Lenders of last resort

11 Mar 2008 By Martin Hutchinson

The Asian Development Bank is looking at relaxing its social and environmental standards bilateral aid donors like China provide money with fewer conditions. It should wait. Tightening world liquidity will leave ADB and other multilateral banks with much less competition.

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US Senator Patrick Leahy, Chairman of the Senate Judiciary Committee and US Rep. Barney Frank, Chairman of the House Financial Services Committee have called on US Treasury Secretary Hank Paulson to demand that the Asian Development Bank stick to tougher environmental and social standards in its lending, rather than relax them, as the ADB Board wishes to do in its "safeguard policy update" during 2008. Leahy and Frank urge that US participation in ADB's capital replenishment "should hinge in part on a successful outcome of the safeguard policy update."

ADB approved $6.1bn of loans in 2006, including $575m to nonsovereign borrowers and made equity investments of $261m.

The operational policies of ADB include three safeguard policies: the Policy on Involuntary Resettlement (1995), the Policy on Indigenous Peoples (1998), and the Environment Policy (2002). All three are required to be satisfied for each ADB project.

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ADB approved $6.1bn of loans in 2006, including $575m to nonsovereign borrowers and made equity investments of $261m.

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