International Financial Institutions | Bank For International Settlements | International Development Association

International Financial Institutions / Development Banks

By Prof Sameer Lakhani

Introduction
One major source of financing is international nonprofit agencies. The primary purpose of these agencies is to finance productive development projects or to promote economic development in a particular region. In general, both public and private entities are eligible to borrow money from such agencies as long as private funds are not available at reasonable rates and terms. Although the interest rate can vary from agency to agency, these loan rates are very attractive and very much in demand. International Financial Organizations Of all the international financial organizations, the most familiar is the World Bank, formally known as the International Bank for Reconstruction and Development (IBRD). The World Bank has two affiliates that are legally and financially distinct entities, the International Development Association (IDA) and the International Finance Corporation (IFC). Exhibit provides a comparison among IBRD, IDA and IFC in terms of their objectives, member countries, lending terms, lending qualifications as well as other details. All three organizations have the same central goals: to promote economic and social progress in poor or developing countries by helping raise standards of living and productivity to the point at which development becomes self-sustaining. Toward this common objective, the World Bank, IDA and IFC have three interrelated functions and these are to lend funds, to provide advice and to serve as a catalyst in order to stimulate investments by others. In the process, financial resources are channeled from developed countries to the developing world with the hope that developing countries, through this assistance, will progress to a level that will permit them, in turn, to contribute to the development process of other less fortunate countries.

Introduction

Introduction .

Introduction .

The World Bank is the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). thereby assisting in raising productivity. the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). finance for productive purposes out of its own capital. To promote private foreign investment by means of guarantees or participation in loans and other investments made by private investors. and encouragement of the development of productive facilities and resources in less developed countries. large and small alike. The purposes for the setting up of the Bank are: To assist in the reconstruction and development of territories of members by facilitating the investment of capital for productive purposes. the standard of living and condition of labour in their territories. To promote the long-range balanced growth of international trade and the maintenance of equilibrium in balance of payments by encouraging international investment for the development of the productive resources of members. funds raised by it and its other resources. on suitable conditions. . can be dealt with first. The IBRD has two affiliates. and when private capital is not available on reasonable terms. the IFC and the MIGA are sometimes referred to as the "World Bank Group". including the restoration of economies destroyed or disrupted by war. To arrange the loans made or guaranteed by it in relation to international loans through other channels so that the more useful and urgent projects.The World Bank The World Bank group is a multinational financial institution established at the end of World War I1 (1944) to help provide long-term capital for the reconstruction and development of member countries. The Bank. to supplement private investment by providing.

funds are lent only to members of the IMF. bank loans are made to cover only import needs in foreign convertible currencies and must be repaid in those currencies at long-term rates. The projects receiving IBRD assistance usually require importing heavy industrial equipment and this provides an export market for many US goods. it provides funds to borrowers by borrowing funds in the world capital markets. from the proceeds of loan repayments as well as retained earnings. It was owned by the governments of 151 countries and its capital is subscribed by those governments. . The women's issues category. Generally. the IBRD lends money to a government for the purpose of developing that country's economic infrastructure such as roads and power generating facilities. At its funding. usually when private capital is unavailable at reasonable terms. The World Bank lays special operational emphasis on environmental and women's issues. Loans generally have a grace period of five years and are repayable over a period of fifteen or fewer years. Generally. the bank's major objective was to serve as an international financing facility to function in reconstruction and development. The importance of improving human capital and improving the welfare of families is perceived as a key aspect of development. specifically known as Women In Development (WID). Funds are directed towards developing countries at more advanced stages of economic and social growth. Also. is part of a larger emphasis on human resources.INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT The IBRD was set up in 1945 along with the IMF to aid in rebuilding the world economy.

IDA's funds come from subscriptions from its developed members and from the earnings of the IBRD. Although the IDA's resources are separate from the IBRD. those with an annual per capita gross national product of $480 or less. Repayment begins after a ten-year grace period and can be paid in the local currency.INTERNATIONAL DEVELOPMENT ASSOCIATION The IDA was formed in 1960 as a part of the World Bank Group to provide financial support to LDCs on a more liberal basis than could be offered by the IBRD. The present emphasis seems to be on helping the masses of poor people in the developing countries become more productive and take an active part in the development process. but at easier and more favorable credit terms. The IDA has 137 member countries. Greater emphasis is being placed on improving urban living conditions and increasing productivity of small industries. Loans are made only to the poorest countries in the world.3 million loan to Tanzania approved in 1989 to implement the first stage in the longer-term process of rehabilitating the country's agricultural research system. . Credit terms usually are extended to 40 to 50 years with no interest. More than 40 countries are eligible for IDA financing. it has no separate staff. as long as it is convertible. Loans are made for similar projects as those carried out by IBRD. An example of an IDA project is a $8. although all members of the IBRD are free to join the IDA.

