2005 ANNUAL REPORT

1
The Record
(amounts in $ million)
1966–2005 2002 2003 2004 2005
OPERATIONAL ACTIVITIES
a a b
LENDING (amount) 116,040 5,658 6,085 5,239 5,797
Number of Projectsc 1,940 70 66 63 64
b b
Ordinary Capital Resources (OCR) Loans (amount) 84,630 4,008 4,706 3,997 4,421
Number of Loans 1,093 35 37 32 32
Disbursements (amount) 56,377 3,067 2,688 2,508 3,498
Asian Development Fund (ADF) Loans (amount) 31,411 1,650 1,379 1,242 1,376
Number of Loans 1,105 53 47 47 40
Disbursements (amount) 22,118 1,136 1,128 1,055 1,247
A. Government and Government-guaranteed Loans (amount) 113,648 5,548 5,918 4,947 5,261
Number of Projects c 1,846 67 62 58 58
OCR Loans (amount) 82,252 3,898 4,539 3,705 3,885
Number of Loans 1,000 32 33 27 25
Disbursements (amount) 54,945 3,011 2,575 2,399 3,294
ADF Loans (amount) 31,396 1,650 1,379 1,242 1,376
Number of Loans 1,100 53 47 47 40
Disbursements (amount) 22,103 1,136 1,128 1,055 1,247
B. Private Sector Loans (amount) 2,392 110 167 293 536
Number of Projects 94 3 4 5 7
b b
OCR Loans (amount) 2,378 110 167 293 536
b b
Number of Loans 93 3 4 5 7
Disbursements (amount) 1,432 55 113 109 204
ADF Loans (amount) 14 – – – –
Number of Loans 5 – – – –
Disbursements (amount) 14 – – – –
b b
EQUITY INVESTMENT (amount) 1,121 36 36 164 217
b b
Number of Investments 137 4 3 11 10
EQUITY UNDERWRITING (amount) 40 – – – –
Number of Commitments 6 – – – –
GUARANTEES 3,166 882 240 10 68
Number of Projects 25 4 3 1 2
Political Risk Guarantee (amount) 763 382 70 10 50
Number of Projects 9 3 1 1 1
b b
Partial Credit Guarantee (amount) 2,403 500 170 0 18
b b
Number of Projects 16 1 2 0 1
GRANTS (amount) 2,065 178 454 104 1,151
Number of Projects 151 27 12 27 51
b b
TECHNICAL ASSISTANCE (amount) 2,782 179 175 195 199
b b b
Number of Projects 5,923 323 312 321 299
MULTITRANCHE FINANCING FACILITIES d (amount) 1,520 0 0 0 1,520
Number of Facilities 2 0 0 0 2
COFINANCING e (amount) 49,492 2,713 2,563 2,437 7,385
Number of Projects 692 33 28 32 34

RESOURCES
Ordinary Capital Resources
Authorized Capital (at end of period) 50,163 47,288 51,997 54,162 50,163
Subscribed Capital (at end of period) 50,163 47,234 51,997 54,162 50,163
Borrowings (gross) 59,553 6,145 4,141 1,629 4,230
Outstanding Debt (at end of period) 24,454 26,324 26,359 24,212 24,454
Ordinary Reserve (at end of period) 8,957 8,470 8,892 8,865 8,957
Special Reserve (at end of period) 194 184 186 190 194
Gross Revenue 34,010 1,979 1,657 1,313 1,432
Net Income after Appropriation of Commissions/ 11,478 978 436 427 105
Guarantee Fees to Special Reserve
Special Funds Resources
Asian Development Fund Total Resources (at end of period) 27,605 22,853 26,759 29,571 27,605
Technical Assistance Special Fund Total Resources (at end of period) 1,257 920 1,006 1,062 1,257
Japan Special Fund
Regular and Supplementary Contributions (at end of period) 904 836 853 877 904
Asian Currency Crisis Support Facility 241 241 241 241 241
ADB Institute Special Fund Total Resources (at end of period) 110 71 83 96 110
Asian Tsunami Fund Total Resources 565 565
Pakistan Earthquake Fund Total Resources 85 85
– Nil.
a
Totals may not add due to rounding.
b
Adjusted to exclude terminated loans/guarantees/equity investments/technical assistance.
c
Projects with multiple loans are counted once. Cumulative number of projects excludes supplementary loans.
d
Multitranche financing facilities are facilities that will give rise to loans. Loans arising from the facilities are included under loans when they are approved by ADB.
e
2 These are non-ADB funds generated by ADB’s cofinancing operations for ADB projects.
Asian Development Bank
2005 Annual Report

Contents
VOLUME 1

Chairman’s Message 2

Board of Directors’ Report 4

Operations 30

East and Central Asia 46

Mekong 60

Pacific 72

South Asia 82

Southeast Asia 94

Appendixes 104

Contact Addresses 114

3
Chairman’s
Message
ADB: Relevant, Responsive,
and Results-Focused
T
ragedy on a staggering scale was a
recurrent theme in Asia during 2005.
The year started with the international
community rushing to help survivors
of the Indian Ocean tsunami and ended with
the huge humanitarian task of sheltering
the millions whose homes were destroyed
in October by the South Asia earthquake.
Both catastrophes and the threat of avian
flu throughout the year illustrated Asia and the
Pacific's vulnerability to events that cannot be
contained within national borders.
At the same time, even as the region as
a whole has become a formidable player in the
global economy, large numbers of poor people
and growing inequality make evident that
not all are benefiting from strong economic
growth. Many countries are unlikely to reach
the non-income Millennium Development
Goals by 2015. Clearly, poverty reduction
remains the region’s key challenge.
The Asian Development Bank faces these
and other emerging issues in its developing
member countries with hardened resolve.
We must pursue our vision of an Asia and
Pacific region free of poverty amidst a new era
of development in which nations, economies,
and societies are becoming more interdepen-
dent, more integrated. We will strive to help
the region and the countries become more
inclusive, with the benefits of dynamic growth
spread more equitably.
ADB sees regional cooperation and
integration as a powerful tool that can
complement national-level efforts aimed at
poverty reduction and shaping a better future.
In 2005, our efforts were rewarded as the
Central Asian nations and the countries that
4
2
President Kuroda visits women's hospital in Jaipur,
India, refurbished with ADB assistance
share the Mekong River started to benefit from
coordinated cross-border transport and energy
infrastructure plans. Recently too, with ADB’s
help, these countries began to work together
to address issues that transcend borders,
such as environmental and health threats.
In 2005, ADB established the Office
of Regional Economic Integration to further
strengthen regional cooperation and
integration initiatives and to ensure that
they are coherent and strategically focused.
Cooperation with other development
partners also deepened over the course of the
year, in keeping with the commitment made in
March at the high-level forum at which more
than 100 countries and major international
agencies endorsed the Paris Declaration on Aid
Effectiveness. The international community also
reaffirmed its commitment to poverty reduction
and the Millennium Development Goals at the
United Nations Millennium+5 Summit in
September in New York. ADB contributed to
and participated in both these processes.
We must pursue our vision
of an Asia and Pacific region
free of poverty amidst a new
era of development in which
nations, economies, and
societies are becoming
more interdependent,
more integrated
 ADB collaborated with development partners assistance—and even more collaboration with
to deliver quick recovery and reconstruction development partners—the Medium-Term
assistance to communities devastated by the Strategy II, which will be launched soon, should
tsunami and the earthquake, and joined the improve the effectiveness of operations over
World Health Organization and the Food and the coming years. As ADB moves toward its
Agriculture Organization in the fight to stop 5th decade as the region’s development partner,
the spread of avian flu. it does so with the confidence that it is
A series of internal changes and realign- increasingly well placed to meet the emerging
ments over the year reshaped ADB to become challenges of its developing members, striving
more relevant, responsive, and results-focused to ensure that all have the opportunity to
in its operations. Under our Reform Agenda, participate in, contribute to, and benefit from
we are improving policies and strategies, sustained economic growth. With the support
seeking to manage for development results, and commitment of the staff and all our members
refining business processes, expanding and partners, it is my privilege to continue to
knowledge management, and putting in place serve ADB and to support its role in fostering
new procedures to improve human resources. peace and prosperity in Asia and the Pacific.
Better systems for planning, monitoring,
and evaluation are being designed to track
ADB performance at every level: the country level,
the institutional level, and globally as part of ADB has made a clear
a network of development institutions. Results-
based country strategies and programs have been
commitment to raise the
introduced for all developing member countries. standards of its operations
And a new Public Communications Policy
promises much more transparency and in keeping with dynamic
accountability to ADB’s stakeholders.
An array of financing instruments offered forces at work in the region
under the Innovation and
Efficiency Initiative, mean-
while, aims at giving
developing member
countries greater flexibility
in meeting their investment
needs. A sharper focus on
portfolio management and
project implementation has
produced an increase in
public sector loan disburse-
ment, while projects at risk
decline steadily.
To manage the risks
inherent in development
work, ADB moved last year
to a centralized risk manage-
ment structure through the
new Risk Management Unit.
ADB will continue to
play a major role in the fight
against poverty in the Asia
and Pacific region. ADB has
made a clear commitment
to raise the standards of its
operations in keeping with
dynamic forces at work in
the region.
Armed with its clearer
strategic priorities, critical
focus on results, a more Large numbers of poor people and growing inequality make clear that not all are benefiting
selective approach to from strong economic growth

3
5
 Board of
DIRECTORS’ REPORT
BOARD OF

Directors’
Report
Improving ADB’s Effectiveness

E
conomic growth was strong in large parts of the
region in 2005 despite the tsunami and
earthquake disasters, avian flu threat, and
higher oil prices. Many countries are no longer
merely aspiring to be part of the global
economy but have moved to its center.
Judged by purchasing power parity, Asia and the Pacific
now makes up 30% of global gross domestic product (GDP),
while the proportion of population surviving on $1 a day or
less has come down from about 34% in 1990 to 19% in 2003,
or some 620 million people.
But Asia and the Pacific is still home to fully two thirds
of the world’s poor—more than any other region. Those
living on less than $2 a day still number about 1.9 billion, or
nearly a third of the world’s population. Clearly, reducing
poverty must continue to be the guiding priority of the Asian
Development Bank (ADB) in the years ahead.
ADB remains firmly committed to helping its
developing member countries (DMCs)—and the entire
region—achieve the Millennium Development Goals
(MDGs). Meeting all these goals by 2015 will be a
challenge and depends on the actions of the developing
countries themselves, as well as those of all development
partners. ADB will play its part to strengthen these
partnerships, and actively monitors progress.
While the region as a whole is making good progress
toward meeting the income poverty target of the first goal
(to eradicate extreme poverty and hunger), several countries
may fall short. The region is also at considerable risk of
failing to reach the non-income goals, with available data
More action is needed in the region to
indicating that 27 of ADB’s DMCs are at risk of not achieve women’s empowerment and
achieving 25% or more of the indicators. gender equality in tertiary education

4
BOARD OF
DIRECTORS’ REPORT

5
caption goes here
 The greatest concerns are in the health, water supply
BOARD OF
DIRECTORS’ REPORT
and sanitation, primary education, and environment
sectors. Additionally, more action is needed to achieve
gender equality in tertiary education and women’s
empowerment.
Throughout the region, ADB must ensure that all its
work is aimed at reducing poverty—its overriding purpose.
This means intervening either directly—by including
strong, pro-poor elements in all programs and projects—
or indirectly, by fostering pro-poor sustainable economic
growth in its DMCs.
In his speech at the 2005 Annual Meeting in
Istanbul, ADB President Haruhiko Kuroda called on ADB
to be more relevant, more responsive, and more focused on
results so it can meet the challenges and demands of the
borrowing members in achieving the MDGs.
The following presents some steps ADB is taking to
ensure it is more effective and efficient in carrying out its
work. Subsequent chapters of this report look at the work
ADB continued or launched in 2005 to help meet the
goals in each of its operational subregions.
Improving ADB’s Effectiveness
PORTFOLIO PERFORMANCE AND RESULTS
The Annual Report on Loan and Technical Assistance Portfolio
Performance for 2004 from the Operations Evaluation
Department was well received by the ADB Board, which
found that the report provided hard evidence and numbers
to identify several important strategic challenges.
These findings were generally consistent with those
6
ADB President Haruhiko Kuroda
called on ADB to be more relevant,
more responsive, and more focused
on results
of other efforts, including the consultation missions for the
partnership framework for middle-income ordinary capital
resources (OCR) countries, and the independent assess-
ment of the effectiveness of the reorganization of ADB
and the Innovation and Efficiency Initiative (see page 11).
Among the findings, the analyses indicated that
when the increased lending of 1997–1998 in response to
the Asian financial crisis was factored out, the annual
OCR and Asian Development Fund (ADF) loan approvals
had stagnated at about $5.2 billion a year in the past
decade, and OCR disbursements had declined steadily.
Income from OCR lending fell by 43% from 2001 to
2004, resulting in a 38% drop in ADB’s gross annual
income.
Some 86% of loan projects in the past 10 years
experienced delays that required at least one extension
of the loan closing date; 60% required extensions of more
than 1 year, with the average overall extension about
2 years.
Many borrowers struggled to meet conditions for
second and subsequent program loan releases, resulting
in a carryover of about $1.25 billion in delayed tranche
releases at the end of 2005. In addition, lending was
heavily concentrated, with 8 DMCs receiving 83% of the
total, while the 23 smallest borrowers received only 9%.
These broad trends supported the contention that
ADB’s traditional products were no longer meeting many
of the needs of its key clients, and that new products and
less arduous procedures were needed to improve the
effectiveness of its development activities.
During 1998–2004, the total number of ongoing
technical assistance grants in ADB’s portfolio increased
by 53%, while the net amount of the technical assistance
portfolio increased by just 42%. There are indications that
the technical assistance portfolio growth has exceeded
ADB’s capacity to manage it effectively. The proportion of
technical assistance activities visited by a review mission
has fallen steadily each year from a high of 66% in 1998 to
a low of 25% in 2004. And despite the significant growth
in the technical assistance portfolio, the average annual
number of staff days on technical assistance review
missions remained about the same during 1998–2004.
These issues are being addressed under ADB’s
These broad trends supported the
contention that ADB’s traditional
products were no longer meeting
many of the needs of its key clients,
and that new products and less
arduous procedures were needed
to improve the effectiveness of
ADB’s development activities
Reform Agenda, through the Innovation and Efficiency
DIRECTORS’ REPORT
BOARD OF
Initiative and other programs. New products, such as the
multitranche financing facility, subsovereign and
nonsovereign public sector financing facility, local currency
lending, refinancing and retrofinancing facility, and
financing syndications and risk-sharing agreements, are
being introduced, and the administration of more projects
is being delegated to ADB’s country offices to improve
oversight and reduce response times.
The report’s direct impacts are largely internal to
ADB. For the first time, the Development Effectiveness
Committee requested Management to prepare an action
plan to address the findings of an Operations Evaluation
Department report. Management formed a task force to
prepare an action plan to address the issues identified in
the report at the corporate level. The larger and more
important indirect impacts of this report will be to stimu-
late improvements in ADB’s performance in administering
the portfolio, and better project delivery for ADB’s DMCs.
ASSESSING PROJECT QUALITY
The reforms under way throughout ADB’s operations are
equally important in its Operations Evaluation Department,
where changes have started to eventually turn the 2005
Annual Evaluation Review into a review of development
results, rather than a review of evaluation activities.
In comparison with its predecessors, the 2005 review
differed in structure, content, and analytical depth. In
particular, it undertook a retrospective evaluation of ADB’s
public sector projects, which account for 84% of cumulative
lending, and its conclusions should help ADB improve
project quality and portfolio performance in the future.
In general, the analysis of 968 projects showed that
project success deteriorated during the 1970s, bottomed
7
 In general, the analysis of
BOARD OF
DIRECTORS’ REPORT
968 projects showed that project
success deteriorated during the
1970s, bottomed out in the early
1980s, and improved from 1987
onward
out in the early 1980s, and improved from 1987 onward
(see graph, page 6). The evidence also suggests that
efforts in the early 1990s to improve project quality
through the project management structure, quality at
entry, and portfolio management and project
administration met with some success, although these
efforts need to be continued.
The report highlighted some key factors necessary for
ADB to become a results-based organization, such as
improving selectivity and focus, taking into account past
results of projects; raising the performance of countries with
poor records; and strengthening the economic forecasts
underlying project plans—since most infrastructure
projects require that planners take a decades-long view.
Measures to prevent project approvals bunching up at
the end of the calendar year were also suggested, among
them, giving staff a clear message that achieving develop-
ment results is more important than the calendar year in
which a loan is approved. ADB Management responded in
August, saying that ADB’s ongoing and future operations will
support the implementation of major recommendations.
The report also noted that ADB had made considerable
efforts to mainstream the Managing for Development
Results agenda across all operations, particularly through
its results-based country strategies and programs and the
Project Performance Management Systems.
Another innovation in the 2005 report featured a
chapter drawing together some of the broader findings of
ADB’s operations in one sector.
In 2005, the Operations Evaluation Department also
published several separate sectoral evaluations (such as the
social sector in Pakistan and the power sector in the Philip-
pines). In addition, evaluations were completed on ADB’s
country assistance programs for Bhutan and Indonesia.
IMPROVING COUNTRY STRATEGIES
These evaluation findings are also being used to help ADB
improve its country strategies.
Among the specific findings, the analysis showed that
the project sector was an important determinant of project
8
Overall, energy is one of ADB’s best-performing sectors
performance (see table, page 7). For transport and energy
projects approved in the 1990s, the probability of a
successful rating was over 85%. There was a lower
probability of success, at 46%, for projects in the
agriculture sector and for lines of credit to government-
owned development finance institutions. The problems
in the agriculture sector were widespread, although
performance was relatively better for irrigation and rural
development projects.
Performance also varied, naturally enough, by country,
although it improved for all country groupings in the
1990s. More than two thirds of ADB-funded projects were
successful in Bhutan, Central Asian republics, People’s
Republic of China (PRC), Greater Mekong Subregion
(GMS), Maldives, and Mongolia.
The project success rate was below 50% in the Pacific
islands, heavily influenced by weak performance in Papua
New Guinea, and in the Philippines.
ADB policies were applied uniformly to all countries,
despite clear differences in portfolio performance and
borrower requirements. ADB has recognized that it will be
more efficient, will reduce transaction costs, and likely
improve results to delegate more authority and
accountability to strong DMCs; work on this continues in
the middle-income country strategy and through the
Innovation and Efficiency Initiative. Efforts will also be
required to assist small, vulnerable, and/or weakly
performing DMCs whose primary needs may not be for
loan-funded projects or programs.
In reviewing these reports, the Development
Of the 94 evaluated power projects,
76 were rated as successful or better
Effectiveness Committee recommended further work to
improve sector selectivity and focus on country strategies,
strengthen core technical skills, increase delegation to the
resident missions, and strengthen loan and technical
assistance project implementation. The committee noted
that, while past performance in a sector is an important
factor, other considerations also need to be taken into
account, including the borrowers’ requirements and the
potential impact on poverty reduction.
SPOTLIGHT ON THE ENERGY SECTOR
The Operations Evaluation Department chose to put the
energy sector under the spotlight in its 2005 report,
because it accounts for 19.7% of cumulative lending and
is going through structural changes in many countries.
Overall, energy is one of ADB’s best-performing
sectors. Although delays in implementation are the norm,
of the 94 evaluated power projects, 76 were rated as
successful or better, 16 as partly successful, and only
2 as unsuccessful.
ADB assistance has contributed to economic
development by increasing access to electricity and making
the energy sector more efficient. ADB should continue to
support power sector reform, sound regulation, tariff reform
and cost recovery; development of an enabling environment
for private sector investment; and finance for both public
and private sector investments in infrastructure.
New and Revised Policies
and Procedures
REFORMING TO REMAIN RELEVANT
The year 2005 was very much a year of transition for ADB:
a new president in February, the final year of the current
medium-term strategy, and many changes implemented
through its Reform Agenda.
To remain responsive and relevant in the complex
and fast-changing environment and to help ensure that
economic growth lifts as many lives as possible, ADB has
been reforming its processes, policies, and programs. Many
changes are being put in place under the plan known as
the Reform Agenda, adopted in 2004, which is making
ADB more effective in delivering country-level
development outcomes and its goal of poverty reduction.
The agenda consists of 19 ADB-wide reform initiatives
to deliver five broad outcomes related to internal changes
and realignment: improving operational policies, strategies,
DIRECTORS’ REPORT
BOARD OF
and approaches; mainstreaming Managing for Development
Results; refining organizational process and structure;
reinforcing knowledge management; and improving
human resources management and staff incentives.
Major milestones were reached on many of the
Reform Agenda’s 19 initiatives in 2005, including
adoption of three change proposals under the Innovation
and Efficiency Initiative on new financing instruments
and modalities, local currency loan product, and cost
sharing and expenditure eligibility; adoption of a revised
design and monitoring framework for the project
performance management systems; establishment of
an independent Risk Management Unit and the Office
of Regional Economic Integration; adoption of a new
Public Communications Policy; and adoption of a new
performance management system under the human
resources strategy.
Running like a thread through the organization, ADB
is deepening its application of results-based systems for
planning, monitoring, reporting, and evaluating its actions
to better manage for development results.
MANAGING FOR DEVELOPMENT RESULTS
Managing for Development Results at ADB is focused on
improved learning and decision making at the DMC level,
within its own institutional framework, and globally as
part of an emerging network of Managing for
Development Results institutions and practitioners.
During 2005, for example, ADB produced the first
results-based annual report on its poverty reduction
strategy. The report assesses progress in advancing the
ADB must make sure all its programs and projects contain pro-poor
elements
9
 BOARD OF
DIRECTORS’ REPORT
strategy, and introduces a results-based monitoring and
evaluation framework with clear indicators.
The ADB Board of Directors also endorsed results-
based country strategies and programs in Bangladesh,
Bhutan, Mongolia, and Philippines, the first batch to join
the 2004 debut of Nepal’s pilot results-based country
strategy and program. The country strategies and programs
for Fiji Islands, Indonesia, Papua New Guinea, Uzbekistan,
and Viet Nam are being developed to include tools to
enable those programs to be managed for development
results. All are being put together after extensive
consultations with a broad spectrum of stakeholders in
those countries, making the strategies and programs more
inclusive and reflective than ever before of the needs of
the poor.
RESULTS IN COUNTRY STRATEGIES
AND PROGRAMS
Results-based country strategies and programs put in place
a matrix of objectives and clear indicators for monitoring
progress, and provide the flexibility to zero in on the
developmental constraints of the member country. For
example, the Philippine country strategy and program
focuses on the fiscal deficit, the Bangladesh and Nepal
country strategies and programs deal closely with
governance, and regional imbalances are important in the
Viet Nam country strategy and program.
Some countries have more capacity to adopt results
orientation than others—such as large, middle-income
economies—more so than smaller, fragile states. As a key
action under Managing for Development Results, ADB
will work with its DMCs to help develop their capacity
and strengthen country systems for the strategy.
Regionally, the new Pacific Regional Economic
10
Women in Bangladesh learn the basics of microfinance, a key step
to improving their lives (left); ADB must clearly and consistently
demonstrate effectiveness in its operations (above)
Results-based country strategies
and programs provide the
flexibility to zero in on the
developmental constraints of
the member country
Cooperation Strategy and Program (Pacific Strategy) is also
designed to be managed for results and was put together
after consultations and extensive workshops with
stakeholders concerned.
The Pacific Strategy is a unique document in ADB.
It will guide the preparation of all country strategies and
programs in the region and all regional activities. Through
a matrix of three objectives and seven key result areas, the
strategy is based on monitoring, reporting, and assessing
work across the region, and, importantly, learning from
this process for future decision making.
PROJECT PERFORMANCE MANAGEMENT SYSTEMS
Inadequate planning and insufficient involvement of
stakeholders in project preparation are among the main
reasons for project failure. The results-based approach is
also working at the project level, under the Project
Performance Management Systems, which centers around
the development of improved design and monitoring
frameworks for ADB projects, programs, and technical
assistance.
The new frameworks are results-based participatory
instruments that help in conceptualizing, designing,
implementing, monitoring, and evaluating projects.
The improved use of better frameworks is expected to
provide a consistent structure for all lending and non-lending
operations; clarify outcomes by harmonizing better with
other aid agencies; describe the “results chain” of a project;
and improve the formulation of expected development
outcomes by identifying performance indicators.
GLOBAL AGENDA
ADB has also played a key role in discussions among the
multilateral development banks to mainstream Managing
for Development Results. For example, it initiated joint
development of the multilateral development banks’
Common Performance Assessment System, which will
collectively assess each year how five banks are progressing
in mainstreaming the Managing for Development Results
agenda.
Indeed, at the Second High-Level Forum on Aid
Effectiveness in March 2005, delegates from more than
100 developed and developing countries and major
international agencies endorsed the Paris Declaration on
Aid Effectiveness. They resolved to take far-reaching and
monitorable actions to reform the ways aid is managed.
ADB and other multilateral development banks also
committed to harmonizing operational policies,
procedures, and approaches to reduce transaction costs for
donors and developing countries. ADB collaborates with
partners on key economic, sector, and thematic works and
increasingly uses harmonized approaches in developing
results-based country strategies and programs.
INNOVATION AND EFFICIENCY INITIATIVE
ADB provides both finance and expertise to its clients.
Finance includes debt, equity, and guarantees. Expertise
covers sector and thematic areas and is channeled mainly
via technical assistance grants. Besides its proximity to the
market and sector/thematic knowledge, ADB also maintains
a close working relationship with countries in the region.
To package these assets for greater development
effectiveness, ADB is streamlining some of its business
processes and developing new financing instruments and
modalities. The Innovation and Efficiency Initiative has
been established for this purpose. It aims to make ADB
more client- and results-oriented, and efficient. The
initiative covers seven change areas: new financial
instruments, including local currency; better country
strategies; simplified business processes; improved
procurement policies; simplified consulting services;
enhanced cost-sharing and expenditure eligibility criteria;
and improved safeguard policies.
The Innovation and Efficiency
DIRECTORS’ REPORT
BOARD OF
Initiative aims to make ADB more
client- and results-oriented,
and efficient
NEW INSTRUMENTS AND MODALITIES
ADB is testing five new financing instruments and
modalities to meet client needs in a more efficient and
cost-effective manner. The new instruments will be
implemented on a pilot basis for an initial period of 3 years,
after which performance, suitability, and outcome will be
evaluated. If found to be sound, relevant, and effective,
they will be mainstreamed into ADB’s operational toolkit.
The new financing instruments are meant to be
client-driven and easy to use. They follow ADB’s strategic
framework, comply with ADB’s Charter, and are aligned
with existing policies and procedures.
They are also designed to preserve the institution’s
triple A credit rating. An independent Risk Management
Unit was created in 2005 as a precondition for the pilot
instruments, and to evaluate nonrecourse financing or
nonsovereign finance transactions. This unit will cover
public and private sector operations processed by regional
departments, by the Private Sector Operations
Department, or by joint teams.
The financing instruments include the following.
• A multitranche financing facility facility,, similar to
a standby and noncontingent line of credit,
relevant for both debt equity and guarantee
finance. The facility targets mainly investment
programs, large projects, and credit lines. Pilot
testing began in 2005 with two transactions,
one in India and another in Pakistan.
• Direct financing to subsovereign, quasi-
sovereign, and state-owned enterprises. This
new instrument responds to the decentralization
process taking place in the region and allows ADB
to service a new set of clients.
• Local currency financing. This is now
applicable to both public and private transactions.
It addresses the potential mismatch between
borrowing in foreign currency and having income
streams in local currency. This is especially relevant
in the case of public services, utilities, and
infrastructure projects.
• Refinancing facility
facility.. This allows ADB to help
with the restructuring and/or expansion of existing
projects with inappropriate financing plans.
11

BOARD OF
DIRECTORS’ REPORT
New country strategies and programs are being put together after
extensive consultations, making them more inclusive and pro-poor
• New forms of cofinancing. ADB has seen
increased interest from commercial financial
institutions in both the private and public sectors
to enter into risk-sharing agreements—cofinancing
through active financial syndications and risk
sharing with commercial financing partners. The
new arrangements will expand cofinancing and
partnership opportunities for all parties involved.
OTHER POLICIES AND STRATEGIES
ADB has been reviewing and improving its policies,
strategies, and approaches to ensure that they are focused
on results and are relevant. In 2005, ADB reviewed its
existing Private Sector Development Strategy and started
preparing a new strategy for regional cooperation and
integration. Following the review of its Private Sector
Development Strategy, ADB prepared and submitted to
the Board of Directors a new strategic framework. This
focuses on enabling environment intervention to create a
level playing field for instruments, mobilization of
finance for private sector development, and new ways of
financing public goods and services. The framework is
accompanied by an action plan.
Setting the tone for policy review, meanwhile, the
Public Communications Policy was approved. After
extensive and transparent consultations with interested
groups around the world, working drafts were posted on
the internet, and extensive comments were publicized
on the ADB intranet. ADB closely considered all
contributions in the final product, which is now setting
a progressive tone for the organization’s dissemination of
knowledge and information (see page 13).
Similar wide-ranging consultations were held as part
of the review of the implementation of ADB’s governance
and anticorruption policies. ADB circulated the review
12
ADB has been reviewing and
improving its policies, strategies,
and approaches to ensure that
they are focused on results and
are relevant
conclusions in the draft paper Improving Governance and
Fighting Corruption: Implementing the Governance and
Anticorruption Policies, which was made publicly
available for comment in December 2005.
The review finds that ADB has succeeded in raising
the profile of governance in the region and significantly
increased assistance between 2000 and 2004. However,
the review concludes that there is a long way to go toward
embedding implementation of the governance and
anticorruption policies in the mainstream of ADB
operations. The sheer scope of the governance policy and
its action plan has resulted in too many small projects of
short duration and thinly spread staff resources.
The review also concludes that ADB has achieved
some success in dealing with fraud and corruption in
procurement and in increasing awareness of the
Anticorruption Policy. But less progress has been made
in assessing the impact of corruption on a country's
ability to meet its development goals.
The review also finds that service delivery in many
DMCs is plagued by inefficiency and corruption, for
example, in health, education, water, licensing, revenue,
and land titles. It says that higher priority should be
given to supporting investments in local transparency,
participation, and complaint mechanisms; and strong
preventive measures against corruption must be built into
project design and followed up with effective oversight
and corruption risk mitigation management during
implementation.
ADB also continued implementation of its
Performance-Based Allocation Policy, which governs the
allocation of grants and loans to borrowers from the ADF
(see below).
And the year included work to prepare ADB’s second
Medium-Term Strategy, which will introduce some
strategic measures as the first steps to a more
comprehensive longer-term ADB response to the rapid and
far-reaching changes in the region is experiencing. The
document will be made available in 2006 (www.adb.org/
Documents/Policies/MTS/2006/). A review of ADB’s
Long-term Strategic Framework is also to progress,
beginning in 2006.

