Role Of ADB

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CHAPTER 1

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The primary function of banks is to deal with money, one cannot

speak about give priority to those banking without referring to money.

Hence, it seems a must to understand money first. Otherwise many

misinterpretations may arise as the result. Interest and profit, although being

clear concepts, have been subjected to many misunderstandings. To be sure, let

me make them clear at the outset. Interest and profit are rewards to money andcapital investment respectively. In other words capital investment produces

profits and money produces interest. Furthermore it has constantly and

mistakenly written and quoted by some writers that the price of money is 1

(unity). One is the exchange rate of money with itself but the price of money is

interest (rate).

Asian Development Bank (ADB) is a multilateral development finance

institution dedicated to reducing poverty in Asia and the Pacific. It was

established in 1966. 63 member countries own ADB. Its members are 64, 46

from Asia and the Pacific and 18 from other parts of the globe. The

overarching goal of ADB is to reduce poverty. To achieve this, ADB supports

activities in its developing member countries to promote pro-poor economic

growth, inclusive social development, and good governance. Asian

Development Bank headquarter is in Manila. It has 26 other offices around theworld.

ADB takes into account in its activities three crosscutting themes:

private sector development, regional cooperation, and environmental

sustainability. ADB's principal tools are loans, guarantees, and technical

assistance, which it mainly provides to governments for specific projects and

programs.

For most of the 1990s, Pakistans economy has been in difficulty mainly

due to political instability, sectarian violence, weak governance, deep-rooted

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structural problems, and inappropriate policy responses. These have resulted in

unsustainable fiscal and current account deficits, a significant slowing down of

economic growth to two-thirds of its historical levels, double digit inflation,

stagnating industrial production and exports, and depletion of foreign exchange

reserves. After taking office in February 1997, the new Government moved

quickly to reverse the trend and initiate a program of economic reforms to

address both immediate macroeconomic stabilization requirements and longer

term structural adjustments, and free the economy from the low investment,

low savings, and low growth path of the nineties. This program paved the way

for the introduction of a comprehensive IMF Policy Framework Paper (PFP)

and Enhanced Structural Adjustment Facility (ESAF)/Extended Fund Facility

(EFF) in October 1997. The PFP encompasses critical reforms of the tax and

fiscal system, state-owned enterprises, financial markets, trade regime, and the

foreign exchange market. Concurrent with the structural policies of most

immediate macroeconomic impact, the PFP also includes reforms directed at

developing Pakistans human capital, raising productivity in key sectors,

protecting the environment, and promoting good governance. ESAF is

receiving substantial complementary support from other development partners,

particularly the Bank and the World Bank. The first review of the program was

successfully completed in March 1998. However, after Pakistans nuclear

testing in May 1998, the IMF program was held in abeyance and is being

renegotiated.

Macroeconomic performance during the first year of the ESAF/EFF

program (October 1997-June 1998) was generally encouraging. Partly as a

result of economic revival measures implemented by the Government and

because of strong agricultural growth due to favorable weather conditions,

Pakistans economy showed some signs of recovery during FY1997/98. Real

GDP growth during the fiscal year is projected at around 5.4 percent, a

significant improvement over the previous years 1.3 percent. Sustained growth

is, however, still severely constrained by a number of impediments rooted in

both demand and supply sides, and including weak investment, slow export

growth, and low productivity. Tight monetary and fiscal policies have led to a

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substantial reduction in inflation, to eight percent by the end of the 1997/98

fiscal year, a single digit growth for the first time since 1989/90.

Progress in reducing Pakistans budget deficit, the top priority formacroeconomic stabilization, has been mixed. The FY 1997/98 budget aimed

to reduce the consolidated fiscal deficit to 5 percent of GDP through a

combination of large expenditure containment and modest revenue growth.

Revenue collection was however disappointing, with tax collection by the

Central Board of Revenue (CBR) during the first half of the fiscal year falling

short of target by about $250 million. Slower than expected economic growth,

a sharp fall in imports, reduction in tax/tariff rates (as an economic revival

measure), and poor tax administration are the main causes of the shortfall. The

worsening financial position of Pakistans public sector corporations,

particularly the power utility companies WAPDA and KESC, is also severely

affecting fiscal operations and threatening macroeconomic stability. Despite a

weak revenue performance, the Government estimates that the FY1997/98

fiscal deficit will reduce to 5.4 percent of GDP.

ADB came with strong development approaches which will be later on

discussed in the project and these implementations really boosted Pakistan

economy.

This research analyzes the functioning of ADB and its role in the

economic development especially in Third World Countries. This research will

be helpful to policy maters, researchers and students in this field.

1.2 PUROPOSE OF THE STUDY

1. To gather relevant information to interpret and analyze it in a useful

manner to understand the proposed topic.

2. To analyze the role and contribution of ADB in the Economic

Development of third world countries.

3. To provide conclusion and suggestions based on analysis.

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1.3 METHODOLOGY OF THE RESEARCH

This would be basically a basic research i.e. to enhance knowledge

about Role of ADB in Development of Pakistan; the data would be mainly

secondary in nature and will be collected through journals, books, and

internet and from other already published materials

1.4 SCOPE OF THE STUDY

The core of this work is centered on how ADB can play its vital role in

the assistance of developmental projects in Pakistan. The global view of the

ADB and its development attempting some definitions of its assistance used inits classification. There after, we examine the different programs run under

ADB, their budgeted and actual costs incurred and finally make our conclusion

and suggestions.

It can also provide assistance to students seeking information regarding

role of central banks in Islamic finance

1.5 SCHEME OF THE REPORT

This project is organized into 6 chapters. Chapter 1 is about

introduction. Chapter 2 explains the various view of different views people is

know as the literature review. Chapter 3 gives Purpose and Functions of ADB.

Chapter 4 is about the analysis of ADB. Chapter 5 is the findings. Chapter 6 is

about the conclusion and suggestions.

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CHAPTER 2

LITERATURE REVIEW

Over the years, Asian Development Bank have played a significant role

in economic and social transformation in Asia and the Pacific- boosting

economic growth, fostering social development, and helping improve the

quality of life for millions of people. Asian development bank provide loans,

Technical Assistance, and Grants to its member countries. ADB approved 11

loans totaling US$709.2 million for seven projects to Pakistan. ADB has also

approved twenty-three technical assistance grants totaling US$28.9 million.

Cumulative ADB lending to Pakistan as of 31 December 2004 was US$14.3

billion. Recently ADB has approved $ 1 billion for the reconstruction and

rehabilitation of the earthquake affected people.

Accounting period of ADB ends on 31 December. So the data in reports

are as of December 2004. A large part of the Asian Development Bank's data is

available at its web site and Depository libraries.

2.1 ADB Loans for Projects in Pakistan:

ADB approved 11 loans totaling US$709.2 million for seven projects in

the following sectors.

1. Assistance for sustainable livelihood improvement in Punjab;

2. Multisector rehabilitation in AJK;

3. Public resource management in Balochistan;

4. Technical education and vocational training in Balochistan;

5. Technical education and vocational training in NWFP;

6. Devolved social services in Punjab; and

7. Road development and sub regional connectivity in NWFP.

The details of the above Project along with their respective loan amountare given in table 2.1

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2.2 TECHNICAL ASSISTANCE (TA)

ADB has three types of TA activity:

1. Project preparatory technical assistance (PPTA) to prepare a project

loan, a program loan, or a sector loan for financing by the ADD and

other external sources;

2. Advisory technical assistance (ADTA) to finance, for example,

institution building or sector-, policy-, and issues-oriented studies; and

3. Regional technical assistance (RETA) for any of the activities covered

in (i) and (ii) involving more than one member country. ADB deems anytechnical assistance projected funded for under $150,000 a small-scale

technical assistance (SSTA).

ADB's public communications policy calls for TA reports to be made

publicly available no later than upon approval.

Table 2.1: Details of the Projects Along with their respective amounts

(SMillion)

Project Name ADF OCR Total

1. Sustainable livelihood in Barani AreaProject(Punjab)

41.0 41.0

2. Balochistan Resource Management Program 23.0 11.0 133.0

3. Decentralized Social Service (Punjab) 75.0 75.0 150.0

4. Restructuring of Technical Education andVocational System NWFP

11.0 11.0

5. Restructuring of Technical Education andVocational Balochistan

16.0 16.0

6. NWFP Road Development Sector andRegional Connectivity

5.0 296.2 301.2

7. Multisector Rehabilitation Project in AJK 57.0 57.0

Total 228.0 481.2 709.2

Technical Assistance Reports

A technical assistance (TA) report is a recommendation to the Board or

President depending on the amount of assistance) to finance a technical

assistance project.

