Asian Development
Bank primer

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By Erika Engle
Star-Bulletin

Question: What is ADB?

Answer: The Asian Development Bank is a $43.8 billion multinational development bank, comprised of 59 member nations. It is based in Manila and employs 2,000 people from nearly 50 countries. It has 19 offices around the world.

Q: What does it do?

A: Projects financed by the ADB's Asian Development Fund include education reform and improvement, health and sanitation, micro-finance, infrastructure rehabilitation, environmental protection and "projects designed to raise the status of women," according to an organization statement.

Senior External Relations Officer Ian Gill said members from developing countries receive access to inexpensive long term loans, while developed countries are eligible to bid for goods and services involved in ADB projects.

The ADB works with non-governmental organizations, usually nonprofit agencies, in choosing projects to support.

For example, the Philippine Nonformal Education Project, according to ADB documents, supports efforts to make basic education available to some 600,000 poor in mostly rural areas through "innovative delivery systems."

Q: Where does it get its money?

A: The bank gets its money through contributions from the member nations as well as through interest income from loans. It loans nearly $6 billion per year.

Q: Who gets the money?

A: The ADB offers two types of loans, which Gill called "ordinary" and "soft."

The ordinary loans are made to developed nations at 6 percent interest, while the soft loan, at a 1 percent interest rate, "is for the very poorest countries," and can be for a term of up to 40 years, he said.

Gill said the soft loans are used to finance such projects as improved drainage, clean water delivery systems or road improvements for poor villages.

Gill said ordinary loans make up two-thirds of the ADB's lending. "For that, we go and borrow the bulk of it from the capital markets," he said.

He said with 59 governments backing the ADB, it has a AAA credit rating. He said with that, and "our incredibly conservative and proven financial management, we're known to be among the most prudent of the multinational development banks."

"So armed with this triple-A rating we go to the capital markets of the world and borrow money, and we re-lend it to our developed members at 6 percent," Gill said.

Q: Why is the bank important?

A: The bank provides low-interest loans to help developing nations improve infrastructure in remote areas, including cleaning up water supplies combatting poverty. The bank also provides emergency relief following natural disasters.

Q: Why are people upset with the Asian Development Bank?

A: "Their policies have displaced tens of thousands of people," said Cha Smith, spokeswoman for opposition group ADBWatch. She said the group disagrees with the idea that "globalization is the only model for survival."

For example, Smith said, the Nam Ngum Hydro Dam in Thailand, financed by ADB, flooded several hundred square kilometers of forest, wiped out fish stocks and opened the watershed to logging. An irrigation project in Sri Lanka "displaced and impoverished 60,000 families" between 1970 and 1999, Smith said.

Opponents say projects financed by the bank harm the environment and benefit large multinational corporations above the people supposedly to benefit from the projects.