Dwindling aid for developing nations puts ADB in spotlight

FUKUOKA — It will become increasingly important for the Asian Development Bank to offer assistance that would pave the way for the private sector to play a larger role in the development of countries in the region, a vice president of the bank said May 13.

Lee Bong-suh of South Korea acknowledged in an interview that there have been signs in recent years that industrial countries are becoming less willing to put up money for development assistance. The trend, triggered by the desire of these nations to correct their huge fiscal deficits, has prompted multilateral assistance institutions, including the ADB, to seek ways to encourage the private sector to play a greater role. “The declining proportion of donors (contributing) aid money is a fact, there’s no denial,” he acknowledged, adding that the ADB hopes some developing countries that have made economic progress will now lend a hand.

In presentations given by the 56 ADB members during the three-day board meeting, many donors pushed for more efficient lending on the part of the bank and underscored the need to place greater focus on such areas as environment protection and education when extending aid. Many countries receiving aid meanwhile indicated they would like to see the focus remain on economic development. But Lee said all participants were in agreement on the fact that loans were useful and that the ADB’s role was to mediate between these two positions and come up with aid packages satisfactory to both.

At the same time, he said the bank, which has been in operation for 30 years, must continue to evolve from simply financing projects to serving a catalytic role so that private sector funds for development would increase. “Starting with the World Bank, all (development institutions) are having problems in identifying what will be our role” in the future as a greater flow of money in the private sector threatens to decrease the relevance of multilateral development banks, he admitted.