In a few cases. IFC investments are for the establishment of new enterprises as well as for the expansion and modernization of existing ones. tourism and local development finance companies. textile production. Some projects are locally owned. . although IBRD provides some administrative and other services to the IFC. manufacturing. food processing. In addition to funds contributed by IFC. joint ventures are formed between investors of two or more developing countries. machinery production. whereas others are joint ventures between investors in developing and developed countries. mining. Loans are made to private firms in the developing member countries and are usually for a period of seven to twelve years. There are 133 countries that are members of the IFC and it is legally and financially separate from the IBRD. The key feature of the IFC is that its loans are all made to private enterprises and its investments are made in conjunction with private business. funds are also contributed to the same projects by local and foreign investors. The IFC's main responsibilities are (i) To provide risk capital in the form of equity and long term loans for productive private enterprises in association with private investors and management (ii) (ii) To encourage the development of local capital markets by carrying out standby and underwriting arrangements and (iii) (iii) To stimulate the international flow of capital by providing financial and technical assistance to privately controlled finance companies.INTERNATIONAL FINANCE CORPORATION The IFC was established in 1956. They cover a wide range of projects such as steel.

are decided by a majority of the votes cast by all members of the Bank. So it is true that the rich countries have a good deal of influence over the Bank's policies and practices. represents all the members. Policies and practices are regularly and frequently debated and decided upon by the board. However.about 17 per cent . programmes and procedures related to foreign investments. ` A Global Cooperative The World Bank is comparable to a global cooperative which is owned by member countries. The United States has the largest shareholding . Together. have about half the votes in the Bank. generally. advises developing member governments on the design and implementation of policies. developing countries. .THE MULTILATERAL INVESTMENT GUARANTEE AGENCY (MIGA) The MIGA was established in 1988 to encourage equity investment and other direct investment flows to developing countries by offering investors a variety of different services. virtually all other matters. which is resident at the Bank's headquarters in Washington DC. so every members' voice is heard. The size of a country's shareholding is determined by the size of the country's economy relative to the world economy. In fact. And the Bank's cooperative spirit is reflected in the fact that voting is rare because consensus is the preferred way of making decisions. including the approval of loans. and sponsors a dialogue between the international b u M s community and host governments on investment issues. The Bank's board of executive directors.which gives it the power to veto any changes in the Bank's capital base and Articles of Agreement (85 per cent of the shares are needed to effect such changes). together. It offers guarantees against noncommercial risks. the largest industrial countries (the Group of seven or G-7*) have about 45 per cent of the shares in the World Bank and they carry great weight in international economic affairs.

strengthening the ability of the governments to deliver quality services efficiently and transparently. The Bank's member countries -particularly the industrial countries . inclusion. annually. including the richer nations. protecting the environment. WHAT DOES THE WORLD BANK DO? The World Bank is the world's largest source of development assistance. The main focus is on helping the poorest people and the poorest countries but for all its clients. governance and institution building as key elements of poverty reduction. higher incomes. particularly through basic health and education. sustainable and equitable growth. supporting and encouraging private business development. to its client countries. Everybody benefits from increased trade and investment. providing nearly $30 billion in loans. the Bank emphasizes the need for investing in people. A world increasingly divided between rich and poor is in no one's interest. its highly trained staff and its extensive knowledge base to individually help each developing country onto a path of stable. fewer social tensions. . gain from economic growth in developing countries. promoting reforms to create a stable macroeconomic environment conducive to investment and long-term planning.also benefit from procurement opportunities derived from World Bank financed projects. focusing on social development. The Bank uses its financial resources. better health and education and environmental protection.WORLD BANK Only developing countries can borrow from the Bank. But all members.

