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      
 
                                                                                                                                                                                                                      
                                                                                    
The implementation of the poverty reduction strategy,approved in late 1999, got under way in earnest; it wasbolstered by the successful replenishment of the AsianDevelopment Fund (ADF) and the establishment of the JapanFund for Poverty Reduction. New policy initiatives wereagreed for work in private sector development. Deliberationsbegan on a long-term strategic framework.Throughout the year, ADB championed financial andregulatory reform, especially for crisis-affected countries. At year’s end, in these countries, external debt structures andpayment positions were quite sturdy—net capital outflowmostly related to scheduled debt repayments, and foreignexchange reserves were generally ample. Most bankingindicators were stronger, and some progress was made incorporate restructuring. However, the extent of restructuringand regulatory reform was far from adequate, as complacency replaced urgency. Also, global trends and political develop-ments unsettled capital and currency markets within the region.For 2001, the regional economy should continue to growalbeit at a slower pace, but there are uncertainties, andeconomic performance will depend greatly on externaldevelopments. The performance of developed economies(especially that of the United States), the state of globalelectronics markets, and the political situations in some coun-tries could all have a critical influence on overall performance.
   
In March, the Board approved a new private sector develop-ment strategy. Its fundamental aim is to strengthen the privatesector so that it can be the vehicle that pulls the poor out of poverty. There are three key thrusts: creating enablingconditions where business can flourish and pro-poor growthbe fostered; generating business opportunities to ensure thatADB’s public sector investments do not crowd out the privatesector and that all possible opportunities are taken to crowdit in; and catalyzing private investments by providing directADB financial assistance to private sector projects that haveclear development impacts or demonstration effects.Four areas of operation will be given priority: governancein the public and private sectors because the businesscommunity needs stability and certainty in the legal andregulatory framework; financial intermediation because goodaccess to finance is critical to private sector development;public-private partnerships because they help balance devel-opment goals with commercial interests; and regional andsubregional cooperation because cooperation offers largermarkets, economies of scale, and efficient division of labor.
   
The seventh ADF replenishment (ADF VIII)—so vital in thefight against poverty—was concluded in Okinawa, Japan inSeptember following meetings in Australia, Italy, Thailand,and United Kingdom. For the four-year period commencing1 January 2001, the planned ADF lending target is $5.65bil-lion, financed by new contributions ($2.91billion) and addi-tional commitments generated from existing and internalresources ($2.74billion). Portugal, whose ADB membershipis being processed, and Singapore became new donors.During the replenishment negotiations, donors agreedon several priorities for ADF VIII. These included introducingsystematic performance-based allocation for ADF loans;stronger support for good governance in the region; andincreased focus on gender equality, environmental protection,and regional cooperation. They recommended abandoning lossprovisioning for loans and denominating loans in specialdrawing rights. They requested a reexamination of theallocation basis of administrative expenses between ADFresources and ordinary capital resources (OCR); an assess-ment of encashment of contributions on a fixed schedule/prorata basis among donors; and an examination of tech-nical assistance financing in the midterm review of ADF VIII.Institutional initiatives recommended by the donorsincluded establishing a Development EffectivenessCommittee to enhance the impacts of operations andmeasures to improve relationships with shareholders.
   
The Japan Fund for Poverty Reduction (JFPR), a new financialresource, was established in 2000. The Government of Japan,recognizing the continuing aftershocks of the Asian financial
 
   
                                                                                                                                                                                                                       
crisis, provided 10 billion yen ($92.6million) to supportinnovative poverty reduction and related social developmentprojects on a grant basis, in line with ADB’s poverty reduction strategy. The JFPR is administered by ADB andis subject to all its procedures, including procurement,evaluation, and monitoring.
   
ADB’s vision is of a region free of poverty, and to this end,extensive work was undertaken in 2000 to develop a long-termstrategic framework that will guide the work of ADB over thenext 15 years. Wide-ranging discussions were held withmember countries, development partners, civil society, andan expert panel, and drew on the skills of ADB staff.The strategic focus will be on achieving sustainableeconomic growth, inclusive social development, and goodgovernance. In particular, the framework embraces thephilosophy and thrusts of the new private sector develop-ment strategy, and it recognizes the importance of regionaldevelopment activities and ADB’s unique role as the region’sdevelopment bank. It also reaffirms commitment to theinternational development goals. Core medium-term poverty targets for 2005 are for each DMC to implement nationalsustainable development strategies and eliminate genderdisparities in primary and secondary education. Thefundamental long-term target is to halve the incidence of extreme poverty by 2015, compared with 1990.
  
ADB needs to be closer to its member countries. TheResident Mission Policy, approved in February, is a majorstep in this direction. The Policy provides for openingresident missions in every DMC, where feasible. To this end,resident missions were opened in the People’s Republic of China and the Lao People’s Democratic Republic in 2000,and approval was given to open missions in Mongolia andThailand. These new missions are a good complement tothe 13resident missions previously established.
  
Despite the rapid growth in microfinance over the last twenty  years, the poor in many DMCs have no access to credit orinsurance. The Microfinance Development Strategy, approvedin June, will help change that. It will help create an enablingpolicy environment for developing microfinance services andstrengthen the capacity of the poor to access these services.
 
In 2000, the Board of Directors met formally on 66 occasions,including executive sessions, and held 30 informal meetings,including briefings, discussion seminars, and presentations.The Board approved $5.85 billion for 90 loans in 74 projects.Of this, $4.26 billion was from OCR and $1.59billion from ADF.
    
     
             
      
                            
       
                           
 
      
 
                                                                                                                                                                                                                      
          
    
    
   
   
   
   
  
          
   
            
 
             
  
    
  
    
  
      
  
      
   
     
 
     
  
     
   
       
  
        
  
      
   
            
   
         
  
       
  
     
   
 
        
   
     
   
          
  
           
  
     
   
         
  
Forty percent of project approvals, excluding private sectorand technical assistance loans, had poverty reduction as theprimary or secondary objective.
1
 The Board approved sevenequity investments in the private sector, amounting to$78.15million. It also approved directly, or through authority delegated to the President, technical assistance grantsamounting to $171.99 million for 306 projects.During the informal meetings, the Directors examineda broad range of issues, including the redesign of ADB’soperational business processes, and country assistance plansfor 2000–2002 and 2001–2003.


  
The 33
rd
 Annual Meeting of the Board of Governors washeld in Chiang Mai, Thailand, from 6 to 8 May 2000.

Turkmenistan became ADB’s 59
th
 member in 2000.
 
 Audit Committee
The 1999–2000 Audit Committee report underscored theimportance of independence and objectivity for both theOffice of the General Auditor (OGA) and the OperationsEvaluation Office (OEO). The Committee reported that itsnew terms of reference, adopted in 1999, made it moreeffective and more focused. It achieved its 2000 programwith fewer meetings than in previous years, although over-sight of year 2000 operations was added to its program. In2000, the Committee also formally adopted guidelines onconflict of interest for itself.Sixteen meetings were held, including one with theexternal auditors (PricewaterhouseCoopers), to reviewADB’s draft financial statements for 1999. With theauditors’ contract expiring in December 2000, theCommittee also monitored the selection of the next au-ditors and recommended the final selection to the Board.
1The classification system uses ADB objectives; projects are assigneda maximum of two objectives: one primary and one optionalsecondary. For example, a project aimed primarily at economic growthmight have secondary features for addressing social concerns.2The membership of Board committees is shown in Appendix 4.

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