Public Communications Policy: Making Information Available
A
DB’s new Public Commu-
nications Policy heralds
an ambitious shift
toward sharing knowl-
edge. ADB commits to a refined and
more focused approach to external
relations, with clear positions on
issues of importance, better
information products to explain
them, and wider distribution. The
policy's new rules regarding the
disclosure of information about its
operations put ADB ahead of other
international finance institutions.
The policy forthrightly supports
the right of people to seek, receive,
and impart information and ideas
about ADB’s activities. Among its
unique features, it will proactively
make information publicly available
by posting it on the web, and not
only after a request. People should
be able to find the information they
want, rather than having ADB
presuppose what they need.
If the information ADB holds is
not subject to clear confidentiality
criteria, it must be publicly disclosed.
The policy even favors disclosure of
sensitive information if the public's
interest in receiving the information
outweighs the harm that may be
caused to ADB. By leapfrogging
other international development
organizations, the new policy puts
ADB apace with a global movement
toward greater transparency and
disclosure. The organization believes
that greater awareness and under-
standing of its objectives will help
generate public trust.
Disclosure Enables
Participation
Overall, the more transparent
approach under the policy ensures
that much more information will be
available to the public in the early
stages of policies, country strategies,
or projects—before decisions are
made and members of the public
can no longer influence the
development initiatives that affect
them. By sharing information,
people can better participate in
decision making.
DIRECTORS’ REPORT
BOARD OF
ADB also recognizes that those the onus on ADB staff to defend
who need information do not why information cannot be released.
necessarily have access to the internet. The policy also favors “redaction”
Early in the design of projects that rather than withholding of informa-
affect local residents, information tion; that is, ADB will remove the
will be made available to the people confidential part of a document in
likely to be affected, and ADB will order for the bulk of it to be
work closely with the borrower or released. And ADB will not withhold
project sponsor to ensure informa- information simply because it is
tion is provided and feedback negative. It will report failures and
sought. A focal point will also be disappointments, as well as suc-
designated for regular contact. cesses.
Organizations such as national- ADB now has strict time limits for
level civil society groups increasingly responding to requests for informa-
want to be involved in their country's tion, and regularly monitors the
development strategy. ADB enables policy to ensure that it operates in
this involvement by requiring that draft accordance with its principles and
country strategies and programs be rules. Reports on the policy's
disclosed to in-country stakeholders. implementation will be produced
ADB regularly consults a wide and disclosed annually.
range of groups before adopting or
revising new operational policies and
strategies, and now requires draft ADB will not withhold
policy and strategy papers to be
posted routinely on its website. information simply
Disclosure Enables Accountability
because it is negative
From the beginning of open and
broad-based consultations with
a huge spectrum of interests in
preparing the policy—a process one
major nongovernment organization
(NGO) called the best policy review
to date among multilateral develop-
ment banks—ADB has signaled a
new direction under this policy. As a
public finance institution, it wants to
be held publicly accountable.
ADB-supported development
activities are paid for by citizens of its
member countries, so the organiza-
tion recognizes that it needs to be
transparent with the public. ADB
reviewed all the documentation it
regularly produces and asked the The policy supports the rights of people
question: What is the harm in to seek, receive, and impart information
releasing this document? This puts and ideas about ADB’s activities
Disclosure of sensitive information is favored
if the public’s interest in receiving the
information outweighs the harm that may
be caused to ADB
13
 PERFORMANCE-BASED ALLOCATION POLICY
BOARD OF
DIRECTORS’ REPORT
ADB’s Performance-Based Allocation Policy governs the
allocation of resources under the ADF, which provides
loans and grants to poorer countries on highly concessional
terms. The policy and its implementation was a central
theme of ADF IX negotiations. ADB began
implementation of its revised Performance-Based
Allocation Policy after Board approval in December 2004.
In 2005, ADB took a number of steps to strengthen
implementation and increase transparency of the policy,
and to further harmonize performance-based operations
with those of development partners.
A focal point was established in ADB’s Strategy and
Policy Department. The First Multilateral Development
Banks’ Technical Meeting on Performance-Based
Allocation, jointly planned by the African Development
Bank, ADB, and the International Development
Association of the World Bank Group, was hosted in
Manila in January 2005.
In April, ADB organized regional technical workshops
in Suva, Fiji Islands, and in Bangkok, Thailand, to explain
the objectives of the new policy to officials from DMCs
and civil society organizations.
In line with the revised policy, the World Bank’s
Country Policy and Institutional Assessment
questionnaire was adopted to conduct the 2005 country
performance assessments, and the two organizations
coordinated to ensure consistency in the conduct of
assessments exercises.
The first country performance assessments under the
revised policy were carried out in 2005 to determine ADF
allocations for 2007–2008. The assessments covered five
areas: macroeconomic management, structural policies,
social inclusion/equity, governance, and portfolio
management.
Recently, ADB reached an important milestone in
implementing the revised Performance-Based Allocation
Policy, with numerical ratings being released for the first
time in the public domain.
Internal Initiatives
HUMAN RESOURCES
Human Resources Strategy
The Human Resources Strategy, approved in 2004, is a
critical component of ADB’s Reform Agenda. ADB made
significant progress implementing several initiatives
under the strategy in 2005. The initiatives, by improving
management of human resources, help ADB work toward
achieving results.
The ADB-wide competency framework was
14
implemented through the new performance management
system and learning and development programs.
Subsequent implementation of the ADB-wide competency
framework will continue in 2006 through enhancements to
the recruitment, selection, and promotion systems.
Among the initiatives, the new performance
management system clearly defines individual staff
responsibilities and accountabilities in annual work plans
agreed between staff and managers. The Performance and
Development Plan provides better alignment between an
individual staff member's work plan and the organization’s
key results. It is a framework that provides the needed
structure to manage performance on a daily basis through
timely, continuous, and constructive feedback as well as
more objective performance distinctions and recognition.
The Performance and Development Plan will allow ADB
to efficiently manage staff development and personnel
decisions. Improvements will continue to be made to the
performance management system during the 2006 cycle.
Recruitment and selection initiatives were improved
through the delegation of some oversight functions to the
Vice President (Finance and Administration) and through
the use of external specialized recruitment firms for senior
positions in the Private Sector Operations Department
and the new Risk Management Unit. Panel interviews for
professional staff and greater participation of the hiring
divisions were sought to screen and interview external
candidates.
To facilitate implementation of the strategy, ADB
was required to first attain the flexibility to adjust the
composition of its workforce to ensure that staff possess
the appropriate competencies, motivation, and potential
to perform. Implementation of the Enhanced Separation
Program started in 2005 and will be completed in 2006.
The program encourages selected staff members who
have reached a plateau in their careers to take the
opportunity to separate from ADB earlier than their
normal retirement date.
New Unit Formed to Focus on Learning
The Learning and Development Unit was established in
2005 to optimize the use of learning and development
resources, support a more efficient approach to learning
and development, and adopt a more strategic approach
toward identifying learning needs within the business
The Human Resources Strategy
is a critical component of ADB’s
Reform Agenda
environment. The focus is primarily on promoting

DIRECTORS’ REPORT
BOARD OF
institutional efficiency and effectiveness, redesigning
leadership programs, and improving technical programs.
To determine ADB’s learning needs, an ADB-wide
training needs assessment was implemented as part of the
new performance management system. Several new
workshops were introduced in 2005, and broad training
programs on technical and operations skills development
as well as leadership coaching to strengthen leadership
and accountability were conducted. A job rotation pilot
was implemented for resident mission national officers.
Initiatives that continue to support the objective of
creating an inclusive and women-friendly environment
were implemented, including diversity and gender
sensitivity sessions.

Staffing
At the end of 2005, ADB had a staff of 2,456 coming from
53 of its 64 member countries. The total comprised
887 professional staff members and 1,569 local staff
members, of whom 342 or about 17.2% are located in
field offices. During the year, there were 95 appointments
and 68 departures of professional staff members, while
137 local staff joined ADB, and 102 left. Women
professional staff members increased in number but
decreased as a percentage of total professional staff.
Women professional staff members totaled 255 (29.8% of
total professional staff) at the end of 2004 and 259
(29.3% of total professional staff) at the end of 2005.
COMPENSATION
Consistent with ADB’s market-driven compensation
system, the Board approved a 3.4% weighted average
salary increase for professional staff and a 0.9% salary
budget for nonrecurring, non-pensionable bonus for 2006.
It also approved a weighted average salary increase of
10.9% for national officers and administrative staff at
headquarters for 2006, while an overall weighted average
salary increase of 10.8% for the national officers and
administrative staff in 25 field offices was implemented
for 2006.
The Board discussed the Comprehensive Review of
Compensation and Benefits for professional staff in
November 2005. It approved a change in the methodology
for setting professional staff salaries. The European Bank
for Reconstruction and Development has been added as a
comparator, in addition to the World Bank. The salary
budget increase has been split into two components: a
salary increase to be distributed based on performance;
and a nonrecurring, non-pensionable bonus to be given to
staff rated exceptional under the Performance and
The new performance development plan provides better alignment
between staff work plans and ADB’s key results
At the end of 2005, ADB had
a staff of 2,456 coming from 53 of
its 64 member countries
Development Plan. Some benefit changes that were
discussed with the Board and approved by Management
included changes to the Staff Retirement Plan and the
Group Medical Insurance Plan for pensioners, as well as
minor changes to the expatriate benefits on housing,
home country travel, and education assistance.
INTERNAL ADMINISTRATIVE EXPENSE BUDGET
Internal administrative expenses for 2005 totaled
$294.3 million, a saving of $5.5 million against the
original budget of $299.8 million, resulting mainly from
lower-than-expected staff costs, business travel, and
administrative expenses, despite emergency assistance to
the earthquake- and tsunami-affected areas. Savings were
offset by a higher requirement for consultants and staff
relocation. About $0.7 million was transferred from the
general contingency to meet the unexpected increase in
staff-related expenses of the Operations Evaluation
Department and higher relocation expenses of the offices
of the directors.
For 2006, the internal administrative expense budget
is $312.9 million, including a general contingency of 1%
(summarized in Appendix 10), and net of $3.8 million

15
 estimated to be recoverable from administering trust
BOARD OF
DIRECTORS’ REPORT
funds of multilateral and bilateral institutions. The 2006
budget has been prepared under a zero real growth
scenario, with no professional staff increases. The nominal
budget increase over the 2005 budget estimate is 5.3%,
which is fully attributable to price increases. To achieve
this flat real growth budget and to ensure that resources
are available to fund priority work programs for 2006,
an across-the-board sequestration of 5% of the authorized
professional staff complement and selected discretionary
expenses was applied.
Budgetary resources in 2006 will fund a prioritized
work program, including the following major initiatives:
expansion of OCR lending to meet the priority needs of
DMCs, including lending to subsovereign and nonsovereign
entities; expanded private sector operations to reach
unserved DMCs; enhanced portfolio management with
increased delegation of project implementation and other
functions to resident missions; strengthened credit risk
assessment and management; enhanced regional and
subregional cooperation and integration; Managing for
Development Results and the Human Resources Strategy
under the Reform Agenda; the Committee of Sponsoring
Organizations of the Treadway Commission framework;
knowledge management action plan; and implementation
of the Public Communications Policy. Increases in
budgetary resources to support these initiatives are to be
met through sequestration of resources, trade-offs,
productivity gains, and various efficiency measures.
In addition to internal administrative expenses,
the 2006 budget also includes an annual capital budget of
$4.1 million, mainly to fund cyclical capital expenditures
for headquarters facilities and information technology
equipment, and to meet replacement and acquisition
requirements of field offices.
ADMINISTRATIVE SERVICES
The Office of Administrative Services worked to maintain
a safer and better work environment through several major
The 2006 budget has been
prepared under a zero real growth
scenario, with no professional staff
increases. The nominal budget
increase over the 2005 budget
estimate is 5.3%, which is fully
attributable to price increases
16
initiatives in 2005. Under the Enhanced Security
Access Control Project—one of the projects under the
Special Capital Budget Projects, which was approved in
April 2004 by the Board of Directors—all six entrances
to the headquarters building were improved and the
Security Operations Center that operates 24/7 to provide
timely information was established. It also led to the
development of the ADB Business Continuity Strategy,
approved in February 2005. The strategy, which aims to
mitigate the probability of a risk occurrence and reduce
the impact of a risk event, focuses on the timely response
to a disruption affecting ADB’s business processes.
In November 2005, ADB passed its second year
surveillance and maintained its ISO 14001 and OHSAS
18001 certification, confirming that ADB’s environment,
health, and safety management systems comply with
international standards.
The office also launched and managed ADB’s i-travel
self-booking tool to enable personnel to make online
travel reservations anytime they require. Last year’s
projects also included the improvement of procurement
procedures and outsourcing opportunities, and the latest
printing technology upgrade.
All these bank-wide initiatives were anchored on the
Balanced Scorecard and Six Sigma, which are now being
used in the office as tools to measure quality for business
process management improvement.
INFORMATION SYSTEMS AND TECHNOLOGY
The Office of Information Systems and Technology
provides access to knowledge and information as required,
in support of ADB goals in three major areas: information
systems, technology infrastructure, and information
technology governance.
Under information technology governance, the office
recently completed a realignment, putting in place four
business units: Technology Division, Solution Delivery
Division, Infrastructure Unit, and Business Process
Support Unit.
As part of the Information Systems and Technology
Strategy Phase II, several initiatives have started to
increase efficiency in information and technology areas.
Foremost is the infrastructure optimization initiative to
simplify and consolidate existing technology. This is
expected to streamline ADB’s information and technology
environment toward the desired enterprise architecture
laid out against the defined business direction and to
ensure greater cost-effectiveness.
In the area of information systems, the office is working
closely with the Knowledge Management Center and the
Regional and Sustainable Development Department to
identify requirements for better information sharing in terms. Each Director appoints an Alternate. The President

support of decision making and knowledge management.
Governing Structure
BOARD OF GOVERNORS AND
BOARD OF DIRECTORS
ADB’s highest policy-making body is its Board of Governors,
which is composed of one representative from each ADB
member. The Governors meet annually and elect the
12 members of the Board of Directors, who serve 2-year
DIRECTORS’ REPORT
BOARD OF
is elected by the Board of Governors for a 5-year term and
serves as Chairperson of the Board of Directors. The
President manages ADB, assisted by four Vice Presidents
and a Managing Director General. (For the current list of
Governors and Directors, see appendixes 4 and 5.)
Haruhiko Kuroda assumed office as ADB President on
1 February 2005 after being unanimously elected by the
Board of Governors in November 2004.
Vice President Joseph Eichenberger completed
his assignment on 31 December 2005. C. Lawrence

38th Annual Meeting

T
he 38th annual meeting of Economic Integration; the region; and
the Board of Governors was • shared ADB’s concern with the • commended ADB on the
held in Istanbul, Turkey, negative net transfer of resources introduction of grants in ADF IX,
from 4 to 6 May 2005, with to DMCs, and welcomed ADB's and noted that the use of ADF IX
activities and events commencing on plan to streamline policies and grant resources must be
2 May 2005. procedures, develop new lending consistent with ADB's overall
ADB’s Board of Governors instruments, sharpen the focus of commitment to development
recognized that developing Asia had its operations, and ensure cost effectiveness.
entered a new era of development competitiveness, within a well- About 2,500 participants
characterized by dynamic growth, defined medium-term strategic attended the annual meeting,
increased interdependence, and an framework; including representatives from
unprecedented prominence in the • urged ADB to work with govern- multilateral and bilateral institutions,
global economy. The Governors also ments, development partners, the global financial community, and
recognized that the generally and the private sector to meet the civil society. The 39th annual meeting
buoyant economic profile was not large infrastructure challenges in will be held in Hyderabad, India.
uniform, that significant disparities
in economic and social development
persist within countries and across
the region, and that reducing non-
income poverty has been slow
in many countries.
The Governors expressed firm
commitment to reducing poverty
and achieving the MDGs in the Asia
and Pacific region, and reaffirmed
their vision of a region free of
poverty.
The Governors also
• expressed their strong apprecia-
tion to ADB for its leadership role
and quick response in addressing
the aftermath of the tsunami in
late 2004; About 2,500 participants attended the annual meeting, including representatives from
multilateral and bilateral institutions, the global financial community, and civil society
• reaffirmed the importance of
Managing for Development
Results;
• noted ADB’s strong commitment The Governors expressed firm commitment
to a more proactive role in
regional cooperation and to reducing poverty and achieving the MDGs
integration, and welcomed the
creation of the Office of Regional for a poverty-free Asia and Pacific region

17
 Greenwood, Jr. was elected by the Governors to replace
BOARD OF
DIRECTORS’ REPORT
Mr. Eichenberger. Mr. Greenwood assumed office on
28 February 2006.
The Board of Directors met formally on 49 occasions
and held 38 informal meetings in 2005 including
briefings, discussion seminars, and presentations.
Members of the Board of Directors made official visits to
India, Maldives, and three Central Asian republics.
The Annual Meeting was held on 4–6 May 2005 in
Istanbul, Turkey (see page 17).
BOARD COMMITTEES
The Board of Directors has four standing committees.
Membership is shown in Appendix 6.
Audit Committee
The Audit Committee identified and reviewed a
comprehensive range of audit issues within its mandate,
representing a broad cross-section of ADB operations and
activities, including the quarterly financial statements,
which are analyzed closely to review the financial
soundness of ADB, and to keep track of the net income
position. It continued to monitor implementation of the
Financial Accounting Standard, FAS 133, covering
accounting principles and practices in relation to
derivative instruments; the effectiveness and efficiency of
control procedures, including backup procedures as part of
the Business Continuity Plan; and measures being taken
to prevent fraud and corruption.
The committee, together with relevant ADB
departments, finalized a review of its terms of reference,
bringing them in line with those of other multilateral
development banks. The role of the committee was made
more specific with the inclusion of risk management, and
procurement policies and procedures as part of the review
of internal controls. The committee supported the
initiative of the President at the Istanbul Annual Meeting
of establishing an independent Risk Management Unit.
Budget Review Committee
The Budget Review Committee discussed the Enhanced
Separation Program, later approved by the Board. It clarified
how the program will provide flexibility to adjust human
resources in line with the Human Resources Strategy.
The committee also discussed and amended its
terms of reference to reflect the participation of Vice
Presidents in committee meetings as necessary, allowing
the discussion of strategic directions before the
finalization of the work program and budget framework.
The committee also looked at efforts and progress to
improve cost information. It noted that the work program
18
and budget framework should be viewed as an ADB
business plan to enhance effectiveness, with inclusion of a
stronger results framework.
The committee reviewed the special capital
expenditure proposal on a business continuity facility,
later approved by the Board, to serve as a backup work
facility during business interruptions at headquarters.
It also recommended approval of ADB’s 2006 budgets
for internal administrative expenses and annual capital
expenditures. The guiding principle of the budget
formulation was zero real growth.
During the deliberations on the 2006 budgets, the
committee requested a review of the overall lending
program projections in the draft budget document, and
these were subsequently revised upward. In response,
the committee was provided with an update of the
projected programs on regular operations, ADF grants,
multitranche financing facility, and emergency
assistance. The committee expressed concern about the
impact of a zero real growth budget on the scaling up of
operations, implementation of new initiatives, and the
medium-term strategy. The committee was informed
that this would not restrict work program objectives
and targets, which are fully resourced.
The committee reviewed the work program of the
ADB Institute, proposed a 2006 budget of $14.2 million,
and recommended its approval.
Compliance Review Committee
The Compliance Review Committee, set up under the
Accountability Mechanism (see page 19), clears the
Compliance Review Panel’s proposed terms of reference and
time frame for conducting compliance reviews, and reviews
the panel’s draft monitoring reports on implementation of
remedial actions approved by the Board before the panel
finalizes them. In 2005, the committee discussed the
panel’s proposed terms of reference for conducting a
compliance review of the request under the Southern
Transport Development Project in Sri Lanka and three draft
monitoring reports on the implementation of remedial
actions on the inspection request on the Chashma Right
Bank Irrigation Project (Stage III). The terms of reference
and monitoring reports are posted on the panel’s website
(www.compliance.adb.org).
Development Effectiveness Committee
To ensure the independence of ADB’s operations
evaluation process and reports, on 1 January 2004,
the Operations Evaluation Department began reporting
directly to the Board of Directors through its
Development Effectiveness Committee.
 Evolving areas of concern to the committee include The committee has changed the focus of its reviews

how evaluation recommendations that Management
accepts are turned into action, with an eye to making
improvements. They also include how impact is monitored,
and how the department could play a more strategic role.
All evaluation reports are posted on ADB’s website
upon circulation to the Board and Management, in
accordance with the Public Communications Policy.
Management’s responses to the reports and
recommendations, and the chair’s summaries of
committee discussions of the department’s major reports
are also posted when available.
DIRECTORS’ REPORT
BOARD OF
and discussions from individual project evaluations to
broader evaluations at the country, sector, thematic,
and policy levels. Accordingly, in 2005, the committee
meeting agenda included only such broader studies,
none at the project level. For the first time, the
committee recommended that Management formulate
a comprehensive action plan to address key strategic
issues identified in the annual report on portfolio
performance. Management responded positively to the
recommendation and committed to monitoring and
reporting to the Board on such an action plan.

Accountability Mechanism

A
DB’s Accountability
Mechanism aims to
improve development
effectiveness, project
quality, and transparency in opera-
tions. Its two functions—consulta-
tion and compliance review—help
solve problems and investigate
alleged violations of ADB’s opera-
tional policies and procedures.
Through the mechanism, people
adversely affected by an ADB-
assisted project can file a complaint
with the Office of the Special Project
Facilitator (www.adb.org/SPF), which
reports directly to the ADB President.
Through the consultation
function, the mechanism seeks
agreement among all parties. A
venue and a process for problem
solving that can include fact-finding
reviews, meetings, roundtable
discussions, stakeholder consulta-
tions, and other means appropriate
to the situation are provided.
Separately, affectees may also file
a request for compliance review with
the Compliance Review Panel (http://
compliance.adb.org) if they believe
they have been adversely affected by
Through the mechanism, people adversely
affected by an ADB-assisted project can
file a complaint
a project because ADB has failed to
comply with its operational policies
and procedures. The panel will
assess eligibility and will conduct
compliance reviews agreed to by the
Board of Directors. The Compliance
Review Panel reports directly to the
ADB Board of Directors for such
matters.
The Office of the Special Project
Facilitator received a complaint from
five villages in South Kalimantan
about the Community Empower-
ment for Rural Development Project
in Indonesia and declared it eligible
in March 2005. The agreed course of
action consisted of preparatory
meetings with all parties involved,
joint fact-finding activities, and
multi-stakeholder consultations.
At the end of September 2005,
the parties signed village agree-
ments for all five villages, and the
consultation phase was concluded.
Three Indonesian NGOs played an
important role as intermediaries. The
parties were to submit a progress
report on the implementation of the
agreements by the end of January
2006.
In December 2004, the Compli-
ance Review Panel received a request
for compliance review of the
Southern Transport Development
Project in Sri Lanka. The Compliance
Review Panel found the project to
have lapses of compliance with
several ADB operational policies and
procedures, including involuntary
resettlement; and environmental
considerations, gender and develop-
ment, and incorporation of social
dimensions in ADB operations. The
Board approved the recommenda-
tions in the Panel’s Final Report in July
2005. The Panel is presently monitor-
ing ADB Management’s implementa-
tion of the remedial actions.
The Panel also monitored ADB
Management’s implementation of
the Board-approved remedial actions
under the inspection request of the
Chashma Right Bank Irrigation
Project (Stage III) in Pakistan.
The Office of the Special Project
Facilitator and the Office of the
Compliance Review Panel intensified
their outreach activities with
government representatives, civil
society, private sector, academe, and
ADB personnel in nine countries.
The Office of the Compliance
Review Panel hosted the 2nd Meeting
of Accountability Mechanisms,
which was attended by 18 represen-
tatives from various accountability
mechanisms in development
institutions.

19
 The main instruments for providing
BOARD OF
DIRECTORS’ REPORT
help to ADB’s DMCs are policy
dialogue, loans, equity
investments, guarantees, grants,
and technical assistance
Financing Operations in 2005
FINANCIAL RESOURCES
Authorized and subscribed capital stock amounted
to $50.2 billion. ADB raised long-term funds totaling
$4.2 billion, of which $1.0 billion was raised through
a global public offering.
Gross income, which includes revenue and net
realized gains, amounted to $1.4 billion, $1.0 billion of
which was generated from the loan portfolio,
$375.3 million from the investment portfolio, and
$36.3 million from other sources, of which $24.5 million
came from equity investment operations.
ADB’s Special Funds are the ADF1 with 2005
committed resources amounting to $2.6 billion,
Technical Assistance Special Fund of $195.5 million,
Japan Special Fund totaling $34.3 million, ADB Institute
Special Fund of $13.9 million, Asian Tsunami Fund of
$578.6 million, and Pakistan Earthquake Fund of
$85.5 million.
FUNDING
About 72.9% of cumulative lending is from OCR.
Funding from OCR comes from three distinct sources:
private placements and capital markets in the form of
borrowing; paid-in capital provided by shareholders; and
accumulated retained income (reserves), which provides
a buffer for risks.
The main instruments for providing help to ADB’s
DMCs are policy dialogue, loans, equity investments,
guarantees, grants, and technical assistance.
ADB offers a range of modalities and terms for loans
aimed at improving performance.
Loans are also provided from Special Funds.
The ADF offers loans on concessional terms to members
with low per capita gross national product and weak
debt-repayment capacity. It is the only multilateral
development bank concessional fund dedicated
exclusively to economic and social development in the
region. The ADF is financed by periodic voluntary
contributions from donors. The current ADF IX program
is $7 billion for 1 January 2005–31 December 2008.
20
ADF IX grants are assisting countries in reducing
the debt burden of development finance, making the
transition from conflict to peace and stability, and
combating HIV/AIDS and other infectious diseases.
ADB also manages and administers additional funds:
Japan Scholarship Program, Japan Fund for Poverty
Reduction, and Japan Fund for Information and
Communication Technology, including those grants
provided by bilateral and multilateral donors to support
technical assistance and soft components of loans.
In recent years, thematic trust funds focusing on gender
and development, governance, poverty reduction, water,
energy, and the environment were established to support
technical assistance operations and selected components
of loan projects (see page 41).
Technical assistance funded through grants or loans
helps maximize ADB’s development impact. Technical
assistance grants are used for preparing projects, and for
supporting advisory and regional activities in areas such
as law and policy reform, strengthening fiscal policies and
procedures, good governance, capacity building, and
natural resource management.
ADB has a triple-A credit rating and actively
mobilizes financial resources through its cofinancing
operations, tapping official, commercial, and export credit
sources. Assistance to its DMCs creates an enabling
environment for private sector development. ADB also
directly finances private sector projects to assist
commercial investors and lenders (www.adb.org/about/
fnncemgt.asp).
OVERVIEW OF OPERATIONS
In 2005, ADB approved 72 loans (64 projects) for
$5.8 billion, 10 equity investments for $217.1 million,
2 guarantees for $68.4 million, 51 grant-financed projects
for $1.2 billion, and 299 technical assistance operations
for $198.7 million for ADB operations of $7.4 billion
(see page 24). In addition, ADB approved 2 multitranche
financing facilities totaling $1.5 billion.
LOANS
Lending with government guarantee accounted for 65 loans
for $5.3 billion (58 projects and programs), comprising
25 loans from ADB’s OCR for $3.9 billion and 40 loans
from the ADF for $1.4 billion. 1 This is a 6% increase over
the almost $5 billion in 2004 (an increase of 4.9% for OCR
lending and 11% for ADF lending). Lending without
government guarantee to the private sector accounted for
seven loans for $536.0 million (seven projects)—in
financial terms, this is an increase of 83.2% over the five
loans for $292.5 million (five projects) in 2004.

