P
Pacific Developing Member Countries The Pacific developing member countries (DMCs) of ADB are Cook Islands, Fiji Islands, Kiribati, Marshall Islands, Federated States of Micronesia, Nauru, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu.
ADB plays an important role in financing development projects in the Pacific DMCs to maximize the use of their human and natural resources in achieving sustainable development.
(See also Office of Pacific Operations; Pacific Stretegy) Pacific Strategy ADB’s Pacific strategy focuses on helping Pacific developing countries streamline their public sectors and boost private sector investment.
The new strategy responds to five key challenges in the Pacific island nations:
vulnerability because of remote location and a narrow resource base, and susceptibility to natural disasters and global markets; political instability and poor governance; limited skilled human resources; sociocultural factors that affect politics and productivity; and inadequate physical, technological, and financial sector infrastructure for sustainable growth.
ADB will adopt four strategic objectives: continuing support for economic, governance, and public sector reform; promoting private sector development; encouraging a more active role for women in social, economic, and political spheres; and supporting environmental management.
In addition, ADB will support upgrading capacity for governance, economic management, and public services; improving physical, and information and communication technology infrastructure development; strengthening financial sector management; and enhancing the role of civil society.
ADB will apply its overall strategy selectively as follows.
In the countries that are resource-rich but have poor growth and high population rates, such as Papua New Guinea, Solomon Islands, and Vanuatu, the strategy will focus on governance, public sector reform, and poverty reduction through social and infrastructure investments. In the more economically advanced countries with a higher skills base, moderate resource potential, and relatively low poverty such as Cook Islands, Fiji Islands, Federated States of Micronesia, Samoa, and Tonga, the strategy will promote private sector growth through policy reform, and physical and financial sector strengthening. In the atoll economies of Kiribati, Marshall Islands, Nauru, and Tuvalu, which are severely disadvantaged by their smallness, isolation, and weak resource base, the strategy is to establish and expand trust funds to support the sustainable financing of basic services. It is also to support niche markets for tourism and sustainable use of marine resources.
ADB’s strategy also underscores the importance of regional cooperation to reap collectively the benefits of economies of scale. ADB is currently supporting regional cooperation in fisheries, air transport, financial sector restructuring (including addressing money laundering), public sector management, and governance.
In addressing these challenges, ADB is working closely with other donors, particularly Australia, European Union, Japan, New Zealand, United Kingdom, United States, and other multilaterals.
(See also Pacific Developing Member Countries)
PAK Pakistan Pakistan Resident Mission (See
Departments and Offices.)
Parallel Cofinancing Parallel cofinancing is a funding arrangement in which a project is divided into specific and identifiable packages of components. Each package is financed separately, either by ADB or by cofinanciers. This mode is often used when the cofinanciers have procurement policies and procedures different from those of ADB and administer their loans themselves. Both tied and untied funds can be used. Partial Credit Guarantee Under the Partial Credit Guarantee (PCG), ADB provides comprehensive coverage to commercial cofinanciers of all commercial and political risks for a specified portion of a borrower's debt service obligation. PCGs can be used to support commercial cofinancing of both public and private sector projects. Depending on the requirements of the project, the PCG can be used to guarantee a variety of debt instruments. For example, it can be used to guarantee part of the debt service under a syndicated loan, or under a floating rate note or bond, provided these are issued for financing the ADB-assisted project
PCGs have generally been used to guarantee debt service during the later maturities of a commercial cofinancing. This may be appropriate when lenders are not willing or able to provide a financing tenor long enough to match the cash flow of a project. Alternatively, PCGs can guarantee a portion of principal and interest payments payable throughout the term of a borrowing.
Consistent with ADB's policy of risk-sharing with cofinanciers, the PCG is designed to cover that portion of the debt service that the cofinanciers are not prepared to take, leaving the remaining portion to the cofinanciers on an uncovered basis.
(See also Cofinancing; and Guarantee) Participatory Development Participation is a process that empowers people and the institutions with which they interact to influence and share control over decisions that are made about their development and the resources involved. The sense of ownership of activities that participants develop as a result of participating in planning usually motivates their sustained involvement and thus the long-term success of investments. Problems that might arise during implementation, where stakeholder interests are not identified and addressed before commitments to development are made, are also averted. Local, regional, and national civil society, private sector, and government organizations are all to be engaged as partners in development. Social capital—the diverse, trust-based, and normative-reinforced networks among people in society, which promotes social cohesion—is also fostered.
(See also Broad-Based Development Institution; Fisheries Sector Policy; and Poverty Reduction Strategy) Partnership Agreement The Partnership Agreement formalizes the antipoverty goals that a developing member country (DMC) government and ADB agree to pursue jointly. The goals are described as quantitative and/or qualitative improvements over the status of selected indicators at the time of signing the agreement. It is based on ADB’s country strategy and program and summarizes the long-term vision, medium-term goals, and short-term targets for poverty reduction. The agreement is used to monitor whether the joint DMC government-ADB strategy is attaining the goals it set out to reach.
