naveed khan (finance report)

8/4/2019 Naveed Khan (Finance Report)

1/167

CHAPTER - 1

INTRODUCTION

1.1 ASIAN DEVELOPMENT BANK

Asian Development Bank (ADB) is a multilateral development

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

was established in 1966. ADB is owned by 63 member countries. 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 the world.

Asian Development Bank has resident missions in Asia

3 sub regional offices in the Pacific

Representative offices in Frankfurt for Europe, Tokyo for Japan,

and Washington, DC for North America

A special liaison office in Timor-Leste

Under its Long-Term Strategic Framework (2001-2015), 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.

1.1.1 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

1


2/167

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 thesmaller 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 such institutions and entities in new opportunities for

investment and assistance; and

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

may advance its purpose.

1.1.2 Considerations for Project Lending

2


3/167

ADB 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

1.1.3 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

3


4/167

the 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 andaccompanied 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.

1.2 CAPITAL STRUCTURE OF ADD

1.2.1 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 par value 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

4


5/167

total number of Governors, representing not less than three-fourths of

the total voting power of the members.

1.2.2 Subscription of Shares

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 which 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 1.1: Member Countries of Asian Development Bank

Subscribed Capital Voting Power

Kmembers 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 0.317Cambodia 1966 1,750 0.050 15,459 0.542 0.352

China, People'sRepublic of

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

5


6/167

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 0.316

Marshall 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

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 2.069

Palau 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 1.191Tajikistan 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

6


7/167

7


8/167

Non Regional Member Countries


Members YearJoined

Number ofShares

Percent ofTotal

Number ofVotes

Percent ofRegional

Percentof 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 0.783

Turkey 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 subscribed

capital stock.

1. The Board of Governors shall at intervals of not less than five (5)

years review 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

8


9/167

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 Governors under paragraphs 1 and3 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

the subscription 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 inaccordance 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.

1.2.3 Payment of Subscriptions

9


10/167

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 Article64 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.

i. The first installment shall be paid by each member 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 theoriginal 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 bepaid 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.

10


11/167

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 mayconsider 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 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.

1. 3 ORDINARY CAPITAL RESOURCES

As used in this Agreement, the term "ordinary capital resources" of

the Bank shall include the following:

11


12/167

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 SpecialFunds 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 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 the

resources 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 formpart of its Special Funds resources referred to in Article 20 of this

Agreement.

1.4 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

1.4.1 Loan and Grant Resources

12


13/167

ADB's operations are financed by issuing bonds, recycling

repayments, and receiving contributions from members. 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.

1.4.2 Co-financing

For every dollar lent by ADB in 2004, an additional 46 cents wasmobilized from other official sources and commercial institutions.

1.4.3 Technical Assistance

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.

1.5.1 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

13


14/167

composed of one representative from each member. Each member appoints

one Governor and one alternate and they serve at the pleasure of the

appointing member. The Board of Governors meets annually. At its annualmeeting, 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.

1.5.2 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).

1.5.3 Meetings of Board of Governors

14


15/167

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 tojustify such action.

2. The Board also hold 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 thedate of an annual meeting and thirty (30) days prior to the date of a

special meeting

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 endits 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.

1.5.4 Chairman of Board of Governors

1. At the end of each annual meeting the Board of Governors elect one

of its Governors to be the Chairman and two other Governors to be

Vice-Chairmen, and they shall serve in their respective positions

until the end of the next annual meeting of the Board. In the absence

of the chairman, the Vice-Chairman, designated by the Chairman

acts in his place.

2. The Chairman, or the Vice-Chairman acting as Chairman, may not

vote, but his Alternate Governor may vote in his place.

15


16/167

1.5.5 Secretary of Board of Governors

The Secretary of the Bank serves as Secretary of the Board of

Governors.

16


17/167

1.5.6 Language

At meetings of the Board the working language shall be English.

1.6 BOARD OF DIRECTORS

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

Alternate), eight of those 12 directors are elected by Governors of regional-

members and the remaining four are elected by non-regional members. A

director shall not be members 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 notpresent. 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 the

business of ADB.

1.6.1 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 ofGovernors.

1.6.2 Election of Directors

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

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

members

1.6.3 Election of Directors by Governors representing regionalmembers:

17


18/167

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 notelected; and

b. Governors whose votes for a person who is elected are deemed to

have raised 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 laiddown 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.

1.6.4 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) 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 ballot

shall be held in which the person who received the lowest number of

18


19/167

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

have raised 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 raisethe 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.