In discussions with borrowers during 2005, countries highlighted the need for ADB to expand support for poverty reduction programs
Of the 64 public and private sector projects and
programs approved in 2005, 16 (25%) were categorized
as targeted interventions and 48 (75%) as general
interventions. By theme, sustainable economic growth
was most prevalent and was associated with 53 projects.
By sector, transport and communications received the
largest share of lending (30%).
The 54 public and private sector projects represented
a total investment of approximately $19.7 billion, of
which $5.1 billion (26%) will be financed by ADB;
$4.4 billion (23%) by governments and borrowers;
$10.1 billion (51%) by cofinanciers, equity sponsors,
and local finance institutions; and $50.7 million (0.3%)
by project beneficiaries. Eight projects, amounting to
$1.0 billion, were financed under the sector lending
modality, compared with seven projects amounting to
$1.3 billion in 2004.
By theme, sustainable economic
growth was most prevalent and
was associated with 53 projects;
by sector, transport and
communications received the
largest share of lending (30%)
DIRECTORS’ REPORT
BOARD OF
The 10 policy-based programs2 approved in 2005
were valued at $1.14 billion, compared with 14 programs
for $1.12 billion in 2004. Two program loans approved in
2005 were coupled with an investment project loan or a
technical assistance loan.
EQUITY OPERATIONS
Ten equity investments totaling $217.1 million were
approved in 2005, compared with 11 for $164 million
in 2004.
COFINANCING AND GUARANTEE OPERATIONS
ADB actively promotes cofinancing to complement its
assistance to its developing member countries with funds
from bilateral partners and multilateral financial
institutions, export credit agencies, as well as commercial
financial institutions. As of 31 December 2005, non-ADB
funds generated by ADB’s cofinancing operations
amounted to $7.4 billion, including $5.2 billion of
commercial cofinancing from international and domestic
banks and export credit agencies, $1.8 billion of official
loan cofinancing, and $352.6 million of grant cofinancing
from bilateral and multilateral development partners.
Of this, cofinancing raised through ADB’s provision of
financial administration or credit enhancement services
amounted to $322.9 million, including $68.4 million in
credit enhancements (guarantees) for commercial loans,
$30.5 million with partial administration services for
21
 official loans, and $224.0 million with full or partial
BOARD OF
DIRECTORS’ REPORT
administration services for project grants.
Additionally, ADB established two new trust funds—
PRC Poverty Reduction and Regional Cooperation Fund
($20 million) and Cooperation Fund for Fighting HIV/
AIDS in Asia and the Pacific ($12.8 million)—with
financing commitments of $32.8 million, and replenished
two funds with commitments of $57.2 million.
GRANTS
ADB approved a total of 51 project grants for $1.2 billion.
Of this amount, $246.6 million was funded from ADF IX;
$570.0 million from the Asian Tsunami Fund;
$80.0 million from the Pakistan Earthquake Fund;
and $254.7 million from cofinancing sources with full or
partial administration by ADB, including $28.4 million
from the Japan Fund for Poverty Reduction, $12.1 million
from the Global Environment Facility, $2.4 million from
the Japan Fund for Information and Communication
Technology, and $211.8 million for ADB administration
from bilateral and multilateral sources (Australia,
Canada, Finland, Netherlands, New Zealand, Norway,
Sweden, United Kingdom, and European Commission).
In addition, parallel grants of $128.6 million were
provided from multilateral and bilateral institutions
without ADB administration services for seven ADB-
financed projects.
TECHNICAL ASSISTANCE
A total of 299 technical assistance activities for
$198.7 million, including 269 new ones and 30 supple-
mentary, were approved in 2005—in financial terms,
this represents a 2% increase over the 321 technical
assistance activities for $195.1 million in 2004. Of the
299 technical assistance activities, 68 were for project
preparation, 152 were advisory, and 79 were for regional
assistance. Of the total amount approved, $89.5 million
will be financed from the Technical Assistance Special
Fund, $28.4 million from the Japan Special Fund,
$2 million from the Asian Tsunami Fund, and the
remaining $79 million from other multilateral and
bilateral sources.
ADB established two new trust
funds—PRC Poverty Reduction
and Regional Cooperation Fund
and Cooperation Fund for Fighting
HIV/AIDS in Asia and the Pacific
22
MULTITRANCHE FINANCING FACILITIES
Under a new financing modality, two multitranche
financing facilities were approved, totaling $1.52 billion.3
These were $770.0 million to Pakistan for the National
Highway Development Sector Investment Program, and
$750.0 million to India for the Rural Roads Sector II
Investment Program. It is expected that loans from these
facilities will be approved starting in 2006.
RESOURCE TRANSFERS
While 2005 shows improvement in disbursement,
lending to clients over the past 10 years was stagnant.
In discussions with borrowers during the year, countries
highlighted the need for ADB to expand support for
poverty reduction programs. The Board discussed a range
of new financial mechanisms and business procedure
reforms under the Innovation and Efficiency Initiative to
respond to client demands.
The net transfer of resources to ADB from its DMCs
decreased to $0.4 billion in 2005, compared with
$2.1 billion in 2004. There was a net inflow of
$1.0 billion ($2.6 billion in 2004) to ADB from OCR
borrowers/investors, mainly from full repayment of the
financial sector program loan to the Republic of Korea of
$1.7 billion and prepayments of $0.6 billion in 2005
($2.8 billion in 2004) of OCR loans. However, net
transfers from ADB to ADF borrowers increased from
$468.5 million in 2004 to $612.2 million in 2005
(see tables 27, 28, Statistical Annex, Volume 2).
Loan disbursements in 2005 totaled $4.7 billion
comprising 116.8% of the target for the year. Of the total,
OCR disbursements were $3.5 billion or 74% and ADF
disbursements were $1.2 billion or 26% (see tables 8, 9,
15, Statistical Annex, Volume 2).
Loan service payments reached $5.2 billion in 2005,
compared with $5.6 billion in 2004. The decrease was
mainly because of lower prepayments of $0.6 billion
($2.8 billion in 2004). In 2005, the four largest net
resource transfers from ADB were to PRC, India, Pakistan,
and Viet Nam (see tables 27, 28, Statistical Annex,
Volume 2).
PRIVATE SECTOR OPERATIONS
A total of 17 financial markets and infrastructure projects
providing $821.5 million in assistance in the private
sector were approved by ADB in 2005. The interventions
are composed of 10 equity investments of $217.1 million,
7 loans of $536 million, a partial credit guarantee of
$18.4 million, and a political risk guarantee of
$50 million.
ADB’s loan and equity investments mobilized

ADB’s private sector loan and equity investments mobilized funding
from other sources, leveraging ADB’s own funds by almost 10 times
funding from other sources, leveraging ADB’s own funds
by almost 10 times. In 2005, ADB’s private sector
operations also embarked on technical assistance for
capacity building in areas such as water, trade, finance,
small business and microfinance banks, development of
the asset-backed securities market, and worker
remittances.
ADB has undertaken strategic interventions through
public-private partnerships in projects that boost a
DMC’s domestic capacity to finance private sector and
economic growth, an indispensable ingredient in poverty
reduction. The projects improve the delivery of essential
services and extend them to the poor. Although private
sector operations are still and will remain in the larger
DMCs, ADB continues to look at opportunities in the
smaller borrowing DMCs, following the priorities
identified in various regional and country strategies and
programs. For example, the first and largest private sector
project in the Lao People’s Democratic Republic (Lao
Endnotes
1
Total ADF operations—loans and grants—amounted to $1.62 billion.
2 Policy-based programs include program loans and policy loan components of sector development program facilities.
3
In 2005, there were four projects with project cost in excess of $1 billion each. In 2004, there were no projects of this size.
PDR) was approved for the Nam Theun 2 Power
DIRECTORS’ REPORT
BOARD OF
Company Limited in 2005.
One hundred ninety-one projects with cumulative
assistance of about $5 billion (inclusive of all types of
interventions) have been approved since ADB
commenced private sector operations in 1983. ADB’s
cumulative equity and loan approvals of $3.5 billion have
catalyzed a total of about $31.6 billion in funding for
private sector projects, leveraging ADB’s investments by a
ratio of 5.4 times. Cumulative disbursements for private
sector projects have thus far amounted to $2.1 billion.
As of 31 December 2005, the overall private sector
exposure amounted to about $1.7 billion, consisting of
$598.2 million in equity investments, loans of
$732.2 million, and guarantees of $361.7 million.
ADB’s private sector exposure is largest in the
infrastructure sector with a total of $820.9 million in
exposure, followed by investment funds and financial
institutions at $742.3 million, with exposure in all other
sectors at $128.9 million.
The total private sector exposures are largely in India
(17.1%), PRC (15.6%), Sri Lanka (11.5%), and
Bangladesh (11.2%). Regional projects account for roughly
8.9% of the total.
Capital was freed up for new investments in the
amount of $53.4 million as ADB’s equity shareholdings
in 15 private companies were fully or partly divested
in 2005. Loan repayments for the year, including
prepayments, amounted to $54.7 million, while total
disbursements amounted to $336.2 million.
While ADB constantly explores ways to improve risk
management in its private sector operations, a loss
provision is recorded for equity investments and loans.
The loss provision, which includes impairment loss, was
about $116.6 million as of 31 December 2005. The loss
reserve ratio as a percentage of total outstanding portfolio
was 10.8%.
191 projects with cumulative
assistance of about $5 billion
have been approved since
ADB commenced private sector
operations in 1983
23
 BOARD OF
DIRECTORS’ REPORT

24
BOARD OF
DIRECTORS’ REPORT

25
 BOARD OF
DIRECTORS’ REPORT

26
BOARD OF
DIRECTORS’ REPORT

27
 Management
BOARD OF
DIRECTORS’ REPORT

Haruhiko Kuroda
President

Liqun Jin Geert van der Khempheng C. Lawrence Young-Hoi Lee Jeremy Hovland
Vice President Linden Pholsena Greenwood, Jr. Managing Director The Secretary
Vice President Vice President Vice President General

28
Board of Directors

DIRECTORS’ REPORT
BOARD OF
Volker Ducklau David Taylor Emile Gauvreau Pasi Hellman Sibtain Fazal Marita Magpili-
Director Alternate Director Director Alternate Director Halim Jimenez
Director Alternate Director
Austria, Germany, Luxembourg, Turkey, United Canada, Denmark, Finland, The Netherlands, Kazakhstan, Maldives, Marshall Islands, Mongolia,
Kingdom Norway, Sweden Pakistan, Philippines, Timor-Leste

Agus Haryanto Richard Stanley Chol-Hwi Lee Batir Mirbabayev Masaki Omura Atsushi Mizuno
Director Alternate Director Director Alternate Director Director Alternate Director

Cook Islands, Fiji Islands, Indonesia, Kyrgyz Republic of Korea; Papua New Guinea; Sri Lanka; Japan
Republic, New Zealand, Samoa, Tonga Taipei,China; Uzbekistan; Vanuatu; Viet Nam

Patrick Pillon Niklaus Zingg Ashok Saikia Nima Wangdi Stephen Sedgwick Richard Moore
Director Alternate Director Director Alternate Director Director Alternate Director

Belgium, France, Italy, Portugal, Spain, Switzerland Afghanistan, Bangladesh, Bhutan, India, Lao Australia; Azerbaijan; Cambodia; Federated States of
People’s Democratic Republic, Tajikistan Micronesia; Hong Kong, China; Kiribati; Nauru;
Palau; Solomon Islands; Tuvalu

Paul W. Speltz Paul W. Curry Chaiyuth Sein Tin Xiaosong Zheng Xiaolong Mo
Director Alternate Director Sudthitanakorn Alternate Director Director Alternate Director
Director
United States Malaysia, Myanmar, Nepal, Singapore, Thailand People’s Republic of China

29
 Operations
in 2005
OPERATIONS IN
OPERATIONS 2005
IN 2005

Promoting Growth, Fighting Poverty

T
he year 2005 was, in part, one of tragedy in Asia
and the Pacific. It opened as survivors of the
Indian Ocean tsunami picked through the
remnants of lives ruined by giant waves and
closed as the homeless victims of the crushing
earthquake in South Asia struggled to find shelter from the
Himalayan winter.
ADB responded with speed and flexibility to both
natural disasters, providing over $850 million for the
countries hit by the tidal waves and a package of $1 billion
for Pakistan. Early disbursements, although slow in some
areas, were concentrated on reestablishing roads, power
facilities, and other major infrastructure. ADB worked to
focus its efforts to ensure speedy implementation of
projects—and close cooperation with development
partners in response to the disasters (see page 34) as well
as to control the spread of the avian flu virus (see page 38).
Overall operations during the year, meanwhile, focused
on the physical infrastructure needed to remove barriers to
faster economic growth, an important factor in efforts to
reduce poverty when linked with complementary services
and activities that support the broadening of livelihood
opportunities for the poor.
ADB also found new ways to draw in private sector
support for development projects—one of five thematic areas
of its programs—including through risk mitigation products
that can overcome investor hesitancy. Most developing
countries hold enormous untapped potential for greater
involvement from private markets, both international and
domestic, and multilateral development banks can help ADB’s infrastructure projects,
particularly roads, are encouraging
unlock this potential and bring it to bear on the massive private firms to invest
funding gap for infrastructure projects.

30
OPERATIONS IN 2005

31
 Similarly, ADB continued to build “soft” infrastruc-
ture under the second of its main development themes,
capacity development. Ensuring strong economic growth
means encouraging laws and strategies that protect
property rights, promote openness, improve financial
governance, and strengthen capital markets.
OPERATIONS IN 2005
The other thematic areas include regional
cooperation and integration, gender and development,
and environment (see pages 37–43).
The most advanced of ADB’s regional programs,
for example, the Greater Mekong Subregion Economic
Cooperation Program (GMS Program), has helped build
a sense of community in the Mekong subregion, making
solid progress in establishing a sound infrastructural base,
and has begun to move into other areas (see page 63).
Realizing the power of partnership, ADB has forged
an alliance comprising eight countries and six multi-
lateral institutions to further regional cooperation
ADB continued to build “soft”
infrastructure under the second
of its main development themes,
capacity development
A power station access tunnel at Nam Theun 2 in the Lao PDR; the
GMS is making solid progress toward a sound infrastructure base
32
under the Central Asia Regional Economic Cooperation
Program. As a result, the program has become a model
for cooperation and enhancing development effectiveness.
Collectively, about $1.05 billion has been mobilized for
regional cooperation projects under the program for the
next 2 years alone in addition to assembling a vast pool
of knowledge to increase cooperation in Central Asia.
Through such efforts, ADB is helping countries
achieve stronger economic growth and make progress in
their commitment to internationally agreed MDGs on
poverty reduction by 2015.
However, the region has more people with
inadequate nutrition, more living in slum conditions,
and more without access to water and sanitation
than any other developing region. To help relieve the
problems faced by the poor, ADB’s lending programs
also concentrate on several sectors, including education,
governance, energy, environment, water, finance, social
development, and health.
Public-private sector partnerships, for example,
have had great success in improving health services in
Bangladesh and Cambodia. In both cases, nongovernment
organizations (NGOs) have been engaged to improve
health service delivery in government clinics (see pages
68, 89–90).
Hundreds of inventive projects have also been
carried out under the ADB-administered poverty funds
over the years (see page 41). One standout project is
the Strategic Private Sector Partnerships for Urban
Poverty Reduction financed by the Japan Fund for
Poverty Reduction and implemented with the corporate-
led NGO, Philippine Business for Social Progress.
The NGO has recorded a number of great successes in
upgrading slums and improving the livelihoods of the
urban poor in Metro Manila (see page 101).
There are other funds to accelerate ADB’s efforts
on poverty reduction such as the Poverty Reduction
Cooperation Fund, with financing from the United
Kingdom (see page 41) and the Cooperation Fund in
Support of the Formulation and Implementation of
National Poverty Reduction Strategies financed by
the Netherlands government.
Throughout its lending operations, ADB strives
to ensure that environmental issues are central, and
that there is a sharp focus on issues affecting women
and other disadvantaged groups, two of five thematic
priorities in lending operations. Environmental
concerns are reflected in every loan, but several in
particular were designed to square environmental
concerns with the demands of high economic growth
in places such as the PRC (see pages 56–57).
INFRASTRUCTURE
Investment in infrastructure accounted for the bulk of
ADB lending in 2005, as it has for several years. It
comprises about 60% of ADB’s overall lending portfolio.
The biggest portion of these loans in 2005 was for
transportation and telecommunications projects at close
to 30%. Loans for energy-related projects amounted to
about 18% of the total, while water supply, sanitation,
and waste management accounted for 11%.
One highlight of the year was the Nam Theun 2
Hydroelectric Project in the Lao PDR. It underscored the
importance to development not only of infrastructure but
also of the private sector, regional cooperation, stakeholder
consultations, and close collaboration among develop-
ment and finance institutions. Eventually, it will provide
much-needed power to Thailand and much-needed
development funds for the Lao PDR (see page 69).
However, in developing Asia and the Pacific, funds
for infrastructure still fall far short of the estimated need.
Private sector investment generally cooled off in East
Asia after the 1997–1998 financial crisis, particularly
for countries like Indonesia and the Philippines.
Poorer countries in the region continue to attract little
or no private infrastructure funds.
Financing needs for energy, transport, information and
communication technology, and water and sanitation
systems are expected to exceed $250 billion per year over
the next 10 years. East Asia alone will require $1 trillion
in infrastructure investment over the next 5 years to
sustain fast growth and create jobs for its young popula-
tion, according to a joint study published in March 2005
by ADB, World Bank, and Japan Bank for International
Cooperation. The PRC still accounts for the lion’s share,
at some 80%, of East Asian investment.
In ADB’s 4 decades, more than half of the
$113 billion invested in Asia and the Pacific has gone to
improvements in transportation and communications,
energy, and water supply and sanitation. Commerce
cannot thrive and the poor cannot improve their lives
using potholed roads, archaic phone systems, weak
irrigation, and distant sources of drinking water.
Financing needs for energy,
transport, information and
communication technology,
and water and sanitation systems
are expected to exceed $250 billion
per year over the next 10 years
OPERATIONS IN 2005
Building infrastructure is clearing the obstacles to economic growth
and helping reduce poverty
The experience of the PRC shows how large invest-
ments in such infrastructure support stronger economic
growth and reduce poverty. Transport projects, in particu-
lar, open up bottlenecks and clear the way to new mar-
kets. ADB approved a large loan in September to help
develop a modern railway connecting the provinces of
Henan and Shaanxi (see page 55).
At the other end of the scale, an infrastructure loan in
Indonesia (approved in late 2005) illustrates ADB’s work
to lift living standards in poor and often isolated villages.
ADB is providing $50 million over 3 years to support
government efforts in some 1,800 communities to cushion
the effect of a 186% rise in the price of kerosene caused by
the oil price spike and an end to government subsidies.
The loan will finance construction and repair of roads,
bridges, irrigation systems, water pipes, and drainage
works with the help of community organizations. About
2 million people stand to benefit (see pages 101–102).
For more on ADB’s infrastructural and other lending
programs, see the subregional chapters.
PRIVATE SECTOR DEVELOPMENT
Raising development funds for infrastructure and other
programs is a formidable challenge, and meeting it
requires broad commitment of private sector funding
and expertise. However, getting that support requires
innovation.
The rebuilding of Afghanistan is a case in point.
When the Taliban was pushed from power in 2001, there
was little left of infrastructure. The roads, phone system,
and financial system were shattered. Without such basic
structure, many private sector investors were lukewarm
33
 ADB Assists Disaster-Struck Areas

S
akina Bibi was at home with
her children in northern
Pakistan on 8 October 2005
OPERATIONS IN 2005

when she felt the mountains

shake. “I thought it was the end of
the world…and we (were) all going
to die,” she recalls. “I started calling
out to Allah and ran out with my
children. Within seconds my entire
house had collapsed.”
The devastating earthquake was
one of two dreadful disasters that
book-ended 2005. The year dawned
just days after massive waves had
torn through coastal areas around
the Indian Ocean, killing more than
200,000 people. And it ended as
millions of survivors of the enor-
mous quake faced winter in tent
camps.
Connecting the two was the swift
response from ADB. In record time,
with marathon legal and assessment
work, ADB launched the Asian
Tsunami Fund. This was equaled by
the speed with which ADB’s project
teams processed the emergency
assistance for all disaster-struck Surveying the damage in Pakistan
countries. At $600 million, the fund
is the largest grant program in disaster, and places a premium on and leaving damage estimated at
ADB’s history. ADB then used the disaster risk planning. more than $200 million.
knowledge gained to launch the ADB’s Earthquake and Tsunami
Pakistan Earthquake Fund in even Rebuilding after the Waves Emergency Support Project is helping
less time. Around the Indian Ocean, more than communities find the resources they
ADB coordinates its assistance for a year after the tsunami, the survivors need to repair farms: agricultural
countries faced with natural disasters are putting their lives back together enterprises are being restored
and post-conflict reconstruction with ADB’s help. With subsequent and support services are being
under its Disaster and Emergency replenishment of the fund, ADB rehabilitated.
Assistance Policy of 2004. It has had approved $859.9 million during the Government and development
a disaster policy since 1987 and year for the countries hit by the waves. partner joint assessments estimated
provided $2.4 billion in emergency In Aceh, Indonesia, those funds losses to Indonesia at about $4.7
assistance loans since then. are helping the severely affected billion. Some 126,000 lives were lost
Under the new policy, however, agriculture sector get back on its in the provinces of Aceh and North
ADB is learning from its long feet. The waves washed out a fourth Sumatra, and hundreds of thousands
experience in disaster management of cash crop areas and rice fields, were left homeless. ADB approved
gained through a string of calami- taking away the livelihoods of about grant financing of $300 million—
tous events in the region, whether 320,000 farmers and employees $290 million for the Earthquake and
the Gujarat earthquake in India in
2001, massive flooding in Bang-
ladesh in 2004 and in the PRC in
1998, or after conflicts in Cambodia,
ADB coordinates its assistance for countries
Timor-Leste, and elsewhere. faced with natural disasters and post-conflict
The policy emphasizes better
coordination among the many reconstruction under its Disaster and
development agencies and relief
organizations that respond to Emergency Assistance Policy of 2004

34

Tsunami Emergency Support Project
and $10 million for the Multi-donor
Trust Fund.
In South Asia, the tsunami funds
are helping rebuild the essentials of
economic growth and recovery:
roads, power facilities, and other
major infrastructure. They are being
used to restore livelihoods, provide
primary education and health
services, revitalize water supply and
sanitation, and rebuild homes.
Sri Lanka is faced with the
arduous task of rebuilding about
100,000 houses; replacing 70%
of the fishing fleet; and helping
11,000 companies get back to
business. Another 150,000 people,
now in informal self-employment,
have to get back on their feet.
Sri Lanka is using the funds it
received, a package of just under
$240 million, to help rebuild
roads—especially those in
the north and east of the country—
community-based infrastructure,
fishery harbors, and livelihoods.
ADB’s tsunami assistance also
addresses governance issues, legal
empowerment for survivors, and
anticorruption issues.
In India’s states of Tamil Nadu
and Kerala, ADB has helped
thousands of fishermen get back
to work. Electricity, water, and
transportation links are also coming
back. Assistance to India includes
the $200 million Tsunami Emergency
* Azad Jammu and Kashmir is an area over which India and Pakistan have been in dispute since 1947. The Asian Development Bank does not intend
to make any judgment as to the legal or other status of any disputed territories or to prejudice the final determination of the parties’ claims.
Assistance Sector Project, comprising
a $100 million loan and an Asian
Tsunami Fund grant of $100 million.
Another $5 million will come from
technical assistance grants.
In the Maldives, the tsunami
caused damage of nearly $500
million, equivalent to some 62% of
GDP, although the loss of lives was
comparatively small. ADB’s tsunami
assistance package of $23.2 million
is helping restore infrastructure
(transport, water supply/sanitation/
solid waste management, power,
agriculture, and fisheries). As a result
of lingering tsunami-related effects
coupled with a steady increase in oil
prices, fiscal balances in the Maldives
deteriorated.
ADB Rushes Assistance to
Pakistan after Earthquake
The 8 October earthquake in South
Asia was another debilitating natural
disaster in the region’s history,
killing about 73,000 and leaving
another 70,000 severely injured or
disabled. More than 2.8 million
people were rendered homeless, and
2.3 million were left without
adequate food. About 324,000 jobs
were lost to the earthquake, equal to
29% of the previously employed
population in the worst-hit districts.
The cost of reconstruction is
estimated at $3.5 billion.
ADB responded quickly.
ADB President Haruhiko Kuroda
OPERATIONS IN 2005
ADB reviews the damage in Sri Lanka (top)
and Aceh, Indonesia (left); the response
was swift and effective
announced a package of $1 billion
for reconstruction and recovery.
Using the experience gained in
putting the Asian Tsunami Fund
together, ADB established the
Pakistan Earthquake Fund in
November to channel grant funding.
Under the $300 million Earth-
quake Emergency Assistance Project,
for example, ADB will help recon-
struct lost assets and restore the
transport, power, health, and
education sectors in Azad Jammu
and Kashmir* and in North-West
Frontier Province.
Approved in December, the loan
features a quick-disbursing mecha-
nism, amounting to $100 million, to
finance imports of materials urgently
needed for the recovery process.
The project aims to quickly revive
economic activity, with work to
rehabilitate major roads and bridges,
repair hydropower generating
stations, and construct new lines
and facilities. Health clinics and
schools will also be reconstructed.
The project will help reestablish
some government services destroyed
in the disaster. It will offer legal
assistance and address governance
issues and the rebuilding of
government institutions to reduce
the enormous strain on government
services. This includes replacing
documents such as birth and death
certificates, property titles, and
identification cards.
35
 Banking from Scratch—Investing in Afghanistan

T
he damage in Afghanistan
was more than ruined
buildings after a quarter
OPERATIONS IN 2005

century of war. The country’s

financial institutions had ceased to
function or no longer commanded
trust; and the central bank had only
a loose grip on the currency. By
contrast, the ancient cash-based
Hawala system enjoyed customer
loyalty others could only envy.
Afghanistan International Bank,
established as a commercial bank
that could foster private sector devel-
opment crucial to economic revival,
was among the first institutions to
step in. Under a contract with Dutch
banking giant ING and supported by
an ADB investment of $2.6 million
for a 25% stake, it is helping rebuild
the shattered financial sector.
“It was very basic when we started
here, and we had to start from
scratch. This is not a branch office;
we were setting up an all-new local
bank. We needed not only to find a
building, but also to create a whole
new banking system. We couldn’t
just adopt the system of our parent
organization,” says Chief Executive
Officer John Haye, a banking veteran
who came to the bank from ING.
The bank was established in
Kabul in March 2004 as a local bank
operating to international standards.
It opened its first branch in Mazar-e-
Sharif in August 2005, followed by a
branch in Kandahar in October.
Staffing was among the big
challenges. To find corporate
banking experts and chief accoun-
tants, skills not widely available in a
country emerging from 25 years of
war, the bank had to look abroad. It
found suitable and affordable
candidates, including Pashto
A man and a boy prepare the day’s bread from scratch; rebuilding the country has also
meant starting from scratch
speakers, in Pakistan. sectors it feels are financially
The next step was finding clients. rewarding and need support. These
Again, unlike other foreign banks, include import substitution busi-
the bank could not tap an estab- nesses that can replace lucrative
lished clientele. “Most of the other goods now expensively imported
banks operating here had merely from Pakistan or elsewhere, and
shifted to their Pakistan clientele promising Afghan export sectors
(many of them Afghan expatriates). that can generate foreign currency.
So they had a clientele already,”
says Mr. Haye.
For its lending portfolio, the bank
had some help from the United
Afghanistan Interna-
States Agency for International
Development, with a $2 million
tional Bank, estab-
funding program used to finance lished as a commer-
the agriculture sector and plans for
another line to fund small- and cial bank that could
medium-sized enterprises.
The bank has also developed its foster private sector
own lending portfolio. “You have to
be careful which clients you are development crucial
selecting,” says Mr. Haye, referring to
the need to avoid those involved in
to economic revival,
the huge illicit drug trade in was among the first
Afghanistan and other areas.
The bank has chosen economic institutions to step in

about committing money. With ADB support for private
sector investments, however, a new commercial bank was
established and began expanding in 2005, and an
investment fund to help small- and medium-sized
enterprises was set up (see above).
Another ADB loan in 2004, $35 million to Roshan—
a company that provides most of Afghanistan’s telecommu-
nications—has helped produce spectacular results from
establishing a mobile phone network (see pages 90–91).
Nonetheless, many obstacles to private sector growth
still exist in Asia and the Pacific. Economic and
regulatory uncertainties; macroeconomic instability;