(See also Poverty Reduction Strategy; and Strategic Planning) PCR project completion report PED (See
Programs Departments (East and West).)
People's Republic of China Resident Mission (See
Departments and Offices.)
Performance Evaluation and Development Impact The Operations Evaluation Department (OED) supports ADB’s vision of a poverty-free region by pursuing excellence and independence in evaluation. In addition to its traditional focus on measuring the performance of completed projects, programs, and technical assistance, OED has intensified its work on
preparing in-depth studies of particular thematic issues; evaluating the effectiveness of ADB’s operations, practices, and procedures; providing real-time feedback on ongoing operations; monitoring and reporting on actions taken by ADB and its executing agencies in response to OED recommendations; building evaluation capacity within and outside ADB to enhance self-evaluation; and coordinating closely with multilateral and bilateral agencies on evaluation methodology.
The revised Guidelines for the Preparation of Project Performance Audit Reports, approved in 2000, is a response to changes in ADB operations since 1992 and to the common concerns of funding agencies that have implications for operations evaluation. The new edition of the guidelines includes a substantial revision of the criteria for rating project success, reflecting initiatives by the Evaluation Cooperation Group to harmonize evaluation practices and standards across all multilateral development banks. The new scheme is also broadly consistent with the principles of the Development Assistance Committee of the Organisation for Economic Cooperation and Development. A key feature of the new guidelines is the use of a four-category rating system—highly successful, successful, partly successful, and unsuccessful—instead of the three overall assessment categories of generally successful, partly successful, and unsuccessful.
(See also Feedback) PHCO (See
Philippines Country Office.)
PHI Philippines Philippines Country Office (See
Departments and Offices.)
PIC (See
Public Information Center.)
Planning Process ADB’s planning process integrates its increasing scope of development assistance services with its organizational capacity to deliver those services. ADB regularly updates the strategic framework within which it plans country-specific operations, reviews and adjusts policies in the context of experience and emerging needs of its developing member countries (DMCs), and develops operational work plans based on these strategies and policies. The planning process establishes long-term, medium-term, and annual business objectives; sets overall and country-specific operational priorities; and, after achieving agreement both with client DMCs and within ADB, establishes the milestones and road maps to follow in implementing its programs.
In 1999 and 2000, ADB undertook a major strategic reorientation to support better the challenges confronting its DMCs. It redesigned its business processes, placing greater emphasis on individual country operations; expanded stakeholder participation; and adopted a selective and focused approach to its program in each DMC. Also in 2000, extensive work was undertaken to develop a long-term strategic framework to guide ADB’s work from 2001 to 2015. The focus will be on achieving sustainable economic growth, inclusive social development, and good governance. Within this broad framework, ADB will work with each DMC to develop an individual country strategy and program with the objective of reducing poverty, and a three-year rolling operational program to translate the strategy into action. These country-based plans will form the basis for ADB’s overall three-year rolling work program, which in turn will provide the framework for the annual administrative budget.
(See also Corporate Planning; Country Assistance Plan; and Environmental Assessment) PNG Papua New Guinea Policy Agenda ADB’s policy agenda encompasses a wide range of issues, including the regulatory and legal frameworks for growth, trade and investment regimes, relative roles of the private and public sectors, pricing and tariffs, cost recovery, good governance and anticorruption, decentralization, beneficiary participation, social and environmental issues, and regional cooperation. Policy Dialogue A major part of ADB’s contribution, aside from lending, is its role in policy formulation and the reform process. Policy dialogue—designed to promote an environment conducive to sustainable economic growth, development, and poverty reduction—is an important element of ADB’s operations in its developing member countries (DMCs) and has been increasingly focused on broad macroeconomic and sector concerns and crosscutting issues.
ADB’s strength lies in its ability to provide technical assistance and advice on policies tailored to the needs of each DMC, coordinated with financial support and implementation—assistance. Its involvement in policy dialogue occurs at four levels—national, sectoral, institutional, and project. The extent of ADB involvement in policy dialogue varies, but it seeks to ensure complementarity of views and approaches to be established among ADB, its DMCs, and other lending institutions. To sustain policy dialogue, ADB devotes substantial resources to economic and sector work.
