ADB and U.S. at odds on policies

25 April 2008

While the U.S. remains committed to the Asian Development Bank (ADB) and its mission of reducing poverty in Asia, objections to the Bank's lending policies and its function are causing concerns that U.S. funding commitments could be cut because of the dispute.

As the Asian Development Bank (ADB) prepares for it's Annual General Meeting (AGM) in Madrid, from May 3-6, a row between the United States and the ADB, has raised concern over the level of U.S. funding commitment to the institution, both Reuters and the Financial Times (FT) reported last week.

The United States has raised concerns about the ADB's proposed long-term strategy, which charts the institution's course until 2020. The ADB's Board of Governors voted on the strategy two weeks ago; the U.S. opposed the strategy, the United Kingdom abstained, and the other member country governments voted in favor of the strategy. A U.S. Treasury Department official was quoted in the Reuters article as stating that the U.S. "opposed the long-term framework because we believed it needed further improvements including an increased focus on the very poorest countries in the region and a better results measurement framework."

ADB officials noted that the U.S.' opposition focused on the bank's lending policies to middle-income countries in the region, such as India and China, two of the fastest growing economies in the world, yet constituting a significant portion of the ADB's lending in the region.

Though the U.S. remains committed to the ADB's mission of reducing poverty in one of the poorest regions in the world, its level of continued support for the Asian bank would depend on a number of factors including the "overall assessment of the Fund's effectiveness." Donors have recently criticized ADB for lack of effective results-based measurement of lending impacts, as well as internal governance and personnel issues.

Sources

U.S. vote underlines unease about ADB policies by Raju Gopalakrishnan, April 24, 2008 (Reuters website)

US shoots down ADB strategic plan, by Raphael Minder, April 8, 2008. (Financial Times website)