1.6.5 President and Vice-President(s)

The president of Bank is the legal representative of bank. He is also

the chief of staff of bank. He is elected by the Board of Governors for a

term of five years. He shall be a national of a regional member country. He

19


20/167

may be re-elected. He shall cease to hold office when the Board of

Governors so decides by a vote of two-thirds of the total number of

Governors, representing not less than two-thirds of the total voting power ofthe members. If the office of the President for any reason becomes vacant

more than one hundred and eighty (180) days before the end of his term, a

successor shall be elected for the unexpired portion of such term by the

Board of Governors in accordance with the provisions of Article. If such

office for any reason becomes vacant one hundred and eighty (180) days or

less before the end of his term, a successor may similarly be elected for the

unexpired portion of such term by the Board of Governors. The President is

the Chairman of the Board of Directors but have no vote, except a deciding

vote in case of an equal division. He can participate in meetings of the

Board of Governors.

Vice-President (S)

The Board of Directors appoints one or more Vice-President(s) on

the recommendations of President who hold office for such term, exercisesuch authority and perform such functions in the administration of the

Bank, as may be determined by the Board of Directors. If the president is

absent for any reason, the Voice president, or in case there is more than one

vice-president, the ranking voice president shall act as president.

1.7 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.

1.7.1 Resident Missions

The resident missions provide the primary operational interface

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

20


21/167

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 theDMCs. 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

private sector

2. Engaging in policy dialogue and support

3. Reporting on country activities

4. Coordinating aid

5. Assisting in external relations and information dissemination

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

21


22/167

3. Portfolio management and project administration

4. Economic and sector work and analyses

1.7.2 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

Controller's Department

The Controller's Department (CTL)

1. Establishes and maintains the Bank's accounting system and records

2. Prepares reports setting forth the financial position of ordinary

capital resources and special funds, including trust funds and the

staff retirement fund

3. Calculates and arranges the settlement of maintenance of value

obligations of members

4. Authorizes disbursements under loans and technical assistance

operations, and provides assistance to other departments in

22


23/167

negotiating and administering loans and technical assistance

operations

5. Authorizes payments of administrative and other expenses in

connection with trust funds and funds of a similar nature

6. Makes payments in respect of salaries, allowances, and benefits

under the Staff Retirement Plan

Department of External Relations

The Department of External Relations (DER) carries out information

activities to improve awareness and understanding of ADB's role and

operations. It is the focal point for all public information activities and bears

overall responsibility for the implementation and consistent application of

the Public Communications Policy (PCP).

East and Central Asia Department

The East and Central Asia Department includes

1. Azerbaijan Resident Mission

2. Central Asia Regional Economic Cooperation Unit (CARECU) Field

Office

3. PRC Resident Mission

4. Kazakhstan Resident Mission

5. Kyrgyz Republic Resident Mission

6. Mongolia Resident Mission

7. Tajikistan Resident Mission

8. Uzbekistan Resident Mission

Economics and Research Department

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

and informal connections.

Ideas: Knowledge Generation and Dissemination

23


24/167

Its immersion in countries in the Asian and Pacific region makes

ADB a key knowledge bank for the developing countries in the region.

ERD publishes the results of empirical research carried out within theDepartment and other 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.

Instruments: Knowledge Center Activities

Rigorous empirical research rests on timely availability of relevant

data. ERD's vision of being a leading research group on key development

issues in the region can only be accomplished by a strong core competency

to compile, analyze, and share data. Hence, ERD:

Generates a statistical database and annual statistical publication that

provides economic, financial, and social indicators at the micro and

macro level

Builds quantitative economic and statistical models to support ADB's

economic forecasting and policy analysis Instructions: Operations

Support

ERD's research products help strengthen ADB's institutional priorities

and country operations, particularly ADB's aid effectiveness, even as

ADB operations inform ERD's research agenda. ERD translates its

research products into operational outcomes through

interdepartmental collaboration.

Informal Connections: DMC Assistance

ERD's applied economic research contributes to augmenting the

stock of knowledge on development issues of interest to the DMC

development community and policymakers. The department provides policy

advice on various development issues.