(See also Asian Currency Crisis Support Facility; Country Operational Strategy Study; Energy 2000; Nongovernment Organization Center; and Resident Mission Policy) Policy Papers Agriculture and Natural Resource Research
Anticorruption
Cofinancing
Confidentiality and Disclosure of Information
Cooperation Between ADB and Nongovernment Organizations
Energy Sector
Fisheries Sector
Forestry Sector
Gender and Development
Governance
Graduation Policy
Health Sector
Indigenous Peoples
Information Policy and Strategy
Inspection Function
Involuntary Resettlement
Microfinance Development
Private Sector Policy
Resident Mission
Water Policy Political Risk Guarantee The Political Risk Guarantee (PRG) facilitates commercial cofinancing of ADB-assisted projects by guaranteeing payment of all or part of the project's debt service against specific political (or sovereign) risks. PRG coverage can include any combination of the following:
currency inconvertibility and/or nontransfer (CI), confiscation, expropriation, nationalization, or deprivation of project assets (CEND), political violence, such as strikes or civil disturbances, that negatively affects the project (Political Violence), and breach of contract, such as nondelivery by state-owned entities of inputs (e.g., fuel supplies) or nonpayment for outputs (e.g., power or water) (Breach of Contract).
PRGs are primarily designed to facilitate private sector development, either through public or private sector projects.
PRGs are well suited to cases in which commercial lenders are prepared to take on the commercial (or credit) risks of a project, but require assistance from a multilateral institution or private insurer in mitigating political risks. Since the political risks covered by a PRG relate to outcomes under the direct or indirect control of the host government, the government may provide a counterguarantee (or indemnity) to ADB. This provides further assurance to cofinanciers and ADB of the host government's commitment to the project.
(See also Guarantee) Poverty Classification of Projects/Programs Effective 9 November 1999, ADB's strategic objectives (reducing poverty, promoting economic growth, improving the status of women, protecting the environment, and developing human resources) were redirected toward poverty reduction. ADB's policy shift has affected every aspect and level of its operations and caused a readjustment in ADB's project focus so that at least 40 percent of all public sector lending will be for poverty interventions.
The difference between poverty interventions and other projects and programs lies in the manner in which they contribute to poverty reduction. Whereas poverty interventions would have clear poverty reduction impacts, in the case of other ADB interventions, the impacts on poverty, though real, may not be immediately obvious. This difference—one of degree rather than of kind—provides the basis for the poverty classification. Only those that benefit the poor disproportionately will be classified as poverty interventions. Once a project/program is classified as poverty intervention, it might fall into the subcategory of core poverty intervention, if the majority of beneficiaries (i.e., 50 percent or more) is below the poverty line and reap the majority of benefits.
(See also Long-Term Strategic Framework; and Loan Projects)
Poverty Reduction The magnitude of the task of addressing poverty in the Asian and Pacific region is immense. Poverty remains a serious condition for what now is approaching one billion people, many of whom live on less than one dollar a day. The financial crisis of 1997 in several countries in the region has risked the social welfare gains that these countries had attained previously. With economic recovery, steps are being taken to improve the lives of those suffering from the economic shocks, but more needs to be done to sustain and further poverty reduction goals in the region.
Poverty reduction is ADB’s central goal. We work toward realizing poverty reduction through targeted assistance that will improve access to services such as water and sanitation, health care, education, and family planning, along with broader initiatives focused on crosscutting concerns, such as gender equity and environmental protection and improvement. But, these services are not sufficient to reduce poverty, because economic growth is an essential engine to generate opportunities for employment and income generation in which the poor can participate. Therefore, ADB assists in creating the right policy environment that will stimulate investments and provides resources for investments in infrastructure.
To generate the highest poverty reduction impact, the mix of investments in social service delivery and infrastructure needs to be determined for each country, depending on opportunities for and obstacles to poverty reduction. ADB's poverty analyses generate an understanding of these opportunities and obstacles and help develop an effective antipoverty strategy, including policy measures and reforms, investments, and technical assistance.
Target groups of poverty reduction include the landless, small farmers, upland communities, the urban and rural poor, and disadvantaged groups in urban and rural areas. Operational areas that have the most direct bearing on poverty reduction include rural development, microfinance, social service delivery, education, urban development, irrigation, and disaster rehabilitation. However, appropriate policy measures and public expenditure management, which indirectly support poverty reduction, are equally important and would receive ADB assistance. Poverty issues are central concerns in both country programming processes as well as in loan and technical assistance activities.
(See also Country Operational Strategy; Good Governance; Human Development; Japan Fund for Poverty Reduction; Long-Term Strategic Framework; Partnership Agreement; and Poverty Reduction Strategy) Poverty Reduction Strategy ADB approved a comprehensive Poverty Reduction Strategy in 1999 that is the driving force for ADB’s Long-Term Strategic Framework. The strategy is based on three pillars: pro-poor, sustainable economic growth; social development; and good governance. The starting point for reducing poverty is a comprehensive country poverty analysis. Key stakeholders discuss the findings of the analysis in a participatory high-level forum. The outcome of these discussions forms the basis of ADB’s new country operational strategies. A partnership agreement between the government and ADB then identifies operations for helping to reduce poverty in each country.
