Nusa Dua, Indonesia: The Asian Development Bank’s (ADB) lending will continue to be dominated by disbursements to India and China, despite donor objections that the two fast-growing economies are not in need of concessional funds. Rajat Nag, managing director general of the Manila-based multilateral lender, said in an interview on the sidelines of ADB’s annual meeting that loans to China and India held more significance than the dollar amounts given out.
“It enables these two countries and also us to be able to bring in best international practices in project implementation, policy issues and safeguards,” he said late on Saturday. “I think for these countries it helps to have an external agency providing that.”
Last year, India accounted for $2.88 billion (around Rs14,450 crore) of ADB’s total ordinary loans of $10.45 billion, while China came in at second spot with $1.75 billion. Other major recipients included Pakistan, Indonesia, the Philippines and Vietnam.
Nag acknowledged that many of ADB’s donors had expressed reservations about the amount of lending to the two Asian powerhouses.
But he added: “If we are going to seriously attack the issue of poverty in Asia and the Pacific, you are really talking about China and India.”
“We believe that our involvement with the two countries is important because of the fight against poverty, because that’s where the numbers are,” he said.
Nag also said it was important for ADB to have a good part of its loans lent out securely. “We are also a bank,” he said. “These are the two countries which are investment grade.”
ADB’s formal meetings with its board of governors—finance ministers from its donors and other member-nations—begin on Monday.
Donors have already agreed to a 200% increase in ADB’s capital base, which will enable the bank to ramp up lending by about 50% over 2009 and 2010 to around $33 billion in the two-year period.
On Saturday, ADB president Haruhiko Kuroda announced a new $3 billion fund to provide quick loans for increased spending to counter the global economic downturn.
ADB has also set up a $1 billion fund to provide trade financing.