Members Agree Adb Must Change To Survive

30TH ANNUAL MEETING OF ASIAN DEVELOPMENT BANK ENDS IN JAPAN

The Asian Development Banks 30th annual meeting ended on Tuesday with most delegates agreeing that the multilateral institution must change itself if it is to survive into the next century.

The three-day meeting in this southern Japanese city marked 30 years of the banks existence and many of the 3,000 delegates had come with doubts on where the bank should be heading.

ADB President Mitsuo Sato described the meeting as a success, saying all members had supported his view that the bank should change itself from being a mere provider of aid to being an institution that helped guide policy and also played the role of a catalyst in attracting private investment.

 

They all agreed that the ADB should not just be a lending institution but a broad-based institution that helps in policy reforms and in the social sector, Sato told a closing news conference.

The ADB, owned by 56 countries, has helped Asias poorest countries in their early stages of development by providing much needed financing for basic infrastructure.

But with the increasing flow of private capital in the region, its role as a financier has become diluted. Another problem facing the bank is that traditional donors, hampered by budgetary constraints, have warned they cannot keep up their contributions to aid.

An advisory panel of bank staff and business leaders suggested the bank should change its outlook and cater its products to financial markets. Among other things, the panel said the bank could offer political risk insurance.

Many donors are of the view that the ADB should increase its private-sector operations...but at the same time we do not unduly want to go into areas which the private sector can handle, Sato said.

The meeting, held in Japan to mark the ADBs founding in this country three decades ago, also saw some differences of opinion on aid and on political influences on the bank.

Japan, so far the banks biggest donor, said it cannot continue to be as generous as in the past because its fiscal situation is not very good.

The announcement was met with jeers from delegates of some countries, particularly Thailand and Malaysia, which chided Japan and other traditional donors for cutting back on aid.

Thailand and Malaysia have long been recipients of aid from the bank but have recently become donors.

Thailand also expressed concern that the banks decisions on aid were politically motivated. The bank has not given aid to Burma since 1987 and a representative of its military junta complained on Monday that it was being unfairly treated.

Without referring to Burma, Thailands Finance Minister Amnuay Virawan said: Full support should be extended to all countries...without political bias.

Bank officials steered clear of the controversy, saying it was up to member nations to decide.

Another hot topic at the meeting was bids for membership by North Korea and Russia. Two countries were invited to Fukuoka though the subject was not on the agenda.

Officials declined to say if it was discussed informally. ....all agreed that the ADB should not just be a lending institution but a broad-based institution that helps in policy reforms and

in the social sector Mitsuo Sato

Opportunity for banks

Latin America may be more popular than Asia with emerging market equity investors this year, but one man who can put a perspective on both regions is William Rhodes, Citibanks vice-chairman, who led banking efforts to restructure Latin American debt in the 1980s. Latin American countries are doing well, with leading economies expected to post growth rates of 5 to 7 per cent in 1987, but compared with Asia, their growth rates are just so, so. Its only logical that after a decade of the highest growth in the world, youre going to have a consolid-ation in Asia, he said. Moreover that provides an opportunity to strengthen the regions banks with more capital and sound risk management practices.

Hostage to fortune

No one knows whether P Chidambaram, newly reinstated finance minister, is back for the long haul. That depends on the fate of thenew United Front government in New Delhi. But, assuming he does stay in government, Chidambaram made himself something of a hostage to fortune by coming forward in Fukuoka with four long-term ambitions for India over the next 10 years. Economic progress should be measured, he said, by whether India succeeds in doubling per capita output to $750 (