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2.2.1 Technical Assistance to Pakistan

ADB has approved twenty-three technical assistance grants totaling

US$28.9 million to Pakistan. These are listed in table 2.2.

Table 2.2: ADB's Technical Assistance to Pakistan

S. No Project Name Division TA Type Amount

1 Balochistan Rural Development andDrought Mitigation

SAAE Projects 600.0

2 Sindh Costal and inland CommunityDevelopment Project

SAAE Projects 650.0

3 Water Sector Irrigation Development SAAE ID 300.0

4 Renewable Energy Development SAEN PP 550.0

5 Supporting Public Resource ManagementReforms in Balochistan

SAGF ID 400.0

6 Punjab Resource Management Reforms(Subprogram 2)

SAGF ID 250.0

7 Strengthening Coordination and Alignmentof Government Operations to Devaluation

PRM ID 450.0

8Strengthening Procedures to Reduce Delaysin Startup of Development

PRM ID 450.0

9 Capacity Building of Alternative EnergyDevelopment Boar

SAEN AO 150.0

10 Implementation of Police Reforms in Punjab PRM ID 950.0

11 National Primary Education FunctionalLiteracy for Rural Women in SelectedBarani Areas of Punjab

SAAE ID 400.0

12 Sindh Basic Urban Services SASS Projects 795.0

13 Balochistan Devolved Social Services SASS Projects 400.0

14 Capacity Building for EnvironmentManagement in Sindh

SASS Projects 400.0

15 Coordination of Devolved Social servicesPrograms

SASS ID 150.0

16 Mobilization of Grassroots Stakeholders forPro-Poor Social service Delivery

PRM ID 400.0

17 Determents and Drivers of PovertyReduction and ADB's Contribution in Rural

Pakistan

PRM ID 400.0

18 Transport Sector Support SATC ID 290.0

19 Coordination of Devolved Social servicesProgram (Supplementary)

SASS ID 130.0

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20 Punjab Devolved Social services Program SASS ID 20000.0

21 SSTA for Facility PPP Initiative in NationalHighway Department

SATC Projects 150.0

22 Improving Governance in the Non-ProfitSector of Pakistan

PRM AND 240.0

Total 28605.0

Table 2.3: Breakdown of Cumulative ADB lending to Pakistan, as of 31

December 2004

Sector Loan

(number)

Loan

Amount (US$

million)

%

Energy 46 3,062.0 21.5

Agriculture and Natural Resources 49 2,977.1 20.9

Finance 25 1,878.0 13.2

Transport and Communications 19 1,604.9 11.3

Multisector 22 1,344.5 9.4

Industry and Trade 1 39 1 1,290.4 9.0

Law, Economic Management, andPublic Policy

12 987.0 6.9

Education 12 501.1 3.5

Water Supply, Sanitation, and WasteManagement

8 384.5 2.7

Health, Nutrition, andSocial Protection

7 229.4 1.6

TOTAL 239 14,258.9 100.0

2.3 OVERVIEW OF ADB ASSISTANCE

As of 31 December 2004, ADB's total loan commitment to the Pakistan

since commencement of its operations in 1968, comprised 239 public sector

loans amounting to $14.3 billion, out of which $7.4 billion (51.7 percent) is

from the Ordinary Capital Resources (OCR) and $6.9 billion (48.3 percent) is

from the Asian Development Fund (ADF). Out of 239 loans, 61 loans covering

51 projects with net loan amount totaling $4.9 billion are ongoing. Of the total

loan amount of $4.9 billion, 42 percent is from ADF.

As of 31 December 2004, the sectoral composition of ADB's assistance

to Pakistan was 21.5 percent for energy sector, 20.9 percent for the agriculture

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& natural resources, 13.2 percent for finance sector, 11.3 percent for transport

and communications, 9.4 percent for multisector, 9.0 percent for industry and

trade, 6.9 percent for Law, Economic Management, and Public Policy, 3.5

percent for education, 2.7 percent for water supply, sanitation, and waste

management, and 1.6 percent for Health, Nutrition, and social

protection(Figure 1).

A cumulative of 293 technical assistance (TA) projects has been

approved by ADB for Pakistan with a total amount of $138.65 million as of 31

December 2004. Presently, there are 62 TAs under implementation with a total

amount $53.6 million.

2.3.1 Social Sectors

ADB has provided assistance for the Social Action Program for a total

of $300 million. In addition, ADB has financed primary education projects

with special emphasis on education for girls, improving the service delivery by

providing assistance for teacher training projects and contributed to skills

development by financing technical and vocational education projects.

2.3.2 Energy Sector

ADB has provided 46 loans totaling $3062.0 million for Energy Sector

Development. It is 21.5% of the total loans. Its assistance has been for

improving the technical efficiency of the energy sector as well as for financing

critical investments in both the Karachi Electric Supply Corporation (KESC)

and the Water and Power Development Authority (WAPDA). As shown in pie

chart ADB has provided the most amounts for Energy Sector.

2.3.3 Agriculture Sector

ADB has provided program and project assistance with the objectives of

reforming the policy framework, ensuring greater role for the private sector and

increasing agricultural productivity. ADB has provided 49 loans totaling

$2977.1 million for Agriculture Sector.

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2.3.4 Irrigation Sector

Irrigation plays an important role in agriculture sector. Realizing the

fact, ADB has provided assistance for such major irrigation initiatives asChasma Right Bank Irrigation Project in North West Frontier Province

(NWFP) and Punjab [Stage III, approved in 1991], Pat Feeder Canal Project in

Balochistan [approved in 1985], and the construction of the Pehur High-Level

Canal in NWFP [approved in 1993]. ADB has also provided assistance for on-

farm water management projects, forestry sector projects, and for the National

Drainage Program.

2.3.5 Transport Sector

Transport is the backbone of economy. Roads network is essential for

boosting the economy. ADB has provided assistance for the development of

farm to market roads m all the four provinces of Pakistan, as well as for

rehabilitation of the provincial road network. ADB has provided 19 loans

totaling $1604.9 million for the development of transport and communication

sector development. It has also announced $ 1 billion assistance for theearthquake effected areas. The Government of Pakistan will determine how

much to allocate for the transport and communication sector. Support has also

been provided for strengthening the road sector institutions, such as the

communication and works departments and for developing an appropriate

regulatory mechanism.

2.3.6 Finance and Industry Sectors

ADB has provided lines of foreign exchange credit for the private sector

industrial development, and of late for the reform of the trade regime under the

ongoing Trade, Export Promotion, and Industry Program Loan. To facilitate

private sector access to foreign exchange for exports, the ADB has recently

approved the Small and Medium Enterprises Trade Enhancement Facility.

ADB has provided 25 loans totaling $ 1878.0 million for the development of

finance sector.

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Under its recently completed Capital Market Development Program

Loan, ADB assistance facilitated the reforms of the capital market and

strengthening of the regulatory environment.

2.3.7 Education Sector

ADB has completed several major projects in education sector. While

other are in progress. It has provided 12 loans totaling $501.1 million. It is

3.5% of total loan.

2.3.8 Technical Assistance

The grant technical assistance provided by ADB has mainly been for

capacity building and institutional development. In addition, it has also

supported various in-country and foreign training programs for public and

private sector institutions.

2.3.9 Decentralized Service Delivery Study

Submissions are invited from individuals working with federal,

provincial or district governments in Pakistan, NGOs, academic institutions

and donor agencies to contribute to a series of short, published "Issues and

Options Notes" that look at emerging concerns and difficulties posed by

devolution, with an emphasis on pragmatic, immediate steps that could be

taken to promote better service delivery by districts and tehsils.

2.4 ADB'S MAJOR PROJECTS IN PAKISTAN

Asian Development Bank has provided assistance for several major

projects. Some of these Projects are discussed in detail in the preceding

chapters. Here these Projects are listed according to their sectorial composition.

