The functions of ADB
The functions of ADB
The functioning of the ADB has been criticised on the following main grounds
(i) Emphasis on Lending to Private Sector Projects: Although objectives of ADB specify that the advances by it would be made for furthering the growth of both private and public sectors in the member countries, yet the ADB operations indicate that higher priority has been given to the private sector projects. It has taken very little interest in the development of public sector which has a key role in the development process of LDC’s.
(ii) Tied Loans: The ADB generally provides tied loans and the borrowing countries are required to utilise funds only for the specified purpose. Such a restriction tends to discourage the developing countries who are in greater need of non-project investible resources.
(iii) High Rate of Interest: The interest rate charged by the ADB on credits is relatively higher than that charged by some other international financial institutions. The proportion of concessional loans in the total lending of the ADB has remained low. The developing countries of Asia, therefore, have to look to other institutions for assistance.
(iv) Political Bias in Lending: There is a serious charge against the credit operations of the ADB that there is an element of political bias in its loan policy. The ADB seems to promote the strategies and interests of the United States and her allies. The majority of the Asian countries that have received credit from the ADB included the countries like South Korea, Singapore and Philippines which are fairly developed economies. The countries pursuing independent political and economic policies have not been able to secure assistance from the ADB to the desired extent.
In view of the above objections, it is important that there is a reappraisal of the role and functioning of the ADB so that it can become a more effective and efficient instrument for the accelerated development of the poor countries in the Asian region.