Nearly 40 countries contribute to IDA's funding. insurance companies. the IBRD sells AAA-rated bonds and other debt securities to pension funds. there is a three to five year grace period before repayment of principal begins. which is replenished every three years. which accounts for about three-fourths of the Bank's annual lending. other banks and individuals around the globe. corporations. technical assistance and policy advice. IDA credits account for about one-fourth of all Bank lendings. Loans must be repaid in 15 to 20 years. IBRD charges interest from its borrowers at rates which reflect its cost of borrowing. there has never been default on an IDA credit. Like the IBRD. IDA helps to promote growth and reduce poverty in the same ways as does the IBRD but using interest free loans (which are known as IDA "credits"). infrastructure and environmental protection which enhance the attractiveness and productivity of private investment. Through World Bank guarantees.governments are reforming their overall economies and strengthening banking systems. raises almost all its money in financial markets. They are investing in human resources. Borrowers pay a fee of less than 1 per cent of the loan to cover administrative costs. Repayment is required in 35 to 40 years with a 10 years grace period. One of the world's most prudent and conservatively managed financial institutions. WHERE DOES THE WORLD BANK GET ITS MONEY? The World Bank raises money for its development programmes by tapping the world's capital markets and in the case of the IDA. investors are minimizing their risks and finding the comfort to invest in developing countries and countries undergoing transition to market-based economies. conservative and cautious way as is the IBRD's.WORLD BANK With Bank support both lending and advice . through contributions from wealthier member governments. IBRD. IDA's funding is managed in the same prudent. MIGA's political risk insurance and in partnership with IFC's equity investments. .

Each member nation appoints a governor and an alternate governor to carry out these responsibilities. . Member countries are shareholders who carry ultimate decision making power in the World Bank.WORLD BANK WHO RUNS THE WORLD BANK? The World Bank is owned by more than 180 member countries whose views and interests are represented by a board of governors and a Washington based board of directors. The governors. decide on changes in the authorized capital stock. They decide on key Bank policy issues. admit or suspend country members. determine the distribution of the IBRD's net income and endorse financial statements and budgets. who are usually officials such as ministers of finance or planning meet at the Bank's annual meetings each fall.

To an extent.MF) came into official existence on December 27. as far as possible. USA. 1947. The IMF commenced financial operations on March 1. IMF lends money to members having trouble meeting financial obligations to other members. when 29 countries signed its Articles of Agreement (its Charter) agreed at a conference held in Bretton Woods.INTERNATIONAL MONETARY FUND . Because of that. countries did not need to resort to exchange controls and other barriers to restrict world trade. Its policies and activities are guided by its charter known as the Articles of Agreement.IMF The International Monetary Fund (I. New Hampshire. the fund served as an international central bank to help countries during periods of temporary balance of payments difficulties by protecting their rates of exchange. 1944. but only on the condition that they undertake economic reforms to eliminate these difficulties for their own good and that of the entire membership. IMF is a cooperative institution that 182 countries have voluntarily joined because they see the advantage of consulting with one another on this forum to maintain a stable system of buying and selling their currencies so that payments in foreign currency can take place between countries smoothly and without delay. . What authority the IMF does possess is confined to requiring the member to disclose information on its monetary and fiscal policies and to avoid. from July 1-22. 1945. putting restrictions on exchange of domestic for foreign currency and on making payments to other members.

. After much negotiations in the difficult wartime conditions. the international community accepted the system and an organization was formed to supervise it.IMF ORIGINS : The need for an organization like the IMF became evident during the great depression that ravaged the world economy in the 1930s. Harry Dexter (US) and John Maynard Keynes (UK) put forward proposals for a system that would encourage the unrestricted conversion of one currency into another. The relation between money and the value of !goods became confused as did the relation between the value of one national currency and another. It then had 39 members. establish a clear and unequivocal value for each currency and eliminate restrictions and practices such as competitive devaluations.INTERNATIONAL MONETARY FUND . The IMF's membership now is 182. The system required cooperation on a previously unattempted scale by all nations in establishing an innovative monetary system and an international institution to monitor it. In the 1940s. A widespread lack of confidence in paper money led to a spurt in the demand for gold and severe devaluation in the national currencies. The IMF began operations-in Washington DC in May 1946.

