Review of ADB's Program-Lending Policies (1999)

Institutional Document | November 1999
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This paper reviews trends in program lending, and based on past experience and forecasted needs identifies the gaps in the policy framework and product line that need to be filled.

Recent developments have highlighted the need to enhance the flexibility of the instrument to meet clients' changing needs. These developments include new types of crises, new clients with special needs and new areas of ADB involvement in policy and institutional reform.

Highlights of program lending modality

  • ADB initiated program lending in 1978. Since then, the policy framework for program lending has shifted from financing sector inputs to improving policy and sector efficiency
  • 1987-1995 program loans were mostly in agriculture while 1996-1998 program loans dealt with the Asian financial crisis
  • A 1999 performance appraisal which covered 27 program loans revealed that 33.3 percent were generally successful and 59.3 percent were partly successful

General conclusions

  • It is necessary to distinguish between crisis and non-crisis program lending. They involve different program horizons, implementation approaches, and disbursement patterns
  • Program cluster approaches should be used to address non-crisis situations. They involve a series of linked subprograms designed to address a policy problem over a longer term
  • There should be special program loans designed to help DMCs in crisis situations with large-scale, rescue-package support

Contents

  • Executive Summary
  • Context
  • Evolution of ADB's Program Lending Instrument
  • Emerging Trends in Program Lending
  • Policy-Based Lending in Instruments of other IFIs
  • Adapting Policy-Based Lending to Clients' Changing Needs
  • Recommendations
  • Appendixes

Additional Details

Type
Subjects
  • ADB administration and governance
  • ADB funds and products

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