Pro-poor sustainable economic growth can reduce poverty by generating income among the poor and fostering equitable development with, and for, the poor. Social development must accompany pro-poor economic growth if poverty is to be reduced. It requires ensuring comprehensive social protection; providing access to basic necessities such as education, primary health care, and water and sanitation; and promoting social institutions and the social capital of vulnerable groups. Good governance for poverty reduction means public policies that encourage the inclusion of the poor and other vulnerable groups in the development process. This involves pro-poor public expenditures; social services that are nearer to the users and have more relevance for the poor; policies that generate equity and access to socioeconomic assets; and enhanced social relations—including gender equity and the improved status of women.
All future ADB projects will be reoriented to have more impact on the poor and wherever possible, infrastructure projects will be located in poverty stricken areas, wherever possible. Support for small, medium, and microenterprises will also increase and emphasis will be given to projects that improve essential services to the poor, especially vulnerable groups including women, children, and ethnic minorities.
Projects intended to benefit the poor will account for 40 percent of ADB’s lending volume in year 2001. ADB is also designing poverty reducing interventions in its member countries and has launched country-specific poverty analyses, in consultation with governments, stakeholders, and other funding agencies. Based on these analyses, ADB is committed to entering into partnership agreements with member countries for poverty reduction. Partnership agreements with Bangladesh, Indonesia, and Mongolia have already been signed and ADB aims to consummate such agreements with most developing member countries by the end 2001.
(See also Strategy and Policy Department; Good Governance; Governance and Capacity Building; LTSF; and Priorities) Poverty Reduction Unit
(See Strategy and Policy Department) PPAR project/program performance audit report PRC China, People's Republic of President The President of ADB is elected by the Board of Governors for a five-year term and is Chairperson of the Board of Directors. The President, assisted by three Vice-Presidents, conducts the business of ADB.
Priorities ADB’s projects and programs, whether poverty interventions or otherwise, focus on one or more of the following priorities: economic growth, human development, gender and development, good governance, environmental protection, private sector development, and regional cooperation.
Each is related directly to the three pillars of the poverty reduction strategy: pro-poor, sustainable economic growth; social development; and good governance. Other crosscutting priorities are law and policy reform, and social dimensions of development.
(See also Asian Development Fund; Cooperation with Nongovernment Organizations; Country Operational Strategy; Long-Term Strategic Framework; Nongovernment Organizations; Project Identification; Social Dimensions of Development; and Thematic Priorities)
Private Sector Development A strong and dynamic private sector is crucial to long-term economic growth, a necessary condition for sustained poverty reduction. Private enterprise is by far the largest source of employment and investment. Economic growth also increases the tax base that enables governments, acting on good governance principles, to finance labor market programs and provide increasing levels of basic social services (particularly health and education services) which, in turn, improve the ability of the poor to increase their earning capacity. Transparency and accountability in government are also crucial in ensuring that social and infrastructure expenditures are effective and can reach the poor.
The private sector can affect poverty in other ways. Private sector investment in infrastructure projects that are properly regulated can relieve pressure on public budgets and enable governments to redirect more resources to social spending. Private sector participation in infrastructure can also improve the delivery and efficiency of essential services, leading to a more equitable distribution of benefits to all, including the poor. Efficiency gains from privatized utilities can benefit all income classes.
(See also Long-Term Strategic Framework; Priorities; Private Sector Development Strategy; and Private Sector Policy) Private Sector Development Strategy In March 2000, ADB’s Board of Directors unveiled a new private sector development strategy aimed at strengthening the role of the private sector as the engine of growth in Asia and the Pacific. This is an important challenge to ADB since long-term, rapid growth is necessary to sustain poverty reduction, which is ADB’s overarching goal as a development institution.
The strategy consists of a systematic and coherent framework that will guide ADB’s activities to promote private sector development across the region. It has three major thrusts.
Creating enabling conditions. Through its public sector operations, ADB will help governments of its developing member countries establish the right conditions for business to flourish and an environment conducive to private sector-led growth. It will encourage reforms that spur entrepreneurial development and stimulate domestic and foreign private investment. ADB will help shift the government’s role from owner-producer to facilitator-regulator of private sector activities, ensuring markets work while protecting public interest. This will free public resources for use in basic education, health services, and social safety nets. Generating business opportunities. ADB will systematically scrutinize its public sector activities to ensure that its public sector investments do not crowd out the private sector, and that it makes all possible opportunities to crowd in private sector participation. ADB will take steps to ensure that, in its public sector projects, business opportunities will be generated for the private sector. Catalyzing private investments. Through its Private Sector Group, ADB will continue to provide direct financial assistance to private sector projects that have a development impact and/or demonstration effects. The main focus is on two sectors: infrastructure and finance. ADB is also pursuing “pilot” projects in social sector, such as health and education, and in information technology. ADB’s participation in a project is usually small but it leverages a large amount of funds from commercial sources for the project. ADB’s presence is seen as a source of comfort by other lenders and investors.
