Statements, Speeches, Interviews

Speech of Finance Minister at ADB's Annual General Meeting

5th May, 2008

Following is the text of the Speech of Finance Minister, Shri P. Chidambaram delivered at the Annual General Meeting of Asian Development Bank in Madrid, Spain on 5th May, 2008:-

“Mr President, Fellow Governors, Ladies and Gentlemen,

May I start by warmly thanking our hosts, the Government of Spain, for the excellent arrangements they have made for this Annual General meeting.

This historic and beautiful city of Madrid is an ideal venue for this important Annual Meeting of the ADB which will decide the Long Term Strategic Framework (LTSF) of the ADB and set the path for the Bank till 2020. We welcome ADB's vision as "an Asia and Pacific Region free of poverty" and its mission to help “its Developing Member Countries (DMCs) reduce poverty and improve living conditions and quality of life".

Addressing Challenges in Asia

Asia is a challenging place for any development institution because of its heterogeneity. The region houses some of most dynamic economies of the world and also some of the most fragile. Even those middle income countries that have achieved considerable economic progress are still grappling with extreme poverty in pockets.

Role of the Private Sector

As emphasized in the LTSF document, the private sector would have to play a more important role in the development of the Asia and Pacific region. However, it is our belief and experience that the bulk of the resources for infrastructure would still have to be found through the public sector. The fundamental role of the ADB as a multilateral development bank should not be diluted by its over-emphasis on non-sovereign loans at the cost of sovereign loans. Hence, a portfolio restructuring plan for the ADB to increase the share of private sector in annual loans to 50 per cent will be consistent with the continued need for a vibrant public sector, and this twin strategy will succeed only if total loan approval and disbursement is enhanced significantly.

Regional integration

India welcomes Strategy 2020's emphasis on regional co-operation, including the intention to increase the share of regional and subregional projects in the total operations. However, these must come as additionality to the national projects and preferably on concessional terms.

New Sectors

India welcomes Strategy 2020's choice of the five core areas of operations, namely, infrastructure, environment, regional cooperation and integration, financial sector development, and education. However, we would also like to see more stress on agriculture and irrigation and on health-related infrastructures. It would be both premature and inappropriate for ADB to disengage from agriculture fully. Improvement in irrigation infrastructure is important for increasing food grain production.

ADF

ADF X negotiations have now been concluded with a significant increase in operational size, and I congratulate the donors and the management of ADB. I may, however, point out that the bulk of the resources are being generated by financial re-engineering of the ADF operations and by transfer of OCR resources to ADF. OCR resources have mostly been generated from income from OCR borrowers. Sadly, we seem to be moving into an era where poor countries will be asked to help out their poorer brethren. My earnest appeal is that ADF should be replenished through greater contributions from donors as was done in the past.

Need for a General Capital Increase (GCI)

We are deeply concerned with the resource position of ADB. With the planned level of lending in the next three years, the OCR lending headroom will be exhausted in 2010. There is an urgent need to focus attention on resource mobilization. India has stressed the need for augmenting the Capital resources of ADB. Any further delay will be at the cost of ADB’s commitments and its credibility. Unlike the past, where unsubscribed or partially subscribed shares were kept aside for allotment to new members, I suggest that this portion may be offered to the subscribing members.

As one of the largest and fastest growing economies in the region, India looks forward to enhancing the quality of its engagement with ADB and for a larger role for the ADB itself in the development of the entire region.”