Mekong Department

24


25/167

The Mekong Department handles

1. Cambodia Resident Mission

2. Lao PDR Resident Mission

3. Thailand Resident Mission

4. Viet Nam Resident Mission

Office of Administrative Services- OAS

OAS provides administrative support and services to help ADB

management and staff do their job and enhance the effectiveness of the

workplace. It aims to deliver quality products and services at an affordable

cost. OAS has two divisions;

1. Facilities and Asset Management (OAFA)

2. Institutional Services (OAIS).

OAFA Manages

1. The planning, operation, and maintenance of ADB facilities,

buildings and grounds

2. The library, archives, and records system

3. Food services, commissary services, property control and office

equipment

OAIS' responsibility includes

1. Procurement of goods and services and contracts administration

2. Printing, shipping, insurance, communications, and transportation

3. Travel and visa

4. Internal and external security and safety

5. Community relations and liaison with the Philippine Government

25


26/167

Office of Cofinaiicing Operations

The Office of Cofmancing Operations (OCO) acts as ADB's focal

point for planning, promoting and arranging cofmancing for ADB projects,

and for formulating policies on cofinancing and guarantee operations. It

Assists borrowers to obtain cofinancing from;

1. Commercial financial institutions

2. Official funding agencies

3. Export credit agencies

Office of Information Systems and Technology - OIST

The Office of Information Systems and Technology (OIST),

formerly called the Office of Computer Services, is responsible for planning

and managing automated information systems and telecommunications

services of the Bank to improve the effectiveness and efficiency of the

Bank's operational, financial, and administrative functions.

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.

Office of Regional Economic Integration

OREI assist the developing member countries of ADB-both

individually and collectively-to harness the full benefits of global financial

26


27/167

integration and international capital flows while at the same time

minimizing any disruptive effects.

Responsibilities

1. Monitor economic policies and financial architecture issues from a

regional and subregional perspective and disseminate the results to

promote prudential economic management.

2. Strengthen ADB's relations with other international financial

institutions, as well as regional and subregional bodies, by providing

monitoring inputs to various meetings and discussions.

Office of the Secretary

The Office of the Secretary (OSEC) provides advice and counsel to

the Board of Governors, Board of Directors, and Management. Other major

responsibilities include the following:

1. Formal channel of communication between ADB and its members

2. Administers applications for membership in ADB

3. Organizes and oversees the proceedings of the Annual Meeting of

the Board of Governors

4. Manages the calendar of meetings of the Board of Directors and

organizes the meetings

5. Supports the Committees of the Board of Directors

6. Edits, classifies and circulates Board documents

7. Maintains the official depository for agreements entered into by

ADB

8. Administers the terms and conditions of engagement of Management

and the Board administers the inspection function

27


28/167

Operations Evaluation Department - OED

OED was established in 1978 as the Post-evaluation Office, and

since then has undergone several changes in functions. The importance of

OED increased when it became a department in 2001.

1. On 1 January 2004 OED became an independent Department

reporting to ADB's Board of Directors through the Board's

Development Effectiveness Committee.

OED's functions are:

2. The evaluation of the performance of completed projects, programs,

and technical assistance (TA), the ongoing project portfolio, broader

thematic issues, and of the effectiveness of ADB's policies, practices,

and procedures.

3. The feedback to ongoing operations, including the design of new

operations

South Asia DepartmentThe South Asia Department covers

1. Afghanistan Resident Mission

2. Bangladesh Resident Mission

3. India Resident Mission

4. Nepal Resident Mission

5. Pakistan Resident Mission

6. Sri Lanka Resident Mission

Southeast Asia Department

The Southeast Asia Department covers

1. Indonesia Resident Mission

2. Malaysia Resident Mission

3. Philippines Country Office

28


29/167

4. Singapore Resident Mission

Strategy and Policy Department - SPD

The objectives of SPD are to provide ADB with a strategic planning

perspective and direction, ensure policy and operations coordination, and

maintain institutional relations with the international development

community, especially on matters relating to resource mobilization.

SPD is divided into Two Divisions

i. Strategy, Planning, Policy and Interagency Relations Division (SPPI)

ii. Management Support Division (SPMS)

Treasury Department - TD

The Treasury Department (TD) is responsible for

1. Mobilizing funds required for ADB's operations

2. Planning and managing ADB's finances

1.8 ASIAN DEVELOPMENT BANK'S STAFF

ADB staff come from around 50 member countries. Over half are

Filipino, but the culture of ADB is international. It has 26 offices around the

world. ADB's staff consists of more than 2,000 employees from over 50

countries.

Professional Staffs General Profile

ADB needs for its operations highly qualified, experienced,

dedicated, and motivated staff with a varied mix of operational and

technical skills. ADB operates internationally and comprises different

nationalities, creating a cross-cultural environment where the elements are

nonetheless bound together toward common goals and objectives.

