President Asakawa visits an ADB project to improve living conditions for the poor in Makassar City in Indonesia, his first visit to the country since assuming office.
This Annual Report provides a comprehensive account of the activities and financial results of the Asian Development Bank (ADB) in 2019. We present this report after the first full year of implementation of ADB’s Strategy 2030, and as I begin my tenure as President.
I am pleased to return to ADB after 30 years, when I served as chief advisor to former President Kimimasa Tarumizu. Asia and the Pacific has made remarkable economic and social progress in that time and our operations have since evolved to respond to the emerging needs of our developing member countries (DMCs).
However, extreme poverty still exists and income inequality is widening. Globalization and digitization have transformed economies while placing some groups at greater risk, particularly in the face of aging trends and demographic shifts. Despite some progress, gender inequality persists, and climate change, ocean pollution, and disasters have placed a heavy burden on the poor and vulnerable.
I am encouraged by our efforts in 2019. I am heartened by what we have achieved so far in 2020. We will build on these achievements to ensure we remain relevant and responsive to our members’ needs as they take action to combat, and then recover from, the COVID-19 pandemic.
These challenges will now magnify as a result of COVID-19. As I write these words in April 2020, the pandemic has become a global health emergency requiring forceful action at the national, regional, and international levels. Working closely with our DMCs and partner institutions, we responded with a $20 billion package to finance an aggressive set of actions to empower governments and businesses in Asia and the Pacific to tackle the severe health and macroeconomic impacts; address the urgent needs of the poor, sick, and vulnerable; and blaze a path to strong recovery. To deliver the package in a much faster, more tailored, and impactful manner, we further streamlined our business processes and made the terms and conditions of our lending more flexible. Our swift response was made possible by a strong capital base, capable and motivated staff, and a close relationship with member countries that speaks to our reputation as a steadfast and long-term development partner in Asia and the Pacific.
The demand for ADB assistance remained strong in 2019. We committed $21.64 billion in loans and grants to support our DMCs. We provided $4.49 billion in concessional assistance and $17.15 billion from our regular ordinary capital resources. This included a $1 billion special policy-based loan to Pakistan as part of a comprehensive multidonor economic reform program led by the International Monetary Fund to stabilize the country’s economy after a major deterioration in its fiscal and financial position.
Our nonsovereign operations exceeded $3 billion for the second year in a row. This result reflects our plan to expand our private sector investments into new sectors and frontier markets and increase support for fragile and conflict-affected situations, small-island developing states, and low-income countries. Our private operations also mobilized cofinancing of $6.98 billion. Together with official and commercial confinancing and technical assistance, ADB’s total commitments for 2019 were $33.74 billion. Disbursements, excluding cofinancing, improved again in 2019, rising 16.1% to a record $16.47 billion.
Our operations strongly supported the thematic targets of Strategy 2030. We met our 2015 goal of doubling climate financing to $6 billion—1 year ahead of schedule—and under Strategy 2030 have further strengthened our climate targets to ensure that at least 75% of our operations focus on climate adaptation and mitigation efforts, while providing $80 billion in cumulative climate financing by 2030. We are also on track to achieve our target of promoting gender equality in at least 75% of ADB’s sovereign and nonsovereign operations. This is vital work that tackles the structural challenges that impede women and girls’ ability to reach their full potential.
Our knowledge work is an important resource for DMCs. In 2019, to mark the 50th edition of our flagship Key Indicators for Asia and the Pacific series, we launched a new database to broaden access to its comprehensive macroeconomic and social indicators. We also hosted events on key development issues, such as the Digital Development Forum and Asia Clean Energy Forum, and continued to share practical knowledge from ADB’s development projects to help improve the design and implementation of future projects.
Internally, we strengthened staff mobility and talent development. We accelerated information technology reforms and digital transformation initiatives, which, critically, allowed ADB to transition smoothly and effectively—without disruption to operations—to work-from-home arrangements for all staff beginning March 2020 during the COVID-19 pandemic. We also increased the number of women international staff. Women now account for 36.6% of ADB’s international staff, demonstrating good progress toward the target of 40% by the end of 2022. Further, an independent study found no significant or unexplained gaps in pay between women and men in comparable roles at ADB. These measures helped ADB become the first international financial institution to achieve Economic Dividends for Gender Equality Move (level 2) certification, the leading standard for workplace gender equality.
