Issues

• Delays in Project Implementation. A comparison of expected and actual implementation periods suggests that delays in project implementation are the rule, rather than exception, for ADB’s sovereign lending operations. Implementation periods—planned and actual—have hardly changed over time, suggesting that delays are predictable, which in turn should enable ADB and its PPR system to address the delay problem better. Average project delays have historically been around almost 2 years, this means almost 40% of the intended project duration of almost 5 years on average.
• Project Implementation Status Monitoring. Some improvements could be made to ADB’s internal reporting system — the PPR — with renewed focus in training on PPR reporting of the project implementation status and more serious quality control.
• Covenant Monitoring. Regular checks on compliance with covenants through the PPR improves due diligence in project management as well as monitoring project-related governance in sectors, countries, and modalities.
• "At Risk" and Potential Problem Monitoring. A number of indicators in the PPR should be clarified as these are often misunderstood or leave opportunities for interpretation.
• Quality of DMFs. OED has rated a sample of DMFs for both loan projects and TA since 2000. The ratings arrived at for DMFs of 2006 and 2007 are lower on average than those reported for DMFs of 2004 and 2005.
• Post-Project Completion Results Monitoring. Currently there is no regular and comprehensive monitoring of outputs and outcomes of ADB-supported interventions after their completion. This report recommends that ADB consider promoting the monitoring of results of individual interventions for a period of 3–5 years after their completion.

Recommendations

• Use more realistic implementation period in project design. Projects should plan for more realistic implementation periods. Schedules should provide for a start-up period (say 6 months or more), and a post-effectiveness time contingency based on experience of implementation delays in the relevant country and sector.
• Improve the PPR system. Revamp the PPR as part of the P3M initiative, drawing on the findings of this report, including the following: (i) refine and supplement the set of indicators for project performance monitoring and measurement in the PPR; (ii) introduce a new portfolio health indicator, separate from the "at risk" indicator; (iii) introduce work plans and work plan-based progress reports in the PPR.
• Strengthen the DMF for projects and programs to take into account country level and ADB-wide result frameworks and related reporting requirements. This may require a revision of the DMF guidelines.
• Introduce a development results monitoring system for the post-project completion period. ADB should consider monitoring these across the board, starting on pilot basis in selected DMCs for 3–5 years after project completion.