2.4.1 Agricultural Research Projects

1. Agribusiness Development Project

2. Decentralization Support Program

3. Infrastructure Development

4. Agriculture Sector Program II

5. Forestry Sector Project

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2.4.2 Social Sector Projects

1. Capital Market Development Program

2. Punjab Devolved Social Services Program3. North-West Frontier Province Barani Area Development Project, Phase

Balochistan Devolved Social Services Program

4. Earthquake Emergency Assistance Project

5. National Drainage Sector Project

6. Social Action Program (Sector) Project II

7. Sustainable Livelihoods in Barani Areas Project

8. Sindh Rural Development Project

2.4.3 Educational Sector Projects

1. Balochistan Devolved Social Services Program

2. Restructuring of the Technical Education and Vocational TrainingSystem Project (Balochistan Province)

3. Restructuring of the Technical Education and Vocational TrainingSystem Project (North-West Frontier Province)

4. Decentralized Elementary Education Project

5. Science Education Sector Project, Second

6. Girls Primary School Sector Project, Second

7. Technical Education Project

8. Restructuring of the Technical Education and Vocational TrainingSystem Project (Balochistan Province)

9. Restructuring of the Technical Education and Vocational TrainingSystem Project (North-West Frontier Province)

2.4.4 Energy Sector Development Projects

1. Energy Sector Restructuring Program

2. Ghazi Barotha Hydropower Project

3. Proposed Loan to Laraib Energy Limited for the New Bong EscapeHydropower Project in the Islamic Republic of Pakistan


2.4.5 Finance and Industry Sectors Projects

1. Punjab Resource Management Program2. Financial (Non bank) Markets and Governance Program

3. Financial Sector Intermediation Loan

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4. Strengthening Regulation, Enforcement and Governance of FinancialMarkets

5. Small and Medium Enterprise Trade Enhancement Finance

6. Trade, Export Promotion, and Industry Program

7. Micro finance Sector Development

8. Balochistan Resource Management Program

9. Rural Finance Sector Development Program

2.4.6 Governance



3. Strengthening Regulation, Enforcement and Governance of FinancialMarkets

2.4.7 Health, Nutrition, and Population Sector Projects


2. Reproductive Health Project

3. Women's Health Project

4. Punjab Devolved Social Services Program

5. Sindh Devolved Social Services Program

2.4.8 Irrigation and Drainage

1. Punjab Farmer-Managed Irrigation Project

2. Malakand Rural Development Project

3. Flood Protection Sector Project, Second

4. Dera Ghazi Khan Rural Development Project

5. Bahawalpur Rural Development Project

6. National Drainage Sector Project

2.4.9 Multisector Projects


2. Multisector Rehabilitation and Improvement Project for Azad Jammuand Kashmir

3. Private Sector Development and Finance


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2.4.10 Rehabilitation

Multisector Rehabilitation and Improvement Project for Azad Jammu

and Kashmir

2.4.11 Roads (Operation and Maintenance)

Earthquake Emergency Assistance Project North-West Frontier

Province Road Development Sector and Subregional Connectivity

Project

2.4.12 Roads, Railways and Highways

1. Infrastructure Development2. Balochistan Road Development Sector Project

3. Punjab Road Development Sector Project

4. Rural Access Roads Project

5. Transport and Communications Infrastructure Development

5. Railways' Infrastructure Development

2.4.13 Sectors / Sectoral Development

1. Micro finance Sector Development2.4.14 URBAN DEVELOPMENT AND HOUSING PROJECTS

1. Southern Punjab Basic Urban Services Project

2. North-West Frontier Province Urban Development Sector Project

2.4.15 Water Resource Management Projects \


2.4.16 Water Supply Projects

1. Punjab Community Water Supply & Sanitation Sector Project


3. Korangi Wastewater Management Project


1. Punjab Resource Management Program (Subprogram 2)

2.4.18 Others

1. Punjab Resource Management Program (Subprogram 2)

2. Sustainable Livelihoods in Barani Areas Project

1. Access to Justice System Program

2. Ports, Waterways, & Shipping Infrastructure Development Project

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CHAPTER 3

3.1.1 Purpose and Functions

The purpose of the Bank is to foster economic growth and co-operation

in the region of Asia and Far East (hereinafter referred to as the "region") and

to contribute to the acceleration of the process of economic development of the

developing member countries in the region, collectively and individually. To

fulfill its purpose, the Bank shall have the following functions:

i. To promote investment in the region of public and private capital for

development purposes;

ii. To utilize the resources at its disposal for financing development of the

developing member countries in the region, giving priority to those

regional, sub-regional projects and programmes which will contribute

most effectively to the harmonious economic growth of the region as a

whole, and having special regard to the needs of the smaller or less

developed member countries in the region;

iii. To meet requests from members in the region to assist them in the

coordination of their development policies and plans with a view to

achieving better utilization of their resources, making their economies

more complementary, and promoting the orderly expansion of their

foreign trade, in particular, intra-regional trade;

iv. To provide technical assistance for the preparation, financing and

execution of development projects and programmes, including the

formulation of specific project proposals;

v. To co-operate, in such manner as the Bank may deem appropriate with

the United Nations, its organs and subsidiary bodies and with public

international organizations and other international institutions, as well as

national entities whether public or private, which are concerned with the

investment of development funds in the region, and to interest suchinstitutions and entities in new opportunities for investment and

assistance; and

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vi. To undertake such other activities and provide such other services as

may advance its purpose.

3.1.2 Considerations for Project LendingADB provides project-lending assistance based upon the following

considerations

Economic viability, technical feasibility, and financial soundness

Effect on development activity in the country concerned

Contribution to the removal of economic bottlenecks

Capacity of the borrowing country to service additional external debt

Introduction of new technologies to raise productivity

Expansion of job opportunities

Strengthening of institutions according to criteria of good governance

Integration of environmental and social considerations into ADB projects

3.1.3 Membership

1. Membership in the Bank shall be open to:

i. Members and associate members of the United Nations Economic

Commission for Asia and the Far East; and

ii. Other regional countries and non-regional developed countries, which

are members of the United Nations or of any of its specialized agencies.

2. Countries eligible for membership under paragraph 1 of this Article

which do not become members in accordance with Article 64 of this

Agreement may be admitted, under such terms and conditions as the

Bank may determine, to membership in the Bank upon the affirmative

vote of two-thirds of the total number of Governors, representing not less

than three-fourths of the total voting power of the members.

3. In the case of associate members of the United Nations Economic

Commission for Asia and the Far East which are not responsible for the

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conduct of their international relations, application for membership in the

Bank shall be presented by the member of the Bank responsible for the

international relations of the applicant and accompanied by an

undertaking by such member that, until the applicant itself assumes such

responsibility, the member shall be responsible for all obligations that

may be incurred by the applicant by reason of admission to membership

in the Bank and enjoyment of the benefits of such membership.

Member Countries of Asian Development Bank

In 1966, when Asian Development Bank was established, it had 31

members. Over the years its membership has grown to 64, listed in table 1.1,

both within and outside the Asian and Pacific region.

3.2 CAPITAL STRUCTURE OF ADB

3.2.1 Authorized Capital

According to the Article of ADB

The authorized capital stock of the Bank shall be one billion dollars

($1,000,000,000) in terms of United States dollars of the weight and

fineness in effect on 31 January 1966. The authorized capital stock shall

be divided into one hundred thousand (100,000) shares having a par

value of ten thousand dollars ($10,000) each, which shall be available for

subscription only by members in accordance with the provisions of

Charter of ADB. The original authorized capital stock shall be divided

into paid-in shares and callable shares. Shares having an aggregate parvalue of five hundred million dollars ($500,000,000) shall be paid-in

shares, and shares having an aggregate par value of five hundred million

dollars ($500,000,000) shall be callable shares. The authorized capital

stock of the Bank may be increased by the Board of Governors, at such

time and under such terms and conditions as it may deem advisable, by a

vote of two-thirds of the total number of Governors, representing not less

than three-fourths of the total voting power of the members.

3.2.2 Subscription of Shares

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Each member shall subscribe to shares of the capital stock of the Bank.

