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Feedback The feedback mechanism is a crucial part of the evaluation system. It refers to the dynamic process of presenting and disseminating evaluation information and ensuring its application in new or existing projects and development activities. The usefulness of operations evaluation depends on the effectiveness of applying the findings and lessons of experience to improve new or existing projects and development activities. Lessons of experience can be applied at different stages of the project cycle, for example, to select a suitable project at the identification stage, improve the design of new projects at preparation, minimize or avoid problems during implementation of ongoing projects, and enhance the performance of completed projects during the operational stage. By providing an accessible track record of the performance of completed projects, evaluation feedback also serves to enhance the organization’s accountability and transparency.
The Operations Evaluation Department (OED) plays an important role in promoting the effectiveness of the feedback process. OED is directly responsible for disseminating evaluation findings to audiences within and outside ADB. The dissemination mechanisms have been gradually modified, expanded, and institutionalized to facilitate the communication of the results of evaluation work to users. The key dissemination mechanisms used by OED include
circulating evaluation reports, such as project/program performance audit reports, technical assistance performance audit reports, impact evaluation studies, reevaluation studies, special studies, and country assistance program evaluations to the Board of Directors, ADB departments and offices, executing agencies, and government agencies; preparing the annual review of evaluation activities, which highlights the major findings of evaluation reports and analyzes issues and recom-mendations relevant to ADB’s operations; maintaining a computerized evaluation information system for the storage and retrieval of all operations evaluation information, which can be made accessible on-line to all ADB staff; organizing feedback workshops to discuss and exchange views with operational staff on important issues arising from operations evaluation findings; preparing digests of evaluation studies in various sectors that provide a summary of issues, lessons, major findings, and conclusion; and developing a project performance management system, which improves the benefit monitoring and evaluation system.
ADB has adopted certain mechanisms that strengthen the feedback process to encourage the application of evaluation results:
Management’s instructions are issued, requiring evaluation findings to be taken into account in formulating country operational strategies and programs, and in designing new projects; OED provides commentary on operational documents, such as the project brief, report and recommendation of the President, country strategy and program, and technical assistance report, and participation in project processing meetings; and a high-level Management Committee on Evaluation Findings was established to reinforce the linkage between ADB’s evaluation staff and senior management.
OED subjects roughly half of all project/program completion reports completed each year to an in-depth review to strengthen and reinforce self-evaluation. OED also monitors and reports on the actions recommended in evaluation studies to determine if they are being followed.
(See also Corporate Planning; and Performance Evaluation and Development Impact) FIJ Fiji Islands, Republic of the Financial Management ADB borrows and lends prudently. It maintains adequate net income, liquidity, and reserves; monitors the creditworthiness of borrowers; and requires borrowers to justify thoroughly the economic, financial, and technical viability of their projects for which they seek ADB loans. As required in its Charter, ADB’s loans, equity investments, and guarantees do not exceed its paid-in and callable capital, plus its ordinary reserve and surplus.
(See also Information) Financial Resources The financial resources of ADB consist of ordinary capital resources comprising subscribed capital, reserve and surplus, and funds raised through borrowings; and Special Funds made up largely of contributions from members for ADB’s concessional lending and technical assistance activities.
(See also Financial Management; and Financial Sector) Financial Risk Management In undertaking its development banking operations, ADB assumes a variety of financial risks. These include credit, commercial, and market risks (interest rate and foreign exchange). ADB has established a risk management infrastructure to ensure that the risks associated with its activities are fully identified, measured, monitored, and managed. Guidelines and constraints relating to the assumption of credit, commercial, and market risks are established within the parameters of various policy and operational documents. The Charter sets the broad policy objectives relating to ADB’s operations. General policy guidelines relating to risk assumption and management are articulated in several policy documents approved by the Board of Directors. These include ADB’s Income and Reserves Policy, Liquidity Policy, and Investment Authority. At the operational level, the Office of the President; Office of the Vice-President, Finance and Administration; and Office of the Treasurer establish specific guidelines relating to the assumption of risk in ADB’s financial operations.
(See also Credit Risk; Overdue and Nonperforming Loans; and Risk Management Committee) Financial Sector ADB’s operations in the financial sector are designed to promote market-based financial systems capable of mobilizing and allocating financial resources in an efficient and effective manner. Key elements of ADB’s operational policy in the financial sector include assisting developing member countries (DMCs) in
building a financially sound banking subsector, which includes promoting commercialization and competition in the subsector, improving the credit analysis of banks, introducing international standards to improve the capital adequacy of banks, and enhancing banking supervision; strengthening nonbank financial institutions (NBFIs) and, in particular, developing adequate legal frameworks to efficiently operate and supervise NBFIs, including credit cooperatives, trust and investment corporations, leasing and finance companies, venture capital firms, insurance companies, pension, and mutual funds; and promote the development of institutional investors by liberalizing the fund management industry; and developing and deepening capital markets—both equity markets and markets for long-term debt—to improve allocative efficiency through supporting necessary legal, regulatory, and institutional reforms. In support of developing domestic bond markets, ADB’s operations focus on extending benchmark yields, and on strengthening the market infrastructure, including clearing and settlement facilities and improving market transparency and comparability of financial information, particularly information related to publicly traded securities.