These activities—and the many others highlighted in this report—strongly align with the priorities of Strategy 2030. I am grateful to former ADB President Takehiko Nakao for overseeing the development of the strategy along with its first year of implementation. I applaud the Board and our members for improving ADB’s financing capacity by introducing differentiated financing terms for developing and more developed borrowing countries. I deeply appreciate the commitment of our members to support our poorest and most vulnerable DMCs during the Asian Development Fund 13 replenishment discussions. I thank Fiji for successfully hosting the ADB Annual Meeting in May, the first time our meeting has been hosted by a Pacific-island nation. And I extend a warm welcome to Niue as our newest member, the bank’s 68th overall member and 49th from Asia and the Pacific.
Our strategy for the next decade is guided by a vision of a prosperous, inclusive, resilient, and sustainable Asia and the Pacific. Our immediate priority is to provide vital support to DMCs as they address the challenges presented by COVID-19 and seek to return their economies to a path of growth and prosperity. Throughout our interventions, we will collaborate closely with peer organizations, including the International Monetary Fund; the World Bank Group; regional development banks; the World Health Organization, United Nations Children’s Fund (UNICEF), and other United Nations agencies; and the global community. And we will continue to follow the roadmap we have set. We will address the need for large-scale infrastructure financing by mobilizing more private sector resources; support domestic resource mobilization through strengthening tax policy and administration, the finance sector, and domestic capital markets; target high-quality support to our members through differentiated approaches, relevant knowledge, and local currency lending; respond to immediate financial and technical needs of countries due to crisis or disaster; and coordinate among partners to scale up financing and tackle global development agendas.
We will accomplish these through an integrated One ADB approach and by celebrating the diversity of our staff across the organization—both of which are essential to maintaining ADB’s country presence and global leadership.
I am encouraged by our efforts in 2019. I am heartened by what we have achieved so far in 2020. We will build on these achievements to ensure we remain relevant and responsive to our members’ needs as they take action to combat, and then recover from, the COVID-19 pandemic
MASATSUGU ASAKAWA
President and Chairperson
of the Board of Directors
Left to right: Vice-Presidents Bambang Susantono, Diwakar Gupta, Deborah Stokes, Ingrid van Wees, Shixin Chen, Ahmed M. Saeed (succeeded Stephen Groff on 26 February 2019); The Secretary Eugenue Zhukov
ADB Board of Directors as of 31 December 2019: Front, left to right: Directors Warotai Kosolpisitkul, Paul Dominguez, Kris Panday, In-chang Song, Takeshi Kurihara, Kshatrapati Shivaji, President and Chairperson of the Board Takehiko Nakao, Zhijun Cheng, Syurkani Ishak Kasim, Pierre-Emmanuel Beluche, Tony McDonald, Helmut Fischer. Back, left to right: Alternate Directors Yuemin Li-Misra, Shahid Mahmood, Leena Viljanen, Yu-Peng Tseng, Kenzo Ohe, Bayrammuhammet Garayev, Jin Lu, Karen Murray, Enrique Galán, Scott Dawson, Burak Müezzinoğlu, Jason Chung.
In 2019, the ADB Board of Directors held 40 formal meetings and 49 informal sessions. It approved 116 loans, grants, financing facilities, equity investments, and guarantees; and endorsed new country partnership strategies for Armenia, Azerbaijan, Bhutan, Cambodia, Fiji, Georgia, Nepal, and Uzbekistan.
In 2019, the Board endorsed plans that set out how ADB will implement the seven operational priorities of Strategy 2030, the bank’s new long-term corporate framework. These plans will guide ADB’s work on (i) poverty and inequality; (ii) gender equality; (iii) climate change, disaster resilience, and environmental sustainability; (iv) livable cities; (v) rural development and food security; (vi) governance and institutional capacity; and (vii) regional cooperation and integration.
The Board approved a new corporate results framework for 2019–2024 that focuses on outcomes and aligns with Strategy 2030. It includes new indicators for poverty reduction and disability inclusion, digital transformation, knowledge and innovation, renewable energy, and quality infrastructure.
The contingent disaster financing mechanism, approved in August, is an important new tool for disaster resilience. It will help developing member countries (DMCs) prepare for, and respond to, disaster events such as extreme weather.