Each subscription to the original authorized capital stock shall be for paid-in

shares and callable shares in equal parts. The initial number of shares to be

subscribed by countries which become members in accordance with Article 64

of this Agreement shall be that set forth in Annex A hereof. The initial number

of shares to be subscribed by countries that are admitted to membership in

accordance with paragraph 2 of Article 3 of this Agreement shall be determined

by the Board of Governors; provided, however, that no such subscription shall

be authorized which would have the effect of reducing the percentage of capital

Table 3.1: Member Countries of Asian Development Bank

Subscribed Capital Voting Power

Members Year

Joined

Number of

Shares

Percent of

Total

Number of

Votes

Percent of

Regional

Percent of

Total

Regional Members

Afghanistan 1966 1,195 0.034 14,904 0.522 0.340

Armenia 2005 10,557 0.301 24,266 0.850 0.553

I Australia 1966 204,740 5.834 218,449 7.654 4.979

Azerbaijan 1999 15,736 0.448 29,445 1.032 0.671

Bangladesh 1973 36,128 1.029 49,837 1.746 1.136

Bhutan 1982 220 0.006 13,929 0.488 0.317

Cambodia 1966 1,750 0.050 15,459 0.542 0.352

China 1986 228,000 6.496 241,709 8.469 5.510

Cook Islands 1976 94 0.003 13,803 0.484 0.315

Fiji Islands 1970 2,406 0.069 16,115 0.565 0.367

Hong Kong, China 1969 19,270 0.549 32,979 1.156 0.752

India 1966 224,010 6.383 237,719 8.329 5.419

Indonesia 1966 192,700 5.490 206,409 7.232 4.705

Japan 1966 552,210 15.734 565,91 11.8.829 12.900

Kazakhstan 1994 28,536 0.813 42,245 1.480 0.963

Kiribati 1974 142 0.004 13,851 0.485 0.316

Korea, Republic of 1966 178,246 5.079 191,955 6.726 4.375

Kyrgyz Republic 1994 10,582 0.302 24,291 0.851 0.554

Lao PDR 1966 492 0.014 14,201 0.498 0.324

Malaysia 1966 96,350 2.745 110,059 3.856 2.509

Maldives 1978 142 0.004 13,851 0.485 0.316Marshall Islands 1990 94 0.003 13,803 0.484 0.315

Micronesia,Federated States of

1990 142 0.004 13,851 0.485 0.316

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Mongolia 1991 532 0.015 14,241 0.499 0.325


Members Year Joined Number of

Shares

Percent

of Total

Number of

Votes

Percent of

Regional

Percent of

Total

Regional Members

Myanmar 1973 19,270 0.549 32,979 1.156 0.752

Nauru 1991 142 0.004 13,851 0.485 0.316

Nepal 1966 5,202 0.148 18,911 0.663 0.431

New Zealand 1966 54,340 1.548 68,049 2.384 1.551

Pakistan 1966 77,080 2.196 90,789 3.181 2.069Palau 2003 114 0.003 13,823 0.484 0.315

Papua NewGuinea

1971 3,320 0.095 17,029 0.597 0.388

Philippines 1966 84,304 2.402 98,013 3.434 2.234

Samoa 1966 116 0.003 13,825 0.484 0.315

Singapore 1966 12,040 0.343 25,749 0.902 0.587

Solomonslands

1973 236 0.007 13,945 0.489 0.318

Sri Lanka 1966 20,520 0.585 34,229 1.199 0.780

Taipei, China 1966 38,540 1.098 52,249 1.831 1.191

Tajikistan 1998 10,134 0.289 23,843 0.835 0.543

Thailand 1966 48,174 1.373 61,883 2.168 1.411

Timor-Lestc 2002 350 0.010 14,059 0.493 0.320

Tonga 1972 142 0.004 13,851 0.485 0.316

Turkmenistan 2000 8,958 0.255 22,667 0.794 0.517

Tuvalu 1993 50 0.001 13,759 0.482 0.314

Jzbekistan 1995 23,834 0.679 37,543 1.315 0.856

Vanuatu 1981 236 0.007 13,945 0.489 0.318

Viet Nam 1966 12,076 0.344 25,785 0.903 0.588

Total Regional 2,223,452 63.351 2,854,066 100.000 65.056

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Non Regional Member Countries


Members Year

Joined

Number of

Shares

Percent of

Total

Number of

Votes

Percent of

Regional

Percent

of Total

Non-regional Members

| Austria 1966 12,040 0.343 25,749 1.680 0.587

| Belgium 1966 12,040 0.343 25,749 1.680 0.587

Canada 1966 185,086 5.274 198,795 12.967 4.531

Denmark 1966 12,040 0.343 25,749 1.680 0.587

Finland 1966 12,040 0.343 25,749 1.680 0.587

France 1970 82,356 2.347 96,065 6.266 2.190

Germany 1966 153,068 4.361 166,777 10.879 3.802

Italy 1966 63,950 1.822 77,659 5.066 1.770

Luxembourg 2003 12,040 0.343 25,749 1.680 0.587

The Netherlands 1966 36,294 1.034 50,003 3.262 1.140

Norway 1966 12,040 0.343 25,749 1.680 0.587

Portugal 2002 12,040 0.343 25,749 1.680 0.587

Spain 1986 12,040 0.343 25,749 1.680 0.587

Sweden 1966 12,040 0.343 25,749 1.680 0.587

Switzerland 1967 20,650 0.588 34,359 2.241 0.783Turkey 1991 12,040 0.343 25,749 1.680 0.587

United Kingdom 1966 72,262 2.059 85,971 5.608 1.960

United States 1966 552,210 15.734 565,919 36.915 12.900

Total Non-Regional

1,286,276 36.649 1,533,038 100.000 34.944

Grand Total 3,509,728 100.000 4,387,104 100.000

Stock held by regional members below sixty (60) per cent of the total subscribedcapital stock.

1. The Board of Governors shall at intervals of not less than five (5) yearsreview the capital stock of the Bank. In case of an increase in the

authorized capital stock, each member shall have a reasonable

opportunity to subscribe, under such terms and conditions as the Board

of Governors shall determine, to a proportion of the increase of stock

equivalent to the proportion which its stock theretofore subscribed bears

to the total subscribed capital stock immediately prior to such increase;

provided, however, that the foregoing provision shall not apply in

respect of any increase or portion of an increase in the authorized capital

stock intended solely to give effect to determinations of the Board of

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Governors under paragraphs 1 and 3 of this Article. No member shall be

obligated to subscribe to any part of an increase of capital slock.

2. The Board of Governors may, at the request of a member, increase thesubscription of such member on such terms and conditions as the Board

may determine; provided, however, that no such increase in the

subscription of any member shall be authorized which would have the

effect of reducing the percentage of capital stock held by regional

members below sixty (60) per cent of the total subscribed capital stock.

The Board of Governors shall pay special regard to the request of any

regional member having less than six (6) per cent of the subscribed

capital stock to increase its proportionate share thereof.

3. Shares of stock initially subscribed by members shall be issued at par.

Other shares shall be issued at par unless the Board of Governors by a

vote of a majority of the total number of Governors, representing a

majority of the total voting power of the members, decides in special

circumstances to issue them on other terms.

4. Shares of stock shall not be pledged or encumbered in any manner

whatsoever, and they shall not be transferable except to the Bank in

accordance with Chapter VII of this Agreement.

5. The liability of the members on shares shall be limited to the unpaid

portion of their issue price.

6. No member shall be liable, by reason of its membership, for obligations

of the Bank.

3.2.3 Payment of Subscriptions

Payment of the amount initially subscribed by each Signatory to this

Agreement (Agreement refers to" Agreement Establishing the Asian

Development Bank) which becomes a member in accordance with Article 64

to the paid-in capital stock of the Bank shall be made in five (5) installments, of

twenty (20) per cent each of such amount.

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i. Each member shall pay the first installment within thirty (30) days after

entry into force of this Agreement, or on or before the date of deposit on

its behalf of its instrument of ratification or acceptance in accordance

with paragraph 1 of Article 64.

ii. The second installment shall become due one (1) year from the entry

into force of this Agreement.

iii. The remaining three (3) installments shall each become due successively

one (1) year from the date on which the preceding installment becomes

due.

1. Of each installment for the payment of initial subscriptions to the

original paid-in capital stock:

a. Fifty (50) per cent shall be paid in gold or convertible currency; and

b. Fifty (50) per cent in the currency of the member.

2. The Bank shall accept from any member promissory notes or other

obligations issued by the Government of the member, or by the

depository designated by such member, in lieu of the amount to be paid

in the currency of the member pursuant to paragraph 2 (b) of this

Article, provided such is not required by the Bank for the conduct of its

operations. Such notes or obligations shall be non-negotiable, non-

interest-bearing, and payable to the Bank at par value upon demand.

Subject to the provisions of paragraph 2(ii) of Article 24, demands upon

such notes or obligations payable in convertible currencies shall, over

reasonable periods of time, be uniform in percentage on all such notes or

obligations.

3. Each payment of a member in its own currency under paragraph 2(b) of

this Article shall be in such amount as the Bank, after such consultation

with the International Monetary Fund as the Bank may consider

necessary and utilizing the par value established with the International

Monetary Fund, if any, determines to be equivalent to the full value in

terms of dollars of the portion of the subscription being paid. The initial

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payment shall be in such amount as the member considers appropriate

hereunder but shall be subject to such adjustment, to be effected within

ninety (90) days of the date on which such payment was due, as the

Bank shall determine to be necessary to constitute the full dollar

equivalent of such payment.

4. Payment of the amount subscribed to the callable capital stock of the

Bank shall be subject to call only as and when required by the Bank to

meet its obligations incurred under sub-paragraphs (ii) and (iv) of

Article 11 on borrowings of funds for inclusion in its ordinary capital

resources or on guarantees chargeable to such resources.