INTERNATIONAL MONETARY FUND . To give confidence to members by making the general resources of the Fund temporarily available to them under adequate safeguards. . to maintain orderly exchange arrangements among members and to avoid competitive exchange depreciation. to the promotion and maintenance of high levels of employment and real income and to the development of the productive resources of all members as primary objectives of economic policy. To facilitate the expansion and balanced growth of international trade and to contribute. to shorten the duration and lessen the degree of disequilibrium in the international balances of payments of members. To promote exchange stability. In accordance with the above. To assist in the establishment of a multilateral system of payments in respect of current transactions between members and in the elimination of foreign exchange restrictions which hamper the growth of world trade.IMF STATUTORY PURPOSES: The purposes of the International Monetary Fund are: To promote international monetary cooperation through a permanent institution which provides the machinery for consultation and collaboration on international monetary problems. thus providing them with opportunity to correct mal adjustment in their balance of payments without resorting to measures destructive to national or international prosperity. thereby.

INTERNATIONAL MONETARY FUND . and other customary terms and conditions of membership. A member's quota in the IMF determines the amount of its subscription. any member country can withdraw from the Fund. in the past were and currently are: . the currencies in the basket are. The determination of the currencies in the SDR basket and their amounts is made by the IMF Executive Board every five years. the form of payment of the subscription. by weight. After the Board of Governors has adopted the "Membership Resolution.increases must be approved by the Executive Board and are linked to formulas that include many variables such as the size of a country in the world economy. although that is rare. At present. Before the introduction of the euro in 1999. its access to IMF financing and its allocation of Special Drawing Rights (SDRs). SDR : SDRs are defined in terms of a basket of major currencies used in international trade and finance. the United States dollar.IMF MEMBERSHIP OF IMF: Any country may apply for membership to the IMF. the Japanese yen. the Deutsche Mark and the French franc were included in the basket." the applicant state needs to take the legal steps required under its own law to enable it to sign the IMF's Articles of Agreement and to fulfill the obligations of IMF membership. and their approximate relative contributions to the value of an SDR. the euro. The amounts of each currency making up one SDR are chosen in accordance with the relative importance of the currency in international trade and finance. Similarly. A member state cannot unilaterally increase its quota . the Executive Board will submit a report to the Board of Governors of the IMF with recommendations in the form of a "Membership Resolution. The exact amounts of each currency in the basket. The United States has exclusive veto power. and the pound sterling." These recommendations cover the amount of quota in the IMF. After its consideration. The application will be considered first by the IMF's Executive Board. its voting weight.

INTERNATIONAL MONETARY FUND . It has also been suggested that having holders of US dollars convert those dollars into SDRs would allow diversification away from the dollar without accelerating the decline of the value of the dollar. SDRs were originally created to replace Gold and Silver in large international transactions. Thus SDRs. and it is also used to denominate some private international financial instruments. .IMF : SDRs are used as a unit of account by the IMF and several other international organizations. based on the exchange rates of the currencies making up the basket. the quantity of gold worldwide is relatively fixed. a perceived need arose to increase the supply of the basic unit or standard proportionately. A few countries peg their currencies against SDRs. are credits that nations with balance of trade surpluses can 'draw' upon nations with balance of trade deficits. The value of one SDR in terms of United States dollars is determined daily by the IMF. or "paper gold". and the economies of all participating IMF members as an aggregate are growing. Being that under a strict (international) gold standard.

The lack of global banking support for consumers (that is to say private persons and businesses for the SDR. The current SDR is a relatively small basket of currencies. this is both a strong point and weak point of the SDR.INTERNATIONAL MONETARY FUND . Euro and UK Pound are contained in the SDR-these currencies have been losing value against a larger basket of secondary reserve currencies since the late 2000 recession started in 2007. which are important benchmark or secondary global reserve currencies. Indian Rupee. . The US Dollar.IMF POTENTIAL PITFALLS AS A RESERVE CURRENCY There are potential pitfalls of using the SDR as a reserve currency. The possible loss of national sovereignty of the nations involved. The SDR does not contain the Chinese Yuan. Australian Dollar or Canadian Dollar.

INTERNATIONAL MONETARY FUND .IMF .

Structural Adjustment Mechanism (with low interest rates) . Standby Arrangements 2. A member country with a payments problem can immediately withdraw from the IMF the 25 per cent of its quota. A member in greater difficulty may request for more money from the IMF and can borrow up to three times its quota provided the member country undertakes to initiate a series of reforms and uses the borrowed money effectively. a line of credit. Extended Arrangements 3. now worth $24 billion. FINANCIAL ASSISTANCE: The IMF lends money only to member countries with balance of payments problems. The main source of finance remains the pool of funds from the quota subscriptions.The IMF's Financial Policies and Operations The IMF makes its financial resources available to member countries through a variety of financial facilities. The frequently used mechanisms by the IMF to lend money are: 1. IMF has had. Besides this.also known as the General Arrangements to Borrow. with a number of governments and banks throughout the world . since 1962.

