In recent years, there has been increasing concern about governance issues in the development debate. This has been reflected in the ongoing discussion within the Bank on the objectives, priorities, and approaches to its operational programs. It received attention, for example, during the discussions leading to the fifth replenishment of the Asian Development Fund (ADF VI). The document ADF VI: Report of the Donors noted “the vital connection between sound and responsive systems of public administration and the effective and equitable operation of the economy.” In this context, reference was also made to the need for “participatory and democratic frameworks” and for strengthening “the legal system and regulatory agencies.” Similarly, during the negotiations concluded last year for the Bank’s Fourth General Capital Increase (GCI IV), emphasis was placed on governance and its impact on the effectiveness of Bank operations.
It was indicated that the Bank would seek to address governance issues in its operations. In view of the importance and urgency of the subject, the President issued interim staff instructions on governance in February 1994. Subsequently, in May 1995, the Board considered a Working Paper on the subject.
The present Paper takes into account the views expressed by the Board at that time and sets out the role, approach, and policy of the Bank in relation to governance issues.