Strategy 2030

Better Governance in the New Normal

Strengthening Governance and Institutional Capacity

In 2020, ADB and its financing partners provided much-needed support for governments in Asia and the Pacific to better respond to immediate public sector concerns brought by the pandemic and increase governments’ resilience in the fight against COVID-19. Cofinancing for public sector management reached new heights.

  • The COVID-19 pandemic strained national budgets and became the greatest challenge to governance and public sector management in recent years.
  • Responding to the COVID-19 governance challenge, 161 out of 180 cofinanced projects in 2020 supported good governance and institutional capacity in some form.
  • In the new normal, ADB and its financing partners will continue to strengthen governance and institutional capacities through investments and knowledge work.

ADB will support public management reforms to improve governance and create an enabling environment for sustainable growth by

  • supporting public management reforms and financial stability
  • strengthening service delivery
  • strengthening capacity and standards

COVID-19 as a Governance Challenge

Within weeks after the World Health Organization declared the COVID-19 disease a Public Health Emergency of International Concern in January 2020, governments worldwide imposed lockdowns and other public safety measures to stop the spread of the disease. In many countries, such measures disrupted economic activities, prompting governments to increase public spending to support failing businesses and households with diminished incomes, despite also suffering from revenue and tax losses. The COVID-19 pandemic strained national budgets and became the greatest challenge to governance and public sector management in recent years.

In developing Asia, many governments were unprepared and struggled with adopting emergency fiscal measures, while protecting already overworked healthcare systems and placating the concerns of their constituencies. Managing public financial resources became critical, particularly for countries with limited economic resources. The role of governments, especially in public sector management, has never been more important.

Responding to the COVID-19 governance challenge, ADB and its financing partners provided $7.8 billion in total cofinancing for pandemic response public sector management projects in 2020, apart from other governance projects. About 1611 out of 180 cofinanced projects in 2020 supported good governance and institutional capacity in some form.

Check out the 2020 cofinanced projects tagged against the operational priority Strengthening Governance and Institutional Capacity.

Cofinancing Solutions for Public Sector Management

In April 2020, ADB rolled out its COVID-19 Pandemic Response Option (CPRO)2 operations to help governments finance programs to mitigate the impact of the pandemic. On 23 April, the first cofinancing loans on public sector management were approved for Indonesia (with the Asian Infrastructure Investment Bank [AIIB] and KfW) and the Philippines (with the AIIB). These initial stimulus packages were geared to keeping government operations afloat to implement social assistance programs; boost resources for COVID-19 prevention and control; and safeguard productive sectors and workers, such as in health and finance, from the economic downturn.

Indonesia received the largest cofinancing sum for a public sector management project, a $1.1 billion loan for the Indonesia: COVID-19 Active Response and Expenditure Support Program, cofinanced with Australia. The AIIB was ADB’s top cofinancier for public sector management in 2020, cofinancing $3.9 billion for nine projects.

Preparing for Better Governance in the New Normal

As the pandemic continues to disrupt our cities and communities, ADB is actively supporting governments in strengthening service delivery and capacity under the new normal. Non-COVID-19-related public sector management projects with cofinancing committed in 2020, amounting to $26.1 million for 19 projects focus on continuing capacity development programs for governance institutions. In Fiji, a cofinancing project with Australia is supporting the implementation of a program to improve public financial management. In Kazakhstan, an ADB project is advancing digital technology solutions in municipal services, e-commerce, agribusiness, green economy, and finance, with cofinancing from the Republic of Korea e-Asia and Knowledge Partnership Fund. Australia, New Zealand, and the World Bank are supporting a post-pandemic macroeconomic resilience program in Tonga to encourage long-term growth. ADB is complementing these country programs with 14 governance-related regional projects and technical assistance focused on adapting to the new normal, such as adopting new technologies, strengthening social protection, and improving public financial management.

As governments continue to find ways to deal with the new normal until COVID-19 vaccines become widely available, ADB and its financing partners will continue to strengthen governance and institutional capacities through investments and knowledge work in four key areas. These are fiscal risk and debt management, domestic resource mobilization, infrastructure governance and state-owned enterprise reforms, and localizing the Sustainable Development Goals. This will be further supplemented by ADB’s governance risk assessments, which will inform ADB’s engagement to further support governance and institutional capacity initiatives across the Asia and Pacific region.

Stories

Philippines: Implementing a Rapid Emergency Supplies Provision Assistance to Design a Sustainable Solution for COVID-19 Impact Areas in the National Capital Region Through a Public–Private Collaboration

ADB and ADB’s Staff Community Fund cofinanced this project that provided critical food supplies to about 55,000 vulnerable households in Metro Manila and neighboring areas, which were under community quarantine to contain the spread of COVID-19. Beneficiaries included the poorest families, as well as informal sector workers who had lost their livelihoods.

Mongolia: Shock-Responsive Social Protection Project

Cofinanced with the World Bank, this project channeled financing through the child money program and food stamp program to lessen the impact of the COVID-19 pandemic on poor and vulnerable groups in Mongolia. The child money program reached more than 1 million children, while the food stamps benefited 240,500 Mongolians, among them more than 118,000 children.

Cook Islands: COVID-19 Active Response and Economic Support Program

Part of ADB’s COVID-19 support package, this program supported the Cook Islands’ Economic Response Plan as the country faced significant declines in tourism and government revenue due to the pandemic. The program, cofinanced with the Asian Infrastructure Investment Bank and New Zealand, helped combat the entry and spread of COVID-19 and provided assistance to vulnerable groups, households, and businesses.

India: COVID-19 Active Response and Expenditure Support Program

ADB and the Asian Infrastructure Investment Bank are supporting India in containing COVID-19 and treating infected people for free, thus protecting the lives of the poor and the vulnerable. The program also targets providing social assistance and protection over 3 months to more than 800 million people, including families below the poverty line, farmers, healthcare workers, women, women’s self-help groups, widows, senior citizens, people with disabilities, low-wage earners, and construction workers.

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