Performance criteria are applied. with a 5. .5 year grace period and a 10 year maturity.5 to 10 years. Quarterly benchmarks and semi-annual performance criteria apply.5 to 5 years after each purchase. such arrangements are typically for 12 to 18 months. Extended Fund Facility (EFF) is designed to support medium-term programmes that generally run for three years.5 per cent. The EFF aims at overcoming balance of payments difficulties stemming from macroeconomic and structural problems. They are made in support of three year programmes and carry an annual interest rate of 0. 80 low income countries are currently eligible to use the ESAF. Designed for low-income member countries with protracted balance of payments problems. Repurchases are made 3. Drawings are phased on a quarterly basis. with their release made conditional on meeting performance criteria and the completion of periodic programme reviews.The IMF's Financial Policies and Operations REGULAR IMF FACILITIES: Standby Arrangements (SBA) are designed to provide short-term balance of payments assistance for deficits of a temporary or cyclical nature. similar to those in standby arrangements and repurchases are made in 4. CONCESSIONAL IMF FACILITY Enhanced Structural Adjustment Facility (ESAF) was established in 1987 and enlarged and extended in 1994. ESAF drawings are loans and not purchases of other members' currencies.

. This facility will enable countries that are basically sound and well managed to put in place precautionary financing should a crisis occur. to 2 to 2 . Contingency Financing Facility (CCFF) provides compensatory financing for members experiencing temporary export shortfalls or excesses in cereal import costs. with IMF Board approval. as well as financial assistance for external contingencies in Fund arrangements.if the need arises will be provided under the CCL to help members overcome the exceptional balance of payments financing needs that can arise from a sudden and disruptive loss of market confidence. but can be extended. The STF was designed to extend financial assistance to transition economies experiencing severe disruption in their trade and payments arrangements.5 to 10 years. Compensatory and. Whereas the SRF is for use by members already in crisis. Supplemental Reserve Facility (SRF) provides financial assistance for exceptional balance of payments difficulties due to a large short-term financing need resulting from a sudden and disruptive loss of market confidence.5to 5 years.The IMF's Financial Policies and Operations OTHER FACILITIES Systemic Transformation Facility (STF) was in effect from April 1993 to April 1995. Repurchases are expected to be made within 1 to 1.5 years. Repurchases are made over 4 . Contingent Credit Lines (CCL) is aimed at preventing the spread of a crisis. Repurchase terms are the same as under the SRF. Repurchases are made over 3%. largely generated by circumstances beyond the members' control. the CCL is intended solely for members that are concerned with potential vulnerability. Short-term financing .5 years.

PRESENT POSITION The IMF's influence in the global economy steadily increased as it accumulated more members. The number of IMF member countries has more than quadrupled from the 44 states involved in its establishment. and to allocate to member countries another $250 billion via Special Drawing Rights. faced with a shortfall in revenue. the G-20 leaders pledged to increase the IMF's supplemental cash tenfold to $500 billion. At the 2009 G-20 London summit. have required the IMF to adapt in a variety of ways to continue serving its purposes effectively. reflecting in particular the attainment of political independence by many developing Countries The expansion of the IMF's membership. together with the changes in the world economy. it was decided that the IMF would require additional financial resources to meet prospective needs of its member countries during the ongoing global crisis. As part of that decision. In 2008. . the International Monetary Fund's executive board agreed to sell part of the IMF's gold reserves.

. ii. The inaugural meeting was held in Tokyo and the newly named bank was installed in Manila (Philippines). of which 41 are from within the region and 16 from outside the region. To respond to requests for assistance in coordinating development policies and plans of its DMCs. The Bank gives special attention to the needs of the smaller or less developed countries and priority to regional. the United National Economic Commission for Asia and Far East (UNECAFE) estimated that Asia and the Pacific region had an annual deficit of US $ one billion. The ADB was formed to fill this gap. HISTORY In early 1960. The Bank's principal functions are i. and iv.Asian Development Bank (ADB) INTRODUCTION The Asian Development Bank is a multilateral developmental finance institution founded in 1966 by 31 member governments to promote social and economic progress of Asian and the Pacific region. The Bank gives special attention to the needs of smaller or less developed countries and gives priority to Regional/Non-regional national programmes. 111. To extend loans and equity investments for the economic and social development of its Developing Member Countries (DMCS). the bank's membership has grown from 31 to 57.. sub-regional and national projects and programmes. To promote and facilitate investment of public and private capital for development purposes. To provide technical assistance for the preparation and execution of development projects and programmes and for advisory services. BANK PROFILE Over the past 31 years.