Requirement for Applicant

Applicants must:

1. Be citizens of ADB member countries

29


30/167

2. Possess very good academic background (those with post-graduate

degrees such as MBA, MS, or Ph.D. are given preference)

3. Have considerable expertise and years of experience in their

profession

4. Have multi-disciplinary background and with experience in an

international environment with involvement in developing countries

5. Have proficiency in both written and spoken English

6. Have the flexibility to work with other nationalities and with

different cultural backgrounds

7. Be willing to travel on mission to member countries, if required With

ADB committed to increasing the number of its female professional

staff, applications from women are actively encouraged.

Selection of Staff members

ADB's Human Resources Division initially evaluates the

applications and may refer their CVs to interested departments/offices for

further review before a final decision is communicated to the applicant.

This is to ensure that all applications are carefully and properly evaluated.

The ADB's HR division encourages internal selection. The Human

Resources Division ensures that applications from qualified ADB staff are

considered for vacancies before considering external candidates.

ADB Staff Members from PakistanAs of 31 December 2004, there were 23 professional staff members

from Pakistan in ADB (2.69% of the total professional staff), including four

senior staff members.

1.9 PAKISTAN AND ASIAN DEVELOPMENT BANK

1.9.1 Pakistan Resident Mission

The Pakistan Resident Mission (PRM) located in Islamabad,Pakistan, started its operation in 1989. PRM's primary role is to:

30


31/167

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 its

annual 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

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 subregional cooperation. The Pakistan 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);

31


32/167

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;

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

Pakistan;

2. Identifying country-specific and sector-specific portfolio and project

performance 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.

32


33/167

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;

1. Disbursement Unit and

2. Finance and Administration Unit.

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 Effectivess 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.

33


34/167

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

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

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

a total amount $53.6 million.

1.8.2 Voting power of Pakistan

Pakistan is the ninth largest shareholder in ADB among its regional

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

34


35/167

Table 1.2 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 totalmembership,

Overall capital subscription: US$1. 19 billion

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

1.9.3 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

35


36/167

CHAPTER 2

ADB ASSISTANCE FOR PAKISTAN

(Literature Survey)

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 earth quake affected people.

As I started my work on my project titled "The Role of ADB in

Pakistan" in December 2005. 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. I used both of the sources.

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 subregional connectivity in NWFP.

36


37/167

The details of the above Project along with their respective loan

amount are given in table 2.1

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 any technical 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

37


38/167

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.

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 on the next Page.

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 ManagementReforms(Subprogram 2)

SAGF ID 250.0

7 Strengthening Coordination and Alignmentof Government Operations to Devaluation

PRM ID 450.0

8 Strengthening 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

38


39/167


40/167

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 & 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.

FIGURE 1

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.

40


41/167

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 SectorADB 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.

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 as

Chasma 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 the earthquake effected areas. The Government of Pakistan

41


42/167

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 fordeveloping 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.

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.


The grant technical assistance provided by ADB has mainly been for

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

42


43/167

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 secrtorial

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

2.4.2 Social Sector Projects

1. Capital Market Development Program

2. Punjab Devolved Social Services Program

3. 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

43


44/167

2. Restructuring of the Technical Education and Vocational Training

System Project (Balochistan Province)


System 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


System Project (Balochistan Province)


System Project (North-West Frontier Province)

3.1.4 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 Escape

Hydropower Project in the Islamic Republic of Pakistan


2.4.5 Finance and Industry Sectors Projects

1. Punjab Resource Management Program

2. Financial (Nonbank) Markets and Governance Program

3. Financial Sector Intermediation Loan

4. Strengthening Regulation, Enforcement and Governance of Financial

Markets

5. Small and Medium Enterprise Trade Enhancement Finance

6. Trade, Export Promotion, and Industry Program

44


45/167

7. Microfmance Sector Development

8. Balochistan Resource Management Program

9. Rural Finance Sector Development Program

2.4.6 Governance



3. Strengthening Regulation, Enforcement and Governance of Financial

Markets

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

Jammu and Kashmir

45


46/167

3. Private Sector Development and Finance


2.4.11 Rehabilitation

Multisector Rehabilitation and Improvement Project for Azad

Jammu and Kashmir

2.4.12 Roads (Operation and Maintenance)

Earthquake Emergency Assistance Project

North-West Frontier Province Road Development Sector and SubregionalConnectivity Project

2.4.13 Roads, Railways and Highways


2. 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

2.4.14 Sectors / Sectoral Development

1. Microfinance Sector Development

2.4. URBAN DEVELOPMENT AND HOUSING PROJECTS

1. Southern Punjab Basic Urban Services Project

2. North-West Frontier Province Urban Development Sector Project

Water Resource Management Projects \


2.4.17 Water Supply Projects

1. Punjab Community Water Supply & Sanitation Sector Project

46


47/167


3. Korangi Wastewater Management Project


1. Punjab Resource Management Program (Subprogram 2)

2.4.19 Others

1. Punjab Resource Management Program (Subprogram 2)

2. Sustainable Livelihoods in Barani Areas Project

3. Access to Justice System Program

4. Ports, Waterways, & Shipping Infrastructure Development Project

47


48/167

CHAPTER 3

ANALYSIS OF ADB ASSISTANCE

The theme of this study to be analyze is The role of ADB in Pakistan

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

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

factors also contributed in improving the quality of life. But those factors

cannot be isolated.