Since adopting the strategy, ADB has moved to recruit private sector development specialists and establish a private sector development network, comprising staff from both projects and other operating departments. External consultants have been recruited to prepare a detailed implementation plan; consider resource requirements, and develop a checklist for defining private sector project options; and develop a scorecard for measuring the success of the strategy.
(See also Long-Term Strategic Framework)
Private Sector Group (See
Departments and Offices.)
Private Sector Operations ADB’s private sector operations are intended to help selected private enterprises undertake financially viable projects that have significant economic and developmental merit but need ADB’s participation to attract other lenders and investors and achieve financial closing. ADB provides assistance in the form of loans without government guarantee, equity investments, credit gurantees, and political risk guarantees and helps mobilize domestic and external resources. The growing emphasis placed by DMCs on the role of the private sector in economic development makes direct support for private enterprise a priority for ADB.
(See also Private Sector Group; and Private Sector Support) Private Sector Policy The private sector policy focuses on infrastructure, financial services, capital markets, investment funds and pilot projects in social sectors such as health and education, and in information technology. The policy aims to sharpen the focus of ADB’s private sector operations, and reconfirm the importance of technical assistance and policy advice to improve the environment for private sector development. ADB particularly emphasizes policy, legal, and regulatory reforms; institutional enhancement; and human development. The formulation and implementation of reforms continue to be supported, on a selective basis, through program lending. In the direct financing of private sector projects, the priority is on capital market and infrastructure development. Plans for private sector assistance are dovetailed with country operational strategies and country assistance plans.
(See also Private Sector Development Strategy) Private Sector Support ADB supports the private sector through public sector operations—such as policy environment, physical infrastructure development, and capital market development—and direct assistance to the private sector.
The role of the private sector varies among ADB’s developing member countries (DMCs), but in many DMCs it contributes substantially to the growth of national income, investment, employment, export earnings, and technology transfer. Many DMCs are trying to stimulate private enterprise by limiting or reducing public sector involvement in the economy and by creating an improved policy environment.
ADB sees the private sector as the main vehicle for the economic growth of its DMCs. In this context, a priority objective of ADB’s medium-term planning is to help its DMCs establish a robust environment for private sector growth. This is done mainly through policy discussions and dialogue with DMC governments on various aspects of policy, and the statutory, regulatory, and fiscal frameworks that have a bearing on private sector growth and development.
Since the beginning of its operations, ADB has provided credit lines to selected DMC financial intermediaries for on-lending to small and medium private enterprises by means of government-guaranteed loans. Direct support for the private sector was enhanced in 1983 when an equity investment facility was introduced. This facility allowed ADB to make direct equity investments in private enterprises and financial institutions, and to extend lines of equity to selected financial intermediaries. In 1986, further support was made available to the private sector through loans without government guarantee.
Since 1995, ADB’s nonsovereign private sector operations have been handled by the Private Sector Group. The Infrastructure, Energy and Financial Sectors Departments (East and West) manage government-guaranteed operations in support of the development of the private sector.
(See Private Sector Group; Private Sector Policy; and Private Sector Operations) PRM (See
Pakistan Resident Mission.)
Procurement Domestic Suppliers
Goods for ADB-financed projects are normally procured through international competition under ADB’s procurement guidelines. When a domestic contractor or supplier participates in international competitive bidding and wins a contract, ADB will finance the contract to the same extent as in the case of a foreign supplier or contractor.
To promote the domestic industry of the borrowing countries and to compare bids offering domestically manufactured goods and imported goods on a more equal basis, a margin of preference may be granted under international competitive bidding procedures. Such a preference may also be granted to eligible civil works contractors from ADB’s Group A developing member countries (DMCs). If the borrowing countries want to avail of this scheme, the methods set forth in the loan agreement for evaluating and comparing bids should be indicated in the tender documents.
In appropriate cases, ADB also allows procuring domestically manufactured goods or domestic construction services through local competitive bidding procedures without going through ADB’s normal procedures of international competitive bidding.
ADB finances the foreign exchange component of such procurement. In these cases, ADB, through local competitive bidding procedures (before agreeing to the proposed procurement arrangement), makes an assessment to ensure that it is unlikely that foreign bidders would be interested and that local production or construction facilities are available at reasonable costs, and are efficient and adequate in terms of prompt delivery and quality of works. Specification
The Guidelines for Procurement under Asian Development Bank Loans provides that descriptions contained in specifications should not prescribe brand names, catalog numbers, or types of equipment of a specific manufacturer unless it has been determined that this is necessary to ensure inclusion of certain essential features—in which case the reference is followed by the words “or equal.” Specifications should, as a rule, permit offers of alternative equipment, articles, or materials that have similar characteristics and provide equal performance and quality to those specified, and that sufficient competition can be expected to achieve best prices. Under all circumstances, restrictive specifications of goods and services are to be avoided to provide equal opportunity for all contractors from ADB members.