36
high tax rates; onerous regulatory and administrative
requirements; corruption; and insufficient infrastructure,
finance, and skills are all significant barriers to
investment.
Through its private sector operations, ADB is finding
innovative ways to overcome investor reticence toward
some parts of Asia. It is mitigating risks, for example,
through the creation of guarantee instruments such as
partial credit guarantees and political risk guarantees,
which protect investors against confiscation, nationaliza-
tion, breach of contract, and other factors.
In 2005, ADB reinitiated a partial credit guarantee
to banks in Pakistan to encourage lending to small- and
medium-sized enterprises, while in Afghanistan it was
in the process of disbursing loans of $5 million for the
Afghanistan Investment Guarantee Facility and
$10 million for a supplemental political risk guarantee.
Other major private sector projects included the
Tangguh Liquefied Natural Gas project in Indonesia, for
which ADB approved a $350 million loan to build and
operate gas production wells, platforms, and a liquefied
natural gas facility. ADB made an equity investment of
$75 million in the PRC’s Bank of China, and in Pakistan,
it will provide $37.3 million to help bridge a pending
electricity shortfall in its first assistance to a private
sector hydropower project (see page 87).
REGIONAL COOPERATION
Regional cooperation and integration have intensified in
many parts of Asia and the Pacific over the past decade.
Intraregional trade now accounts for 55% of East Asia’s
total, up sharply from 35% in 1980; free trade agreements
are proliferating; and rapid growth in the PRC and India
is encouraging the trend.
ADB believes regional cooperation and integration
will continue to play a significant role in the growth of
Asia and the Pacific. It has stepped up its effort to
encourage both and is managing the area under the new
Regional Cooperation and Integration Strategy, which
rests on four pillars: regional and subregional cooperation
programs, trade and investment cooperation and integra-
tion, monetary and financial cooperation and integration,
and the provision of regional public goods (such as in
efforts to control HIV/AIDS or avian flu; see page 38).
The GMS Program is widely recognized as an
example of a successful subregional initiative established
in 1992 with the support of ADB. In addition to ADB’s
vigorous effort toward continued strengthening of the
GMS Program, it envisages significant scaling up of
support for the Central Asia Regional Economic Coopera-
tion Program in the coming years, and work there has
found momentum in building roads, ports, and bridges;
planning power and telecommunication networks; and
untangling trade relationships through harmonized policy
and institutional environments (see pages 49–50).
Leaders in the Pacific region have overcome a recent
lack of momentum toward greater cooperation and are
OPERATIONS IN 2005
moving forward with agreement to a new Pacific Plan
for regional cooperation and integration.
In South Asian countries, dialogue is increasing
through several programs, including the South Asian
Association for Regional Cooperation, South Asia Subre-
gional Economic Cooperation, and Subregional Economic
Cooperation in South and Central Asia programs.
Meanwhile, emerging trends of trade and investment
integration in Asia prompt ADB to have a more coherent
approach to promote trade and investment intraregionally
as well as extraregionally. ADB will focus on supporting
regional and subregional policy dialogue on trade and
investment, conducting research on regional trade
agreements—how to make them a building block toward
multilateral liberalization—and strengthening institu-
tions within developing member countries.
Support for monetary and financial cooperation and
integration has been significant. ADB has supported
several regional initiatives, including those under the
Association of Southeast Asian Nations (ASEAN),
ASEAN+3, Asia-Pacific Economic Cooperation, and
Asia-Europe Meeting. ADB will expand its support to
other regional groups, such as the South Asian Association
for Regional Cooperation Finance Ministers and Central
Asia Regional Economic Cooperation Program Finance
Ministers. ADB has conducted extensive research to
support the ASEAN+3 Research Group and the Asian
Bond Market Initiative Working Group. ADB publishes
the biannual Asia Economic Monitor and Asia Bond Monitor
and maintains the AsianBondsOnline website.
In April 2005, ADB established the Office of Regional
Economic Integration to act as an internal focal point for
regional cooperation and integration efforts. Two special
advisors to the President in charge of regional cooperation
and integration were appointed to coordinate and
streamline activities undertaken by ADB’s departments
and advise on strategic measures and initiatives to
enhance the organization’s role in furthering regional
cooperation and integration in Asia and the Pacific.
In April 2005, ADB established
the Office of Regional Economic
Integration
37
 IMPROVING FINANCING OPTIONS
To expand the range of financing instruments and moda-
lities, ADB began testing three new initiatives in 2005
under the Innovation and Efficiency Initiative. The aim
is to increase flexibility to respond better to client needs.
A new approach to cost sharing and expenditure
OPERATIONS IN 2005
are screening proposals with local government units.
Refinancing propositions are also under consideration.
ADB began testing the new multitranche financing
facility in 2005 with two loans for major road investment
programs in South Asia (see pages 85 and 87). Designed
to provide finance “as you go” and somewhat akin to a

eligibility has been put in place. This will improve ADB’s
project financing capability in a manner more consistent
with market practices. The new arrangement involves
more flexible cost-sharing limits and expands the
categories of expenditures ADB can finance (land
acquisition and payments for rights-of-way, taxes and
duties, and other expenses such as bank charges, leasing,
and secondhand goods). It also does away with the old
distinction between foreign exchange and local costs and
a level of investment plans.
A number of nonsovereign transactions with state-
owned enterprises (majority owned by the state) are being
prepared, namely in India and Indonesia. Project teams
commercial bank’s letter of credit, this facility will allow
ADB to finance long-term investment programs in
structured and staggered multiple loans. It allows clients
to combine financing sources with ADB. The financing
sources can include multilateral development banks,
bilateral agencies, private equity groups, commercial
banks, and capital market operators.
The facility establishes a means to target specific,
sequential components of large stand-alone projects;
slices (or tranches) of sector investments over a longer
time frame than the current norm; equity investments;
financial intermediary credit lines; and guarantees.
ADB has been expanding its coverage into local

Cooperation Combats Avian Flu

O
f the 175 human cases
of avian flu the World
Health Organization
has reported globally
since the outbreak in January 2004,
almost all have been in Southeast
Asia. Of those, 93 occurred in Viet
Nam, with deaths now at 42.
In October 2005, ADB approved
$58 million for two planned grant
projects—a $28 million regional
project addressing bird flu and
$30 million for a communicable
disease project in the Mekong.
It plans to rapidly allocate an
additional $600,000 to continue
its support to the World Health
Organization’s regional office in
Manila and extend this to its Delhi
office covering Southeast Asia.
However, estimates of the cost
for controlling avian flu and
preparing for a possible pandemic
stand at about $1 billion for the
next 5 years. Viet Nam’s Ministry of
Agriculture and Rural Development
and Ministry of Health estimate
their needs to be about $300
million each. The government is
providing about $130 million per
year, mainly for the Ministry of
Agriculture and Rural Development,
and external agencies have commit- about 0.5% in 2004. In the medium
ted about $90 million so far. term, ADB could commit at least
Viet Nam has been the epicenter $470 million to support the overall
of the epidemic to date, with cases response in Asia, it announced in
reported from most provinces and November. Assistance could include
totaling over 1,900 outbreaks. About about $300 million for new projects
60 million of the 300 million chicken in the PRC, Indonesia, Philippines,
and ducks have died or been culled and Thailand.
and a nationwide campaign is in
place to identify and contain new
outbreaks in flocks.
Although the poultry sector is
relatively small, the economic cost is
put at about $200 million, and a
similar sum has been used for control
efforts, most of it government-
financed. The flu epidemic is
estimated to have lowered GDP by
Viet Nam has been
the epicenter of the
epidemic to date,
with cases reported
from most provinces
and totaling over Estimates of the cost for controlling
avian flu and preparing for a possible
1,900 outbreaks pandemic stand at about $1 billion for
the next 5 years

38
currency lending through bond issues and commercial
swaps in the PRC, Philippines, and Thailand.
GOOD GOVERNANCE, FIGHTING CORRUPTION
Governance and legal systems have been called the weak-
est link in the strong chain of development in a number of
economies in Asia. Poor government, ineffective policies,
and corruption hinder economic growth and development,
and thus efforts to reduce poverty. Public administration is
often also used to serve a small portion of the population
who rely on the state and its institutions to provide special
privileges for their businesses or their personal interests.
ADB was the first multilateral development bank to
adopt a governance policy applying to all its operations,
in 1995, following it up 3 years later with the Anti-
corruption Policy. Governance work has covered a range
of areas. In national government administration, for
example, ADB’s work embraces Viet Nam’s Support
Implementation of the Public Administration Reform
Master program. It includes assistance to the Marshall
Islands to refocus its public sector for effective delivery
of basic social services, and technical assistance to
Azerbaijan to develop a competition policy framework.
ADB is helping local governments in Cambodia,
Indonesia, Pakistan, and Philippines to decentralize and
improve their financial management and service delivery.
In law and judiciary, ADB has supported the Access to
Justice Program in Pakistan; set up a cadastral commis-
sion in Cambodia; and strengthened legal education in
the Maldives, Mongolia, and elsewhere.
Among loans approved in 2005, ADB is providing the
Indonesian government with $200 million to support its
medium-term development plan, which aims to raise
average GDP growth to 7% annually by 2009 from about
4% in 2004. Reaching that goal in Indonesia will require
greater macroeconomic stability, and sound fiscal and
financial management. To support the government’s
plans, ADB is working with the World Bank and using the
Development Policy Support program, which includes a
series of structural reform packages. It is one of several
recent loans in Indonesia that will help improve gover-
nance (see page 99).
In its second Asian Environment
Outlook, released in 2005,
ADB stressed that a “grow now,
clean up later” approach to
economic growth is unacceptable
And to keep its governance programs sharp and its
fight against corruption up-to-date, ADB began a review
in 2005 of the implementation of its governance and
anticorruption policies.
ENVIRONMENTALLY SUSTAINABLE GROWTH
OPERATIONS IN 2005
Serious environmental problems have accompanied strong
economic growth in the region: air pollution chokes many
major cities, forest cover is the world’s lowest per capita,
and wetlands and wildlife habitat are disappearing fast.
Often the poor suffer the worst effects.
The countries of Asia and the Pacific must continue
to grow strongly to overcome poverty. However, in its
second Asian Environment Outlook, released in 2005, ADB
stressed that a “grow now, clean up later” approach to
economic growth is unacceptable. Degradation is not
inevitable, and a healthier environment in Asia and the
Pacific is a prerequisite to economic development that
includes the poor.
Under its Environment Policy of 2002, ADB is
working to reshape views toward environmental manage-
ment under five goals: promoting environmental interven-
tions to reduce poverty directly, mainstreaming environ-
mental considerations in economic growth, supporting the
maintenance of global and regional life support systems,
building partnerships, and integrating environmental
safeguards into ADB operations.
In 2005, 9 of 58 new public sector loan projects had
environmental sustainability as a theme, totaling some
$605 million, up from $569 million in 2004. They
represented 12% of total public sector lending. Of the total,
80% funded urban environmental improvements through
provision or rehabilitation of water supply, sanitation,
and waste management systems; 15% promoted the
conservation of natural resources; while 5% funded the
rebuilding and restoration of tsunami-affected areas.
Many of ADB’s interventions support several of the
Environment Policy goals simultaneously.
The Fuzhou Environmental Improvement project in
the PRC, Kerala Sustainable Urban Development, Phase
II project in India, and Regional Development project in
the Maldives, for example, are improving environmental
infrastructure, strengthening planning and environmental
management, and building management and implemen-
tation capacity. These projects were designed with strong
stakeholder participation and are expected to provide the
basis for stronger economic growth potential.
The Sanjiang Plain Wetlands Protection project,
meanwhile, began establishing a program in 2005 to
conserve globally significant biodiversity while generating
employment and income in a sustainable manner in the
39
 northeast corner of the PRC (see page 57).
Assistance was approved to restore tsunami-affected
areas in Sri Lanka in ways that will conserve coastal
ecosystems.
Technical assistance grants are also an important
source of environmental work. Of the nearly $307 million
OPERATIONS IN 2005

in technical assistance and grants approved in 2005 with

environmental objectives—almost triple the 2004
amount—77% funded improvements to urban or rural
environments, 15% promoted natural resource conserva-
tion, and 7% helped mainstream the environment into
the legislative, policy, and institutional frameworks.
The amount of technical assistance grants approved
in 2005 to strengthen environmental capacity at the
national and regional levels doubled to about $38 million
from $19 million in 2004. Moreover, environment-
oriented grants rose to $260 million compared with
$24 million in 2004, with a sizeable portion of this
increase attributed to rebuilding tsunami-affected areas
in Sri Lanka ($203 million), but also including protection
of wetlands in the Sanjiang Plain of the PRC
($12.14 million) and support for the Tonle Sap sustain-
able livelihoods initiative in Cambodia ($15 million;
see page 65).
In the Mekong subregion, ADB is undertaking
extensive work to ensure that environmental sustainability
remains of paramount importance as the subregion’s Furrowing the land to protect against erosion in Gansu, PRC (top);
through efforts such as those to protect the Tonle Sap, ADB is
economy expands. In May 2005, in conjunction with its striving to achieve environmentally sustainable growth
endorsement of the Core Environment Program, the
environment ministers of countries of the GMS Program
endorsed the establishment of an environment operations collaboration with the United Nations Environment
center in Bangkok to enhance cooperation in the subregion. Programme, United Nations Economic and Social
ADB continued to support efforts to reverse patterns Commission for Asia and the Pacific, and United Nations
of land degradation afflicting many parts of the region, an Convention to Combat Desertification. Four countries are
important factor contributing to poverty. As an executing actively participating: PRC, Japan, Republic of Korea,
agency of the Global Environment Facility, ADB is and Mongolia.
leading three partnerships for combating drought and The Central Asian Countries Initiative for Land
desertification and mitigating drought in Central and Management, meanwhile, with ADB serving as the lead
East Asia. Global Environment Facility agency, will support the
In 2004 and 2005, for example, ADB approved a implementation of a 10-year program of country-driven
regional technical assistance activity, the Prevention and activities and resource mobilization to pursue sustainable
Control of Dust and Sandstorms in Northeast Asia, in land management in those countries.
In collaboration with the International Finance
Corporation, ADB approved a small-scale technical
ADB continued to support assistance for the training of representatives from finan-
cial institutions in the region on environmental and social
efforts to reverse patterns of due diligence, and on finding new business opportunities
land degradation afflicting many in the environment field.
In parallel with these new efforts, ADB has continued
parts of the region, an important to implement a range of ongoing regional environmental
factor contributing to poverty programs. The Poverty and Environment Program in 2005

40
helped integrate environmental considerations into
poverty reduction projects, while ADB’s Renewable
Energy, Energy Efficiency, and Climate Change program
supported by Canada, Denmark, and Netherlands has
provided funding to the Climate Change Adaptation
Program in the Pacific, which is helping some Pacific
pursuit of a sustainable future for Asia and the Pacific
must include a business sector that takes responsibility
for its environmental performance and also recommends
how the public and private sectors can work together more
closely to achieve environmental goals (www.adb.org/
environment/aeo).

countries prepare for the likelihood of rising seas and
more frequent severe storms (see page 78).
ADB is also one of the few international institutions
providing underlying finance to projects that can produce
tradeable emission-reducing credits for governments to
meet commitments made under the Kyoto Protocol
(www.adb.org/CDMF). Three such projects have already
contracted credit buyers, and several more projects will
be coming on board in 2006 or 2007 through assistance by
the Clean Development Mechanism facility.
Among ADB’s major existing environmental partner-
ships, work continued in 2005 under the Clean Air
Initiative–Asia, which now has over 130 members
including cities, governments, development agencies,
NGOs, academic organizations, and corporations.
The initiative’s work centered on the establishment
of national networks in several parts of the region to
promote investment and policy reform supporting air
quality improvement.
In 2005, ADB presented its second Asian Environment
Outlook, which focuses on opportunities for the region to
address environmental issues more effectively through
strong engagement of the private sector. It argues that the
OPERATIONS IN 2005
ENVIRONMENTAL AND SOCIAL SAFEGUARDS
ADB has three safeguard policies covering the environ-
ment, indigenous peoples, and involuntary resettlement.
These policies aim to avoid, minimize, and/or mitigate
adverse environmental and social impacts including the
marginalization of vulnerable groups that may result from
development projects.
Working under the overriding safeguard mandate to
ensure all projects “do no harm,” ADB reviewed all
projects for Board approval during the year to ensure
safeguard policy compliance. In a review of 74 projects
and equity investments, 59 projects required environmen-
tal assessment reports, 20 required the preparation of
a plan or specific action for indigenous peoples, and
41 required resettlement plans and/or frameworks.
More than a hundred staff members at headquarters
and resident missions were trained on ADB’s safeguard
requirements. ADB reinforced knowledge sharing through
the regular update of its websites on the safeguards.
During the year, ADB initiated a safeguard policy
update to enhance the effectiveness of its safeguard
policies and ensure relevance to changing client

Fund Leads by Example

S
harpening the poverty
reduction efforts of
developing members is
the focus of the ADB-
administered Poverty Reduction
Cooperation Fund.
The $60 million grant facility
from the United Kingdom’s Depart-
ment for International Development
was opened in 2002 to fund a wide
range of projects that are designed
to improve policy, strategy, and
capacity through advisory support,
small-scale pilots, research, and
knowledge sharing.
Many of the projects test
how best to target assistance to
the poor and to socially excluded
groups, and serve as good examples
for broader ADB investments.
For example, a $700,000 technical
assistance grant in the Greater
Mekong Subregion is trying to
identify a set of successful methods
to raise awareness of HIV/AIDS
among specific ethnic minority
groups.
By 2005, the fund had been
fully committed to 109 projects,
with $20 million endorsed last year.
Five technical assistance grants had
Many of the projects test how best
to target assistance to the poor and
to socially excluded groups
been completed, and most others
had been started. Two of the
completed grants went to the PRC,
which has a $9 million window.
Two others helped the Lao PDR,
with one helping silk weavers gain
business skills and another assisting
the country in developing a social
protection strategy. Another went
to support a consultative process
for developing multi-donor poverty
reduction efforts across the Pacific.

41
 needs and new lending modalities and instruments
(www.adb.org/Safeguards/policy.asp). A discussion note,
uploaded on the ADB website, describes the objective
and scope of the safeguard policy update. Face-to-face
consultations will start after completion in 2006 of
an independent study by the Operations Evaluation
OPERATIONS IN 2005
Department on the implementation of the three
safeguard policies.
ADB approved assistance to help strengthen the
country safeguard systems of selected member countries
and will shortly begin to develop its corporate approach to
country safeguard systems. Together with the United
States Agency for International Development, ADB also
launched the Asian Environmental Compliance and
Enforcement Network, which will serve as an important
new mechanism for sharing of best practices among Asian
environmental decision makers.
In relation to involuntary resettlement and under
regional technical assistance for Capacity Building for
Resettlement Risk Management, ADB assisted three
participating countries—Cambodia, PRC, and India—to
identify resettlement risks and improve capabilities for
handling involuntary resettlement.
In Bangladesh, ADB is working with the Ministry of
Land to develop a national policy on involuntary resettle-
ment, while in Cambodia, technical assistance for
Enhancing the Resettlement Legal Framework and
Capacity Building is helping the government develop a
subdecree on compensation, resettlement, and rehabilita-
tion. In Nepal, the National Planning Commission is
preparing a national resettlement policy framework with
ADB support. In Viet Nam, technical assistance for
Enhancing the Resettlement Legal Framework and
Institutional Capacity assisted the government in
developing a decree on compensation and resettlement
and to disseminate it nationwide.
In its continuing effort to safeguard the interests of
indigenous peoples, ADB also actively participated in
regional and global discussions. In two regional work-
shops, ADB engaged in constructive dialogues with some
indigenous peoples network members from the region.
It also took part in a dialogue between the United
Nations Permanent Forum on Indigenous Issues (the
In Bangladesh, ADB is working
with the Ministry of Land to
develop a national policy on
involuntary resettlement
42
Permanent Forum), World Bank, Inter-American Develop-
ment Bank, ADB, and International Fund for Agricultural
Development. Discussions highlighted the need for
international finance institutions to rethink the concept
of development, with the full participation of indigenous
peoples in development processes and taking into account
their rights and traditional practices. ADB also continued
to work with the World Bank and the Inter-American
Development Bank on the joint publication of the Global
Handbook on Indigenous Peoples Policy.
GENDER AND DEVELOPMENT
As a major thematic concern of ADB’s Poverty Reduction
Strategy, gender issues have been increasingly
mainstreamed in ADB loan operations across a range
of sectors: agriculture, water resource management,
transport, rural infrastructure, governance, education,
and water supply and sanitation. In 2005, ADB continued
to strengthen its overall loan portfolio addressing gender
issues. Significant gender mainstreaming was evident
in 37% of loans in 2005. Of these, 17% (11 loans) were
classified with a gender theme, while 20% (13 loans)
were classified with significant gender mainstreaming.
The majority of the remaining loans indicate the poten-
tial to benefit women in some ways.
Loans addressing gender equality objectives were
represented in all three core strategic areas of ADB
operations—pro-poor, sustainable economic growth;
inclusive social development; and good governance.
While they tend to be concentrated in the health,
education, and water supply sectors, some loans were
for irrigation, rural development, agriculture and natural
resources, small- and medium-sized enterprises, public
resource management, and rural infrastructure. ADB also
continued to improve how it addresses gender issues in
large infrastructure projects, especially road projects.
The multi-donor Gender and Development
Cooperation Fund established in 2003 continued to
support gender equality and women’s empowerment
through regional and technical assistance activities.
As of 31 December 2005, 4 technical assistance projects
and 24 subprojects under regional technical assistance
were approved for funding to enhance gender design
features in ADB loans, support initiative and strategic
approaches to empower women and girls, and promote
regional awareness and cooperation on gender issues.
These include 14 subprojects approved in 2005.
Other technical assistance approved in 2005
included the $4.5-million Pakistan Gender Reform
Action Plan Implementation, financed by the
Government of Canada and the United Kingdom's

By ensuring that gender issues are reflected in all its work, ADB is
helping improve women’s lives
Department for International Development through
the ADB-administered Poverty Reduction Cooperation
Fund, and a $550,000 regional technical assistance
activity, Legal Empowerment for Women and
Disadvantaged Groups.
Meeting the MDGs by 2015 will mean ensuring
that development programs increasingly address issues
affecting gender equality and women’s empowerment.
Goal 3 specifically calls for promoting gender equality
and women’s empowerment, whereas Goal 5 calls for
improving maternal health. In addition, two other goals—
Goal 2 on education and Goal 6 on HIV/AIDS—include
gender-specific or gender-disaggregated indicators.
To help ensure that gender concerns are reflected
in its country strategies and programs, ADB has been
preparing country gender assessments and related
strategies, which specify how ADB intends to promote
and implement its overall gender and development
objectives in a DMC, and discuss how ADB assistance
will address gender disparities. In cooperation with
multilateral/bilateral donors and United Nations
agencies, country gender assessments were completed for
Mongolia, Timor-Leste, and Uzbekistan and are under
way for Fiji Islands and Indonesia. Assessments were
As a major thematic concern of
ADB’s Poverty Reduction Strategy,
gender issues have been
increasingly mainstreamed
OPERATIONS IN 2005
into ADB loan operations across
a range of sectors
prepared for Azerbaijan, Kazakhstan, Kyrgyz Republic,
and Tajikistan under regional technical assistance on
Mainstreaming Gender into Poverty Reduction Strategies
in Four Central Asian Republics.
In 2005, ADB continued the review of the implemen-
tation of the Gender and Development Policy to assess
progress and effectiveness since its adoption in 1998,
the results of which will form the basis for the Gender
and Development Action Plan. As part of the review,
ADB conducted rapid gender assessments on gender
equality results in selected projects in Bangladesh,
Cambodia, Nepal, and Pakistan. The assessments aim
to determine whether the introduction of project-specific
gender action plans and strategies has improved project
implementation, outreach, and results for women as
compared with those for men.
SOCIAL PROTECTION
ADB defines social protection as a set of policies and
programs designed to reduce poverty and vulnerability by
promoting efficient labor markets, lowering people’s
exposure to risks, and enhancing their capacity to protect
themselves from hazards and loss of income.
Loan projects in 2005 contributed to social protec-
tion schemes in pensions in India, work protection in
Pakistan, child protection in the Kyrgyz Republic and
Azerbaijan, and social security reform in Mongolia. Social
protection in the informal sector, social insurance, labor
issues in enterprise restructuring, and migration for
employment were among the areas of special focus during
the year.
KNOWLEDGE MANAGEMENT
In July 2005, ADB marked its first year implementing
the Knowledge Management Framework. Through its
extensive operations in the region, ADB has always been
a major repository of information. The framework aims
to make better use of this information by making ADB
a hub for knowledge about Asian countries, encouraging
sharing within ADB and among DMCs.
43

OPERATIONS IN 2005
Gaining knowledge and new skills in a computer class in Viet Nam
Binding groups of professionals
together in organized communities
of practice helps them share
their knowledge
Consultations Enhance Role of NGOs
A
DB’s efforts to involve
NGOs and other civil
society organizations
meaningfully in its
development activities are evolving
quickly. Through deeper and more
organized consultations, these
groups are now taking part more
frequently at the early stages of
project and policy formulation, and
implementing an increasing number
of effective projects targeted at
poverty reduction.
For example, a regional 3-year
technical assistance project begun in
2003 and completed in December—
Promoting NGO Support for Poverty
Reduction in the Greater Mekong
Subregion—has demonstrated
through practical trials in the GMS
44
Vice President Geert van der Linden put it more
simply: “In India, the people want to find out how things
are done in the People’s Republic of China.”
In 2005, the Knowledge Management Center worked
to establish communities of practice to help generate and
share knowledge within ADB. A community of practice
includes groups of professionals who share common
expertise in areas such as education or governance
but who may otherwise be spread out in different depart-
ments. Binding them together in organized communities
of practice helps them share their knowledge.
Other communities of practice within ADB concern
energy, environment, water, finance, gender and social
development, health, regional cooperation, and transport;
the number of groups was narrowed last year from
19 to 10.
Among other activities, ADB also signed a
memorandum of understanding with the Republic of
Korea to establish the e-Asia and Knowledge Partnership
Fund at ADB. This aims to narrow the “digital divide”
in the region by providing technical assistance for
promoting information and communication technology
in e-government, e-learning, e-trade, and e-commerce.
In 2006, the framework will include initiatives to
increase awareness through an internal communications
plan and a knowledge management electronic newsletter,
to increase the number of activities to help staff integrate
knowledge management concepts into their work
how their early involvement in
formulating ADB’s latest regional
and country strategies can contrib-
ute to the depth and support for
such strategies. By nurturing trust
among government, civil society
organizations, and ADB, it has
strengthened foundations for
regular future collaboration.
Some of the most dynamic ADB-
assisted projects involving NGOs,
meanwhile, were being carried out
through a pilot NGO small-grants
facility established under a regional
technical assistance for NGO
Partnerships for Poverty Reduction.
Through this 3-year activity, ADB
supported more than 70 NGO-run Through closer consultations, civil society
projects in 15 countries, with the last representatives are getting involved early
grants made in 2005. in projects and policy
processes and to create incentives to encourage staff to
support knowledge sharing. Together with the Office of
Information Systems and Technology, systems will be
developed for capturing, classifying, and accessing
information to encourage the exchange of information and
collaboration among staff.

OPERATIONS IN 2005
ASIAN DEVELOPMENT BANK INSTITUTE
Encouraged by the Board of Directors, the Tokyo-based
Asian Development Bank Institute increased its focus
in 2005 on work in infrastructure for regional cooperation,
as well as continuing work in other areas of poverty
reduction, governance, and private sector development.
The institute responds to stakeholders’ requests for
assistance in research, training, and the supply of local
language materials. For example, after the Indian Ocean
tsunami, the institute coordinated a conference for
Indonesia to promote financial accountability in
managing funds for conflicts, tsunamis, and other
disasters. It also commissioned a study on long-term
efforts to rebuild damaged areas of Sri Lanka, translating
it into Bahasa Indonesia to share the lessons learned.
Under poverty reduction, the institute published
the book Poverty Targeting in Asia, which includes studies
on the effectiveness of poverty targeting in the PRC,
India, Indonesia, Philippines, and Thailand.
Fighting corruption and ensuring integrity help all people in Asia
It also released a study in English and Khmer on and the Pacific, including this family
Cambodia’s accession to the World Trade Organization,
and lessons for other least developed countries.
Work in the private sector area included aspects of tion of loan proceeds, and post-implementation review
the revitalization of the PRC’s northeast region, focusing of two modules of ADB’s financial and human resources
on trade with Japan and the Republic of Korea, enterprise information system.
performance, and technological capability. ADB barred 40 firms and 33 individuals in 2005 as
As part of knowledge management activities, more a result of corruption investigations, making a total of
than 50 independent expert reviews of development- nearly 250 firms and individuals currently ineligible to
oriented CD-ROMs have been posted on the institute’s work with the development institution.
website. A guidebook to Asian think tanks and their The Integrity Division, which enforces ADB’s
research programs is also online. Anticorruption Policy, received 199 complaints last year,
up 44% from 2004.
AUDIT AND INTEGRITY The Integrity Division also conducted four project
The Office of the Auditor General, through the Financial, procurement-related audits as part of its efforts to reduce
Administrative and Information Systems Division, weaknesses that may allow fraud, corruption, or abuse in
conducts independent appraisals of ADB activities to ADB-financed projects. It also recommended strengthen-
ensure that internal controls are adequate and effective, ing of internal control over the procurement process.
and to improve efficiency. Through the Integrity Division,
it addresses alleged incidents of corruption or fraud in
ADB projects, or by staff.
The office completed 20 audits in 2005 related to ADB barred 40 firms and
financial and administrative operations of resident
missions and a representative office, administration of
33 individuals in 2005 as a result
loans and technical assistance in two countries; realloca- of corruption investigations

45
 East and
Central Asia
Armenia, Azerbaijan,
People’s Republic of China,
EAST AND CENTRAL ASIA

Kazakhstan, Kyrgyz Republic,

Mongolia, Tajikistan,
Turkmenistan, Uzbekistan

Subregional Perspective

T
he People’s Republic of China (PRC) has made
remarkable progress in reducing poverty,
establishing an example among emerging
economies in East and Central Asia, including
the South Caucasus. By 2004, the number of
people living on $1 per day or less had been slashed to about
10.4% of the population from 33% in 1990, while by 2005
the number of rural poor under the official poverty line had
fallen to 23.7 million from 250 million in 1978.
To the west, and blessed with oil, natural gas, cotton,
gold, and hydroelectric potential, the Central Asian and the
Caucasian republics are also growing strongly and stepping
away from their post-Soviet decline.
The PRC’s economic rise is well documented. In 2005,
economic growth surged to 9.9%, led by strong investment,
accelerating consumption, and robust exports. Foreign trade
exceeded $1.4 trillion to make it the third highest volume
in the world. The government recently adjusted its growth
figure for 2004 from the 9.5% originally reported to 10.1%.
Its economy is now the world’s fourth largest.
Major economic developments in 2005 included the
reform of the foreign exchange regime. Beginning in July 2005,
the PRC adopted a package of reforms installing a managed
floating exchange rate system based on market supply and
demand and with reference to a basket of foreign currencies.
Inflation in 2005 was under control at 1.8%, below the Smooth and strong, silk being spun
in Samarkand, Uzbekistan, which along
government’s 4% target, while urban unemployment was kept with its Central Asian neighbors,
to 8.39 million. grew strongly in 2005

46
EAST AND CENTRAL ASIA

47
 East and Central Asia: Main Indicators,a 2005
Real GDP Average Foreign
Poverty Growth Inflation Trade Direct
Rate Rate Ratea Balance Investment
Country (%) (%) (%) ($ million) ($ million)

Armenia 39.0 13.9 0.6 (534.0) 151.0

Azerbaijan 29.0 26.4 9.6 2,701.0 3,466.0
China, People’s Republic of 10.4 9.9 1.8 133,450.0 60,325.0
Kazakhstan 14.3 9.4 7.6 9,817.0 2,544.0
Kyrgyz Republic 45.9 (0.6) 4.4 (435.0) 60.0
Mongolia 36.1 6.2 12.7 (95.0) 110.0
Tajikistan 56.6 6.7 7.1 (279.0) 55.0
EAST AND CENTRAL ASIA

Turkmenistan 29.9 10.0 5.9 1,301.0 233.0

Uzbekistan 26.2 7.0 7.8 1,300.0 200.0
– no data available, ( ) negative.
a
Where 2005 data are unavailable, data for the latest year have been provided.