Nepal. It has resident missions in Bangladesh. and help ensure project quality. STRATEGIC OBJECTIVES Economic Growth : Agriculture: In the agriculture sector. These resident missions improve the Bank's coordination with the governments and donor agencies. LOCATION The Bank's headquarters are in Manila.Asian Development Bank (ADB) SHAREHOLDERS The two largest shareholders of the Bank. were Japan and the United States. Forty one regional members accounted for 63 per cent of total shareholding while 16 non-regional members contributed 37 per cent of the total. expansion of power supply and enhancement of power companies' operational efficiency. assist with activities related to country programming and processing of new loans and technical assistance projects. India. Sri Lanka and Vietnam and has opened resident missions in Kazakhstan and Uzbekistan. . Cambodia. as of 31 December 1997. Pakistan. each accounting for 16 per cent of the total subscribed capital. Energy: The broad focus for the energy sector was restructuring of the power sector. Indonesia. Philippines. the projects with a growth focus had diversified emphasis from building irrigation systems in Indonesia to developing rural financial institutions in the Kyrgyz Republic.

in turn. Capital and financial markets: The numerous projects in the capital and financial markets sector reflected the key role that these sectors play in the development process and the Bank's emphasis on being a catalyst of financial resources rather than simply a provider of financial assistance. One approach in the Bank's poverty reduction efforts is the promotion of broad-based economic growth and support for targeted interventions. institution building and the creation of an enabling environment for private sector development. . Technical assistance operations continued to support the preparation of numerous projects promoting economic growth and to assist in policy reforms. The Bank pays close attention to poverty reduction issues in the formulation and implementation of its project and technical assistance activities. Poverty reduction has been an implicit element of all operations since the Bank was established. provide opportunities for the poor to participate in and benefit from this growth. This approach is based on the experience of countries that have been most successful in reducing poverty. helps the poor participate more effectively. The role of the Bank in promoting reforms in the capital and financial markets became particularly critical in the wake of the financial crisis shaking East Asian markets.participation in. particularly education and health services. Poverty Reduction. Technical assistance: The Bank's technical assistance programme was an integral component of efforts to promote economic growth. Sustained rates of economic growth. the provision and operation of transport and communications infrastructure. The Bank also assisted in the improvement of ports and air transport network in Indonesia to support growth initiatives in the East Asian region.Asian Development Bank (ADB) Transport and communications: Significant emphasis was placed on promoting sector and institutional reforms to enhance the commercialization of the private sector . Support for basic social services.

Appropriate water and sanitation services are essential for the health and well-being of the population and the provision of such services should be cost-effective. sustainable and affordable.and skills training in particular . The Bank encourages an integrated approach to urban development by supporting investments for a balanced range of infrastructure and services.Asian Development Bank (ADB) Supporting Human Development : The Bank has continued to emphasize its strategic objective of promoting human development by expanding investments in the critical sectors of education. Health and nutrition: The Bank's main strategies for supporting the health improvement efforts of its DMCs are to focus on primary health care services. 27 projects had human development as either their primary (22) or secondary (5) objective. Water supply and sanitation: The Bank's main objective for the water supply and sanitation subsector is to increase the availability of safe drinking water and adequate sanitation facilities. targeted at meeting the basic needs and improving the living conditions of the urban poor. water supply and sanitation and urban development.more relevant to market needs. improving the quality of education and making education in general . the control of communicable diseases and capacity building. Urban development: Addressing the rapid pace of urbanization throughout Asia is a formidable challenge facing the majority of the Bank's DMCs. excluding private sector and engineering technical assistance loans. Human development is an expanding area of activity for the Bank. health and nutrition. . Education: The Bank aims to support the education sector in its DMCs by investing in basic education. Of a total of 72 projects approved during 1997.

