Performance-Based Allocation Policy

ADB's performance-based allocation (PBA) policy is based on the principle that aid is most effective in accelerating economic growth and poverty reduction in countries where policy and institutional performance is strong. It was introduced as part of the seventh Asian Development Fund (ADF) replenishment (ADF VIII) in 2001, and substantially revised during ADF IX to strengthen the link between performance--as measured by the country performance assessment (CPA)--and ADF allocations. The policy covers country allocations of ADF resources, including grants, with separate earmarked pools of resources for developing member countries (DMCs) in the Pacific and for other eligible members in exceptional situations, as well as facilities for specific needs of DMCs.

While the PBA system provides a strong link between performance and allocation, it was recognized that such allocations need to be modified to meet the needs of less developed members more effectively. Refinements to the PBA policy were therefore made to address concerns that emerged in earlier PBA allocations, and to incorporate agreements made in the course of the ADF X and ADF XI negotiations. These include special considerations for post-conflict situations and reengaging countries, and adjustments to allocations to ensure that sufficient concessional funds are available for countries lacking access to other financing sources. Separate eligibility and allocation criteria guide the allocation of ADF resources to support subregional projects. A pilot disaster response facility is being introduced in ADF XI to strengthen ADB’s capacity to assist ADF countries in responding to natural disasters.

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