High oil prices are an area of concern, however, and

pose some risks to the 2006 economic outlook. In 1993,
the PRC was an oil exporter, but as its economy surged,
so have its energy needs. It now imports 40% of its oil,
and its energy efficiency still needs improvement.
In Mongolia, GDP expanded by 6.2% in 2005,
down from 10.7% in 2004. Strong growth in 2005 was
underpinned by higher livestock production, investments
in the mining and mineral sectors, and surging
commodity prices. But all these have been insufficient to
bring down the high levels of poverty—more than one
third of the population—that emerged in the transition
from centrally planned to market-based economies.
In Central Asia, growth has been strong in recent years,
fueled by gas and oil deposits in Azerbaijan, Kazakhstan,
and Turkmenistan; gold in the Kyrgyz Republic; cotton in
Uzbekistan; and construction in Armenia.
However, Central Asia remains poor, and a gap is
opening up between those countries with oil and gas, and
those without. Per capita incomes in the oil producers in
2005 were already more than double those in the Kyrgyz Stronger economies and greater regional cooperation mean a better
future for children like these in Bukhara, Uzbekistan
Republic, Tajikistan, and Uzbekistan. In Kazakhstan’s
case, per capita GDP was $3,600 in 2005, compared with
Uzbekistan’s $515. Agriculture accounted for about 50%
of the Kyrgyz economy in 2005, but for just 6.3% of
Kazakhstan’s.
In Central Asia, growth has been
The value of exports increased by 87% in Azerbaijan strong in recent years, fueled by
in 2005 and by 40% in Kazakhstan, with proven oil
reserves of 0.6% and 0.8% of the world total, respectively. gas and oil deposits in Azerbaijan,
Turkmenistan has less oil, measured at about 0.3% of Kazakhstan, and Turkmenistan;
world reserves in 2003, but also accounts for about 2.1% of
global natural gas production. gold in the Kyrgyz Republic;
If the Central Asian and the Caucasian republics are to cotton in Uzbekistan; and
sustain strong growth, they will have to direct more attention
to the nascent private sector, the development of which has construction in Armenia

48
lagged behind both the PRC and Mongolia. In these
countries, except in Armenia, which has undergone large-
scale privatization, the private sector is still being
overshadowed by large state enterprises; afflicted by weak
support for services; and hamstrung by poor policy, legal,
and regulatory frameworks.
Regional Cooperation
Economic cooperation in the East and Central Asian
regions is advancing strongly, fueled by the PRC’s economic
success. The PRC is actively working with its neighbors to
foster regional cooperation. To the south, through Yunnan
province, the country has been a member of the GMS
Program from its inception in 1992. In 2005, the GMS
Program began integrating the PRC’s Guangxi Zhuang
Autonomous Region into its activities (see page 63). To the
west, the PRC—through the Xinjiang Uygur Autonomous
Region—is also finding new opportunities as a member of
the Central Asia Regional Economic Cooperation Program,
as the Central Asian republics look to reestablish age-old
commercial ties with their booming neighbor.
Remote and landlocked, yet a land bridge connecting
Asia with Europe and Russia with South Asia, Central Asia
and the Caucasus are finding regional cooperation a
necessity. Under the program, founded in 1997 with ADB
support, the countries are rediscovering regional trade and
finding bigger markets.
Spanning nearly 4,000 km across Central Asia, from
Baku, Azerbaijan on the west coast of the Caspian Sea,
through Ulaanbaatar in Mongolia, the program includes
Azerbaijan, Kazakhstan, Kyrgyz Republic, Mongolia,
Tajikistan, Uzbekistan, and the Xinjiang Uygur
Autonomous Region of the PRC. Afghanistan was admitted
in November 2005, while Russia has been invited to join.
As of end-2005, ADB had approved 13 loans totaling
$357.1 million for nine program-related projects and had
attracted cofinancing amounting to $52.8 million for three
projects. ADB had also approved 37 technical assistance
grants totaling $23.8 million.
The program is an alliance of development partners
that includes ADB, World Bank, International Monetary
Fund, Islamic Development Bank, United Nations
Development Programme, and European Bank for
Reconstruction and Development. So far it has focused
on transport, energy, and trade.
BOOSTING TRANSPORT AND TRADE
ADB provided assistance in the transport sector for
improving important sections of the old Silk Road and
other regional transport corridors through a series of road
projects in Kazakhstan, Kyrgyz Republic, and Tajikistan.
A loan was approved in November 2004 for the
Southern Transport Corridor Road Rehabilitation project
to improve the road linking Osh in the south of the Kyrgyz
Republic through Irkeshtam on the PRC border with the
major Xinjiang market town of Kashgar and beyond.
In November 2005, ADB approved another loan,
the Dushanbe–Kyrgyz Border Road Rehabilitation II
project, to improve a section of the road running north from
Dushanbe in Tajikistan to the border with the Kyrgyz
EAST AND CENTRAL ASIA
Republic. Further projects are under consideration to
complete the improvement of the north–south corridor
through the Kyrgyz Republic and Tajikistan, to extend it
west toward Kashgar and Urumqi in the PRC, and to
extend it east into Uzbekistan.
Under the Central Asia Regional Economic
Cooperation Trade Facilitation Program, the PRC has
strengthened bilateral customs cooperation with other
participating countries. PRC customs entered into bilateral
cooperation agreements and protocols with Azerbaijan,
Kyrgyz Republic, and Uzbekistan, and initiated harmoni-
zation of customs manifest with Kazakhstan and a joint
customs control initiative with Mongolia. Significant
progress has been made in preparing accession to the
Customs Convention on International Transport of Goods
under Cover of Transports Internationaux Routiers Carnets
to promote transit trade and transform Central Asia and
the western part of the PRC into a modern Silk Road.
PRC customs is also a major host and financial sponsor of
regional training and knowledge forums. Five events have
been organized in the PRC since the beginning of the
Trade Facilitation Program.
Bread for sale in Khojand, Tajikistan; ADB projects provide micro credit
and assistance to small- and medium-sized enterprises
49
EAST AND CENTRAL ASIA

Major work has been done to improve Central Asia’s roads as

on this one between Bishkek and Osh in the Kyrgyz Republic (right),
making trade easier (above)

ADB is also helping the regional transport sector with

assistance to the Shanghai Cooperation Organization
in drafting a regional road transport agreement including
PRC, Kazakhstan, Kyrgyz Republic, Russian Federation,
Tajikistan, and Uzbekistan.
A large amount of infrastructural lending to the
Central Asian republics is channeled through the
Central Asia Regional Economic Cooperation Program A large amount of infrastructural
and, as in other regions, ADB has aimed to get the
private sector more deeply involved. Central Asia needs lending to the Central Asian
about $2–3 billion per year in new infrastructure from republics is channeled through
2005 to 2010 to sustain growth and reduce poverty,
up from about $1 billion per year. the Central Asia Regional Economic
For now, however, most is state-funded and Cooperation Program and, as in
insufficient. Red tape, excessive bureaucracy, insufficient
property rights, and corruption are just some factors other regions, ADB has aimed to
discouraging private sector growth. There is potential,
however, particularly for private sector participation in
get the private sector more deeply
railways, water supply, and aviation. involved

East and Central Asia: Approvals by Country, 2005 ($ million)

Grant-Financed Projects
Equity and Other Technical
Country Loans Guarantees ADF IX Fundsa Assistance Total

Armenia – – – – 0.15 0.15

Azerbaijan 52.00 – – 1.50 2.94 56.44
China, People’s Republic of 1,499.52 95.00 – 12.14 18.33 1,624.99
Kazakhstan – – – – 1.30 1.30
Kyrgyz Republic 15.50 – 15.50 – 1.80 32.80
Mongolia 10.00 – – 1.00 1.65 12.65
Tajikistan 29.50 – – 1.80 4.00 35.30
Turkmenistan – – – – – –
Uzbekistan 55.00 – – – 2.30 57.30

TOTAL 1,661.52 95.00 15.50 16.44 32.47 1,820.93

– = nil, ADF = Asian Development Fund.
a
Includes trust funds and externally financed grants.

50
POWERING CENTRAL ASIA
In the energy sector, projects under the Central Asia
Regional Economic Cooperation Program included
improving regional gas transmission networks,
rehabilitating the power supply in Tajikistan,
rehabilitating the Central Asia–Central Europe gas
pipeline, and working on power interconnection.
The program established the Members Electricity
Regulators Forum in 2005 to support regional electricity
trade through better regulation of power industry reforms
and the promotion of efficient energy use.

EAST AND CENTRAL ASIA

The program is gaining recognition, particularly with
its expansion to Afghanistan, and plans to include Russia.
It operates in partnership with other regional
organizations such as the Shanghai Cooperation
Organization and the Eurasia Economic Community
(which was recently merged with the Central Asia
Cooperation Organization), and is the only forum that
brings together all the countries of the region, key
A giant transformer in Nurek, Tajikistan; the Central Asia Regional
multilateral institutions, and regional trade organizations Economic Cooperation Program is taking measures to support
within a single institutional framework. regional electricity trade

East and Central Asia: Cumulative ADB Lending

by Country as of end-2005 ($ million)
Armenia –
Azerbaijan 104.00
China, People’s Republic of 16,375.40
Kazakhstan 501.60
Kyrgyz Republic 588.50
Mongolia 620.34
Tajikistan 273.84
Turkmenistan –
Uzbekistan 914.70

TOTAL 19,378.38
– nil.

East and Central Asia: Cumulative ADB Disburse-

ments by Country as of end-2005 ($ million)
Armenia –
Azerbaijan 0.50
China, People’s Republic of 9,920.25
Kazakhstan 432.58
Kyrgyz Republic 452.41
Mongolia 491.98
Tajikistan 99.59
Turkmenistan –
Uzbekistan 374.31

TOTAL 11,771.62
– nil.

51
 ADB is strengthening its
partnership with the PRC and
members of the Central Asian
Regional Economic Cooperation
Program to enhance cooperation
in trade and transport in the region
EAST AND CENTRAL ASIA

ADB is strengthening its partnership with the PRC

By strengthening its partnership with the PRC and members of
the Central Asia Regional Economic Cooperation Program, ADB aims
to promote cooperation in the region’s trade and transport
and members of the program to enhance cooperation in
trade and transport in the region. An expressway project
linking Urumqi, the capital of Xinjiang Uygur
Autonomous Region, to the border of the Kyrgyz
Republic, and an urban infrastructure and environment
improvement project have been included in the 2007
and 2008 lending program.
In March 2005, the PRC contributed $20 million to
set up a technical assistance fund to promote regional
cooperation and poverty reduction among the countries
of developing Asia.

East and Central Asia: Public and Private Sector Loan Approvals by Country, 2005 ($ million)
Total Date
Country OCR ADF Total Project Cost a Approved

AZERBAIJAN
East-West Highway Improvement 49.00 3.00 52.00 93.20 8 Dec
CHINA, PEOPLE’S REPUBLIC OF
Sanjiang Plain Wetlands Protection 15.00 – 15.00 55.55 14 Mar
Jilin Water Supply and Sewerage 100.00 – 100.00 232.20 18 Jul
Development
Fuzhou Environmental Improvement 55.80 – 55.80 185.50 29 Jul
Business Development Bank Limited b 20.72 – 20.72 35.72 11 Aug
Central Sichuan Roads Development 600.00 – 600.00 2,077.00 22 Sep
Xi’an Zhengzhou Railway 400.00 – 400.00 4,131.93 22 Sep
Henan Wastewater Management
and Water Supply 100.00 – 100.00 200.00 9 Dec
Hunan Road Development III 208.00 – 208.00 519.51 15 Dec
KYRGYZ REPUBLIC
Banking Sector and Capital Market – 15.50 15.50 15.50 20 Dec
Development Program
MONGOLIA
Financial Regulation and Governance Program – 10.00 10.00 10.00 15 Dec
TAJIKISTAN
Dushanbe-Kyrgyz Border Road – 29.50 29.50 39.50 17 Nov
Rehabilitation (Phase II)
UZBEKISTAN
Information and Communications Technology – 30.00 30.00 43.00 27 Oct
in Basic Education
Kashkadarya and Navoi Rural Water Supply – 25.00 25.00 36.00 12 Dec
and Sanitation Sector
– = nil, ADF = Asian Development Fund, OCR = ordinary capital resources.
a
Total project cost includes financing by ADB, governments, borrowers, beneficiaries, and sub-borrowers; cofinancing from official, export credit, and
commercial sources; equity sponsors; and local participating private companies and financial institutions.
b
Private sector loan without government guarantee.

52
 Loan Helps Clean the Air in the PRC

C
oal is the primary fuel in
the PRC. It fires heavy
industry and envelops
cities in a smoky, un-
healthy haze, particularly in the
winter months. Improving air quality
means finding more efficient ways to
use coal to meet energy needs.
Coal mines are already extracting
substations to the cities of Benxi and
Fushun.
Before 2002, none of the major
cities in Liaoning province in the PRC
met national air quality standards.
By 2003, 7 of 14 did, helped by a
concerted government effort to close
small and highly polluting coal-fired
heating boilers.

EAST AND CENTRAL ASIA

methane from mines around the
country, which improves coal mining
safety. Inefficient methane removal,
however, causes the gas to be
released into the atmosphere, with
the PRC coal mines releasing about
6 billion cubic meters of highly
potent methane each year. Methane
has 21 times the greenhouse impact
of carbon dioxide on the earth’s
atmosphere.
Another way is to make better
use of cleaner-burning methane gas,
present in many coal mines, for
heating and power, and to convert
methane into less harmful carbon
dioxide. In doing so, the process can
generate tradable emission reduc-
tion credits by using the Clean
Development Mechanism, a major
provision of the Kyoto Protocol on
climate change.
To that end, ADB is lending
$70 million for the Liaoning
Environmental Improvement project
to extract, store, and distribute
methane gas from coal mines.
A component of the project centered
around Fuxin is financed with
backing from a $15.8 million loan.
The Liaoning project will capture
up to 46 million cubic meters of
methane for residential and
industrial use, delivering it through
new and upgraded pipelines and
The project will also supply large
and efficient heating boilers
equipped with modern pollution
control devices, and allow the
closure of more than 412 small,
polluting coal-fired boilers.
Meanwhile, ADB’s Clean Develop-
ment Mechanism Facility and
Clearworld Energy, a clean-energy
development company based in
Beijing, have structured agreements
for the Fuxin Mining Group to sell
greenhouse gas emission reduction Cleaner air through reduced methane
credits to two buyers under the emissions is the goal of several projects
mechanism. The mechanism allows
industrialized countries to invest in
developing country projects and to Development project in Shanxi
acquire credits that they can then province. This project will use the
use to meet reduction targets under latest technologies to boost
the Kyoto Protocol. methane production produced by
ADB set up its facility in Septem- coal mines to about 265 million
ber 2003 to provide technical and cubic meters to fuel a 120-megawatt
administrative assistance to eligible power plant, and will transport
projects in parallel with project methane to consumers under
identification and loan processing. a $117.4 million ADB loan.
A larger undertaking to capture It is expected to save about
methane is the Coal Mine Methane 430,000 tons of coal per year.
The Liaoning Environmental Improvement
project will capture up to 46 million cubic meters
of methane for residential and industrial use

The Regional Cooperation and Poverty Reduction
Fund, the first such one set up by an ADB developing
member, will encourage greater sharing of knowledge
and experience on regional cooperation and poverty
reduction across developing Asia. All ADB developing
members will be eligible for grants.
In addition, the Inner Mongolia Autonomous Region
of the PRC has been exploring ways to cooperate in cross-
border trade, transport, and environmental protection
with Mongolia. Mongolia is also a member of the program,
and a part of several other regional cooperation efforts.
ADB Assistance
To enhance relevance, ADB is adapting its programs
in the PRC to improve infrastructure development,

53
EAST AND CENTRAL ASIA
ADB assistance is helping the PRC rail network expand to the far
reaches of the interior, helping address income disparities
environmental protection, agriculture and natural
resource management, energy conservation, social
sector development, private sector development,
and regional cooperation.
In Central Asia and the Caucasus, ADB’s lending
portfolio has emphasized regional cooperation. Loan and
grant support has also helped in several other areas in
individual countries, including programs to help combat
land degradation under the Central Asian Countries
Initiative for Land Management (see page 55).
Assistance in East and Central Asia totaled about
$1.84 billion in 2005.
PEOPLE’S REPUBLIC OF CHINA
Improving Connectivity
ADB approved loans to the PRC totaling about
$1.5 billion in 2005, with total assistance of about
54
$1.6 billion. It also approved $18.3 million in technical
assistance, and secured $2.5 billion in cofinancing. About
81% of ADB lending in 2005 went to transportation,
particularly roads and railways; about 17% for projects for
urban infrastructure and urban environmental improve-
ment; and the rest for agriculture and natural resources.
One way that ADB is helping address income
disparities between the east and west, and between urban
and rural areas, is through “connecting” infrastructure,
particularly roads and railways that lead to larger markets.
About 30 loans since 1991, totaling nearly $6.2 billion,
have financed approximately 4,500 km of expressways,
which encourage interregional trade, and 7,700 km of
local road networks to foster economic efficiencies.
The “go west” policy involves a massive
redistribution of resources from coastal areas to
12 western provinces. The policy is designed to create
conditions supportive of economic activities, transport,
infrastructure, utilities, education, health, environmental
protection, and private sector promotion.
A $600 million loan to finance construction of
a 244-km expressway from Ya’an to Lugu in Sichuan
province was among the features of transport assistance
approved in 2005. Part of a $2 billion project, the
expressway will complete a 900-km route connecting
the Sichuan capital, Chengdu, with Kunming in Yunnan
province; upgrade 678 km of local roads in poor areas;
and rehabilitate four public transport centers.
Located in the poor mountainous periphery of the
province, the PRC’s seventh smallest, the project will
improve the network and increase access to jobs, markets,
and social services. It also supports the Western Region
 Agreement Tackles the Dust Bowl in Central Asia

T
he Central Asian republics
suffer severe land degrada-
tion caused by years of
unsustainable agricultural
practices including overgrazing and
deforestation, and natural disasters.
Degraded lands hamper economic
progress, are a health risk, and
undermine the region’s social

EAST AND CENTRAL ASIA

structure. Yet efforts to address
problems have generally had limited
success. They have been poorly
coordinated, and have suffered from
weak policy, legislation, and
regulation.
In answer, ADB and the Global
Mechanism of the United Nations
Convention to Combat Desertifica-
tion have spearheaded formulation
of the Strategic Partnership Agree-
ment for UNCCD Implementation
in the Central Asian countries.
The agreement aims to coordinate
a more integrated response among
the development agencies to the
subregion’s land degradation
problems.
Members include the Global
Mechanism, ADB, Canadian
International Development Agency,
the Convention to Combat Desertifi-
cation Project of the German Agency
for Technical Cooperation, Swiss
Agency for Development Coopera-
tion, International Fund for Agricul-
tural Development, International
Center for Agricultural Research in
Dry Areas, and United Nations
Development Programme. The World
Bank has applied for membership.
The Central Asian Countries
Initiative for Land Management has
Desertification can be tackled only through an integrated and cooperative effort
involving all development partners
emerged as the main vehicle for planning and budgetary processes.
reaching their goals. With ADB It will also identify the leading
serving as the lead Global Environ- problems and constraints to sustain-
ment Facility agency, the initiative able land management, and identify
will support the implementation of a priority areas and investment and
10-year program of country-driven technical assistance requirements.
activities and resource mobilization
covering 2006–2015, with an
additional 5 years for implementa-
tion (to 2020). The agreement
In 2005, it was in the design
phase, with a multi-country aims to coordinate
partnership framework currently
being prepared for submission a more integrated
to the Global Environment Facility
in March 2006. response among
The initiative will help describe
the necessary policy, legislative, and
development
institutional conditions needed for agencies to the
sustainable land management and
will present an approach to main- subregion’s land
streaming sustainable land manage-
ment into national development degradation problems

Development Strategy of the government, which aims to
reduce development disparities between the interior and
coastal regions.
Similarly, a $208 million loan for Hunan’s rural and
mountainous Xiangxi Tujia and Miao Autonomous
Prefecture will help build an expressway to provide access
to the poor region.
Related objectives are behind PRC plans for
construction of eight passenger railway lines by 2020.
In 2005, ADB approved a $400 million loan to develop
the railway connecting the provinces of Henan and
Shaanxi, with plans for 459 km of track and nine new
stations from Zhengzhou in Henan to Xi’an in Shaanxi.
The line will help link PRC cities and ports with Central
Asia and Europe by connecting the Beijing–Guangzhou,
Shanghai–Xuzhou, and Beijing–Wuhan main lines in the
east with the Xi’an–Baoji–Lanzhou, Xi’an–Baoji–Chengdu,
Xi’an–Ankang, and Xi’an–Yan’an main lines in the west.

55
 Improving the Environment
The PRC’s rapid growth and urbanization have taken a
toll on the environment. Urban infrastructure construc-
tion has not kept pace and large-scale investments will be
required to improve air quality in major cities and towns,
treat wastewater discharged into rivers and lakes, and
provide safe drinking water supplies. Land degradation is
also a serious concern for the PRC and one that is linked
to agriculture. Sandstorms are an annual event, with
desertification encroaching in the west and north, while
other areas suffer as farmers convert wetlands and other
EAST AND CENTRAL ASIA
natural areas into agricultural uses (see page 57).
ADB provided three loans in 2005 to improve the urban
environment of cities in Jilin and Henan provinces and
Fuzhou municipality. ADB’s partnership with the PRC in
urban infrastructure and environmental improvement is
expected to strengthen in the next few years.
To fight air pollution, ADB has undertaken several
projects to provide clean energy, one of which is building a
hydroelectric power plant in Gansu province, where coal-
fired thermal plants have been the main source of energy.
Approved in 2003 and expected to be completed in 2007,
the $35 million project is constructing the 98-megawatt
Xiaogushan Hydropower plant to serve Zhangye city.
It will also upgrade the power supply to three poor rural
townships—Xishui, Huazhai, and Anyang. Zhangye
suffers frequent power interruptions and shortages,
a situation that has worsened as demand has risen and
new generating plants have been slow to come online.
Two other projects, in Liaoning and Shanxi, are
helping extract and use the methane gas produced in coal
mining as a clean fuel (see page 53).
A flower seller in Kunming, Yunnan province; the province is gaining
new economic opportunities through the GMS Program
56
An important $1 million technical assistance grant
helped develop a strategy for pollution control in the
Songhua River Basin, and is in line with the PRC
government’s goal to develop a suitable river basin
approach for managing water quality. The strategy
gives attention to the critical areas of water quality
and pollution control management, as well as addressing
a number of related policy, technical, institutional,
regulatory, and financial issues. The government has
committed $1.9 billion to clean up the Songhua River’s
domestic and industrial wastewater, providing a basis
for further, faster, and sustainable growth of the
northeast economy.
Private Sector Development
The PRC’s private sector has been growing strongly, and
more rapid development is expected as the government
continues its efforts to tackle constraints such as unclear
private property rights, market entry barriers, high
taxation for domestic private enterprises, and inadequate
access to financial services. The government has asked
ADB for strong support. In response, ADB’s private sector
operations in the PRC have focused on environmental
improvement and on the infrastructure, energy, and
financial sectors.
In October 2005, ADB made an equity investment
of $75 million, less than a 1% stake, in the Bank of China
Limited, its largest equity transaction to date from its
private sector operations. This is an important effort to
support the PRC as it reforms its financial sector to
prepare for greater competition under the World Trade
Organization and fits ADB’s view that an efficient
financial sector is a critical component of the region’s
economic development. The Bank of China is one of the
country’s largest commercial banks and among the first
state-owned banks slated for privatization.
More than 80% of small- and medium-sized
enterprises still have trouble accessing financial services.
Under one loan in 2005, ADB agreed to lend the
Business Development Bank Limited $17.5 million
and 2.5 million euros.
The Business Development Bank now extends
mainly dollar-denominated loans to medium-sized
enterprises requiring dollar financing in Shanghai and
nearby coastal provinces. It is also permitted to conduct
More than 80% of small- and
medium-sized enterprises still have
trouble accessing financial services
Wetlands Plan Marks a Watershed

M
assive flooding in the
PRC in 1998—which
left thousands dead,
millions homeless,
and the economy poorer—marked
a critical change in views about flood
control. It helped officials recognize
the havoc caused by the destruction
of natural systems that for millennia

EAST AND CENTRAL ASIA

had sustained the country’s river
basins.
“There was an awakening after
the 1998 floods: People asked ‘Why,
when we’ve been spending all this
money, are these floods still
happening and causing more and
more severe damage?’ The emerging
view is that floods must be managed
under an integrated approach and in
better harmony with nature,” says
KyeongAe Choe, ADB principal
natural resources management
specialist.
That “new” thinking is behind the
$55 million Sanjiang Plain Wetlands
Protection project, which is designed
to manage watersheds in an
integrated way to protect humans
and biological diversity on the vast
Sanjiang Plain in Heilongjang
province in the northeastern PRC.
This is in line with the long-term
focus of ADB assistance for the
Songhua River.
The plain covers an area the size of
the Republic of Korea and supports
about 37 ecosystems, 1,000 plant
species, and 528 vertebrate species.
Yet 5 decades of agricultural
expansion have imperiled it, and
just one fifth remains in the original Two views of the vast Sanjiang Plain, where an ADB project is improving management
forest and wetland cover.
Residents have drained wetlands mid-2005 and is funded jointly by
to expand farms and have channeled the Global Environment Facility, PRC
floodwaters. Immense networks of government, and ADB. The Sanjiang Plain
drainage canals, pumping stations, It will increase forest cover in
and flood control dikes have altered upper watershed areas and improve Wetlands Protection
the cycle of entire watersheds and
destroyed millions of hectares of
water resource planning and
management. It also targets
project is designed
natural marshes and wet meadows.
To put the plain on a sustainable
restoration of 3,433 hectares of
wetlands and the repopulation of
to manage watersheds
path, the project adopts an inte- wetland natural reserves with in an integrated way
grated watershed and wetland globally threatened wildlife species.
management approach, combining Six key nature reserves will directly to protect humans and
conservation with the economic benefit from habitat and wildlife
welfare of rural people. It began in protection. biological diversity

57
 Grant Fortifies Diets for Children

A
lack of basic vitamins and
micronutrients in the diet
is damaging the cogni-
tive health of children in
Central Asia, where deficiencies are
unusually high.
Only two parts of the world are
now suffering from a rise in the
levels of stunted children caused by
EAST AND CENTRAL ASIA
Yet salt can be iodized for as little
as $0.05 per person per year, and
wheat flour can be fortified with iron
for as little as $0.09, according to
the World Bank.
A two-phase project under the
Japan Fund for Poverty Reduction—
Improving Nutrition of Poor Mothers
and Children in Asian Countries in
After almost 3 years of implemen-
tation, both production and
consumption of iodized salt had
substantially increased in all
participating countries. As of April
2004, production of iodized salt in
Kazakhstan, Kyrgyz Republic, and
Tajikistan had surpassed the project
goal of 66% of domestically

malnutrition: Central Asia and Sub-
Saharan Africa. Iron-deficient
women are more likely to die in
childbirth and to give birth to
children with impaired or delayed
motor and cognitive skills.
In Tajikistan alone, more than
30% of children suffer from a severe
lack of iodine in their diets, which
can impair brain development.
There are pockets of Central Asia
where the incidence of iodine
deficiency is greater than 90%.
Transition, begun in 2001 and consumed salt. Tajikistan produced
provided with over $7 million in more than twice the project goal.
2004—is one of two approved by
ADB to remedy the situation.
A second phase of the project,
running from 2005 to 2007, is
promoting fortification as a simple
solution to the malnutrition problem,
and is helping iodize salt and fortify
wheat flour with iron, folic acid,
and other minerals in Azerbaijan,
Kazakhstan, Kyrgyz Republic,
Mongolia, Tajikistan, and Uzbekistan.

