What is the Asian Development Fund?
The Asian Development Fund (ADF) provides grants to ADB's poorest and most vulnerable developing member countries (DMCs). Established in 1974, the ADF initially provided loans on concessional terms. Grants were introduced in 2005, and beginning 2017, with ADB’s concessional lending financed from its ordinary capital resources (OCR), the ADF has become a grant-only facility.
How is ADF funded?
ADF resources mainly come from contributions of ADB's member countries, which are mobilized under periodic replenishments, and net income transfers from OCR. Initial contributions to the ADF were pledged in 1973 and designated as ADF I. Since then, the ADF has been replenished several times. The twelfth replenishment (ADF 13), which will support grant operations during the period 2021-2024, is the first ADF to support the implementation of ADB’s corporate strategy—Strategy 2030— during its full cycle.
Thirty-six members of ADB have provided direct contributions to the ADF since its establishment:
Australia; Austria; Azerbaijan, Belgium; Brunei Darussalam; Canada; China, People’s Republic of; Denmark; Finland; France; Germany; Hong Kong, China; India; Indonesia; Ireland; Italy; Japan; Kazakhstan; Korea, Republic of; Luxembourg; Malaysia; Nauru; The Netherlands; New Zealand; Norway; Philippines, Portugal; Singapore; Spain; Sweden; Switzerland; Taipei,China; Thailand; Turkey; United Kingdom; United States
The following ADB member countries will provide direct contributions for ADF 13 covering 2021-2024:
Australia; Austria; Azerbaijan, Brunei Darussalam; Canada; China, People’s Republic of; Finland; France; Germany; Hong Kong, China; India; Indonesia; Ireland; Italy; Japan; Kazakhstan; Korea, Republic of; Luxembourg; Malaysia; The Netherlands; New Zealand; Norway; Philippines, Portugal; Singapore; Spain; Sweden; Switzerland; Taipei,China; Thailand; Turkey; United Kingdom; United States.
(Hong Kong, China; Kazakhstan and Malaysia are still in the process of confirming their pledges.)
Who is eligible for ADF grant assistance?
ADB uses a three-tier DMC classification system: groups A, B, and C. Classification is determined by two criteria: gross national income (GNI) per capita (Atlas method) and creditworthiness. Group A countries include DMCs lacking creditworthiness. Group B countries include those with limited creditworthiness. Group C countries have adequate creditworthiness and per capita incomes exceeding the operational cutoff of the World Bank’s International Development Association (IDA).
Among group A countries, 13 DMCs are ADF countries and are accessing grant country allocations: Afghanistan, Kiribati, Kyrgyz Republic, Maldives, Marshall Islands, Federated States of Micronesia, Nauru, Samoa, Solomon Islands, Tajikistan, Tonga, Tuvalu, and Vanuatu.
In addition, under the ADF13 framework, ADF grants play a catalytic role by supporting project investments in areas often underinvested by governments. The ADF 13 thematic pool provides ADF grants to incentivize governments to consider projects with strong national and regional positive externalities and to support the implementation of Strategy 2030 with a focus on the following strategic areas: (i) fostering regional cooperation and integration (RCI), including the provision of regional public goods (RPGs); (ii) supporting disaster risk reduction and climate adaptation; and (iii) achieving Sustainable Development Goal 5’s transformative gender agenda. The thematic pool supports projects in group A countries, and very selectively, in group B countries.
How are ADF resources utilized?
ADF-financed operations serve many of the economic, strategic, and humanitarian interests of contributing members in a cost-effective manner. No other multilateral fund is as directly and broadly involved in the economic and social development of the poorest and most vulnerable countries in Asia and the Pacific.
ADB member countries see ADF financing as important for achieving ADB's vision of “Achieving a Prosperous, Inclusive, Resilient, and Sustainable Asia and the Pacific” as presented in Strategy 2030. In support of this overarching objective, ADF financing is used to support development projects and programs that include:
- policy support and policy reform;
- production capacity, human development, and environmentally sustainable investments;
- good governance and capacity building for development management; and
- regional cooperation.