For this analytical study three educational sector projects, two agricultural

sector projects, three finance and industrial sector projects, one energy

sector project, two health sector projects and three social sector projects

were selected for all Pakistan to give a comprehensive view of the ADB

role.

3.1 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. This is done by 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

48


49/167

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

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 and numeracy, 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

49


50/167

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 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

to Pakistan for the improvement of educational sector, increasing the

literacy rate in Pakistan. I have selected the following for analysis.

Emphasis is given on the cost and benefits/outputs of the projects.

3.1.1 Analysis of Teacher Training Project Basic Data about the

project

1. Loan Number: 1210-PAK (SF)

2. Project Title: Teacher Training3. 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 million

Project DescriptionIn 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,

the Government of Pakistan launched the Social Action Program (1992-

50


51/167

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 toincrease 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 the TTP. The TA findings were reviewed by principal

stakeholders, policymakers, administrators, and beneficiaries at a national

conference in Islamabad 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.

51


52/167

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 in teacher 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;

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 3.1: 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

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

52


53/167

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 long delays.

Table 3.2 Financing plan of the Projects

Cost Appraisal Estimate Actual

Foreign Local Total Foreign Local Total

Implementation CostsADB-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

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

Project Schedule

The loan was approved on 15 December 1992, and signed on 29 March

1993. The original date of loan effectiveness was 27 June 1993, but the loan

became effective on 14 October 1993, as more time was needed to comply

with the conditions precedent to loan effectiveness. TTP was expected to be

implemented over 5.5 years, with physical completion by 30 June 1998, and

loan closing by 31 December 1998. However, significant delays werecaused mainly by:

i. late site selection of PITEs in Punjab, Sindh, and NWFP, which, in

turn, set back procurement of equipment, furniture, recruitment of

staff, and operation and maintenance; and

ii. late decisions by FCU on fellowships abroad, curriculum and

instructional material development, consultancy services, and

procurement of electronic media equipment.

53


54/167

TTP was extended twice for a total of 24 months at the request of GOP,

initially to complete the physical infrastructure, in-service and training

abroad, and other institution-strengthening activities, and subsequently totry and complete the capacity-building activities for the PITEs and the

instructional material development. Ultimately, the civil works, in-service

training, and other capacity-building activities were generally completed,

but not installation of the electronic media equipment and related

operational training and printing of the remaining textbooks for Dipl. Ed.

A comparison of scheduled and actual project implementation is given in

Table 3.3.

Table 3.3: Project Schedule

Item AppraisalEstimate

Actual

Civil Works

Balochistan

Engineering Designs May 1995

Date of Award Oct 1993 Sep 1995

Completion of Work Jun 1995 Dec 2000North West Frontier

Engineering Designs Jun 1996

Date of Award Oct 1993 Feb 1996

Completion of Work Junl995 Sep 1999

Punjab

Engineering Designs

Date of Award Oct 1993 Mar 1996

Completion of Work Jun 1995 Jul 2000

Sindh

Engineering Designs

Date of Award Oct 1993 Jun 1994Completion of Work Jun 1995 Jun 2000

Equipment and Supplies

First Procurement Mar 1993 Sep 1994

Last Procurement Dec 1995 Mar 2000

Consulting Services

Start of services Mar 1993 Sep 1995

Completion of services Dec 1997 Dec 1999

Staff Development

Local FellowshipFirst Training Mar 1993 Apr 1995

Last training Dec 1997 Dec 1999

Overseas Fellowship

54


55/167

First Award Mar 1993 Jun 1998

Return of Last Fellow Dec 1995 Dec 1998

Project Implementation Unit

Beginning of Start-Up Jun 1993 Oct 1993

Completion Dec 1997 Dec 2000

Performance of Consultants, Contractors, and Suppliers:

The consultants started late due to delays in their engagement; some were

terminated early due to unsatisfactory performance. Overall, the output of

consultants was generally not satisfactory. This was d

naveed khan (finance report)

Documents