A Japan Fund for Poverty Reduction project is

promoting fortification as a simple solution
to the malnutrition problem, and is helping Fortifying basic, staple foods will allow

iodize salt and fortify wheat flour children like this one in the Kyrgyz
Republic to grow up healthy

limited renminbi business with foreign enterprises in

specified major cities. Under the loan, it will expand
lending to small- and medium-sized enterprises, increase
its capital base, and obtain a broader renminbi business
license to provide local currency loans to local enterprises.
The year 2005 also saw the launch of the first yuan-
denominated bond (the Panda Bond) for CNY1 billion
($124.9 million), part of a bigger plan to boost local
currency capital markets throughout East Asia and
improve the availability of funds for the private sector in
the PRC.

MONGOLIA
A $10 million loan for the Financial Regulation and
Governance Program, approved in 2005, will develop a
sound and broad-based financial sector. The program aims
to reduce borrowing costs and expand credit, strengthen
Education provides the basis for a sound economy
governance in banks, and enhance the role of nonbank

58
financial institutions in mobilizing savings for
investment capital by helping establish a single regulator
for the sector. The program will establish a financial
intelligence unit in the Bank of Mongolia to help reduce
the risks from money laundering.
In 2005, ADB approved $1.65 million in technical
assistance to Mongolia to prepare the Urban Development
and Housing project to support capacity building for
financial sector reforms, and for a prefeasibility study
of the Western Regional Road Corridor. A $1 million
Japan Fund for Poverty Reduction grant for Maternal

EAST AND CENTRAL ASIA

Mortality Reduction will help Mongolia meet this
important MDG.

CENTRAL ASIAN AND CAUCASIAN REPUBLICS

ADB approved about $152 million in loans to the Central
Asian and Caucasian republics in 2005, almost the same
as in 2004. A third of the loan assistance went to
Uzbekistan at 36%, followed by Azerbaijan with 34%,
Tajikistan with 19%, and the Kyrgyz Republic with 10%.
Students at a computer class in Merv, Turkmenistan; information and
ADB also approved $12.49 million in technical communication technology will equip them to land better jobs
assistance.

Supporting Transition in grades five to nine as well as 89,000 teachers in

A considerable number of projects are helping support
transition to more market-friendly rural economies, where
economic growth has been slower, with much wider
support for farmers’ rights and with less state interference.
In Tajikistan, for example, ADB is assisting farm
reform and is implementing the Farm Debt Resolution
Strategy. This $15 million project will help the Tajikistan
government resolve cotton farm debt through an analysis
of a large number of indebted farms.
The technical assistance grant will also help
coordinate the activities of other agencies involved in the
country’s rural sector, including the World Bank, United
Nations Development Programme, and European Union.
ADB is helping Azerbaijan improve the last two
sections of its East-West Highway through a new loan
package of $52 million approved in late 2005. It is
improving a two-lane paved road on the Yevlakh–Ganja
and Qazakh–Georgian border, as well as local roads.
Improving Education
In the Kyrgyz Republic, ADB approved a $15.5 million
grant to help it deliver better basic education services to
children in poor areas.
In Uzbekistan, ADB lent $30 million to integrate
information and communications technology—including
computers and internet access—into basic education.
The project will directly benefit some 540,000 students
predominantly poor, rural, and remote areas.
Uzbekistan invests substantially in its education
system and, indeed, all the Central Asian republics boast
high literacy rates. However, the systems are expensive
and based on Soviet values and the labor requirements of
a centrally planned economy, and are thus ill suited to
transitional economies.
Safe Drinking Water, Improved Health
Another project approved in 2005 will benefit around
250,000 rural residents in Uzbekistan, who will gain
access to safe drinking water and sanitation through
rehabilitation of dilapidated infrastructure in two
provinces, backed by a $25 million ADB loan. The project
will help improve living conditions and public health in
about 170 villages in Kashkadarya and Navoi provinces
through rehabilitating and upgrading piped water supply
systems, building public and school latrines, and
improving wastewater drainage. Some 12 subprojects will
be carried out covering clusters of up to 20 villages
comprising an integrated water supply system and
improved sanitation facilities.
Wide-ranging support also included a grant from the
Japan Fund for Poverty Reduction to help the region deal
with the serious problem of poor nutrition that is behind
the high incidence of cognitive dysfunction, birth defects,
and maternal and child mortality (see page 58).

59
 Mekong

Cambodia, Lao People’s Democratic

Republic, Myanmar, Thailand,
Viet Nam
MEKONG

Regional Perspective

T
he Mekong River has always connected the
diverse peoples living in its watersheds, a
geographic constant in the face of trade links
often broken in the past by conflict. The
countries sharing its watersheds, however, are
now securing lasting ties amid growing economic prosperity.
Poverty in the Mekong countries has declined markedly
since 1990, when the incidence was close to 50%. Recent
estimates show national poverty levels ranging from 9.8%
in Thailand to 34.7% in Cambodia. Despite this reduction,
poverty remains a major development challenge.
In 2005, most Mekong countries grew strongly despite
high oil prices and the economic fallout from avian flu
(see page 38).
Cambodia registered remarkable growth estimated
at 8.4% in 2005, buoyed mainly by considerably stronger
agricultural production. New government legislation is
expected to have far-reaching, positive implications for
Cambodia’s private sector and for growth throughout the
economy.
The Law on Commercial Enterprises, which took effect
recently, eases business start-up by substantially reducing
the time and cost to register. Similarly helpful to private
businesses, the Law on Secured Transactions is likely to
reduce lending costs and increase bank intermediation, and
the Law on Concessions should improve the environment for
private participation in infrastructure projects. Both are The lungs of the Mekong, the waterways
before the National Assembly awaiting approval. of the Tonle Sap must be preserved

60
MEKONG

61
 Mekong: Main Indicators, 2005
Real GDP Average Foreign
Poverty Growth Inflation Trade Direct
Rate Rate Rate Balance Investment
Country (%) (%) (%) ($ million) ($ million)

Cambodia 34.7 a 8.4 b 5.8 (1,033.5) b

216.0 b,c
Lao PDR 32.7 d 7.2 7.2 (342.3) 27.1 e
Myanmar 26.6 f 12.2 g – 1,231.7 h
–
Thailand 9.8 i 4.5 4.5 (8,578.0) 3,288.9 c
Viet Nam 19.5 a 8.4 8.3 (4,564.0) 1,914.0 c
– no data available, ( ) negative.
a
Data as of 2004; b Estimates; c Net basis; d Data as of 2002–2003; e Gross basis; f Data as of 2001; g Fiscal year 2005 (April 2005–March 2006); h Fiscal year 2004 (April 2004–
March 2005); i Data as of 2002.

Cambodia’s financial sector has made significant fiscal situation remained solid, while business confidence
progress since the Financial Sector Cluster program began remained strong.
MEKONG

in 2001, with greater financial stability, increased financial
services, and indications of growing confidence in the sector.
The Lao PDR grew strongly in 2005, following on
healthy expansion in recent years that helped lower
poverty figures. The country is also making progress
toward the income and non-income MDGs. Inflation
slowed to 7.2% in 2005, while the trade and current
account balances remained in deficit.
Thailand posted growth of 4.5% in 2005, helped by
the favorable performance of the export sector and with
the effect of the December 2004 tsunami and drought
subsiding in the second half of the year. The country’s
Viet Nam, a net exporter of oil, actually benefited
from the oil price rises. Oil prices aside, the country was
also spurred by an improving business environment.
Standout sectors included strong manufacturing, a diverse
agricultural base little influenced by avian flu, and
buoyant hotel and restaurant businesses, which grew by
15% during the year, thanks to a surge in tourism. A solid
expansion of private enterprise also boosted growth.
In Myanmar, ADB continues to monitor economic
developments, but a reliable assessment remains to be
made, depending on the availability of timely and
reliable data.

Major transport routes are being built to form the base of the subregion’s economic corridors that link production, trade, and investments

62
Regional Cooperation
The Greater Mekong Subregion Economic Cooperation
Program (GMS Program) was established in 1992 with
ADB support. It promotes cooperation in nine sectors—
transportation, energy, telecommunications, human
resource development, tourism, environment, trade,
investment, and agriculture—and provides a means for
GMS members to reduce poverty. Member countries—
Cambodia, PRC, Lao PDR, Myanmar, Thailand, and
Viet Nam—have made steady progress toward greater
connectivity and improved competitiveness, resulting in
an increased sense of community in the Mekong subregion.
Initiatives aimed at addressing shared concerns, such as
those related to sustainable management of shared
The 13th GMS Ministers’ Meeting, held in Vientiane
in December 2004, welcomed the inclusion of the
Guangxi Zhuang Autonomous Region of the PRC in the
GMS Program. Guangxi began participating in GMS
Program activities in 2005 and, during the year, ADB
assisted a study of how Guangxi could more rapidly link
with the rest of the GMS.
ECONOMIC CORRIDORS BOOST ECONOMIES
Reflective of the progress in 2005 on the projects under
way are the major transport routes that form the base of the
GMS economic corridors—the strategic concentrations of
infrastructure development linked to production, trade,
and investment. The transport corridors are at the core of
the 11 flagship programs of the GMS Program. The three

natural resources and tackling health and social issues, are
also contributing to a more equitable and prosperous
subregion.
The GMS Program entered a new phase in 2005
as work on several economic transport corridors passed
milestones. Hundreds of kilometers of newly paved
roads, easier border crossings, and agreements to expand
trade are boosting livelihoods around the subregion.
By streamlining cross-border transport arrangements;
laying down modern roads, telecommunications, and
power links; and promoting tourism and investment,
GMS members are reducing poverty.
In 2005, five GMS loans and grants amounting to
$56 million and 24 technical assistance grants totaling
$39.2 million (including cofinancing) were approved.
Between 1992 and December 2005, ADB approved loans
totaling $1.8 billion and technical assistance grants
amounting to $67 million under the GMS Program.
MEKONG
major economic corridors—the east-west, north-south, and
southern corridors—will provide the foundation for
significantly higher cross-border economic activity.
Along the newly upgraded 240-km highway between
Phnom Penh and Ho Chi Minh City, business is booming.
Traffic increased rapidly once the road improvements
were made.
Hundreds of kilometers of
newly paved roads, easier border
crossings, and agreements to
expand trade are boosting
livelihoods around the subregion

GMS SUMMIT AND OTHER EVENTS

The Second GMS Summit of Leaders was held in
Kunming in July 2005. The successful conclusion of
the summit saw the issuance of the Kunming
Declaration: A Stronger GMS Partnership for Common
Prosperity, which embodied the subregional leaders’
strong commitment to the GMS Program, underscoring
the need for concerted effort to achieve the MDGs.
The Biodiversity Corridors Conservation Initiative,
launched by the GMS Ministers of Environment in
May 2005, was an important legacy of the summit.
Initiatives in the social and environment sectors
were also pursued more vigorously. These include
the prevention and control of infectious diseases,
training of civil servants under the Phnom Penh Plan
for Development Management, and the Core
Under the GMS Program, the Mekong countries are simplifying
Environment Program. customs procedures to speed up border crossings

63
MEKONG
The Tomb of Emperor Tu Duc in Hue, Viet Nam, is one of the many tourist attractions in the GMS, where tourist arrivals totaled nearly
20 million in 2005
Progress on the East-West Economic Corridor is
indeed impressive. It stretches nearly 1,500 km from the
Andaman Sea in the west to the South China Sea in the
east. At Sepon, Savannakhet province, on the East-West
Economic Corridor, an Australian mining company has
made substantial investments. The development has
provided employment and other forms of livelihood to the
benefit of local villages.
EASIER BORDER CROSSINGS
The GMS Program is helping reduce nonphysical barriers to
the cross-border movement of people and goods through the
implementation of the Cross-Border Transport Agreement.
Formulated under the auspices of ADB technical assistance,
the agreement is a multilateral instrument designed to be
adopted by all GMS members. It covers in one document all
the relevant aspects of cross-border transport facilitation
including single-stop, single-window inspection; cross-
border movement of people; transit traffic regime; and
exchange of commercial traffic rights.
In 2005, the GMS Program began implementing the
agreement at the Lao PDR–Viet Nam border of
Dansavanh–Lao Bao. Implementation will commence in
2006 at the borders of Bavet-Moc Bai, along the Phnom
Penh–Ho Chi Minh City highway; at Mukdahan–
Savannakhet along the East-West Economic Corridor; and at
Aranyaprathet–Poipet between Thailand and Cambodia.
Trade is already on the rise in many parts of the subregion.
64
PROMOTING TOURISM, TELECOMS
To boost tourism, the GMS countries in 2005 launched
the long-term GMS Tourism Sector Strategy, which aims
to promote the subregion as a single destination.
They have begun to relax visa regimes, upgrade airports,
start training programs, and step up marketing efforts.
Tourist arrivals in the six countries in 2005 totaled
nearly 20 million, and these are expected to soar to
30 million by 2010.
In the telecommunications sector, meanwhile,
feasibility studies have been undertaken for establishing
a subregional network. Fiber-optic cable links are planned
for the missing portions of a backbone that will inter-
connect national networks in the subregion. Cooperation
will also focus on constructing an information super-
highway network that will enhance the range of services
and applications based on subregional network facilities.
To boost tourism, the GMS
countries in 2005 launched the
long-term GMS Tourism Sector
Strategy, which aims to promote
the subregion as a single
destination
Initiative Protects Cambodia’s Great Lake

C
enturies ago, Cambodia’s
inhabitants mastered the
seasonal ebb and flow of
Southeast Asia’s largest
freshwater lake, maximizing rice
production and making possible the
wonder of the Angkor Kingdom.
Today, many Cambodians rely on the
Tonle Sap for fish to feed their
families and on its monsoon-fed
waters to irrigate their rice fields.
Under its Tonle Sap Initiative, ADB
is helping the Cambodian govern-
ment put in place a plan to protect
1993. The United Nations declared it
a biosphere reserve in 1997. In
2003, ADB finalized the Tonle Sap
Basin Strategy, giving geographical
focus to its country strategy and
program for 2005–2009 and its
annual updates. The development
objectives are to foster, promote,
and facilitate pro-poor sustainable
growth, access to assets, and
management of natural resources
and the environment.
Threats to the lake must be
considered from the perspective of
the basin as a whole, but everything
cannot be tackled at the same time.
Interventions work from core areas
of the lake to its upper catchments
over an 8-year period, repeating this
cycle as may be needed to allow the
accomplishments and lessons
learned to be incorporated into
long-term protection for the
complex ecosystem.
As part of the initiative, in 2005,
ADB approved a grant for $18
million that will help provide safe
drinking water to more than

MEKONG
the rich natural resource that 1 million people living around the
sustains so much of the nation. Tonle Sap River Basin.
Central to the initiative is a phased The grant will help fund a project
sequence of core loans and grants that will provide rural water supply
that will put in place an integrated and sanitation facilities to about
and basin-wide approach to dealing 1,760 villages in five provinces
with its problems. around the basin. It will also improve
The special characteristics of the sanitation for about 720,000 rural
Tonle Sap Basin derive from the 100- people, train communities to take
km long Tonle Sap River, which runs responsibility for the facilities, and
into the Mekong River farther south conduct health and hygiene
at the capital, Phnom Penh. During awareness outreach.
the rainy season, the heavy flow of
the Mekong forces the Tonle Sap
River to reverse flow and head north,
filling the lake. This causes it to swell Fish, birds, mammals,
from around 2,500 square kilome-
ters to as much as 16,000 square and plants thrive in
kilometers. Fish, birds, mammals,
and plants thrive in this hydrological this hydrological
phenomenon.
The Tonle Sap supports one of
The Tonle Sap supports one of the
most productive fisheries in the world
phenomenon
the most productive fisheries in the and supplies protein to a majority of
world and provides most Cambodi- Cambodians
ans with their main source of
protein. Its land, water, and biotic
resources directly benefit 40% of the
population of provinces adjoining
the lake and shore up food security
and employment elsewhere. The lake
is also of global significance for
biodiversity conservation.
Overexploitation of fisheries and
wildlife, conversion of the flooded
forest to agriculture, and collection
of wood for fuel are threats to this
balance. Widespread deforestation
in the watershed is destroying
habitats, impairing water and soil
quality, and increasing siltation rates.
Cambodia designated the Tonle
Sap a multiple-use protected area in

65
 To ensure that the GMS Program
proceeds along an environmentally
sustainable path, the member
countries endorsed in 2005 the
implementation of the Core
Environment Program, including
the Biodiversity Conservation
Corridors Initiative
MEKONG

ADB is coordinating with its development partners to help

poultry farmers control avian flu
WARDING OFF AVIAN INFLUENZA
To help stem the avian influenza threat in Asia and the
Pacific, ADB has committed to another subregional
initiative to encourage cooperation on infectious diseases.
A $30 million ADF grant, approved in 2005, will assist
Cambodia, Lao PDR, and Viet Nam in controlling the
spread of avian flu and other infectious diseases among
vulnerable groups. ADB committed $18 million in 2005
for Viet Nam, which was at the center of the avian flu
outbreak in 2005 (see page 38).
SAFEGUARDING THE ENVIRONMENT
To ensure that the GMS Program proceeds along
an environmentally sustainable path, the member
countries endorsed in 2005 the implementation of the
Core Environment Program, including the Biodiversity
Conservation Corridors Initiative. ADB approved its
largest-ever regional technical assistance—about
$25 million—to support the initiative, which aims at
environmental sustainability and social equity in the
Mekong Subregion toward increasing its development
potential, performance, and impact.

Mekong: Cumulative ADB Lending by Country

as of end-2005 ($ million)
Cambodia 850.24
Lao PDR 1,183.14
Myanmar 530.86
Thailand 5,388.07
Viet Nam 3,732.37

TOTAL 11,684.68

Mekong: Approvals by Country, 2005 ($ million)

Grant-Financed Projects
Equity and Other Technical
Country Loans Guarantees ADF IX Fundsa Assistance Total

Cambodia 10.00 – 42.00 9.98 7.62 69.60

Lao PDR 70.00 50.00 16.00 1.50 3.02 140.52
Myanmar – – – – – –
Thailand – – – – 3.35 3.35
Viet Nam 577.70 – 25.64 0.90 12.25 616.49

TOTAL 657.70 50.00 83.64 12.38 26.24 829.96

– = nil, ADF = Asian Development Fund.
a
Includes trust funds and externally financed grants.

66
ADB Assistance
Helped by an ADB investment of about $800 million
in 2005, the Mekong countries continued to focus on
speeding up social and economic development as well
as reducing poverty in the subregion. Assistance to these
countries focused on providing the infrastructure needed
to boost economic growth and to reduce poverty, always in
cooperation with member governments and development
partners. Transport and energy-related projects accounted
for over three quarters of lending.

CAMBODIA: TONLE SAP INITIATIVE

During 2005, three loans/grants amounting to $43 million
were approved for Cambodia, including two exclusive grant

MEKONG
assistance projects for rural water supply and sanitation

A new bridge across the Mekong at Mukdahan to Khanthabuly

will lessen dependence on ferries

Mekong: Cumulative ADB Disbursements by

Country as of end-2005 ($ million)
Cambodia 564.58
Lao PDR 905.76
Myanmar 411.83
Thailand 4,183.05
Viet Nam 1,955.16

TOTAL 8,028.38

Mekong: Public and Private Sector Loan Approvals by Country, 2005 ($ million)
Total Date
Country OCR ADF Total Project Costa Approved

CAMBODIA
Financial Sector Program (Subprogram III) – 10.00 10.00 10.00 29 Sep
LAO PDR
Greater Mekong Subregion Nam Theun 2
Hydroelectric
– Private Sector Loan 50.00 – 50.00 1,450.00 4 Apr
– Public Sector Loan 20.00 – 20.00 4 Apr
VIET NAM
Preventive Health System Support – 27.90 27.90 47.54 25 Aug
Support the Implementation of the – 15.00 15.00 225.00 3 Nov
Poverty Reduction Program II
Central Region Transport Networks – 94.50 94.50 138.00 11 Nov
Improvement Sector
Greater Mekong Subregion: – 6.00 6.00 8.00 19 Dec
Kunming–Haiphong Transport Corridor
Noi Bai–Lao Cai Highway
Technical Assistance
Central Region Water Resources – 74.30 74.30 99.00 19 Dec
Northern Power Transmission 360.00 – 360.00 452.70 21 Dec
Expansion Sector
– = Nil, ADF = Asian Development Fund, OCR = ordinary capital resources.
a
Total project cost includes financing by ADB, governments, borrowers, beneficiaries, and sub-borrowers; cofinancing from official, export credit, and
commercial sources; equity sponsors; and local participating private companies and financial institutions.

67
 Health Contracts Widen Access to Care

A
relatively low life expect-
ancy, coupled with high
maternal mortality rate
and greater vulnerability
to contract HIV/AIDS, calls for
extensive and innovative efforts to
significantly improve the health
status of the Cambodian people.
The poor in Cambodia, when in
need of medical attention, may self-
treat, call traditional healers, and
even flee before they ever seek
advice from government-run clinics.
“When I saw the health staff
MEKONG
NGOs attract people in need of
care with cleaner clinics; predictable,
professional, and respectful service;
and successful treatment. They use
enforceable contracts, financial
incentives, user fees, and achievable
goals to motivate staff.
Overall care has improved for
numerous reasons, says HealthNet
International, one of the contracted
NGOs. Of critical importance was an
end to private practice among
public workers. Salaries were so low
in the government clinics—$10–30
per month—that health workers
had to seek other income. Many
openly sold their services outside
of the health centers and earned
10 times more than their official
salaries.
Salaries were raised to levels high
enough to get staff to dedicate
100% of their time to the public
system. Doctors and district
managers settled for salaries
between $120 and $180 per month.

come to my village ... I took my little

baby with me and hid in the bushes
behind the village,” says one mother
in the Memut district of Kampong
Cham province.
A government program that
contracts private organizations to
run and upgrade public health
services is changing that. Wide-
spread success since the program
was begun in 1996, under a loan
now completed, has convinced
officials to expand contracting from
5 to 10 of the country’s 76 districts.
The second phase, ongoing in 2005,
was funded with a $20 million ADB
loan under the Health Sector
Support project and is due
for completion in 2007.
Under the contracting system,
use of public services has risen,
particularly among the poor. Average Maternal care is improving and use of public services is rising in clinics run by NGOs
out-of-pocket health costs have (above); salaries were raised to levels high enough to get staff to dedicate 100% of their
plunged by over $30 per person for time to the public system (below)
the bottom half of the population
in some project districts.

Under the
contracting system,
use of public services
has risen among the
poor; average out-of-
pocket health costs
have plunged by
over $30 per person

68
($18 million) as well as sustainable livelihood in the Tonle
Sap Basin ($15 million). The third project, amounting to
$10 million in an ADF loan, was approved for a financial
sector program for the development of a market-based
financial system.
The Tonle Sap Initiative has made good progress
toward reversing threats to Southeast Asia’s largest
freshwater lake (see page 65). Cambodians also continued
to find better health care in efficient clinics run by NGOs
under new funding in a long-running project (see page 68).
The non-lending program (consisting of 14 technical
assistance activities), based on resources from the
Technical Assistance Special Fund, Japan Special Fund,
and other sources, amounted to $7.62 million during
2005, which included technical assistance for project

MEKONG
preparation as well as capacity building.
The 2005–2009 country strategy and program for
Cambodia was endorsed by the Board. A notable feature
of its preparation was the joint process undertaken
with World Bank, United Kingdom’s Department for
International Development, and United Nations agencies
concerned.

LAO PDR: HYDROPOWER

In April 2005, ADB approved a $20 million public sector
A worker in a factory in the Lao Bao commercial area in the Lao PDR
loan, a private sector loan of up to $50 million, and a (above); Thailand’s economy and relationship with ADB are entering
political risk guarantee of up to $50 million for the Nam a new era (below)
Theun 2 Hydroelectric Project. These were ADB’s first
private sector loan and first such guarantee in the Lao
PDR. It was also the second public-private partnership
in the Lao PDR power sector. Approval of the project
was a breakthrough in the Mekong subregion, making it
a public-private partnership model. It is part of an
international effort to supply 1,070 megawatts of power
to the Thai and Lao PDR markets.
During 2005, ADB also approved a $10 million
ADF grant for the Lao PDR to help provide safe and
reliable water supplies. The quality and reliability of
water supply services will be improved in about 12 small
towns in the country’s northern and central regions by
developing new water sources and constructing optimal-
sized water supply systems.
Complementing the loans and grants for the Lao
PDR are seven technical assistance grants amounting to
$3.0 million, which focused on project preparation and
capacity development in priority areas.

MYANMAR
ADB continued to monitor economic development in
Myanmar during 2005. An operational strategy will be
formulated when appropriate. The last loan and technical

69
 assistance projects for Myanmar were approved in 1986
and 1987, respectively.

THAILAND: A NEW ERA

ADB’s work in the Mekong countries focuses on laying the infra-
structure needed to boost economic growth and to reduce poverty
MEKONG
The opening of the Thailand Resident Mission in 2005
marked a new chapter in the country’s long-standing
relationship with ADB. Discussions with the government
on a partnership framework are ongoing to define areas
of collaboration on national and regional programs.
As a middle-income country, Thailand recognizes
the critical role of infrastructure for sustainable economic
growth and increased competitiveness. ADB is prepared
to work closely with the government to support its
“megaprojects” infrastructure investment program.

Cooperation on Dam Generates Power

C
onstruction of the Nam
Theun 2 hydroelectric
dam, so far the largest
foreign investment in the
Lao PDR, has started. It is also one of
the largest GMS projects and
exemplifies the benefits not only of
regional cooperation in the Mekong
but also of the potential for tapping
private sector strengths through
partnership with public sector groups.
Thailand will buy up to 95% of the
1,070 megawatts to be generated,
and the Lao PDR government will use
the dividends, taxes, and royalties for
its development program.
With funding from 27 interna-
tional institutions—including public
and private sector loans and a The Nam Theun 2 project illustrates the potential for tapping private sector strengths
political risk guarantee from ADB— through partnership with public sector groups
the Nam Theun 2 Power Company
Limited will build the project, the
total base cost of which is estimated
Thailand will buy up to 95% of the 1,070 mega-
at $1.25 billion. watts to be generated, and the Lao PDR
Consultations leading up to the
project were broad, deep, and government will use the dividends, taxes,
frequent. The people living near
the project began providing inputs and royalties for its development program
to planning in 1996, and were
consulted in several hundred Environmental concerns were also evaluation, including the publication
public meetings and information clearly established. For example, with of performance evaluations,
exchanges throughout the area. funding from the company, the progress reports, and data monitor-
Planners also held consultations in project will help preserve the Nakai ing. Furthermore, the obligations of
Bangkok, Tokyo, Paris, Washington Nam Theun National Protected Area, the company relating to social and
DC, and Vientiane with international one of Southeast Asia’s few environmental mitigation or compen-
groups concerned about the project, remaining intact tropical rainforests. satory measures are detailed in the
whose views were taken into It also features a program for safeguard documents and clearly set
account in the design. transparent monitoring and out in binding agreements.