5. In the event of the call referred to in paragraph 5 of this Article,

payment may be made at the option of the member in gold, convertible

currency or in the currency required to discharge the obligations of the

Bank for the purpose of which the call is made. Calls on unpaid

subscriptions shall be uniform in percentage on all callable shares.

6. The Bank shall determine the place for any payment under this Article,

provided that, until the inaugural meeting of its Board of Governors, the

payment of the first installment referred to in paragraph 1 of this Article

shall be made to the Secretary-General of the United Nations, as Trustee

for the Bank.

3. 3 ORDINARY CAPITAL RESOURCES

As used in this Agreement, the term "ordinary capital resources" of theBank shall include the following:

1. Authorized capital stock of the Bank, including both paid-in and callable

shares, subscribed pursuant to Article 5 of this Agreement, except such

part thereof as may be set aside into one or more Special Funds in

accordance with paragraph 1 (i) of Article 19 of this Agreement;

2. Funds raised by borrowings of the Bank by virtue of powers conferred by sub-paragraph (i) of Article 21 of this Agreement, to which the

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commitment to calls provided for in paragraph 5 of Article 6 of this

Agreement is applicable;

3. Funds received in repayment of loans or guarantees made with theresources indicated in (i) and (iii) of this Article;

4. Income derived from loans made from the aforementioned funds or from

guarantees to which the commitment to calls set forth in paragraph 5 of

Article 6 of this Agreement is applicable; and

5. Any other funds or income received by the Bank which do not form part

of its Special Funds resources referred to in Article 20 of thisAgreement.

3.4 FINANCIAL MANAGEMENT

Instruments

ADB provides different forms of assistance to governments and private

enterprises in its developing member countries based on a member's priorities.

The main instruments are:

1. Loans

2. Technical assistance

3. Grants

4. Guarantees

5. Equity investments

3.4.1 Loan and Grant Resources

Issuing bonds, recycling repayments, and receiving contributions from

members, finance ADBs operations. About 70% of the bank's cumulative

lending comes from its ordinary capital resources.

ADB also provides loans from its Special Funds resources. Among them

is the Asian Development Fund, which provides concessional loans to ADB's

least developed member countries. ADB also manages several trust funds and

channel financing of grants provided by bilateral donors.

3.4.2 Co-financing

For every dollar lent by ADB in 2004, an additional 46 cents was

mobilized from other official sources and commercial institutions.

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Technical assistance activities-funded through grants, loans, or both-

help maximize development impact.

In 2004, a total of 323 technical assistance activities, amounting to

US$197 million, were approved for

1. Preparing and executing projects and programs

2. Supporting advisory and operational activities in areas such as law,

economic management, public policy, agriculture and natural resources,

energy, finance, education, etc

3. Regional activities 1.5 Organizational Structure and Management of

Asian development Bank

The Bank have a Board of Governors, a Board of Directors, a President,

five Vice-Presidents (i.e. (i) Vice-president of Knowledge Management and

Sustainable Development, (ii) Vice-president of Operation 1, (iii) (iv) Vice-

president of Operation 2, (v) Vice-president of Finance and Administration)

and such other officers and staff.

3.5 Board of Governors

The Board of Governors is ADB's highest policy-making body and all

the powers of the Bank are vested in the Board of Governors. It is composed of

one representative from each member. Each member appoints one Governor

and one alternate and he or she serve at the pleasure of the appointing member.

The Board of Governors meets annually. At its annual meeting, the Board

appoints one of the Governors as Chairman who holds office until the election

of the next Chairman and the next annual meeting of the Board. The Board of

Governors elects the president of the Bank for a term of (5) five years.

According to the Charter of the Bank, all the power of institution are vested in

ABD's Board of Governors, which in turn delegate these power to the Board of

Directors except for those power reserved for the board of government in the

Charter.

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3.5.1 Voting Power of Members

The total voting power of each member consists of the sum of its basic

votes and proportional votes.

i. The basic votes of each member consists of such number of votes as

results from the equal distribution among all the members of twenty (20)

per cent of the aggregate sum of the basic votes and proportional votes

of all the members.

ii. The number of the proportional votes of each member shall be equal to

the number of shares of the capital stock of the Bank held by that

member.

The basic votes allotted to each member are 13701. Pakistan has 77080

shares of the capital stock of the bank. Thus Pakistan has 90789 votes (total

Pakistan voting power is 90789 votes= 77080 shares of capital stock + 13709

basic votes)

Japan and USA have the highest number of votes (i.e. 12.900 % of total)

each and Tuvalu has the lowest number of votes (0.314% of total votes).

3.5.2 Meetings of Board of Governors

1. The Board meets annually at such date and place as the Board may

determine. However, the Board of Directors may change the date and

place of the meeting when special circumstances or reasons arise to

justify such action.

2. The Board also holds special meetings when it so decides or when called

by the Board of Directors.

3. The President shall notify all members, by the most rapid possible

means, of the date and place of each meeting of the Board. Such

notifications must be dispatched at least sixty (60) days prior to the date

of an annual meeting and thirty (30) days prior to the date of a special

meeting

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4. A majority of the Governors shall constitute a quorum for any meeting

of the Board, provided such majority represents not less than two-thirds

of the total voting power of the members.

5. The Board may order the temporary adjournment of any meeting end its

resumption at a later date.

6. The President, Directors and their Alternates may attend any meeting of

the Board and participate therein. However, Directors and their

Alternates shall not be entitled to vote unless they are entitled to vote as

a Governor.

3.6 Board of Directors

The Board of Directors is composed of 12 Directors (each with an

Alternate), Governors of regional-members elect eight of those 12 directors and

the remaining four are elected by non-regional members. A director shall not

be a member of the Board of Governors. The Board of Governors elects the

Board of Directors every two years. Each director appoints one alternate who

has full powers to act for him when he is not present. Directors and alternates

shall be nationals of member countries. No two or more Directors may be of

the same nationality nor may any two or more alternates be of the same

nationality. The Board of Directors performs its duties full-time at the ADB

headquarters and holds formal and executive sessions regularly. The Directors

supervise ADB's financial statements, approve its administrative budget, and

review and approve all policy documents and all loan, equity, and technical

assistance operations.

The President chairs the Board of Directors and, under its guidance, conducts thebusiness of ADB.

3.6.1 Powers of Board of Directors

The Board of Directors is responsible for the direction of the general

operations of the Bank and, shall, in addition to the powers assigned to it

expressly by article, exercise all the powers delegated to it by the Board of

Governors.

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3.6.2 Election of Directors

As mention earlier, there are two types of directors I) Those representing

regional members; and ii) Those representing non-regional members

3.6.3 Election of Directors by Governors representing regional members:

1. Each Governor representing a regional member shall cast all votes of the

member he represents for a single person.

2. The seven (7) persons receiving the highest number of votes shall be

Directors, provided that he received ten percent of the total voting power

of regional members. If seven (7) persons are not elected at the first

ballot, a second ballot shall be held in which the person who received

the lowest number of votes in the preceding ballot shall be ineligible and

in which votes shall be cast only by:

a. Governors who voted in the preceding ballot for a person who is not

elected; and

b. Governors whose votes for a person who is elected are deemed to haveraised the votes cast for that person above eleven (11) per cent of the

total voting power of regional members.

3. If, after the second ballot, seven (7) persons are not elected, further

ballots shall be held in conformity with the principles and procedures laid down

in this Section, except that after six (6) persons are elected, the seventh may be

elected notwithstanding the provisions of paragraph (2) of this Section - by a

simple majority of the remaining votes of regional members. All such

remaining votes shall be deemed to have counted towards the election of the

seventh Director.

3.6.4 Election of Directors by Governors representing non-regional

members

1. Each Governor representing a non-regional member shall cast all votes

of the member he represents for a single person.

2. The three (3) persons receiving the highest number of votes shall be

Directors, except that no person who receives less than twenty-five (25)

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per cent of the total voting power of non-regional members shall be

considered as elected.

3. If three (3) persons are not elected at the first ballot, a second ballotshall be held in which the person who received the lowest number of

votes in the preceding ballot shall be ineligible and in which votes shall

be cast only by:

i. Governors who voted in the preceding ballot for a person who is not

elected; and

ii. Governors whose votes for a person, who is elected are deemed to haveraised the votes cast for that person above twenty-six (26) per cent of

the total voting power of non-regional members.