(See also Bid Evaluation; Business Information; Central Operations Services Office; and Disbursements)
Profits It is ADB's policy to maintain an adequate level of net income to protect its risk-bearing capacity. The two main sources of its net income are its loan assets and its equity capital. Minimum net income requirements in excess of income generated from equity capital are generated from loan assets primarily through changing the lending spread. ADB has consistently generated net income or profits in its ordinary operations since 1968. Program Cluster Approach The Program Cluster Approach (PCA), an extension of the existing program lending modality, consists of alternative ways of “packaging” policy and institution reforms over a longer time frame in a process-oriented approach: chronologically sequenced packaging (over time), vertical packaging (across levels of government), and horizontal packaging (intersectoral). The main criterion for assistance under the PCA would be the need to package in a flexible manner a set of reforms that requires one or more of the following:
a process-oriented approach, follow-through of related policy and institutional actions to ensure sustainability, building up of policy delivery capacity commensurate with the desired policy change, involvement with multiple levels of government with associated differentiation in policy instruments and institutional arrangements across the levels, and application of cross-sectoral strategies to make a development impact.
Program Lending Program lending supports the efforts of developing member countries (DMCs) to improve the policy, institutional, and investment environment of sector development through a lending mechanism that, being quick-disbursing, also helps meet the short-term costs that policy adjustment entails.
ADB’s project lending, as compared with program lending, also seeks to address policy and institutional issues that are relevant to project objectives but cannot readily tackle policy constraints and opportunities that are underlying and sectorwide in nature, or bear upon the links between particular sectors and the macroeconomy. Program lending meets these wider needs.
To take account of experiences in program lending and the changed circumstances in many DMCs, revisions were introduced in ADB’s program lending policies in 1996. Program loans will be used to facilitate and accelerate the adoption of necessary policy reforms. The sector development program approach combines program, project, or sector lending, and technical assistance with a view to addressing sector needs more comprehensively.
(See also Private Sector Policy; Program Cluster Approach; and Sector Development Program)
Programs Departments (East and West) (See
Departments and Offices.)
Project Cycle Once a project is identified by agreement between a government and ADB, it is processed and implemented. The various steps from project identification to completion make up what is known as the project cycle.
Loan Preparation Loan preparation involves justifying the technical feasibility, economic viability, and financial soundness of a project. This preparation phase can be undertaken by the government or any other agency, but ADB can also assist by providing technical assistance grants to the government. Using the grants, ADB hires consultants to undertake a feasibility study of the project. The consultants’ work is closely monitored by ADB staff and the draft final report is reviewed at a meeting attended by representatives of the government, ADB, and the consultants.
Project Examination Project feasibility, as presented in the consultants’ report, is then examined by ADB, first through a fact-finding mission and then through an appraisal mission. The mission teams—in consultation with the government—examine the project’s technical, financial, economic, environmental, marketing, and management aspects and potential social impact. Loan terms and conditions are discussed. Following the examination in the field, the appraisal mission team prepares a report and draws up a draft loan agreement for negotiation.
Loan Negotiations After negotiations with the government, the loan proposal is submitted to ADB’s Board of Directors for approval. The loan agreement is then signed by the ADB President and representatives of the government and the executing agency. The loan takes effect once certain conditions are met.
Project Implementation The project is implemented by the executing agency according to the agreed schedule and procedures. Project consultants are recruited, the detailed engineering design and bidding documents are prepared, machinery and equipment are procured, and civil works are constructed and installed. ADB’s project divisions review the implementation in close coordination with the borrower and the executing agencies. ADB disburses the loan for approved expenditures, as provided in the loan agreement.
Project Completion After the project facilities are completed and commissioned, ADB prepares a project completion report to document the implementation experience. ADB’s Operations Evaluation Department evaluates the formulation and implementation of projects on a selective basis and prepares a project performance audit report containing an assessment of the project’s formulation and implementation; its economic, financial, and social benefits; and its environmental impact.
(See also Operations Evaluation Department; Feedback)
Project Identification ADB resources, compared with the needs of its borrowing members, are limited, requiring ADB to select projects carefully. Before any project is identified for ADB financing, ADB staff review the member’s economy, particularly its poverty situation, and national and sectoral development programs; and determine the prospects for the project’s success. Country programming missions visit developing member countries (DMCs) regularly to discuss topics of mutual interest with government officials and select suitable projects for ADB assistance.
As the levels of economic growth and the priorities for development vary from one DMC to another, ADB tries to select those projects that will most effectively contribute to the economic and social development of the country concerned and have the strongest poverty reduction impact in conformity with the country and ADB-wide strategies.
