Where does ADB spend its money?

The Asian Development Bank is known primarily for financing infrastructure projects in the region, a view that has been reinforced by the bank’s most recent multinational survey of stakeholder perceptions. Not surprisingly, investments in infrastructure comprised the majority of ADB’s spending in 2013. According to its latest annual report, the bank approved $21 billion worth of development financing for the Asia-Pacific region in 2013. Of this, infrastructure projects made up more than 60 percent of investments, most of which were related to energy, transport and ICT. Spending on education, health and social protection — sectors ADB identified as key to achieving inclusive growth in developing Asia — is significantly lower. Total investment in these sectors constituted less than 7 percent of approved financing in 2013. ADB does recognize the need to shore up spending on these sectors, and has set targets for education and health in its Strategy 2020. And while 2013 spending remains low, a recently released midterm review confirms investments are steadily reaching their 2020 targets. Education-related projects, for instance, accounted for 3.7 percent of approved financing in 2013 — just 2.3 percentage points shy of the 6 percent minimum target for 2020. Progress in the health sector is even more significant: at 2.5 percent of total approved projects, health operations require just half a percentage point to meet its 3 percent minimum target for 2020. In addition to investment targets per sector, ADB aims to increase the share of co-financed operations by 2020. Stand-alone project financing, however, still largely exceeded co-financing in 2013. Of ADB’s $21 billion assistance, only $6.65 billion came from direct value-added co-financing, mainly through official (58 percent) as opposed to commercial (42 percent) means. Despite donor member countries’ tight budgets, ADB received a record $3.85 billion from development partners to co-finance 45 investment projects and 163 technical assistance projects in 2013. The bulk of ADB investments remain concentrated in Southeast Asia. South Asia — which replaced Central and West Asia as the second-largest recipient of ADB assistance this year — inched slightly higher on ADB’s geographic priorities. Central and West Asia Afghanistan, Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkmenistan, Uzbekistan New lending to the region amounted to $4.13 billion: $3.56 billion in ADB financing and $567 million in co-financing. Technical assistance — advisory services to support capacity development, regional cooperation and integration, research and development, and project preparation — reached $34.89 million. Investments in improving connectivity and promoting regional cooperation were the focus of ADB operations in Central and West Asia — a region that comprises landlocked countries — this year. To ease connectivity and flow of goods, ADB supported the reconstruction of four roads in Afghanistan: a 106-kilometer section of the Kabul-Jalalabad road, 50 kilometers of the Sharan-Angoor Ada road, 33 kilometers of the Lashkar Gah-Gereshk road and 75 kilometers of the Doshi-Bamyan road. The third tranche of a $500 million financing facility for Armenia was signed off as well. A country partnership strategy for Kyrgyzstan, which prioritizes inclusive economic growth, was also approved for 2013-2017. As ADB gears up for its annual meeting in Astana, Kazakhstan, this week, Central and West Asia could gain greater prominence in its agenda. East Asia China, Mongolia China may have gained upper-middle-income country status, but development issues — the need to protect the environment and reduce regional inequality, for example — continue to plague the rapidly evolving economy. ADB assistance to China, which amounted to $1.54 billion in 2013, focused on four sectors: natural resources and agriculture, energy, transport, and urban and social. While China continues to attract the world’s attention, Mongolia, China’s landlocked neighbor, has been quietly expanding. Its economy has been growing 11.5 percent year-on-year, fueled by fiscal and monetary policies and copper production at the Oyu Tolgoi mine — a project that is expected to contribute up to 30 percent to Mongolia’s gross domestic product once full production starts in 2020. But limited cross-border links and vulnerability to external shocks, among other factors, hamper Mongolia’s growth potential. In both China and Mongolia, the ADB is working toward reducing reliance on fossil fuel and responding to the environmental problems that accompany economic growth. Last year, it incorporated climate change impact assessments into some of its projects to promote climate-resilient infrastructure in both countries. Pacific The Cook Islands, East Timor, Fiji, Kiribati, the Marshall Islands, the Federated States of Micronesia, Nauru, Palau, Papua New Guinea, Samoa, Solomon Islands, Tonga, Tuvalu, Vanuatu ADB assistance to Pacific island countries amounted to $437.8 million for 15 loan and grant projects and $62.6 million in technical assistance for 33 projects in 2013. Lending and grant assistance, supported by $24.8 million in co-financing, went to transport (63 percent), energy (22 percent), water supply and sanitation (6 percent) and public sector management (5 percent) projects. Papua New Guinea and East Timor received $305.7 million and $50 million in ADB support, respectively, in 2013 — the highest in the Pacific. But the region’s geography, marked by sparsely distributed islands across a wide area, makes it vulnerable to a host of environmental and economic challenges. Consistent with the Pacific Approach 2010-2014, ADB’s 2013 activities focused on developing climate-resilient infrastructure, helping to improve Pacific countries’ fiscal positions and managing public investments more efficiently. For example, in East Timor, ADB is helping to build roads that can withstand frequent and intense weather changes. Meanwhile, it is promoting good governance in Samoa, Solomon Islands and Tonga through policy-based operations aimed to improve fiscal positions and delivery of public services. South Asia Bangladesh, Bhutan, India, the Maldives, Nepal, Sri Lanka Loan-based assistance approved for South Asia in 2013 amounted to almost $4 billion, while technical assistance grants reached close to $55 million. Since infrastructure deficits impede productivity, investment and social inclusion in South Asia, ADB activities in this sector comprised 87 percent of its operations in the region last year. Meanwhile, investments in energy, such as the interconnection transmission line to supply electricity from India to Bangladesh and the award-winning 126-megawatt Dagachhu hydropower facility in Bhutan, amounted to almost $1 billion in 2013. The approval of 2013-2017 partnership strategies for India and Nepal — both prioritize faster but more inclusive and sustainable economic growth — and the opening of a country office in Thimphu, Bhutan, seem to suggest that South Asia will have a larger role in ADB operations. Southeast Asia Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Vietnam ADB’s lending to the public sector in Southeast Asia totaled $3.18 billion — supplemented by $1.37 billion in co-financing and $153.77 million in technical assistance — in 2013. Lending support went to three key areas: public sector management (50 percent), transport (15 percent) and energy (10 percent). The devastation brought by Typhoon Haiyan last year, meanwhile, resulted in increased emergency assistance to the Philippines. The first loan ADB approved for Myanmar after the country initiated a series of reforms was a $512 million facility from the Japan Bank for International Cooperation. The loan is meant to support Naypyitaw’s economic and social reforms. In Indonesia, ADB financed a $400 million program to spur economic activity through lower transport and logistic costs. The 2013-2016 country partnership strategy for Thailand, which focuses on knowledge-based partnership and increased private sector funding, was also finalized last year. The approval of the document stresses the importance ADB places on learning from its lending and nonlending operations, and incorporating lessons from these activities into its projects. Join the Devex community and gain access to more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health.