The Board approved mainstreaming the use of results-based lending to enhance ADB operations in DMCs, drive achievement of development results in government programs, strengthen government institutions, and foster partnerships with other development agencies.
In November, the Board approved the diversification of financing terms for regular ordinary capital resources sovereign lending to countries borrowing only from these resources. New financing terms will take effect on 1 January 2021, in line with Strategy 2030 guidance to apply differentiated approaches to meet diverse client countries’ needs.
The first-ever Board forum, held in February, discussed measures to improve Board effectiveness. The forum complements the Board and Management retreat, which in 2019 discussed fostering innovation, transforming the bank into a knowledge-based organization, and expanding private sector operations.
LOANS, GRANTS, FINANCING FACILITIES, EQUITY INVESTMENTS, AND GUARANTEES WERE APPROVED BY THE BOARD OF DIRECTORS IN 2019. DIRECTORS ALSO ENDORSED 8 NEW COUNTRY PARTNERSHIP STRATEGIES AND 7 NEW OPERATIONAL PRIORITY PLANS.
The Board values the exchange of ideas and opinions with government and donor partners, private sector groups, civil society organizations, and project beneficiaries. Board members gather first-hand knowledge of development needs by visiting several DMCs each year, where they inspect ADB-financed projects and consult stakeholders, and by engaging with experts in specialist areas.
In February, directors traveled to Papua New Guinea (PNG) and Cambodia, where they met the Prime Minister of PNG and the Deputy Prime Minister of Cambodia. In PNG, the group visited ADB-supported road projects and local communities in Goroka. In Cambodia, directors visited project sites for wastewater treatment, irrigation, and skills training.
In June, directors visited Mongolia and the People’s Republic of China (PRC), meeting Mongolia’s Deputy Prime Minister and the PRC’s Vice Premier. In Mongolia, they visited a hospital, an urban development project for informal settlements, and a solar power plant. In the PRC’s Guizhou and Yunnan provinces, directors visited rural poverty reduction, urban development, skills training, and water resource management project sites.
In September, the Board held a colloquium with a high-level advisory group on digital technology. The eight leaders from academia and prominent technology companies provided expert advice on applying digital technologies to ADB’s work.
In October, directors also visited Bangladesh, where they met the Prime Minister, and the Lao People’s Democratic Republic, where they met the Deputy Prime Minister. In Bangladesh, they visited camps in Cox’s Bazar where ADB is providing emergency assistance for displaced people. In the Lao People’s Democratic Republic, directors traveled to Vientiane, Bolikhamxay, and Luang Prabang provinces to observe flood and drought-risk management and mitigation, hydropower, and tourism development projects.
Directors serve on committees to oversee and guide ADB’s operations.
In 2019, the Audit Committee initiated an action plan to improve oversight of the private sector portfolio. It also recommended the selection of ADB’s external auditor and reviewed the Respectful Workplace Unit.
The Development Effectiveness Committee assessed evaluations of ADB’s use of private sector equity investments, Asian Development Fund operations, and multitranche financing facilities.
The Budget Review Committee discussed ADB’s preparation of the work program for 2020–2022, 2019 budget utilization, reforms in capital expenditure budgeting, and the bank’s 2020 budget.
The Board Compliance Review Committee assessed action on complaints raised under the Accountability Mechanism and recommended selection of a new member and chair to the Compliance Review Panel.
The Ethics Committee reviewed the code of conduct, ethics procedures, and associated guidelines applicable to ADB directors and the President. The review recommended amendments to bring these standards and procedures into line with the best practices of comparable institutions.
The Human Resources Committee discussed preparations for the 2020 review of ADB staff benefits. It also reviewed issues of respect in the workplace, staff mobility, use of experts, workforce analysis, and the human resources framework to support Strategy 2030.
Members of the Board wish to acknowledge the significant contribution made to ADB by former President and Chairperson of the Board of Directors, Takehiko Nakao, who ended his term on 16 January 2020 after nearly 7 years in office. Under Mr. Nakao’s leadership, ADB implemented a number of major reforms and new policies, including Strategy 2030, that strengthened ADB’s ability to deliver its core mission to help developing members reduce poverty and improve people’s quality of life. The Board will continue to build on Mr. Nakao’s legacy under the leadership of his successor, President Masatsugu Asakawa.
Former ADB President Takehiko Nakao delivers his farewell speech at ADB headquarters.