4. In determining whether the votes cast by a Governor shall be deemed to

have raised the total number of votes for any person above twenty-six

(26) per cent, the said twenty-six (26) per cent shall be deemed to

include, first, the votes of the Governor casting the highest number of

votes for that person, and then, in diminishing order, the votes of each

Governor casting the next highest number until twenty-six (26) per cent

is attained.

5. Any Governor, part of whose votes must be counted in order to raise the

votes cast for any person above twenty-five (25) per cent, shall be

considered as casting all his votes for that person even if the total

number of votes cast for that person thereby exceeds twenty-six (26) per

cent. If, after the second ballot, three (3) persons are not elected, further

ballots shall be held in conformity with the principles and procedures

laid down in this Section, except that after two (2) persons are elected, a

third may be elected - provided that subscriptions from non-regional

members shall have reached a minimum total of three hundred forty-five

million dollars ($345,000,000) and notwithstanding the provisions of

paragraph (2) of this Section - by a simple majority of the remaining

votes.

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3.7 DEPARTMENTS, OFFICES, AND MISSIONS OF ASIAN

DEVELOPMENT BANK

ADB's field offices include resident and regional missions, a country

office, a liaison office, and representative offices.

Each support ADB's objective of reducing poverty by strengthening

representation in its regional and non-regional members, and by providing

broader and more direct access to its constituencies.

3.7.1 Resident Missions

The resident missions provide the primary operational interface between

ADB and the host DMC. The missions help implement ADB's goal of reducing

poverty and related strategic objectives in the DMCs and enhance policy

dialogue with the DMCs. They are the recognized intellectual resource and

knowledge base on development issues in the DMCs. The resident missions

also

1. Create strong partnerships with DMC development stakeholders,including governments, the private sector, and civil society

2. Enhance ADB's responsiveness to local needs and issues

3. Take the lead in aid coordination where possible

4. Promote Sub-regional Corporation.

Work of Resident Mission

The work of the resident missions is grouped into two broad categories:standardand

Specific functions

Standard functions: Standard functions are those that the resident missions

perform as ADB's principal representatives in the field:

1. Promoting relationships with government, civil society, and the privatesector

2. Engaging in policy dialogue and support

3. Reporting on country activities

4. Coordinating aid

5. Assisting in external relations and information dissemination.

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Specific functions

The specific functions carried out by the missions relate to delivering

and implementing ADD projects. More complex and resource intensive, these

functions include

1. Country programming

2. Project and technical assistance processing

3. Portfolio management and project administration

4. Economic and sector work and analyses

3.7.2 Important Departments and Offices

Budget, Personnel and Management Systems Department

The Budget, Personnel and Management Systems Department (BPMSD)

determines, allocates, manages, and administers the Bank's budgetary

provisions for financial and human resources. The department also designs and

assesses the organization and systems within which these resources are brought

together to carry out the broad range of Bank activities. It develops and

operates personnel programs.

Central Operations Services Office

The Central Operations Services Office (COSO) is responsible for

central planning, monitoring, and coordinating project processing and

administration work programs, and for identifying and resolving procedural

and institutional problems being experienced with the Bank's projects. It

provides advisory services on procurement of goods and services and use of

consultants, it also prepares guidelines, loan administration manuals, project

administration instructions, and other operational documents

Economics and Research Department

ERD delivers four basic products: ideas, instruments, instructions, and

informal connections.

Ideas: Knowledge Generation and Dissemination

Its immersion in countries in the Asian and Pacific region makes ADB akey knowledge bank for the developing countries in the region. ERD publishes

the results of empirical research carried out within the Department and other

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departments in ADB. ERD distributes its publications to over 1,000 libraries

and institutions worldwide. ERD also conducts seminars, workshops, and

conferences meant to share country experiences, state-of-the-art knowledge,

and progress on ongoing projects.

Office of the Auditor General

The Office of the Auditor General (OAG) consists of a Financial,

Administrative and Information Systems Division (OAGF) and an Integrity

Division (OAGI) reporting to the Auditor General. The Auditor General reports

directly to the President. The Audit Committee of the Board of Directors

reviews OAG's activities.

Office of the General Counsel

The Office of the General Counsel (OGC) provides advice and

assistance to the President, the Board of Governors, the Board of Directors, and

various departments and offices of the Bank on legal matters relating to the

organization, administration, finance, policies, and operations of the Bank.

3.8 PAKISTAN AND ASIAN DEVELOPMENT BANK

3.8.1 Pakistan Resident Mission

The Pakistan Resident Mission (PRM) located in Islamabad, Pakistan,

started its operation in 1989. PRM's primary role is to:

1. Initiate and maintain policy dialogue with the Government of Pakistan

on issues relevant to ADB's operations in Pakistan

2. Prepare the Country Strategy and Program (CSP) for Pakistan and itsannual updates, and initiate and monitor the progress of the Poverty

Reduction Partnership Agreement with the Government

3. Plan and prepare ADB's economic and sector work for Pakistan

including Country Economic Review (2001), Pakistan Economic

Update, Poverty Assessment

4. Maintain and strengthen working relations with the Government, civil

society, private sector and development partners

5. Strengthen project processing and portfolio management

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6. Process and implement a selected number of technical assistance

7. Assist the executing agencies in complying with ADB procedures on

procurement and disbursement

8. Promote external relations and disseminate information about ADB and

its operations, including publication of regular PRM Newsletter

9. Undertake other activities from participating in HQ project processing

missions to provide back-up operational support, donor coordination,

and sub regional cooperation. ThePakistan Resident Mission (PRM) is

organized into three operational units;

1. Country Policy Operations (CPO) Unit,

2. The Results Management & Development Effectiveness Unit And

3. Two supporting operations units-Disbursement Unit and Finance and

Administration Unit. Country Policy Operations Unit: The Country

Policy Operations Unit is responsible for;

4. Preparing Country Strategy and Program (CSP) and its annual updates

(CSPUs);

5. Carrying out programming tasks and conducting country programming

6. Taking the lead role in economic and sector work relating to Pakistan

including input in the processing and implementation of policy-based

operations.

7. Providing assistance in the processing of country assistance including

loans and Tas.

8. Supporting work and initiatives on sub-regional cooperation.

9. Supporting donors coordination.

Results Management & Development Effectiveness Unit

The Results Management & Development Effectiveness Unit is

responsible for;

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1. Assessing the performances of portfolio of ADB-financed projects in

Pakistan.

2. Identifying country-specific and sector-specific portfolio and projectperformance issues and analyzing underlying reasons.

3. Formulating measures to improve portfolio and project performances

with emphasis on increased development effectiveness.

4. Building result-based management capacity for project implementation

in the government and

5. Carrying-out administration of delegated projects and assisting

Headquarters in administering non-delegated projects.

Governance Unit

The Governance Unit is responsible for:

1. Preparing and overseeing ADB's support to Pakistan's governance

reforms, including devolution, gender and social development, access to

justice, and civil society - state relations.

2. Assisting preparation of technical assistance and loan projects to ensure

consistency with ADB policy commitments on governance, civil society

participation, gender and social development.

3. Effectively administering and implementing delegated loan and

technical assistance projects.

4. Networking with partners in civil society, research and policy

institutions and government to support improved quality and relevance

of ADB's operations to poverty reduction in Pakistan.

Supporting Unit

There are two supporting operations units;

3. Disbursement Unit and

4. Finance and Administration Unit.

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Disbursement Unit

The Disbursement Unit is responsible for:

1. Processing disbursement claims for all Pakistan Loans in accordance

with ADB guidelines and local regulations

2. Monitoring Contract Awards and Disbursement achievements and

communicating with Project staff, HQ and Federal and Provincial

Governments.

3. Training Implementing Agencies' staff on Disbursement Guidelines of

ADB for smooth disbursement of funds.

4. Coordinating its activities with Federal and Provincial Ministries of

Finance, Implementing Agencies, ADB Controller's office and Result

Management and Development Effectives Unit.

5. Fielding Review Missions to monitor and improve compliance of

Disbursement Guidelines of ADB, and take remedial action.

6. Handling all internal/ external queries pertaining to disbursement or

lending and borrowing issues.

Finance and Admin Unit

The Finance and Admin Unit is responsible for:

1. Providing support to the office operations in the fields of financial

accounting and management, personnel functions and administration,

including security.

2. Handling financial functions of PRM operations, including financial

transactions of administrative expenses, business travel, training, capital

expenditure, and TA-related expenses.