70

Demand for electricity in Viet Nam has grown by at least 15% per year in the last 10 years, but supply has not always kept pace
Consistent with the government’s efforts to increase
the size, depth, and liquidity of Thailand’s capital market,
ADB issued a debut 4 billion baht ($102.5 million), 5-year
bond in the country’s domestic bond market in May 2005.
Thailand has always been an integral partner of ADB
in the GMS Program. Additionally, new opportunities are
being explored for expanding Thailand’s role as a regional
development partner. ADB and Thailand are involved in a
number of initiatives to promote further development of
Asian bond markets. Collaboration will strengthen coope-
ration and deepen economic integration across the region.
No new loans have been made to Thailand since
2000. However, seven technical assistance grants
amounting to $3.35 million were approved in 2005.
These included three tsunami-related technical
assistance operations to assist in post-tsunami support
activities. Another technical assistance—Infrastructure
Investment Advisory Assistance to the Public Debt
Management Office of Thailand—aims to assist the
government in evaluating various mechanisms and
options for integrating the urban mass rail transport
system in Bangkok.
VIET NAM: POWERING UP
In 2005, ADB approved $577.7 million in loans,
$26.5 million in grants, and $12.3 million in technical
assistance, for a total of $616.5 million. A $95.0 million
loan and grant package approved in November 2005
will improve 1,200 km of roads and help boost economic
growth in the central provinces. It will rehabilitate roads
MEKONG
and, in selected rural districts, raise them to all-weather
condition. The improved roads will increase the efficiency
with which people can move and goods can be traded, and
the project will help improve access to markets, jobs, and
social services.
Viet Nam will also be a beneficiary of a loan
($27.9 million) and grant package ($10.1 million) totaling
$38.0 million to strengthen the country’s preventive
health system. Specifically, the project will help combat
communicable and emerging lifestyle diseases.
Non-lending assistance in Viet Nam, consisting
of 20 technical assistance grants amounting to
$12.3 million for 2005, constituted an important element
toward project preparation as well as capacity building.
An OCR loan for $360 million, approved in
December 2005, will construct and expand power
transmission lines and substations in the northern part of
the country. The project will improve reliability, remove
transmission bottlenecks, reduce transmission losses, and
promote more efficient use of power plants. Demand for
electricity in Viet Nam has grown by about 15% per year
in the last 10 years, but supply has not always kept pace.
Demand for electricity in Viet Nam
has grown by about 15% per year
in the last 10 years, but supply
has not always kept pace
71
 Pacific
Cook Islands, Fiji Islands, Kiribati,
Marshall Islands, Federated States
of Micronesia, Nauru, Palau,
Papua New Guinea, Samoa,
Solomon Islands, Timor-Leste,
Tonga, Tuvalu, Vanuatu

Subregional Perspective

T
PACIFIC

he area covered by ADB’s Pacific operations is

vast. Just one country alone, Kiribati, spans
nearly 6,000 km from east to west. Most
of the region’s island nations are remote, have
small populations, and face a peculiar set of
developmental challenges as a result.
The economic performance of most Pacific countries
has improved in the past 2–3 years, following variable but
often weak or negative economic growth in the preceding
decade. On average, economic growth in the Pacific
countries weakened slightly in 2005 compared with the
previous year. Real GDP expanded on average by 2.7%—down
from 3.1% in 2004—and was barely enough to keep ahead of
regional population growth, which was 2.4% in 2004.
However, the average conceals significant variations
among the Pacific countries, including in the key factors
affecting growth prospects and performance. High oil prices,
for example, continued to weigh heavily on most Pacific
economies in 2005, although higher global commodity
prices for exports offset these in several countries.
In Papua New Guinea and Timor-Leste, higher oil
prices in 2005 were clearly beneficial, given the importance
of petroleum exports to both countries. In Papua New
Guinea, existing oil projects were expanded, while
agreements were secured with an Australian aluminum
refinery and a gas wholesaler for a proposed gas pipeline.
As of end-December 2005, Timor-Leste government
deposits held abroad by the Banking and Payments
Economic growth was strong in
Authority totaled $506 million, including $370 million several Pacific countries, including
in the Petroleum Fund. Samoa, where these schoolgirls live

72
PACIFIC

73
 Pacific: Main Indicators, 2005
Real GDP Average
Poverty Growth Inflation Trade
Rate a Rate Rateb Balancec
Country (%) (%) (%) ($ million)

Cook Islands 12.0 d 3.0 1.7 32.0

Fiji Islands 39.5 e 1.7 2.4 (867.0)
Kiribati 50.0 d 0.3 2.5 (43.0)
Marshall Islands 20.0 f,g 3.5 3.5 (69.0)
Micronesia, Federated States of 27.9 d 1.0 2.5 (130.0)
Nauru – – – –
Palau 23.0 h 5.5 3.0 –
Papua New Guinea 53.8 3.0 1.7 1,464.0
Samoa 20.3 5.5 8.0 –
Solomon Islands – 4.4 6.9 (40.0)
Timor-Leste 39.7 i 2.5 1.8 (204.0)
Tonga 22.3 2.5 8.0 (90.0)
Tuvalu 29.3 j 2.0 2.8 –
Vanuatu 40.0 k 3.1 2.6 (86.0)
– no data available, ( ) negative.
a
Data are for 2002, except for the Fiji Islands (2003) and Papua New Guinea (2005); b Data are as of March for Tonga and refer to year-end inflation for Fiji Islands, Marshall
Islands, Papua New Guinea, and Tuvalu; for Kiribati, 2004; c Data for Fiji Islands, Kiribati, Palau, Papua New Guinea, and Solomon Islands are as of 2004; d 1998 Household
Income and Expenditure Survey (HIES) data; e 1990/91 HIES; f $1-a-day benchmark; g 1999 census data; h 1998 estimate; i Based on the 2001 Timor-Leste Living Standard
Measurement Survey; j Based on 1994 HIES data; k Calculated from the 1998 HIES $1-a-day benchmark.
PACIFIC

Of the 14 countries, growth in 2005 GDP was strong
in Palau (5.5%), Samoa (5.5%), Solomon Islands (4.4%),
and Marshall Islands (3.5%). Vanuatu (3.1%), Cook
Islands (3%), Timor-Leste (2.5%), and Tonga (2.5%) grew
modestly, with Tuvalu expanding by 2%, and Federated
States of Micronesia by 1%. Kiribati (0.3%) experienced
the region’s lowest growth. No figures were available for
Nauru.
Papua New Guinea, the region’s largest economy
with 49.2% of regional GDP, grew by 3% in 2005, similar
to 2004’s 2.9%. Excluding gold production, all sectors of
the economy expanded, with agriculture particularly
strong. Palm oil and copra benefited from high world
prices. The country’s economy has improved greatly in
recent years, as reflected in a buildup of foreign reserves,
fiscal consolidation, a stable exchange rate, and much
lower interest rates and inflation.
GDP growth slowed in the Fiji Islands to 1.7% in
2005 after 4.1% in 2004, as the region’s second largest
economy faced significant adjustment pressures. Fiscal
deficits continue to be moderately large, and the textile
and sugar sectors are under considerable pressure,
reflecting reductions in preferential trade advantages
in Australia and the European Union (see page 79).
In Vanuatu, growth was 3.1% compared with 4.2%
in 2004 and -4.7% in 2003, led by agriculture, forestry,
and the fishing sectors.
Throughout the region in 2005, tourism remained
a significant income source; it has grown substantially
in recent years, supported by a consumer shift to safer
destinations, improved country and regional marketing,
and structural reforms that are allowing low-cost air
carriers to enter the market. In the Fiji Islands, tourist
arrivals increased by 6% in the first 8 months of 2005;
Palau broke its 2004 visitor arrivals record; and the Cook
Islands enjoyed a rise in arrivals, shaking off the
destruction of the March cyclones.
Inflation decreased a bit in the region, although it
remained slightly high in Samoa, Solomon Islands,
and Tonga.
Regional Cooperation
Each Pacific country is unique, but they also face
common challenges related to high transport and other
transaction costs, limited human resources and weak
institutional capacities, governance difficulties, and
narrowly based economies vulnerable to natural disasters
and external shocks.
Throughout the region in 2005,
tourism remained a significant
income source; it has grown
substantially in recent years,
supported by a consumer shift
to safer destinations

74
 Regional cooperation and integration can help the
Pacific countries minimize constraints and expand
economic opportunities. They can gain economies of
scale and improve governance, for example, by building
regional institutional capacity that complements
national strengths. A regional approach can also expand
access to labor markets, including to larger neighboring
countries, and can be part of an important strategy for
increasing economic opportunities.
In 2005, heads of government of the Pacific Islands
Forum reinvigorated Pacific regionalism by approving the
Pacific Plan for Strengthening Regional Cooperation and
Integration. ADB preceded the initiative with the report
Toward a New Pacific Regionalism and supported the effort
with technical assistance. Published jointly by ADB and
ADB established the Aviation Safety Office under its first-ever loan to
the Commonwealth Secretariat, the report provided a regional organization
Forum island countries with a timely analysis of major
issues and opportunities for Pacific regionalism, and
recommended several initiatives that were later adopted The office will help the region meet international
under the Pacific Plan. aviation requirements by providing safety and security

SAFER SKIES
Aviation safety and security is one area where the benefits
of Pacific regional cooperation have been clearly
demonstrated. Under an ADB loan and technical
assistance grant package totaling $1.95 million approved
in 2005 and the first ever made directly to a regional
organization, ADB is helping Cook Islands, Fiji Islands,
Kiribati, Papua New Guinea, Samoa, Solomon Islands,
and Vanuatu establish the Pacific Aviation Safety Office.
PACIFIC
inspections, and technical assistance to airlines, airports,
and civil aviation authorities.
The ADB loan will establish the office in its new
headquarters in Port Vila, Vanuatu, while the grant will
finance regulatory and legislative harmonization and
update the certification of airlines. The office will
standardize the operating environment across member
countries and support implementation of the Pacific
Islands Civil Aviation Safety and Security Treaty.
The regional approach adopted will reduce costs to

Pacific: Approvals, 2005 ($ million)

Grant-Financed Projects
Other Technical
Country Loans ADF IX Funds a Assistance Total

Cook Islands 2.83 – – 0.60 3.43

Fiji Islands 25.00 – – 1.60 26.60
Kiribati – – – – –
Marshall Islands – – – 0.30 0.30
Micronesia, Federated States of – – – – –
Nauru – – – 0.48 0.48
Palau – – – – –
Papua New Guinea – 0.00 – 2.15 2.15
Samoa 8.06 – 17.20 0.65 25.91
Solomon Islands – – – 1.10 1.10
Timor-Leste – 10.00 – 1.20 11.20
Tonga – – – 0.70 0.70
Tuvalu – – – – –
Vanuatu – – – – –
Regional 1.50 8.00 – 6.24 15.74

TOTAL 37.39 18.00 17.20 15.02 87.61

– = nil, ADF = Asian Development Fund.
a
Includes trust funds and externally financed grants.

75
 governments, airlines, and airport operators, and the office
will become financially self-sustaining through service fees.
FIGHTING HIV/AIDS
A regional approach can also help better equip the Pacific
in the fight against HIV/AIDS. Many small Pacific
nations share a vulnerability to the disease because of low
condom use, high mobility, and various cultural and
sexual taboos. Reported contraceptive use averages around
30–35% in most Pacific countries. At the same time,
many of the region’s health care systems have trouble
ensuring safe blood supplies, have a poor record for
treating other sexually transmitted infections, and do not
provide adequate counseling or testing for HIV/AIDS.
At the end of 2005, Papua New Guinea was the only
Pacific country considered to have an HIV epidemic,
with cases estimated between 23,000 and 90,000 in the
15–45 age group, or about 2% prevalence.
In 10 countries in the region—Cook Islands, Kiribati,
Marshall Islands, Federated States of Micronesia, Nauru,
PACIFIC
Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu—
the reported incidence of HIV/AIDS was over 120 cases in
2005, although the real number may be considerably
higher because of less than adequate surveillance systems.
Under an $8 million ADF grant approved in 2005,
ADB will help improve the management and delivery of
HIV/AIDS programs by strengthening surveillance and
supporting community prevention in the 10 countries.
The project will help countries develop the skills to
identify risk factors and vulnerable sectors of the
population, design surveillance programs, and improve
laboratory work and data collection.
Community assistance will include social marketing
programs for condoms, launch events, peer education,
and campaigns to influence and change sexual behavior.
The project will increase facilities for diagnosing sexual
diseases, and will help fund 20 clinics in the 10 countries.
Educational materials on HIV/AIDS and other
sexually transmitted infections will be available at
drop-in centers to provide information to vulnerable

Pacific: Cumulative ADB Lending as of end-2005

($ million)
Cook Islands 29.50
Fiji Islands 249.90
Kiribati 15.14
Marshall Islands 78.13
Micronesia, Federated States of 75.14
Nauru 5.00
Palau –
Papua New Guinea 873.99
Samoa 129.98
Solomon Islands 79.31
Timor-Leste –
Tonga 57.79
Tuvalu 7.82
Vanuatu 51.25
Regional 1.50

TOTAL 1,654.45

Pacific: Public and Private Sector Loan Approvals, 2005 ($ million)

Total Date
Country OCR ADF Total Project Costa Approved

COOK ISLANDS
Cyclone Emergency Assistance – 2.83 2.83 7.87 30 Jun
FIJI ISLANDS
Alternative Livelihoods Development 25.00 – 25.00 49.78 28 Mar
SAMOA
Education Sector II – 8.06 8.06 30.00 16 Dec
REGIONAL
Establishment of the Pacific Aviation Safety Office – 1.50 1.50 2.10 22 Sep
ADF = Asian Development Fund, OCR = ordinary capital resources.
a
Total project cost includes financing by ADB, governments, borrowers, beneficiaries, and sub-borrowers; cofinancing from official, export credit, and commercial
sources; equity sponsors; and local participating private companies and financial institutions.

76
HIV/AIDS programs will be improved by strengthening surveillance
and supporting community prevention in 10 Pacific countries (above);
vulnerable communities, such as seafarers, will be targeted (right)

communities such as seafarers. There will also be special Priorities are determined by matching country needs with
training on health issues at regional maritime schools as key result areas identified in ADB’s Pacific Strategy for

well as for NGOs working with vulnerable groups.
For HIV-positive people, the project will provide
skills training for livelihoods and fund antiretroviral drug
treatments. Education campaigns will hopefully reduce
high-risk behavior.
Papua New Guinea, because of the scale of its HIV
challenge, is receiving targeted country-level assistance,
with an ADF grant being prepared.
ADB Assistance
ADB provides a range of services to its Pacific DMCs, with
lending and grant operations supplemented by extensive
technical assistance, analytical work, and policy advice.
PACIFIC
2005–2009, which began implementation in 2005.
Total ADB assistance to the subregion was
$73.4 million. Four loans and two grant projects approved
by ADB for the Pacific in 2005 highlight the diversity of
the countries and the challenges facing the subregion.
Valued at $63.1 million, they address the need for
agriculture sector restructuring and alternative livelihoods
for sugar farmers in the Fiji Islands (see page 79), a multi-
donor education sector partnership in Samoa (see page
80), cyclone recovery in Cook Islands, grant financing for
national roads in post-conflict Timor-Leste, and regional
cooperation for aviation safety and HIV/AIDS prevention.
ADB updated its strategy and program for three
countries during 2005: Federated States of Micronesia,

Pacific: Cumulative ADB Disbursements by Country

as of end-2005 ($ million)
Cook Islands 26.15
Fiji Islands 160.56
Kiribati 13.55
Marshall Islands 63.99
Micronesia, Federated States of 36.78
Nauru 2.30
Palau 0.00
Papua New Guinea 634.01
Samoa 102.66
Solomon Islands 57.91
Timor-Leste 0.00
Tonga 52.26
Tuvalu 4.26
Vanuatu 48.99

TOTAL 1,203.42

77
 Support Holds Back Rising Tides

K
ing tides, storm surges,
and severe cyclones are
part of life for Pacific
islanders, particularly for
those living on the region’s many
thousands of low-lying atolls.
Adapting to severe weather is a
well-scripted routine learned over
the millennia.
However, these normal events
are becoming abnormally frequent
due to global warming, many
scientists now claim.
ADB is helping Asian and Pacific
countries prepare for climate
ADB is helping Asian
and Pacific countries
PACIFIC
change through “adaptation” road during construction. Estimates
projects under the Renewable suggested that spending the money
Energy, Energy Efficiency, and early for “climate proofing” would
Climate Change Program. save roughly 11% in costs due to
The Climate Change Adaptation lower maintenance and repair.
Program in the Pacific, for example,
is aiming to climate-proof six
infrastructure projects in the
Federated States of Micronesia and
Cook Islands. The program, funded
by the Canadian Cooperation Fund
for Climate Change, has designed
adaptation measures and helped
provide the institutional and human
resource capacity to carry them out.
The effort addresses economic,
financial, technical, and legal issues,
plus social and environmental
dimensions.

In the Federated States of

Micronesia, the project identified
prepare for climate cost-effective adaptation measures
in the Sapwohn coastal community
change through in Pohnpei. A Kosrae road project
was put on hold until funds were Coastal areas are being made safer with
“adaptation” made available to climate-proof the climate proofing

Papua New Guinea, and Timor-Leste. ADB also approved
$15 million for 24 technical assistance grants, including
significant new regional assistance. Improving ADB’s
project and technical assistance portfolio performance in
the Pacific was a major focus in 2005, with the number
of active technical assistance operations substantially
decreased to improve focus, and loan projects judged to
be “at risk” reviewed and either managed for better
performance or closed.
The year 2005 was significant for publishing—
in its Pacific Studies Series—the outcomes of ADB’s
economic, sector, and thematic analytical work.
Economic studies included a country economic
assessment for the Federated States of Micronesia and
studies on the roles of remittances, trust funds, and
business development services in the Pacific. Thematic
studies published covered Pacific regionalism and
“climate proofing”—a risk-based approach for adapting
to climate change (see box). An ADB education and
training sector strategy was also released, and private
sector assessments for the Fiji Islands and Solomon
Islands were posted on ADB’s website and widely
disseminated in those countries.
Strengthening partnerships is increasingly important
to ADB’s effectiveness in the Pacific. ADB resident
missions in the subregion are enhancing dialogue and
responsiveness to member countries, while improving
coordination and advancing harmonization with
development partners are also a high priority. The Samoan
education sector offers just one example of the new ways
of doing business. In addition, ADB has consciously
upgraded its relations with two key Pacific regional
organizations: the Pacific Islands Forum Secretariat and
the Secretariat of the Pacific Community.
ENCOURAGING THE PRIVATE SECTOR
Improving the environment for the private sector so it
can lead to economic growth is one of three main goals of
ADB’s Pacific Strategy for 2005–2009. Business success
stories exist in some Pacific countries, but on the whole
policies and institutions for private sector development
are unfriendly to business and job creation. In many cases,
state activity crowds out private business, exacerbates
the problems of geographic isolation, and harms economic
growth. Development partners have sometimes
unwittingly contributed to this situation.

78
 Loan Sows New Opportunity

T
he Fiji Islands’ sugar
industry, at the core of its
economy for over a century,
is in sharp decline, jeopar-
dizing the livelihoods of many
thousands of farmers and workers.
The Fiji Islands’ economy floated
on high sugar returns for many
years, but favored treatment
insulated growers from the need for
improvements. The industry is now
plagued by high costs and low yields
that stem from antiquated sugar
mills and inefficient infrastructure.
These leave it in poor shape to cope
with world competition as the
European Union reduces long-
standing subsidies on much of the
country’s crop, in accordance with
agricultural diversification, better
agricultural services, and effective
public-private sector partnerships in
commercial agriculture communities,
offering farm households opportu-
nities for substantially higher
incomes. The project will also
improve about 600 km of farm roads
to provide farming communities
with better access to markets.
In addition, it will encourage off-
farm livelihoods by promoting the
development of small and micro-
enterprises and supporting voca-
tional training. It will also strengthen
rural financial services in areas poorly
served by commercial banks. “It’s very hard for us to manage,” says
Roshni Chand (middle), whose husband
Ramesh earns $3.50 a day

PACIFIC
World Trade Organization rules.
This dire situation is exacerbated
by the anticipated expiry of some
10,300 farm leases over the next
25 years, which will likely cause
hardship both for experienced
farmers leaving the sugar industry
and for new farmers entering with
limited capital and experience.
In anticipation of the difficulties
now being faced by the Fiji Islands’
sugar farmers, ADB in March 2005
approved a $25 million loan to help
cushion the impact through support
of viable livelihood alternatives and
by promoting agricultural diversifica-
tion.
The Alternative Livelihoods
Development project targets 8,000 In anticipation of the difficulties now being
sugarcane farmers as well as cutters,
mill workers, and landowners, faced by the Fiji Islands’ sugar farmers,
including women, in the sugarcane
belt of the western and northern ADB in March 2005 approved a $25 million
divisions on the main islands of Viti
Levu and Vanua Levu. It will promote loan to help cushion the impact

Improving conditions for private sector development
was therefore a major focus of ADB’s Pacific operations in
2005, building on the knowledge gained from private
sector assessments to better understand the problems of
private business in the Pacific. Having consolidated the
common issues under a regional assessment—Swimming
Against the Tide: An Assessment of the Private Sector in the
Pacific—which helped shape ADB’s new Pacific Strategy,
ADB has sought to raise the profile and elevate the
discussion of private sector development issues in
individual countries and regionally. Private sector
development road maps were formulated and used to
sharpen country and strategy program updates and to
strengthen ADB’s portfolio of private sector development
projects, technical assistance, and analytic work.
Private sector assessments have proved to be a

79
 Samoa Builds Its Knowledge Base

A
DB is supporting a joint
government and develop-
ment partner program of
improvements in the
Samoan educational system with an
$8 million ADF loan and a technical
assistance grant of $350,000,
approved in 2005.
Although Samoa has high levels
of school enrollment and has
achieved gender equity, maintaining
the quality of education is a critical
challenge. More than half of fourth-
year Samoan students in 2003 fell
short of basic English language
standards, and about 71% of 6th-year
students were deficient in basic
mathematics. Samoa’s primary school
PACIFIC
curriculum is 25 years old, and many
teachers lack in-service training,
as well as teaching and learning
materials. Samoa also needs a more
effective student assessment system.
The ADB loan is integral to a
$30 million program financed by the
Australian Agency for International
Development, New Zealand Agency
for International Development, and
government of Samoa to improve the
curriculum and student assessments
and to provide better schools,
learning materials, and teaching
methods. The program will help
about 40,000 primary students get
better education, targeting schools
with many pupils at risk.
Project partners are developing
harmonized approaches in support of
Samoa’s own systems to ease the
transaction costs of the program and
ensure it remains responsive to
Samoan needs and priorities.

Better schools,
learning materials,
and teaching
methods will help
40,000 students An ADB loan is helping Samoa update a 25-year-old school curriculum to raise basic
standards of education; maintaining quality is critical

powerful tool for engagement with governments.
Increasingly, private sector organizations are using them
as a basis for their contributions to policy formulation and
policy dialogue with governments.
The financial sector was one key area that passed
substantial milestones in 2005. Samoa, for example, has
followed up financial sector reforms by establishing a
credit reference bureau, a key step in making credit more
available to business. In Vanuatu, a national task force on
policy, legal, and regulatory frameworks for rural and
microfinance was established to build on recent successes
in rural microfinance provision. Significant successes were
also achieved in microfinance operations in Papua New
Guinea, Timor-Leste, and Vanuatu, with Papua New
Guinea’s recently established Wau Microbank attaining
operational financial self-sufficiency in 2005.
While individual countries were the primary focus of
ADB’s private sector engagement in the Pacific, 2005 also
saw substantial progress in regional technical assistance
activities to promote reform across countries. One
initiative, Improving the Legal Business Environment in
the Pacific Region, is working to promote efficiency and
reduce risk, uncertainty, and transaction costs for private
businesses through updated companies laws and
associated regulations. Diagnostic Studies for Secured
Transaction Reforms in the Pacific Region is developing
road maps for promoting secured financial transactions,
as well as funding selected analytic work on financial
sector issues. Improving Delivery of Infrastructure
Services, approved in 2005, aims to promote public-
private partnerships, regional cooperation, and cost and
delivery efficiencies in providing infrastructure services—
water, power, telecommunications, and transport.
AT THE MERCY OF NATURE
Between 4 February and 8 March 2005, five cyclones
ripped across the Cook Islands. The storms, four of them
in the maximum category 5, tore up public infrastructure,
businesses, and private homes, with potential long-term
harmful effects.

80

Timor-Leste is rebuilding its roads, port facilities, bridges, and power
infrastructure, restoring normalcy to the country—and providing jobs
To help recovery, ADB approved a $2.83 million loan
in June for restoring basic social services and economic
activities, covering part of the economic damage,
estimated at about $7.9 million. The governments of
Australia and New Zealand will cover 17% of the
projected total cost, equivalent to $1.16 million, while
the government of the Cook Islands will take up the rest.
The project includes cleanup efforts, reinstatement
of infrastructure and basic services, and restoration of
essential materials and supplies related to roads, ports,
power and water supply, waste management, and
buildings.
These storms are a reminder of the vulnerability of
many Pacific countries to severe weather. ADB’s work in
2005 identified several successful approaches to preparing
for climate change by “climate proofing” Pacific
infrastructure under the Climate Change Adaptation
Program in the Pacific (see page 78). To help implement
this approach, the Cyclone Emergency Assistance project
also included a technical assistance grant—Strengthening
Disaster Management and Mitigation—to prepare
disaster management strategies to cope with severe
weather caused by global warming, and a master plan for
developing environmentally sustainable infrastructure.
POST-CONFLICT INFRASTRUCTURE
In September 2005, ADB approved the first ADF IX grant
to Timor-Leste of $10 million for the Road Sector
Improvement project. The project will rehabilitate
about 123 km of important roads in isolated rural areas
with insecure food supplies. These roads have the
The Post-Conflict Emergency
Rehabilitation project has provided
a highly visible peace dividend
for the people of two main islands
in Solomon Islands
potential for industrial and port development and for
international trade.
The project also incorporates gender design features
aimed at ensuring women’s involvement in project
activities, including rehabilitation and maintenance of
selected roads, community empowerment initiatives for
sustainable rehabilitation, road safety, and prevention of
the risks of HIV/AIDS.
At the same time, the Timor-Leste government
continued with road sector reforms in 2005 by creating
PACIFIC
the Road Fund in the National Road Authority to
efficiently fund and implement routine maintenance
starting in 2006. This reform was possible through ADB’s
policy dialogue in the sector.
In Solomon Islands in 2005, the Post-Conflict
Emergency Rehabilitation project has provided a highly
visible peace dividend for the people of two main islands,
rehabilitating vital roads, bridges, local administration
centers, and water supplies. The goal is to reinstate access
to markets and social services affected by years of conflict
and political instability. Recognizing the primary
importance of this infrastructure to economic and social
recovery in Solomon Islands, Australia and New Zealand
have recently committed funds for an extension of the
project and are working with ADB to prepare a long-term
road rehabilitation program.
WEB KIOSK SPREADS ADB’S MESSAGE
In June 2005, ADB celebrated the first anniversary of
its South Pacific Subregional Office in Suva, Fiji Islands,
by launching a public access information kiosk and
website. The new office provides additional ADB capacity
and responsiveness to the needs of Pacific clients.
It undertakes country programming, economic analysis,
and project administration for Cook Islands, Fiji Islands,
Samoa, Tonga, and Tuvalu.
Designed to provide better information services
to the public, the kiosk will offer users free access to
downloads of ADB’s website, including the new
subregional office web pages, and ADB studies and
reports on the Asia and Pacific region.
81
 South Asia

Afghanistan, Bangladesh,
Bhutan, India, Maldives, Nepal,
Pakistan, Sri Lanka

Subregional Perspective

M
any South Asian countries have an
unparalleled opportunity now to reduce
SOUTH ASIA

poverty as never before. Buoyant

economies combined with policy changes
in the region are laying the foundations
for sustained growth that can lift millions out of poverty.
The regional economy grew a robust 7.8% in 2005,
helped by strong growth in India and Pakistan. South Asia
is benefiting from further integration into an expanding
global economy, rising consumer spending, generally
accommodative monetary policies, and market liberaliza-
tion. Still, 30% of the subregion’s 1.4 billion people live on
less than $1 a day.
Growth in India was impressive at 7.5% in 2004–2005
and reached 8.1% in 2005–2006. The government is
initiating several measures to address the constraints to
high growth in a comprehensive manner. These measures
will help in upgrading infrastructure, providing stronger
institutions and better policy, encouraging private
investment, and improving agricultural growth.
Meeting the funding needs for infrastructure will
require strong participation from the private sector, in
partnership with the public sector. Foreign direct invest-
ment can be a means of bridging the gap between India’s
huge investment requirement and domestic savings, but
a lot more needs to be done to attract those investors.
India’s economy is booming, and
Overall, high and volatile oil prices remain a major risk,
with ADB’s help, development assistance
with India depending on imports for 70% of its oil needs. is also reaching rural areas, particularly
The rapid rise in international crude prices has not been through infrastructure projects

82
SOUTH ASIA

83
 South Asia: Main Indicators,a 2005
Real GDP Average Foreign
Poverty Growth Inflation Trade Direct
Rate Rate Rate Balance Investment
Country (%) (%) (%) ($ million) ($ million)

Afghanistan 53.0 13.8 10.0 (2,515.0) 253.0

Bangladesh 49.8 5.6 6.5 (3,297.0) 776.0
Bhutan 25.3 8.8 4.8 (225.0) 9.0
India 26.1 8.1 4.5 (59,342.0) 3,240.0
Maldives 21.0 (5.5) 3.3 (494.0) 13.0
Nepal 31.0 2.3 4.5 (978.0) 12.0
Pakistan 32.1 8.4 9.3 (4,515.0) 1,459.0
SOUTH ASIA

Sri Lanka 22.6 5.7 11.6 (2,690.0) 261.0

( ) negative.
a
Where 2005 data are unavailable, data for the latest year have been provided.

completely passed on to consumers, however, and inflation To some extent, Sri Lanka has
was contained at a moderate 4.5% in 2005.
In Pakistan, GDP expanded by 8.4% in 2005, its learned to live with uncertainty and
highest rate in 3 decades and the third consecutive year disasters; its economy has averaged
of strong growth. Manufacturing surged 12.5%, backed by
a 9-year high in agricultural growth, at 7.5%. Good weather, 4% growth in the last 3 decades
easier credit, and greater access to fertilizer benefited despite the upheavals of civil war
farmers. Inflation rose sharply to 9.3%, however, pushed up
by expensive energy and high consumer demand, while the
SOUTH ASIA

balance-of-payments current account turned into a deficit
of $4.5 billion, ending a 4-year surplus.
In Bangladesh, the economy was buoyant, as GDP
expanded by 5.6%, helped by steady expansion in industry
and services. However, insufficient pass-through of the
increase in international oil prices to domestic consumers
resulted in huge losses in the state-owned Bangladesh
Petroleum Corporation, amounting to 0.7% of GDP in
FY2005. Inflation hit 6.5% in FY2005.
More promisingly, earlier concerns about the adverse
effects on the industry sector from the phaseout of the
Multi-Fibre Agreement for garment exports proved
unfounded.
In Sri Lanka, the effect of the Indian Ocean tsunami
was not strong enough to slow economic growth signifi-
cantly. First-quarter GDP was dragged down in part by
weak tourism and fisheries after the disaster, bringing it
down to 4.4%, but the country bounced back to full-year
growth of 5.7%.
An upsurge in violence at the end of 2005 left the
cease-fire with the Liberation Tigers of Tamil Ealam
looking fragile. To some extent, Sri Lanka has learned
to live with uncertainty and disasters. Its economy has
averaged 4% growth in the last 3 decades despite the
upheavals of civil war.
Nepal’s economy has fared less well amid political
instability and conflict. Growth slowed to 2.3% in
FY2005, compared with 3.5% in FY2004, affected also
by lower agricultural production due to poor weather and
by weaker industry and services sectors. If it is to regain
the average growth of 5% in the 1990s, it will need to
resolve the conflict and accelerate its reform process.
Faced with security problems, the illicit opium trade,
the poor state of infrastructure, and weak institutions,
Afghanistan nonetheless leapt ahead to full-year GDP
growth of 13.8% in FY2005, helped by continuous interna-
tional reconstruction efforts, favorable weather conditions
for agriculture, and an expanding services sector.
In Bhutan, GDP expanded by 8.8% in 2004/05,
well above the medium-term trend of 7.0%. Hydropower
remained the economic mainstay, backed up by a 19%
spurt in the construction sector.
The Maldives’ economy was hit hard by the Indian
Ocean tsunami and contracted 5.5% in 2005. Tourist
arrivals for 2005 did not meet expectations, while high oil
prices have exerted additional pressure.
Regional Cooperation
Regional cooperation gained momentum in South Asia,
particularly after the meeting of the South Asian
Association for Regional Cooperation in November 2005
in Dhaka. At this landmark meeting, which reinvigorated

84
cooperation, the leaders affirmed their commitment to a
vision of South Asian economic union in a phased manner.
Another regional grouping, the Bay of Bengal Initia-
tives for Multi-Sectoral Technical and Economic Coopera-
tion, also gained momentum after a summit in July 2004.
This grouping joins Bangladesh, Bhutan, India, Nepal,
and Sri Lanka with Myanmar and Thailand.