result in greater economic efficiency and decreased levels of poverty. Environmental Protection: The Bank's major environmental activities include i. Financing projects that promote the sound management of natural resources and rehabilitate and protect the environment. Ensuring inter-agency collaboration to avoid costly duplication of efforts and to enable the Bank to focus its assistance in critical areas. Undertaking resource centred activities to enhance Bank and DMC staff awareness on current and emerging environmental issues. Ensuring. lower infant and maternal mortality. lower fertility rates. iii. Promoting cooperation among countries in the region or sub region to address trans boundary environmental concerns and to enhance possible environmental benefits occurring from subregional cooperation. Providing financial and technical assistance to facilitate institutional and policy reforms and build staff capacity in environmental agencies. Development programmes that include measures to expand economic opportunities for women and increase their incomes. enabling them to effectively carry out their mandate for environmental protection and management. that Bank-funded projects are environmentally sustainable. increased life expectancy and reduced welfare costs. 11. v. Public policies and investments that raise the status of women have specific benefits such as improved public health. and vi. combined with efforts to improve women's health and education. iv.Asian Development Bank (ADB) Gender Development: Improving the status of women is one of the strategic objectives of the Bank. through the use of environmental assessment and review procedures. .

. Industry and non-fuel minerals 4. Agriculture and natural resources 2. vary from one DMC to another.Asian Development Bank (ADB) SECTOR COVERAGE The Bank's operations cover a wide spectrum of activities that have been classified according to the following sectors 1. Social infrastructure 7. the Bank evaluates the project. Bank staff review the country's economy. Energy 3. Since the levels of economic growth. the Bank tries to select those projects that will contribute most effectively to the economic and social development of the country concerned. Transport and communications 6. as well as the priorities for development. particularly its national and sectorial development programmes and determines the prospects for its success. in conformity with the country and Bank wide strategies. Once it is confirmed that investment in the project is justified. Finance 5. Country programming missions visit DMCs regularly to discuss topics of mutual interest with government officials and to select suitable projects for Bank assistance. Combinations of some of the sectors (1) to (6) PROJECT PROCESS Before any project is identified for Bank financing.

Asian Development Bank (ADB) PROJECT QUALITY The four attributes of project quality are 1. including evaluation of the efficiency of its implementation after the project or programme is completed. beneficiary participation and project performance. . rather than simply on the physical completion of projects. OPERATION EVALUATION The Bank evaluates projects and programmes financed by it to obtain a systematic and comprehensive assessment of the extent to which the project or programme objectives have been. Evaluation activities include 1. or are likely to be. Sustainability Emphasis is placed on the broader objectives of capacity building. Project completion reporting and independent performance evaluation of a project or programme. Implement ability 4. and 2. achieved. Inntensive analysis of both ongoing and completed projects concerning certain specific issues or subjects of broader significance to the Bank's strategic objectives and policies. Economic and financial viability 2. Social impact 3.

2. water supply. or guarantee loans to its DMCs or their governments or any of their agencies. transport and telecommunications sectors. investment advisory services and guarantees. co financing. agribusiness and other projects with significant economic merit. In limited cases.Asian Development Bank (ADB) PRIVATE SECTOR DEVELOPMENT The Bank helps selected private enterprise to undertake financially viable projects that have significant economic merit and for which normal sources of commercial finance are not available. public or private enterprises operating within such countries. participate in. . FINANCIAL MANAGEMENT Lending Policies The Bank is authorized to make. securitization. Bank support is provided directly to private enterprises and financial institutions through loans. mutual funds. Infrastructure projects such as in the power. investment in equity securities. credit enhancement and credit rating. industrial. insurance. underwriting. . Loans are approved by the Bank only for projects or programmes of high development priority. The Bank provides financing to its borrowers to cover foreign exchange expenditures and also finances local currency expenditures in certain cases. The Bank's private sector operations focus primarily on assistance to 1. as well as to international or regional entities concerned with economic development in the region. including build-own-operate / build-operate-transfer projects. venture capital financing merchant banking. 3. Financial intermediaries involved in leasing.