3. Preparing the annual, midyear and revised budgets and allocations,

monitoring and controlling the expenditures and ensuring cost

effectiveness and adherence to laid down policies and procedures

4. Advising the Country Director on personnel functions, covering

recruitment of staff and various staff actions

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5. Monitoring and evaluating overall security situation in country,

participating in security meetings at the UN, and based on that plus own

assessments, issues

6. Overseeing necessary work involved in physical expansion of PRM

Office

7. Providing support to AFRM in a number of areas, including transport,

procurement of equipment and supplies.

A cumulative of 293 technical assistance (TA) projects has been

approved by ADB for Pakistan with a total amount of $138.65 million as of 31December 2004. Presently, there are 62 TAs under implementation with a total

amount $53.6 million.

3.8.2 Voting power of Pakistan

Pakistan is the ninth largest shareholder in ADB among its regional

members. Overall, Pakistan is the 13th largest shareholder.

Table 3.2 Pakistan's Number of Share and voting power

Number of shares held: 77,080 (2.203% of total shares)

Votes: 3.21% of total regionalmembership)

90,965 (2.08% of total membership,

Overall capital subscription: US$1. 19 billion

Paid-in capital subscription: US$83. 55 million

3.8.3 Contributions to Special Funds Resources

Pakistan has contributed to the Technical Assistance Special Fund

(TASF), which provides grants to borrowing members to help prepare projects

and undertake technical or policy studies.

Contributions to the TASF (committed): | US$1.60 million

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CHAPTER 4

ANALYSIS OF ASIAN DEVELOPMENT BANK

ASSISTANCE

The aim of this study is to analyze The role of ADB in Pakistan

Development. In order to analyze the required topic of the study, the

improvement in quality of life is the criteria. Although, several other factors

also contributed in improving the quality of life. But those factors cannot be

isolated.

For analytical study following projects were selected from allover

Pakistan to give a comprehensive view of the ADB role.

4.1 ANALYSIS OF ADB ASSISTANCE FOR IMPROVING BASIC

EDUCATION

ADB's main human development objective is to reduce poverty by

improving the health, living standards, and livelihood of people in its DMCs.

Strengthening institutions; building capacity; reforming policy; and providing

loans and technical assistance in education, health and nutrition, water supply

and sanitation, and urban sectors.

No country or region has done well in reducing poverty without first

providing widespread basic education and health services. Education helps to

empower the poor, to enhance their income-earning potential, and to improve

the quality of their lives. Without basic education-without basic skills and

knowledge-the poor lack the tools essential for breaking the poverty cycle.People with basic education are more productive and more likely to earn higher

incomes. Where attention has been paid to educating women, multiple benefits

have been obtained: educated women have lower fertility rates, produce less

children and their children have lower infant mortality rates; and educated

mothers are more likely to use health services and to send their children to

school.

Children from poor families are less likely to attend or to complete

school and, as adults, these children will be less likely to improve their quality

of life or that of their own children. The poor child-who was malnourished as

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an infant-may have diminished learning ability, may suffer from chronic

disease, and therefore may be unable to benefit fully from schooling. A child

from a poor family is less likely to receive appropriate stimulation and

encouragement at home and may find the transition from home to school more

difficult. Early childhood development programs ensure adequate nutrition and

health care, help compensate for disadvantaged home environments, and lay

the foundation for better performance at school.

ADB and education: Work continued in 1999 on preparing an updated

education sector policy paper to assess ADB's evolving role in education, with

particular attention to education's role in reducing poverty. Of all types of

education, primary education is clearly the most important for poverty

reduction. But even when this is available and successfully completed by the

poor, their transition to higher education and training is limited. Strategies for

education and poverty reduction must identify ways to ensure equity of access

to education beyond the basic levels. As poor adults are likely to have had no

access to education in their childhood or to have dropped out of school early,

investing in adult and community education programs (designed to teach basic

literacy, transfer essential knowledge in health and nutrition, and provide

entrepreneurial and income-enhancement skills) is warranted. Enrollment of

the poor in both higher education and skills development programs must be

encouraged. However, entry qualifications often require completion of lower

levels of education that are often not completed by the poor. Because books

and supplies are expensive, the cost of such programs is usually beyond the

means of the poor, even when tuition is provided free. The opportunity cost of

attending post-basic education training in terms of income foregone is higher

for the poor, whose immediate income is needed by the family. ADB-assisted

programs in higher education and skills development support programs to

enhance equity of access to higher levels of education and training for the poor

through the provision of vouchers and scholarships, and develop alternative

means of delivering and assessing skills training and higher education. Policy

dialogue with governments and capacity building are needed to put in place

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pro-poor policies and pro-poor resource allocation mechanisms. ADB's

Projects for Improving the Education in Pakistan

Asian development Bank has provided loans and grants for several projects toPakistan for the improvement of educational sector, increasing the literacy rate

in Pakistan.

4.1.1 Analysis of Teacher Training Project Basic Data about the

project

1. Loan Number: 1210-PAK (SF)

2. Project Title: Teacher Training

3. Executing Agency:i. Federal Ministry of Education (MOE); and

ii. Provincial education departments (PEDs) of

Balochistan, North-West Frontier, Punjab, and Sindh.

4. Amount of Loan: $52.1 millionsource: (Pakistan economic update, ADB website and Ministry of finance

website)

Project Description

In spite of impressive economic growth in the previous two decades,

Pakistan in the early 1990s had some of the world's lowest social indicators.

Out of 160 developing countries, Pakistan ranked 120th and suffered from

widespread poverty and low quality of life. Annual population growth rate was

3.1%; infant mortality rate, 107 per 1,000 live births; life expectancy, 55 years;

overall illiteracy rate, 69% (85% for women); and primary-school enrolment

was very low (less than 50%), particularly for females. In 1992, theGovernment of Pakistan launched the Social Action Program (1992-1995) to

emphasize human resource development, which is essential to promote

economic development, reduce poverty, and improve social well-being. The

program allocates resources for universal primary education to increase the

literacy rate to about 80% by the end of the decade. Government of Pakistan

also adopted the National Education Policy in the 1990s.

This policy reflected issues identified in the 1988 studies that strengthened the

rationale for the Teacher Training Project (TTP). In 1990, ADB provided

project preparatory technical assistance (TA) to prepare a detailed proposal for

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the TTP. Principal stakeholders, policymakers, administrators, and

beneficiaries at a national conference in Islamabad reviewed the TA findings in

1992, and recommendations incorporated to improve the project design.

Objectives of Teacher Training Program

The objectives of TTP included the following:

1. An expanded teacher training system to solve the teacher shortage,

which at appraisal was estimated to reach 525,800 by 2000 (234,600 for

primary schools; 96,100 for middle schools; and 195,100 for secondary

schools);

2. Improved quality of teacher training programs, which at appraisal were

dominated by the 9-month primary teacher training certificate (PTC)

training course and the 12- month certificate of teaching (CT) course,

and which, after over 25 years, had become obsolete; and

3. Improve planning, management, and efficiency of teacher training

institution (TTIs), which were under multiple chains of command and

responsibilities at the federal and provincial levels.

Anticipated Benefits

Anticipated benefits upon project completion included the following:

i. Training for over 160,000 teachers, of whom at least 60% would be

women; staff development through overseas fellowship and in-country

training for about 5,000 Ministry of Education (MOE) and provincial

education department (FED) senior staff and officials involved inteacher training;

ii. Improvement of 59 TTIs; and

iii. Establishment of six new TTIs to

a. Increase training capacity, quality, and research;

b. Increase access to teacher training in disadvantaged rural areas,

especially for women;

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c. Improve the quality of methodologies and teaching environment

in TTIs;

d. Strengthen planning and management.

Project Cost and Financing

The total project cost at appraisal was estimated at $71.3 million.

Table 4.1: Project Cost($ Million)

Cost Appraisal Estimate Actual

Foreign Exchange cost 13.5 7.3

Local Currency Cost 57.8 19.4

Total 71.3 26.7

Source: (Pakistan economic update, ADB website and Ministry of financewebsite)

ADB provided a loan of$52.1 million and Government of Pakistan

committed $19.2 million for local currency costs. The loan approved on 15

December 1992 and declared effective on 14 October 1993, was to cover the

entire foreign exchange costs of $13.5 million, and part ($38.6 million

equivalent) of the total local currency costs. The actual project cost was $26.7

million, including $21.4 million financed by an ADB loan and $5.3 million by

Government of Pakistan. After five loan cancellations amounting to $29.7

million, the loan account was finally closed on 18 July 2002. No major changes

were made to the project scope during implementation, including the midterm

review, although changes to the project schedule were required due to longdelays.