Once it is confirmed that investment in the project is justified, then ADB evaluates the project. In some cases, especially in the smaller and less-developed DMCs, project identification may require the help of outside experts. If so, ADB can provide technical assistance to a country to help it identify and prepare a project for possible ADB financing.
(See also Project Cycle) Project Implementation Normally, the loan documents allow 90 days for the loan agreement to become effective. The preparatory work for construction (including recruiting consultants, preparing tender documents and detailed designs, procuring equipment, and selecting contractors for construction) may take 6–12 months or longer. Usually, these activities cannot begin until the loan agreement becomes effective. However, certain preliminary steps in procuring goods and selecting consultants can begin at an earlier stage to speed up project implementation. Implementation time generally ranges from two to five years and depends on the type and nature of the project. The progress of project implementation is assessed by ADB review missions, which visit the project at least twice a year throughout the implementation period.
(See also Bid Evaluation; Project Cycle; and Project Performance Management System) Project Management Unit (See
Departments and Offices.)
Project Performance Management System ADB has recently given increased emphasis to improving project quality and development effectiveness through both improving project quality at entry and more effective ongoing project performance management. Since 1999, ADB has progressively introduced what it terms the Project Performance Management System (PPMS), to replace the former benefit monitoring and evaluation system. PPMS is a results-based design, monitoring, and evaluation system that emphasizes the identification of project performance indicators at the design stage (the logical framework is a requirement) and ongoing monitoring and evaluation of these indicators during project implementation.
The success of the PPMS hinges on identifying indicators to monitor the achievement of expected project progress and impacts, continuing efforts to monitor these indicators, and implementing appropriate action by project management on project performance.
The PPMS has three key elements.
The Logical Framework—used for project design; states the outputs, purpose, and sector goals; and identifies monitorable indicators, including key assumptions and risks. The Project Performance Report—reports on monitoring of indicators and assumptions, and provides feedback on project performance. The Project Management Information System—supported through the executing agency management information system, for both ADB and the developing member country/executing agency.
The ultimate goal of the PPMS is to lift the success rate of projects.
(See also Feedback)
Project Quality ADB is continuously working to improve project quality and development impact. An important ingredient of project quality is effective implementation. Accordingly, ADB now places greater emphasis on portfolio management to enhance overall project effectiveness and efficiency.
In its report approved by ADB’s President on 15 October 1999, ADB’s Working Group on Toward Real Portfolio Management concluded that ADB should move more resolutely toward comprehensive portfolio management, in partnership with its developing member countries (DMCs). This will require fine-tuning or changes in the operating system of ADB, in its internal and external incentives, and in its operational procedures. The recommendations of the working group aim to foster an internal and external environment supportive of better portfolio management. Specifically, it places portfolio management at center stage in the context of ADB’s dialogue with DMCs, in planning future country operations, and in assessing internal efficiency and external effectiveness.
A Portfolio Management Action Plan was developed in 2000 to implement the working group’s recommendations. The action plan sets out activities that will be introduced in three phases during 2000–2001. Three working groups have been formed to detail and implement activities relating to
strengthening portfolio management; designing systems for measuring, monitoring, and managing ADB’s portfolio effectively; improving internal effectiveness and linking portfolio performance to overall development impact in DMCs; and improving reporting and management information systems.
(See also Broad-Based Development Institution; Project Cycle; Project Performance Management System; and Social Dimensions of Development) Project Reports ADB project reports include environment-related documents (summaries of environment impact assessment, and summaries of initial environment examination), post-evaluation reports (project/program performance audit reports, project completion reports, and technical assistance completion reports), project completion reports, reports and recommendations of the president, technical assistance reports, and semiannual reports on project administration and technical assistance implementation. These can be downloaded from ADB’s web site at http://www.adb.org. Project Selection Criteria ADB’s Charter states that only economic considerations should be relevant in the decisions taken by ADB, Management, and staff, and such considerations should be weighed impartially to achieve and carry out the work of ADB. All developing member countries (DMCs) are entitled to borrow from ADB so long as the project concerned satisfies ADB’s lending and evaluation criteria.
In evaluating projects, ADB pays specific attention to the economic viability, technical feasibility, and financial soundness of projects; their effect on development activity in the country concerned; their contribution to removing economic bottlenecks; the capacity of the borrowing country to service additional external debts; the introduction of new technologies to raise productivity; the expansion of job opportunities; the strengthening of institutions along the criteria of good governance; and the integration of environmental and social considerations into ADB projects.
The social aspects of ADB lending cover poverty reduction, gender and development, human development (including population planning), and the effects of economic development on vulnerable groups. ADB is concerned about job opportunities, vocational training, land reform, providing basic necessities of modern life to many people, dispersing economic activities and residential communities to ease urban congestion, reducing regional disparities in income, and providing facilities that will ensure wider and more assured markets for agricultural crops.