The pool based multicurrency loan window where loan disbursements are made in a variety of currencies of the Bank's choice. or Swiss francs to private sector borrowers and government guaranteed financial intermediaries at current terms prevailing in international financial markets.Asian Development Bank (ADB) Financial Resources The financial resources of the Bank consist of Ordinary Capital Resources (OCR) comprising subscribed capital. and 3. and special funds. 2. Loans from the Asian Development Fund (ADF) are made on highly concessional terms and almost exclusively to DMCs with a low per capita gross national product and limited debt-repayment capacity. Japanese yen. MBL borrowers have the option of having the interest rates of their loans in either fixed or floating rate terms. Lending Windows The Bank has three lending windows for OCR loans. repayments from past loans and amounts previously set aside from paid-in capital. comprising contributions made by member governments. The Market Based Loan (MBL) window which provides single currency loans to private sector borrowers and to financial intermediaries in the public sector. These are 1. Loans from OCR lending operations are generally made to member governments which have attained a somewhat higher level of economic development. The MBL window provides single currency loans in US dollars. reserves and funds raised through borrowings. . MBL lending to government guaranteed financial intermediaries is limited to US $1 billion in loan commitments. The pool based single currency loan window in US dollars.

. debt servicing and other expenditures. fiscal strengthening. capacity building. Borrowings The Bank has been an active borrower in world capital markets since 1969. or a combination of both. The emphasis is on support for various DMC programmes in terms of policy reforms. loans. Its borrowing programme is broadly determined by a number of factors. its liquidity policy and its perception of current and future market conditions. Financial Policy The Bank was established primarily to perform the financial intermediation role of transferring resources from global markets to developing countries to promote socio-economic development. promotion of financial and capital markets. Technical assistance activities are funded by the Bank through grants. Investment of liquid assets is governed by the Investment Authority approved by the board of directors. Liquidity Management The main purpose of the liquidity policy is to ensure the uninterrupted availability of funds to meet loan disbursements.Asian Development Bank (ADB) Technical Assistance The basic objective of the Bank is to maximize development impact not only in terms of lending volume but also through technical assistance that is not directly related to lending. The ultimate goal of the financial policy of the Bank is to achieve effective financial intermediation. sub regional economic cooperation. cash flow requirements. support for good governance. including the Bank's lending operations. environmental protection and natural resource management.

private individuals or corporate entities. Established on 17 May 1930. the BIS is the world's oldest international financial organization. As its customers are central banks and international organizations. The BIS Aims at promoting monetary and financial stability Acts as a forum for discussion and cooperation among central banks and the financial community Acts as a bank to central banks and international organizations . or provide financial services to. The BIS strongly advises caution against fraudulent schemes. the BIS does not accept deposits from. Switzerland and there are two representative offices: in the Hong Kong and in Mexico City. The head office is in Basel.Bank for International Settlements (BIS) The Bank for International Settlements (BIS) is an international organization which fosters international monetary and financial cooperation and serves as a bank for central banks. The BIS fulfils this mandate by acting as: A forum to promote discussion and policy analysis among central banks and within the international financial community A centre for economic and monetary research A prime counterparty for central banks in their financial transactions Agent or trustee in connection with international financial operations .

Bank for International Settlements (BIS) Monetary & Financial Stability . The committees are: . The standing committees located at the BIS support central banks. The Basel Committee on Banking Supervision The Committee on the Global Financial System The Committee on Payment and Settlement Systems The Markets Committee The BIS secretariats prepare the meetings of the committees. by providing background analysis and policy recommendations. Bimonthly meetings of the Governors and other senior officials of the BIS member central banks to discuss monetary and financial matters are instrumental in pursuing this goal. several independent organizations involved in international cooperation in the area of financial stability have their secretariats at the BIS: The Financial Stability Board The International Association of Insurance Supervisors and The International Association of Deposit Insurers.Overview Promoting monetary and financial stability is one key objective of the BIS. In addition. . and authorities in charge of financial stability more generally. draw up background papers and reports and publish the work of the groups they serve.

with a view to promoting common understanding At times. Contacts have been further strengthened by an International Conference of Banking Supervisors (ICBS) which takes place every two years. the Committee is best known for .Bank for International Settlements (BIS) ABOUT THE BASEL COMMITTEE The Basel Committee on Banking Supervision provides a forum for regular cooperation on banking supervisory matters. its international standards on capital adequacy. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide. It circulates to supervisors throughout the world both published and unpublished papers providing guidance on banking supervisory matters. It seeks to do so by exchanging information on national supervisory issues. The Committee encourages contacts and cooperation among its members and other banking supervisory authorities. the Core Principles for Effective Banking Supervision. . and on cross-border banking supervision. the Committee uses this common understanding to develop guidelines and supervisory standards in areas where they are considered desirable. approaches and techniques. In this regard.

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