Table 4.2 Financing plan of the Projects


Foreign Local Total Foreign Local Total

Implementation Costs

ADB-Financed 11.9 38.6 50.5 6.3 14.1 20.4

Borrower-Financed 0.0 19.2 19.2 0.0 5.3 5.3

Sub total 11.9 57.8 69.7 6.3 19.4 25.7

IDC Cost

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ADB-Financed 1.6 0.0 1.6 1.0 0.0 1.0

Borrower-Financed 0.0 0.0 0.0 0.0 0.0 0.0

Total 1.6 0.0 1.6 1.0 0.0 1.0

Source: (Pakistan economic update, ADB website and ministry of finance

website)

Performance of the Asian Development Bank

ADB generally handled approval, disbursement, and related project procedures

efficiently and on time. Fourteen review missions were conducted from 1995 to

2001. Although adequate staff time was provided for review missions, field

supervision of project activities to help FCU and PIUs solve their problems,

given the complexity of the umbrella-type design of the project, could have

been more effective. During project implementation, the review missions could

also have recommended further training of FCU and PIU staff in ADB's

procurement and disbursement procedures to expedite completion of project

components, and advised EAs to have funds reimbursed under advance action

and retroactive financing. ADB's performance was considered partlysatisfactory.

Efficacy in Achievement of Purpose

In general, TTP accomplished its overall objectives of capacity

expansion and increased access to training, as well as intermediate and long-

term goals of pre-service quality through the Dipl. Ed. course. Consistent with

the targets, the physical infrastructure was practically all completed and more

classrooms were constructed than planned. However, specific objectives such

as the provision and installation of electronic media equipment and laboratory

equipment, vehicles, furniture, curriculum and instructional material

development, in-service training, and TEMIS and BME were partly

accomplished. In other words, TTP is assessed as partly efficacious.

4.1.2 Analysis of Second Girls Primary School Project

Basic Data about project

1. Project Number: 27180

2. Loan Number: 1454(SF)

3. Country: Pakistan

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4. Loan Number: 1454-PAK(SF)

5. Project Title: Second Girls Primary School Sector Project

6. Executing Agency:

i. Ministry of Education (federal)ii. Department of Education (Balochistan)

iii. Department of Education (NWFP)

iv. Department of Education (Punjab)

v. Department of Education (Sindh)

7. Amount of Loan: SDR31, 178,000

Project Description

Pakistan has one of the highest rates of illiteracy in the region because

of limited access to education and lack of basic education facilities. Females,

especially in rural areas, are particularly disadvantaged, as the adult literacy

rate is considerably lower in rural areas than in urban areas, and illiteracy is

significantly higher among females than among males. The Asian Development

Bank (ADD), through the Primary Education (Girls) Sector Project 1,

supported the Government of Pakistan's (the Government's) long-term plan to

increase girls' participation in primary education by setting up communitymodel schools (CMSs) for girls in union councils. In the final phases of that

project, ADB responded to the Government's request for further assistance by

approving a project preparatory technical assistance (PPTA) to build on

experience and achievement under the earlier project, and prepare a detailed

proposal for the Second Girls Primary School Sector Project (the Project) in

close consultation and coordination with the Government, other aid agencies,

and expected beneficiaries.

Purpose of the Project

The Project was aimed at providing accessible and good-quality primary

education to increase the participation and retention rates of girls in rural areas.

The Project supported the government's long-term plan to expand primary

education for girls by establishing CMSs where they could receive good-

quality instruction and master the basic literacy skills needed for further

education and productive life.

Project Cost

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The total cost of the Project at appraisal was estimated at $ 78.8 million

equivalent comprising $ 10.1 million in foreign exchange cost of $ 68.7 million

equivalent in local currency cost. ADB approved a loan of $45.0 million from

its Special Fund to finance $7.6 million (76%) of the foreign exchange cost and

$37.3 million (54%) in local currency cost.

The ADB loan represented 57 % of the total project cost. The Organization of

Petroleum Exporting Countries Fund for International Development (OPEC

Fund) was to finance $16.0 million ($1.7 million of the foreign exchange cost

and $14.4 million of the local currency cost). The remaining $17.8 million,

comprising $0.8 million in foreign exchange cost and $17.0 million in local

currency cost, was to be shouldered by the Government through budgetary

allocations.

The actual project cost was $60.6 million $41.6 million in foreign

exchange cost 15 and $19.0 million equivalent in local currency cost. ADB

financed $37.1 million, OPEC Fund $11.3 million, and the Government $12.2

million equivalent. Local currency costs financed by ADB included primarily

civil works, furniture, IM, and staff development activities. The actual costs as

shown in the following Table 4.3 were lower than the appraisal estimate. Here

we do not discuss its reasons.

Table 4.3: Project Appraisal Estimate and Actual Cost ($ million)


Foreign Exchange cost 10.1 41.6

Local Currency Cost 68.7 19.0

Total 78.8 60.6

Source: ( Pakistan economic update, ADB website and Ministry of finance

website)

Breakdown by Project components

The amounts allocated to each component of the Project are shown in the table

below.

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Table 4.4: Breakdown by Project component

Component Appraisal Estimate Actual

Base Cost

Civil Work 39.3 36.4Furniture, Equipment, Vehicles, and Materials 13.8 4.1

Staff Development 2.9 0.8

Consulting Services 2.2 2.8

Community Participation 2.2 0.0

CMS staff Salaries 16.5 9.7

Salaries, Incentives, and O&B 1.9 1.5

Total Base Cost 77.2 55.3

Taxes and Duties 0.0 0.

Service Charges 1.6 0.8

Imprest Account 0.0 4.5

Total 78.8 60.6

Source: ( Pakistan economic update, ADB website and ministry of finance website)

Performance of the Asian Development Bank

ADB closely supervised and monitored the Project, and guided the EAs

in procurement. ADB approved contract awards on time and clarified

implementation issues raised by the EAs. In addition to regular review

missions, regular follow-up meetings were held with the project directors. As

required, joint review meetings with the project directors were also held to

discuss and resolve common implementation issues. The project directors

keenly appreciated this initiative taken by ADB. The Government appreciated

as well ADB's approval of a loan extension of 2 years and 10 months, to allow

for the implementation delays and the need to complete the large number of

civil works contracts. Throughout the implementation period, ADB maintained

a cordial relationship with the EAs, and its review missions supported the quick

resolution of outstanding constraints on project implementation.

Efficiency in Achievement of Purpose

In general, the Project accomplished its overall objectives of increased

access and enhanced institutional capacity. Consistent with the targets, the

physical infrastructure was practically completed and functioning with students

and staff, classrooms and TRRs were being used, and most of the SMCs were

in place, although not all were equally active. The PCR mission visited over

100 schools; nearly all were functioning, with average student enrollment near

designed capacity. The Project made improvements in the collection and

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analysis of data on student enrollment, dropout, and repetition rates; however,

this initiative could not be completed because the consulting firm did not field

the required consultants. The following key appraisal targets were met:

1. 75 new schools were built and 979 existing schools were upgraded.

Nearly all these school projects were completed and are functioning.

2. Furniture was procured for all 1,054 CMSs. Most of the furnishings are

in place and are being used.

3. Equipment and library books were procured, and IM were developed

under the Project.

4. Management and planning capacity at the central level and in the

provinces was strengthened. At the school level, SMCs were

established.

4.1.3 Analysis of Middle School Project

Basic Data

1. Loan Number: 1278-PAK (SF)2. Project Title: Middle School Project

3. Executing Agencies:

i. Ministry of Education, Federal

ii. Department of Education, Balochistan

iii. Department of Education, North-WestFrontier Province (NWFP)

iv. Department of Education, Sindh

4. Amount of Loan: $78 million estimated

Project Description

In 1992 the Government of Pakistan requested Asian Development

Bank (ADB) assistance to analyze issues, strategies, and options relating to

expanding and improving middle-school education, and to prepare a project

proposal to address issues identified. The Government confirmed its priority

for the project to the 1993 Country Programming Mission and requested that

ADB assistance be limited to the provinces of Balochistan, North-West

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Frontier Province (NWFP), and Sindh. The Punjab was excluded because the

World Bank was undertaking a similar project in Punjab.

Objectives of the Project

The rationale for the proposed intervention was that the Government

was improving access, quality, and supervision in primary schools with

external assistance, including from ADB.

The Middle School Project took note of two realities: the need to create

additional seats for the increased number of students projected to complete

primary school; and the importance of elementary education with a special

focus on girls' education. The Project thus aimed to:

i. Improve access to and participation in middle schooling in rural and

urban slum areas, especially for girls;

ii. Improve the quality of education, and increase student learning and

achievement;

iii. Strengthen the capacity to plan, implement, and maintain the schoolsystem.

To achiev

Documents

Role Of ADB