Allowing for differences that may be inherent in the nature of the projects financed, the criteria adopted in evaluating projects for financing from Special Funds are similar to those used for lending from ordinary capital resources. Generally, projects selected for concessional loans must have a distinct and justifiable priority in the socioeconomic development plans of the country concerned. They should also be translated into corresponding financial or foreign exchange returns. Recipients of loans from Special Funds are mainly the poorest and least-developed DMCs.
(See also Feedback) Projects Loan projects from 2001 onwards are classified in terms of ADB's poverty classification: (i) Pro-poor Intervention; (ii) Poverty Intervention (including Core Poverty Intervention); and (iii) none (empty cell). All projects further focused on the following thematic priorities: Economic Growth (ECO), Human Development (HD), Gender and Development (GD), Good Governance (GG), Environmental Protection (ENV), Private Sector Development (PSD), Regional Cooperation (REG), and none (empty cell).
Projects are classified as having social or environmental objectives only if they are designed to address specifically and primarily poverty, human development, the status of women, or the environment, and if their expected impact in terms of benefits and beneficiaries is adequately documented, and fulfills the relevant classification criteria.
A project is classified as a growth project if its primary aim is to promote economic growth through investments that increase economic production capacity and/or enhance economic efficiency.
A project is classified as a growth-oriented project if social emphasis is a secondary aim.
(See also Channel Financing; Cost Overruns; Country Operational Strategy; Country Operational Strategy Study; Disaster Rehabilitation; Disbursements; Environmental Assessment; Equity Investments; Export Credit; Governance and Capacity Building; Growth Project; Japan Fund for Poverty Reduction; Japan Special Fund; Lending; Loan Projects; Operations Evaluation; Performance Evaluation and Development Impact; Poverty Reduction Strategy; Private Sector Development; Procurement; Project Cycle; Project Identification; Project Performance Management System; and Project Selection Criteria) Pro-Poor Economic Growth
(See Poverty Reduction Strategy) Protection of Vulnerable Groups Vulnerable groups include children, the aged, tribal people, ethnic minorities, illegal settlers/squatters, people at the bottom of the social ladder, disabled people, and new and old immigrants. They are often poor and socially powerless, with very little capacity to absorb economic and social shocks. Thus, the costs of adjustment imposed on the vulnerable groups may be out of proportion to their capacity to bear such a burden. ADB is aware that while carrying out policy adjustments, institutional reforms, and project investments aimed at improving economic efficiency, enhancing growth, and protecting the environment, it is necessary to include the concerns of these people in planning and provide safety nets to the vulnerable groups that may be adversely affected. Compensating people adversely affected is in the interest of equity, poverty reduction, and overall social harmony. In its development activities, ADB follows the principle that as a result of an adjustment, reform, or investment, no group will be worse off and at least some groups such as the poor should be better off than before.
(See also Social Dimensions of Development; and Thematic Priorities) Public Information Center ADB’s Public Information Center (PIC), established in 1996 in line with ADB’s Information Policy and Strategy, makes available to the public ADB publications—either free of charge or for purchase, depending on the publication—including information brochures, videos, and documents covered by ADB’s Policy on Confidentiality and Disclosure of Information. The PIC is often the public’s first point of contact with ADB. In addition, the PIC is the dispatch point for ADB’s Depository Library Program, a worldwide network of over 150 libraries where the public has free access to ADB documents and publications.
(See also Office of External Relations) Publications ADB publishes and distributes nearly 50 books each year, including the ADB Annual Report, Asian Development Outlook, Asian Environment Outlook, and Key Indicators of Developing Asian and Pacific Countries, as well as the results of its economic work, technical assistance reports, and statistical work. In addition, ADB publishes an economic journal and numerous information brochures, occasional papers, newsletters, and newsmagazines.
ADB created a Publications Committee in 1992 to recommend to Management approaches regarding the coordination and control of ADB’s publications activities. The committee reviews policies governing ADB’s publications activities. As requested or as appropriate, the committee may also recommend guidelines and explore new standards, vehicles, and strategies for publications. For the Publications Committee’s purposes, publications are defined as publications for general external circulation, including those arising from technical assistance projects, conferences, and seminars, but not necessarily including ADB’s statutory publications.
Information about ADB and its publications is available on the Internet. Information about ordering and details of the publications may also be obtained from the Office of External Relations through e-mail at adbpub@adb.org.
(See also Depository Library; Information; Public Information Center; and Web Site) Purchases Loans made from ADB’s ordinary capital resources may be used for purchases from any member. Under ADB’s present policy, loans made from the concessional Asian Development Fund (ADF) may be used for purchases from any developed member which has contributed to ADF, and from any developing member country. PWD (See
Programs Departments (East and West).)
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