Five per cent ADB loans to Nepal at risk: Annual report

The Asian Development Bank (ADB) has positively evaluted the loans at risk for Nepal to only five per cent for the year 2008 from a year earlier that was 14.3 per cent, according to ADB's 2008 Annual Report released ahead of the 42nd annual meeting to be held on May 2-5 in Bali (Indonesia).
Similarly, ADB had commited $64.5 million and disbursed $60.9 million in the year 2008, the Portfolio Performance Indicators for Sovereign Lending reveals. "The bank's ongoing loans to Nepal till the end of December 2008 numbers at 20. The ADB grant - financed projects worth $159.3 million for education, ICT, governance support, and rural reconstruction and rehabilitation and technical assistance grant worth $4.5 million," it adds.
The cumulative lending and disbursements as of the end of 2008 for Nepal stands at $2,301.0 million and $1,703.7 million, the report said. However, ADB approved a total of $10.5 billion in loans -- a 5.3 per cent increase over a year earlier.
The 2008 amount is the highest in ADB's 42-year history, reveals the report. It reflects the region's ever-increasing development finance demand, and the assistance provided by ADB to help developing member countries deal with the impact of the global financial crisis.
"The comprehensive midterm review of the country strategy and programme (2005-2009), was completed in consultation with stakeholders in July, validated its strategic pillars -- broad-based economic growth, inclusive social development, and good governance -- while stressing the importance of state building, inclusive growth, and results orientation, the report said about Nepal. "Consultations with a broad range of stakeholders were also held in partnership with the DfID of the UK and the World Bank to prepare for a new country partnership strategy to be completed in 2009. The ADB also held annual country portfolio review with the government and key development partners in November to strengthen country systems by identifying generic implementation issues and establishing results-based monitoring mechanisms and the time bound action plan for dealing with implementation constraints.
In 2008, India was the largest borrower with $2.9 billion or 27.4 per cent of the total loans ADB extended last year.
Loans with government guarantees last year totaled $8.7 billion for 72 projects. Of this amount, $6.9 billion came from the ordinary capital resources of ADB, while the balance was sourced from the concessional Asian Development Fund (ADF).
ADB approved a further $811.4 million of assistance in grants in 2008, up by 20.6 per cent from the previous year. Of the total, $707.4 million came from ADF and $104 million from external sources.
A total of 299 technical assistance projects were approved worth $274.5 million, all of which were also provided as grants.
Recognising the important role of the private sector in generating jobs and economic growth, ADB significantly increased non-sovereign lending in 2008. It approved $1.5 billion for 13 loans to the private sector, an increase of 106.9 per cent on the previous year, and $300 million for non sovereign loans to the public sector.
The annual report notes that in May 2008 ADB secured $11.3 billion for the next four-year phase of its concessional ADF to fight poverty in the Asia and Pacific region-a significant jump of over 60 per cent from the previous period.
The ADF provides grants and low-interest loans to Asia and the Pacific's poorest countries. The new ADF will cover the period 2009-2012. "The replenishment will enable ADB to make a contribution to poverty reduction in its lower-income developing member countries, particularly during this difficult period," ADB president Haruhiko Kuroda said in the report.
He also said in the report that ADB is seeking a substantial general capital increase to respond to the vast investment and development needs of the region. Negotiations with shareholders began in late 2008, and an agreement is hoped to be reached by May 2009.
"ADB responded quickly -- to the global financial crisis-- allocating over $4 billion of additional resources to support the efforts of its developing member countries," he added.