ADB’s operations in the sector closely reflect the differences in the levels of development among DMCs and, consequently, the variety of demands that are being placed on domestic financial systems. Thus, in the transition economies, where the principal shortcoming is the absence of basic banking skills and financial infrastructure, ADB’s operations focus on developing the banking system, with an emphasis on transferring basic banking skills while upgrading banking regulation and supervision within the context of market-based approaches. In market-based economies with financial sectors that have been dominated by public sector banks, for example in most parts of South Asia, the focus is more on deregulation while enhancing prudential and regulatory mechanisms, as well as information disclosure and corporate governance. In the more sophisticated financial sectors of Asia, ADB’s operations are directed at developing capital markets, principally but not exclusively, to facilitate the long-term domestic debt financing that is required to meet the region’s rapidly growing needs for infrastructure. Here, too, a strong emphasis is placed on regulating financial markets, although the weight of the emphasis is placed on developing self-regulatory mechanisms.
Underpinning ADB’s overall assistance to DMCs in the financial sector is the recognition of the crucial role played by the sector in promoting the allocation of saving to the most productive investments. Improved allocation of savings promotes increased growth and still higher incomes and savings. Under a regulatory framework that promotes market-based provision of financial services, the competition within the sector also helps ensure efficiency with reduced intermediation costs. Such a financial system tends to be more flexible and resilient when confronted with domestic and external shocks, and thus contributes to macroeconomic stability.
(See also Capital and Financial Markets; Infrastructure, Energy and Financial Sectors Departments (East and West); and Private Sector Support) Fisheries Sector Policy ADB’s operations in the fisheries sector are based on three basic principles: efficiency in developing and managing aquatic resources, equity in balancing the interests of competing resource users, and sustainability in conserving and using fisheries and aquatic resources.
The policy explicitly recognizes the potential of the fisheries sector for reducing poverty.
ADB’s fisheries investments cover four areas:
policy support for developing long-term sustainable fisheries management; capacity building for development and resource management; creating and strengthening productive capacity, infrastructure, and services; and regional cooperation.
Specifically, a participatory approach to project design and implementation is adopted to ensure the acceptability of projects by their target beneficiaries. Projects are designed in a holistic manner, incorporating environmental, social, and other costs and benefits not included in conventional cost-benefit analyses. Forestry Sector Policy The ADB vision for forestry in Asia encapsulates the idea that forests are to be managed on behalf of mankind to provide essential goods and services, a healthy and safe environment, and a habitat for all creatures that depend on forests for their existence. The policy for the forestry sector has evolved from emphasis on the forest and the need to protect it toward a determination of the more complete role forests can play in economic development and poverty reduction. The three imperatives, protection, production, and participation continue to underpin ADB's operations in this sector. Guiding principles are that the multiple and complementary uses of forests for their economic, environmental, and social values should be considered; the renewable character of forest resources should be capitalized on; forest development strategies should recognize and support the identity, culture, and rights of forest-dwelling communities and involve the recent encroacher in a constructive way; and the vital role of forests in maintaining biodiversity, acting as a global carbon storage, reducing air pollution, and mitigating global warming should be recognized.
The policy identifies several priority areas for ADB's operations: improving developing member country (DMC) policy and regulatory frameworks for forestry development and management; supporting research; making greater use of public consultation in forestry development and empowerment of forest-dwelling communities; developing investment strategies; and raising the capability of forestry agencies for sector analysis, participation and community forestry, planning, regulation, enforcement, and monitoring.
The management of forests increasingly aims to achieve the most appropriate balance between protection of habitat for the conservation of genetic diversity, wildlife, soil, and water and the production and extraction of all potentially useful products for human benefit. In natural and semi-natural forests, the emphasis will be more on habitat and environmental function, without excluding the role of production, while for plantations and cultivated trees the reverse will apply. In recognition of the rapidly increasing and potentially beneficial interaction of forestry with other sectors, forests will also be managed in support of agriculture, improved water resources management, tourism and recreation, and the sequestration of carbon.
ADB's Long-Term Strategic Framework, approved in 2001, defines three core areas of intervention in ADB's efforts to reduce poverty: sustainable economic growth, inclusive social development, and improved governance. ADB's forestry policy therefore aims to support DMC governments in their efforts to maximize the contribution of forestry toward poverty reduction. FSM Micronesia, Federated States
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