ADF X Donors' Meeting
Opening Remarks by
Haruhiko Kuroda
President
Asian Development Bank
13 September 2007
Sydney, Australia
Ladies and gentlemen,
Welcome to this first meeting of the ADF X replenishment negotiations. Let me also take this opportunity to thank the Government of Australia for their gracious hospitality and for inviting us to the beautiful city of Sydney. It is always a pleasure to visit this global cultural hub, which showcases the multi-cultural society of our Asia and Pacific region for the rest of the world.
These are exciting times for our region, a region of great dynamism, full of hope and rising aspirations. But for many, these are also very challenging times. Some of these challenges stem from the great diversity in our region, the enormous variation across countries in their size, their levels of development, their rates of growth, their geography, their demography, their natural endowments. The list is endless, but we can simplify and stylize this diversity into what has been described as the two faces of Asia. You have here some of the world's fastest growing countries, expanding at near double digit rates or even faster, and some of them emerging as global economic powers. And on the opposite end of the spectrum, we see the high incidence of poverty and the circumstances of our ADF countries. These countries continue to suffer from low income levels. Many are growing slowly. Some are in post-conflict situations and facing vast challenges. Others are performing weakly and require special attention. All these countries are urgently in need of concessional assistance.
We at ADB are sometimes asked, is ADB changing course? Is it turning away from its mission of poverty alleviation? For an answer, we have only to look at some realities on the ground. Over half a billion people still suffer extreme poverty, at less than $1 a day. Another one billion live on the edge on $2 a day, where the slightest economic shock or a natural disaster could tip them back into the abyss of poverty.
In the ADF countries, some 100 million people are living in extreme poverty, and additional 300 million live on less than $2 a day. Many of these economies are growing at relatively modest rates of 3-4% or less. At this rate, they will still be relatively poor and eligible for concessional ADF assistance, even in 2020. Under these circumstances, this is a time for redoubling our efforts to fight poverty, rather than weakening it, especially in the ADF countries. While the large scale prevalence of income poverty in the region is - happily - declining quite rapidly, the outlook for non-income poverty is more somber. For many of the non-income MDGs the region is expected to fall far short of the targets set for 2015.
The countries of the region must therefore intensify their efforts to alleviate poverty, and they need the utmost support from all of us in the international development community. Against this background, I must again reiterate the request I made to you during the annual meeting in Kyoto last May for a replenishment that will give us a significantly enlarged ADF X. This is the last replenishment period during which we can deliver projects that could contribute toward the achievement of the MDGs in 2015.
Official Development Assistance or ODA is an important component of the development effort. But the share of total ODA flowing to the Asia-Pacific region has been declining. In absolute terms, it is too modest, at only $20 per head per year. In the poorest 'ADF-only' countries, ODA accounts for as much as 40% of development expenditure. Clearly, a significant enhancement is necessary to help boost growth rates through increased investment, ensure access to social services and jobs, and grow in an environmentally sustainable manner. Decisions made today will shape the future for these countries.
This is why the ADF is more relevant than ever. Beyond your direct bilateral assistance to these countries, your investment in the ADF replenishment is an investment in our shared vision of the region free of poverty.
Diligent management of your past contributions to this fund over many years has now created a sizeable pool of reflows and other internal resources. Our Treasury department estimates that these could amount to as much as $6.5 billion for the ADF X period. Adding that to a volume of new donor contribution could indeed give us a substantially enlarged ADF X.
More importantly, I believe our operational track record in deploying ADF assistance is good. Project success rates have been rising steadily and evidence shows that those successful projects are resulting in real impacts on the ground. Among the reports we have prepared for this meeting, you will read about household incomes of the rural poor in rising by 30% due to an ADF road project in Cambodia; women benefiting from new income opportunities through a livestock project in Nepal; and over 400,000 Mongolian villagers have seen significant improvements in their health status thanks to your generosity through ADF. And there are other examples too numerous to count of how ADF projects have made a solid contribution to individual country efforts to achieve the MDGs. Moreover, ADB has been able to deliver them cost effectively. Our performance ratios such as the administrative cost of projects approvals, disbursements and other such indicators compare very favorably with other available benchmarks in this field.
This brings me to the question of ADB's institutional effectiveness. As you know, internal reform has been a major priority in ADB for several years now. I am happy to report that a great deal has already been accomplished in many areas. These include organizational restructuring, the introduction of new products and processes under the Innovation and Efficiency initiative, mainstreaming Management for Development Results, and ongoing implementation of the Human Resources Strategy. The task is by no means complete and much remains to be done. You will have an opportunity to review our progress in greater detail during your discussions later today. For my part, let me simply say that the consolidation of reforms to further strengthen ADB's institutional effectiveness remains a top priority for the management of ADB.
Finally, I wish to refer to the relationship between ADF X and the ongoing review of the Long-Term Strategic Framework or LTSF. Many of you have enquired about this. These two faces of Asia, to which I referred earlier, do pose a unique challenge for ADB. Both the rapidly developing countries and the ADF countries have very diverse development needs. All, of course, remain our important clients. While the ADF can be exclusively tailored to the needs of the ADF countries, the LTSF must have a broader reach that accommodates the needs of both groups of countries.
Similarly, while the ADF X replenishment has a medium term horizon of four years ending in 2012, the LTSF has a much longer time perspective going up to around 2020. Poverty is a multifaceted phenomenon. This is recognized in ADB's original Poverty Reduction Strategy adopted in 1999. During the next 10 to 15 years the challenges of poverty will not disappear, but they will certainly evolve in form and dimension. Also, during the next decade we will face new challenges and opportunities - some of which are already emerging as identified by the Eminent Persons Group (EPG) in their recent report. The LTSF must address these new dimensions of poverty and rising inequality, as well as the emerging challenges of climate change and other environmental issues, and globalization and regional integration.
Work on the LTSF Review and discussions on the role and priorities of ADF X have just begun. Through these parallel processes, we will ensure that the LTSF and ADF X are consistent. In the past several weeks, we have consulted with our shareholders and other stakeholders on the LTSF Review. This is only the beginning of a conversation about the future directions of an institution of great importance to all of us and for the region as a whole. In the weeks and months ahead, I hope that this conversation will lead us to a long term strategy for ADB that will ensure its continuing relevance to the region, its responsiveness and its unwavering commitment to achieving results for the region's poor.
Thank you.
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