ADB Assistance
Most urgently, assistance was rushed in 2005 to victims of
the Indian Ocean tsunami and the massive South Asian
earthquake. The late 2004 Indian Ocean tsunami
A man surveys the damage from the October earthquake in
devastated coastal communities in India, Maldives, and

SOUTH ASIA
Pakistan; ADB rushed aid under the Pakistan Earthquake Fund
Sri Lanka, while the earthquake inflicted suffering and
extensive damage in Azad Jammu and Kashmir* and
certain districts in North-West Frontier Province in NEW FACILITY TO FINANCE
Pakistan and in Jammu and Kashmir** in India. In both ROADS IN PAKISTAN
cases, ADB assistance concentrated on restoring the In Pakistan, total assistance was about $1.7 billion,
infrastructure needed for economic activity to resume, with including loans of $776 million. This also includes the
social service delivery, commerce, and communications new multitranche financing facility, which is making
either debilitated or destroyed (see page 34).
In 2005, ADB assistance to the South Asian subregion
totaled $4.4 billion. The overall operational approach The overall operational approach

SOUTH ASIA
remained focused on helping the eight countries spur
growth by removing infrastructural bottlenecks—in
remained focused on helping the
particular roads and highway development, urban develop- eight countries spur growth by
ment, and energy—and by improving governance. Work also
focused on sectors, such as education, and on projects
removing infrastructural bottlenecks
providing basic needs, such as water (see pages 88 and 93). and by improving governance

South Asia: Approvals by Country, 2005 ($ million)

Grant-Financed Projects
Equity and Special Other Technical
Country Loans Guarantees Funds a Funds b Assistance Total

Afghanistan 135.00 5.50 100.00 0.00 8.49 248.99

Bangladesh 474.80 – 10.00 75.99 7.45 568.24
Bhutan 27.30 – – 0.50 1.70 29.50
c
India 440.31 20.60 100.00 – 6.33 567.24
Maldives 7.80 – 20.00 1.00 1.92 30.72
Nepal – – – – 2.16 2.16
d
Pakistan 776.30 – 85.00 36.00 15.28 912.58
Sri Lanka 253.00 – 164.00 63.10 3.11 483.21

TOTAL 2,114.51 26.10 479.00 176.59 46.44 2,842.64

– = nil, ADF = Asian Development Fund.
a
Includes Asian Development Fund IX, Asian Tsunami Fund, and Pakistan Earthquake Fund.
b
Includes trust funds and externally financed grants.
c
This figure does not include the multitranche financing facility for the Rural Roads II Investment Program ($750 million).
d
This figure does not include the multitranche financing facility for the National Highway Development Sector Investment Program ($770 million).

* Azad Jammu and Kashmir is an area over which India and Pakistan have been in dispute since 1947. The Asian Development Bank does not intend to make any
judgment as to the legal or other status of any disputed territories or to prejudice the final determination of the parties’ claims.
** Jammu and Kashmir is an area over which India and Pakistan have been in dispute since 1947. The Asian Development Bank does not intend to make any judgment
as to the legal or other status of any disputed territories or to prejudice the final determination of the parties’ claims.

85
 $770 million in financing available to support the
country’s National Highway Development Sector
Investment program.
Infrastructure, particularly roads vital to regional
trade, remains one of ADB’s focal areas. The facility will
support the long-term development of the country’s
national highway network and regional road connections.
Important sections of Pakistan’s highway network
consist of only narrow roads, often unsuitable for heavy
SOUTH ASIA
traffic. In other sections where congestion cripples traffic,
double lanes are needed, while cities need bypasses.
ADB’s investment will target road improvements in
three batches: the first comprises three sample projects
covering 376 km, the second 460 km, while the third will
be determined later. The facility also provides planning
and design support, management of construction
schedules, social and resettlement assessments,
and environmental safeguards.

South Asia: Public and Private Sector Loan Approvals by Country, 2005 ($ million)
Total Date
Country OCR ADF Total Project Costa Approved

AFGHANISTAN
Power Transmission and Distribution – 26.50 26.50 50.00 14 Apr
Fiscal Management and Public Administration
Reform Program (Subprogram I) – 48.00 48.00 55.00 14 Dec
Western Basins Water Resources Management – 60.50 60.50 87.60 20 Dec
BANGLADESH
Emergency Flood Damage Rehabilitation – 152.30 152.30 240.00 20 Jan
Second Urban Primary Health Care – 30.00 30.00 90.00 31 May
Gas Transmission and Development 225.00 5.00 230.00 413.00 27 Oct
Agribusiness Development – 42.50 42.50 60.00 27 Oct
Southwest Area Integrated Water Resources – 20.00 20.00 43.40 23 Nov
Planning and Management
BHUTAN
SOUTH ASIA

Road Network – 27.30 27.30 34.10 30 Sep

INDIA
Chhattisgarh Irrigation Development 46.11 – 46.11 66.61 29 Mar
Tsunami Emergency Assistance (Sector) 100.00 – 100.00 218.60 14 Apr
Infrastructure Development Finance Company Limitedb 50.00 – 50.00 50.00 19 Apr
Yes Bank Limited b 23.00 – 23.00 23.00 23 Aug
Kerala Sustainable Urban Development 221.20 – 221.20 316.10 20 Dec
MALDIVES
Tsunami Emergency Assistance – 1.80 1.80 25.30 31 Mar
Regional Development Project, Phase II—
Environmental Infrastructure and Management – 6.00 6.00 7.50 28 Apr
PAKISTAN
Agribusiness Development – 31.00 31.00 49.00 19 May
Infrastructure Development – 25.00 25.00 33.67 18 Aug
New Bong Escape Hydropowerb 37.30 – 37.30 149.20 21 Nov
Balochistan Devolved Social Services Program
–Program Loan 130.00 65.00 195.00 200.00 8 Dec
–TA Loan – 5.00 5.00 6.25 8 Dec
National Highway Development Sector
Investment Program – 3.00 3.00 3.00 13 Dec
Rawalpindi Environmental Improvement 20.00 40.00 60.00 85.70 13 Dec
Earthquake Emergency Assistance – 220.00 220.00 374.20 13 Dec
Punjab Resource Management
Program—Subprogram 2 200.00 – 200.00 200.00 14 Dec
SRI LANKA
Tsunami-Affected Areas Rebuilding 0.00 7.00 7.00 249.30 14 Apr
North East Community Restoration and
Development II – 26.00 26.00 55.00 14 Apr
Technical Education Development – 20.00 20.00 26.70 21 Nov
Local Government Infrastructure Improvement – 50.00 50.00 66.70 24 Nov
National Highways Sector 150.00 – 150.00 208.00 15 Dec
– = nil, ADF = Asian Development Fund, OCR = ordinary capital resources.
a
Total project cost includes financing by ADB, governments, borrowers, beneficiaries, and sub-borrowers; cofinancing from official, export credit, and commercial sources;
equity sponsors; and local participating private companies and financial institutions.
b
Private sector loan without government guarantee.

86
 ADB assistance also focused on areas destroyed by
the devastating earthquake in October with almost
$400 million approved immediately to support
rehabilitation and recovery efforts (see page 34).
Work in Pakistan will shortly begin on the New Bong
Escape project, an 80-megawatt power plant downstream
from the Mangla dam on the Jhelum River in Azad Jammu
and Kashmir, home to some of the areas worst hit by the
earthquake. The plant, scheduled to begin generating
power in 2009 and to be built by a private entity, is the first
Help for India’s rural sector is coming through better roads and
large-scale, private sector infrastructure project in Azad improved irrigation under several programs
Jammu and Kashmir. It is also the first private sector co-
financing between ADB and the Islamic Development Bank.
ADB also approved a $205 million loan for the ADB approved five loan projects in 2005, including

Balochistan Devolved Social Services Program, which will
support policy reforms to improve education, health, and
water supply and sanitation, and will also provide
resources for local government social services—enabling
the private sector to participate—and help develop
capacity and strengthen institutions.
INDIA: FOCUS ON INFRASTRUCTURE
Infrastructure development dominates ADB assistance in
India as well, and supports the Indian government’s own
SOUTH ASIA
two private sector loans (see page 86); the Chhattisgarh
Irrigation Development project ($46.1 million); Kerala
Sustainable Urban Development project ($221.2 million);
and Tsunami Emergency Assistance Project, comprising
a loan of $100.0 million and an Asian Tsunami Fund
grant of $100.0 million. Three technical assistance
operations were approved in 2005 in support of the
government’s road program.
In addition to these loans, assistance to the country
also included $750 million for the Rural Roads II

SOUTH ASIA
massive plans for such investment. Investment Program, setting up a credit facility from

South Asia: Cumulative ADB Lending by Country

as of end-2005 ($ million)
Afghanistan 752.28
Bangladesh 8,044.69
Bhutan 138.46
India 14,936.21
Maldives 91.48
Nepal 2,214.98
Pakistan 15,035.24
Sri Lanka 3,703.25

TOTAL 44,916.59

South Asia: Cumulative ADB Disbursements

by Country as of end-2005 ($ million)
Afghanistan 286.65
Bangladesh 5,572.63
Bhutan 98.82
India 8,144.63
Maldives 57.25
Nepal 1,437.19
Pakistan 10,530.69
Sri Lanka 2,573.91

TOTAL 28,701.77

87
 Gujarat Communities Meet Basic Needs

I The Sabarkantha
n many parts of Gujarat, India,
villagers struggle to find clean
drinking water. Almost 60% of
the state’s villages have no
water source that is assured through-
out the year. In Surendranagar
district, rural communities face acute
water scarcity, especially during
summer, when the entire Saurashtra
region is parched. The rural women
bear the brunt, having to walk long
distances to collect drinking water.
The Aga Khan Rural Support
Programme is attempting to alleviate
this water crisis by mobilizing the
local women’s federation, Mahila
Manch, to operate tankers to supply
drinking water at affordable rates to
20 villages in the Chotila and Sayla
blocks of Surendranagar. In the
summer of 2005, the Manch
transported and supplied more
than 480,000 liters for nearly
2,000 households. With Aga Khan
support, the Manch procured tractors
SOUTH ASIA
ing. Every 10th day, villagers receive
cash payments, right in the village.
The Sabarkantha Dairy has
organized villagers into eight dairy
Dairy has organized
cooperatives, has helped them villagers into eight
purchase livestock, has trained them
in basic animal husbandry, and buys dairy cooperatives,
their entire milk production. In less
than 2 months of operations, the has helped them
villagers supplied nearly 15,000
liters of milk and generated sales of purchase livestock,
nearly $3,500.
Both these projects are funded
has trained them in
through a $3.4 million grant to the basic animal
government of Gujarat from the
ADB-administered Japan Fund for husbandry, and
Poverty Reduction. The grant is
supporting more than a dozen buys their entire
similar projects in Gujarat, which are
being implemented by NGOs and milk production
community-based organizations.

and tankers, trained drivers, and

planned water distribution. The
Manch covers its operating costs
through a nominal charge to the
poor. This has forced private
suppliers to reduce water prices.
In the drought-prone Poshina
area of Sabarkantha district in north
Gujarat, nearly 1,000 tribal house-
holds have started lining up at the
local milk collection center to get
their milk weighed, tested, and
recorded before it is transported to
the Sabarkantha Dairy for process- Villages in Gujarat are mobilizing to address water issues

which loans can be drawn on the new multitranche
financing facility, the second facility structure set up in
South Asia after Pakistan.
Providing loans from the multitranche financing
facility, ADB’s assistance will finance investments in
the rural roads program of the government, covering
30,000 km and connecting 19,000 villages. To ensure
success, the facility will assist in all stages, from planning
to maintenance and road safety.
Multiple loans will be provided over 5 years, each
financing a clearly defined investment project. Some
3,200 km of rural roads—about 1,000 km each in Assam
and West Bengal and about 1,200 km in Orissa—will be
addressed in the first stage. The remaining projects will be
prepared by participating states in three annual batches.
ADB’s support to the Indian government’s develop-
ment priorities include constructing rural infrastructure,
building the highway network, upgrading cities and
satellite towns, and strengthening the power sector.
In support of urban development, for example, ADB
approved a loan of $221.2 million. It aims to develop
urban living conditions in five municipal governments in
India’s southernmost Kerala State, including Kochi,
Kollam, Kozhikode, Thiruvananthapuram (the state

88
In Chhattisgarh, ADB will help
improve the livelihoods of
about 120,000 farm families
by improving irrigation services
and agricultural practices through
a $46.1 million loan
capital), and Thrissur. In particular, it will rehabilitate
and expand urban water supply, sewerage and sanitation,
urban drainage, solid waste management, and roads and
transportation.
It offers “livelihood enhancement” components
focused on the poor communities; makes investments in
other smaller urban local bodies in the state; and supports
capacity building and project management.
The combined population of the Kerala municipali-
ties covered by the project is 2.5 million and is projected
to rise to about 3.6 million by project completion in 2011
and further to 6.2 million by 2021. Kerala has performed
considerably better than most Indian states on social
development measures, but lingering urban poverty
remains a threat to its future growth.
In Chhattisgarh, ADB will help improve the liveli-
hoods of about 120,000 farm families by upgrading
irrigation services and agricultural practices through
a $46.1 million loan. The project will help the government
of Chhattisgarh’s Water Resources Department better
develop and manage the state’s irrigation sector by
strengthening its existing capacity, initiating reforms,
upgrading procedures, modernizing equipment, and
developing new facilities.
It will also redefine and bolster the role of water users
associations in managing and maintaining irrigation
systems by strengthening the framework for partnership
between them and the government. The project will then
rehabilitate and upgrade about 200 minor and 20 me-
dium irrigation schemes, especially those with
high potential for diversified cropping, serving about
200,000 hectares throughout Chhattisgarh.
Other projects in India included several funded under
the Japan Fund for Poverty Reduction, which is adminis-
tered by ADB and uses extensive support from NGOs to
find creative ways to help alleviate the difficulties faced
by the poor. In Gujarat, for example, the Japan Fund for
Poverty Reduction is funding efforts to provide clean
drinking water to villages in the drought-prone state
(see page 88).
ADB’s overall loan portfolio to India at the end of
2005 comprised 33 ongoing loans for $5.7 billion,
including $2.6 billion to transport, $1.7 billion to urban
infrastructure, $1.1 billion to energy, and $0.2 billion to
the financial sector. Another $0.05 billion went to agri-
culture, environmental protection, and natural resources.
BANGLADESH: INFRASTRUCTURE
FOR THE POOR
In Bangladesh, ADB approved six new loans in 2005.
These included ADF and OCR loans for the Gas Trans-
mission and Development project (total $230.0 million),
Emergency Flood Damage Rehabilitation project
($152.3 million), Agribusiness Development project
($42.5 million), Second Urban Primary Health Care
project ($30.0 million loan and $10.0 million ADF grant),
and Southwest Area Integrated Water Resources Planning
and Management project ($20.0 million).
The first project will construct four gas pipelines
totaling 353 km for transporting natural gas to the less
developed western region, an area with nearly 15 million
people. With plans to transport 360 million cubic feet of
natural gas per day, this will be the first time the region
has had access to a large-scale gas supply.
SOUTH ASIA
The Emergency Flood Damage Rehabilitation project
will repair public infrastructure in five sectors damaged by
major floods in 2004. It will restore access to basic services,
increase disaster preparedness and mitigation, and include
capacity building and training in infrastructure design and
assistance to enhance early warning systems.
ADB also began the second phase of the highly
successful Urban Primary Health Care project, which has
been contracting NGOs to run primary health services.
The project is providing more efficient and affordable care
than government-run services, with at least 30% of its
Under the Urban Primary Health Care project, the poor in Bangladesh
are finding better health care in government clinics run by NGOs
89
 services targeted at people earning less than 700 taka
(about $10) per month. Nutritional supplements will also
be given to severely malnourished women and children.
It will be active in six cities—Barisal, Chittagong, Dhaka,
Khulna, Rajshahi, and Sylhet—and five municipalities—
Bogra, Comilla, Madhabdi, Savar, and Sirajgonj—and
support the construction of 64 health facilities, upgrading
of 4, and purchase of 12 apartments and/or buildings for
primary health care facilities in Dhaka.
Separately, Bangladesh joined Nepal and Bhutan as
SOUTH ASIA
one of the first batch of countries to adopt a results-based
country strategy and program for 2006–2010 (see page 92).
As a landmark harmonization initiative, the new
results-based strategy and program was prepared jointly
with the United Kingdom’s Department for International
Development, Government of Japan, and World Bank.
The country strategy and program is also aligned with
Bangladesh’s national poverty reduction strategy, which
aims to achieve the MDGs, including halving the
number of poor people in the country by 2015 and
delivering substantial improvements in almost all
aspects of human development. To achieve these aims,
the national poverty reduction strategy emphasizes
promoting growth, advancing human development, and
SOUTH ASIA
improving governance.
RECONSTRUCTING AFGHANISTAN
Since resuming operations in Afghanistan in 2002, ADB
has approved some $817.5 million in support, comple-
mented by nearly $85 million in cofinancing. ADB will
provide the country with up to $200 million per year in
ADB will provide Afghanistan with up to $200 million per year in ADF loans and grants over the remainder of the 2005–2008 period
90
ADF loans and grants over the remainder of the 2005–
2008 period, in keeping with its pledge at the 2004 Berlin
donors’ conference, with up to 50% on a full-grant basis.
Another $10 million a year in grant financing will go
toward capacity development and technical assistance.
In 2005, ADB approved a $50 million loan and grant
package to improve the power supply. The project will
construct a 110-kilovolt power transmission network, as
well as a low-voltage distribution system that will connect
11 rural towns, or more than 900,000 households, to the
emerging electricity grid.
Another grant for $55 million will rehabilitate a final
section of Afghanistan’s “ring road” as ADB’s further
contribution to major international efforts to restore the
national road system (see page 91).
A $75 million ADF loan and grant project will
support irrigation rehabilitation in Afghanistan’s Western
Basins region. The project will include extensive capacity
development for Afghan authorities and improve commu-
nity water resource management.
The $55 million Fiscal Management and Public
Administration Reform Program approved in 2005
consisting of loan and grant support will help improve
government budgeting, strengthen domestic resource
mobilization, improve the civil service, and enhance the
monitoring of public finance—all important comple-
ments to investments in infrastructure rehabilitation.
ADB’s assistance also contributes to improving
governance and development skills, national institutions,
and major policies—areas that have constrained
Afghanistan’s reconstruction.
 In the private sector, a $35 million loan approved in
2004 to the main telecommunications provider, a company
called Roshan, had extraordinary results in 2005. Before
the mobile phone network started operations, Afghanistan’s
nearly 30 million people had to make do with just 25,000
decrepit land-based telephone lines. Roshan quickly drew
down the full ADB loan to erect communications towers
to reach more remote parts of the country.
TSUNAMI ASSISTANCE FOR SRI LANKA
at the end of December 2004. In the coastal regions,
however, the tidal waves killed tens of thousands, wiped
out whole villages, and destroyed businesses. To help
rebuild, ADB provided $157 million in 2005, of which
$150 million was given as a grant from the Asian Tsunami
Fund. Support is going to the reconstruction of roads,
community infrastructure, and shelter; rebuilding
livelihoods; and coastal protection. Other funding
agencies are supporting reconstruction in education,
health, and power. The Japan Fund for Poverty Reduction

SOUTH ASIA
In Sri Lanka, the industrial sectors of the country were also provided a total of $4 million in grants for post-
more or less unscathed by the Indian Ocean tsunami tsunami reconstruction.

Gordian Task Reconnects Afghanistan

F
ixing Afghanistan’s transport
network has been an
undertaking of Gordian
complexity. As a result of
conflict, the nation’s roads were
devastated, with many sections
having all but disappeared. An early
assessment of Afghanistan’s
transport sector found that up to
graphic position and its potential as
a land bridge to boost regional trade.
Rehabilitating the road system is
critical for a landlocked country like
Afghanistan. In 2005, ADB approved
a $55 million ADF grant to rehabili-
tate one of the last major unpaved
stretches of the ring road. Together
with an $80 million loan approved in
AIDS prevention and antihuman
trafficking awareness campaigns in
areas near the road project.
ADB is also preparing a road
development master plan through a
$2 million technical assistance grant
that will identify routes linking main
markets and production centers.
Completion of the full primary road

SOUTH ASIA
54% of the country’s national roads, late 2004, ADB financing will rehabi- network by 2008, together with
totaling 6,100 km in length, were in litate 300 km from Andkhoy to Bala major upgrades of adjoining roads in
poor condition. Murghab, south of the Turkmenistan the Central Asian republics, Iran, and
Just getting supplies to construc- border, linking this remote part of Pakistan, will help realize the goal of
tion sites has been a huge logistical the country with the city of Herat, a regional transport corridor.
challenge. Roadsides remained about 100 km from Afghanistan’s Afghanistan’s opening of its borders
littered with land mines, freezing western border with Iran. has provided new opportunities for
winters slowed progress, and remote The project will include the landlocked countries in Central Asia
mountain ranges posed numerous provision of toll facilities, important to take advantage of the transit
problems. In addition, many areas for longer-term operation and corridors to access the Arabian Sea
were still subject to insurgency- maintenance of the national road and Persian Gulf through Iranian and
related violence, delaying the system, and will also support HIV/ Pakistani ports.
reconstruction process and aug-
menting security costs.
Yet through a massive internatio-
nal effort that includes ADB support,
work to rebuild the “ring road” that
circles the country and links Afghani-
stan to its neighbors is now well
under way. Planners have even begun
eyeing Afghanistan’s central geo-

Rehabilitating the
road system is critical
for a landlocked coun-
An early assessment of Afghanistan’s transport sector found that up to 54% of the
try like Afghanistan country’s national roads were in poor condition

91
 Sri Lankans have been reestablishing livelihoods after the Indian
Ocean tsunami, with ADB’s help (above); throughout the region,
ADB focuses on bringing the essentials of life to the poor (right)
In addition to the tsunami assistance project,
four other projects were approved in 2005, including
the $150 million National Highways Sector project,
$50 million Local Government Infrastructure Improve-
ment project, $40 million loan and grant North East
Community Restoration and Development II project,
and $20 million loan for the Technical Education
SOUTH ASIA
Development project.
ADB and the new government are discussing reforms
in key sectors, including power; roads; and, in alignment
with the International Monetary Fund, fiscal manage-
ment. The government is striving to improve economic
management within existing structures and promote a
greater role for the private sector and sector restructuring
where necessary for better performance. In Sri Lanka, the
lack of investment in infrastructure is one of the biggest
obstacles to private sector growth and investment, with
power among the most expensive in South Asia, and the
road network outside of Colombo in rough condition.
BHUTAN, MALDIVES, AND NEPAL
In Bhutan, total assistance in 2005 came to $29.5 million,
including $27.3 million for the Road Network project,
which will improve national roads and selected secondary
roads to better connect rural areas. It will upgrade about
140 km of the 244 km Gelephu–Trongsa national
highway, which connects with the Indian border.
As part of the first batch of results-based country
strategies and programs, the Bhutan country strategy and
program is designed to focus on managing for development
results. It will facilitate the achievement of the MDGs in
Bhutan as well as specific commitments in each sector,
with goals, targets, and indicators to which ADB assistance
operations will contribute. It aims to reduce poverty
92
through economic diversification, broadening the base to
better absorb large numbers of young people as they leave
the school system. ADB undertook its country strategy and
program in consultation with other development partners to
ensure that all sectors of the economy were adequately
covered.
In the Maldives, the response to the tsunami included
a $20 million Asian Tsunami Fund grant and a loan for
$1.8 million. The Maldives Tsunami Emergency Assis-
tance project aims to boost economic recovery by rebuild-
ing damaged infrastructure and restoring livelihoods,
especially of the poor, on the affected islands. The Japan
Fund for Poverty Reduction also provided a $1 million
grant for the restoration of livelihoods of the tsunami-
affected farmers.
The $6 million loan for the Regional Development
project Phase II—Environmental Infrastructure and
Management was approved in April 2005 to raise the
standard of living in the central regions of the Maldives
by improving environmental and land management.
Total assistance in the year amounted to $30.7
million, including $7.8 million in loans, $21.0 million
in grant financing, and technical assistance amounting
to $1.9 million.
In Nepal, political instability and the security
situation hampered the 2005 assistance program,
although ADB approved a technical assistance for
$2.2 million. It was the first year of implementation
of the new Nepal country strategy and program (2005–
2009). It is ADB’s first pilot results-based country
strategy and program and is serving as a model for
other DMCs.
Water Projects Take on Rural and Urban Poverty

A
cross Bangladesh, every
year, millions struggle
through months of floods,
food insecurity, disease,
and scarce incomes. In Pakistan’s
third largest city of Rawalpindi,
storm drains turn into sludge canals
that seep waste into groundwater
and through broken pipes, and
contaminate the drinking water.
These stark realities, however, are
changing. ADB is supporting govern-
ments as they tackle some of the
region’s toughest water problems.
These operations also address an
array of poverty issues that are directly
and indirectly linked to poor water
supplies and lack of sanitation. The
impact of these projects is proving
that an investment in the water
sector is an investment across the
poverty board.
Stemming Floods Revitalizes
Rural Life
tions undertaken by the Department
of Cooperatives, members have effec-
tively used their savings to start micro
credit schemes to increase their in-
comes in new activities, such as pur-
chasing milk cows, sewing machines,
and higher producing seeds.
The same approach is being rolled
out in 300 more communities during
phase 2 of the project (2002–2009).
A third phase is planned.
Rawalpindi Project Brings
Institutional Reforms
The deplorable conditions of water
supply and sanitation in Rawalpindi,
near Islamabad, Pakistan, were clear
indications that institutions were not
in order. Lessons from other projects
have shown that the sustainability of
water supply and sanitation projects
requires the utilities to be in good
financial health first.
So the Rawalpindi Urban Water
Supply and Sanitation Project went to
$1.4 billion in water sector loan
components and $27.5 million in
technical assistance grants, which
includes the water supply, sanitation,
and waste management sector, as
well as water subsector components
in multi-sector loans, amounting to
20% of ADB total lending and 14%
of total grants. In the water supply,
sanitation, and waste management
sector alone, ADB approved $618
million in new loans and $5.1
million in technical assistance grants.
The investments are a consider-
able contribution to sustaining
economic development—laying the
groundwork for water’s critical role
in achieving almost all the MDGs.
In the water supply,
sanitation, and waste

Managing chronic floods in
Bangladesh was not the objective,
per se, of the Small-Scale Water
Resource Development Sector
project. Rather, it was an entry into
reducing overall poverty. If floods
could be managed, drainage
improved, and irrigation water made
available, then total cropping area
and cropping intensity could
increase. Essentially, less flooding,
more fields, more irrigation, and
higher yields could result in greater
overall productivity, more farm jobs,
and higher income levels.
What the project envisioned,
it accomplished—and more. In its
first phase (1995–2002), using an
intensely participatory approach in
the 280 subproject areas in the
west, total crop area increased by
almost 13% and cropping intensity
by 40%. The increased agricultural
production in project areas has
generated 14.4 million labor-days
annually. Fishery production also
increased and created an estimated
176,000 labor-days annually.
Local people have formed water
management associations to sustain
these benefits. According to inspec-
SOUTH ASIA
work on institutional and financial management sector
reforms. Unreasonable and unsustain-
able low tariff levels have been alone, ADB approved
revised, billing systems computerized,
several complaint offices established, $618 million in new
a disconnection policy for defaulters
of bills strictly enforced, and an
loans and $5.1 million
incentive program initiated among
utility employees to improve
in technical assistance
collection efficiency of utility bills. grants in 2005
At the same time, the project
began increasing water supply levels
by considerably rehabilitating the
distribution system, legalizing illegal
connections, and extending the
network to new areas.
The institutional reforms are
making for a more efficient, reliable
system as the project unfolds into
phase 2 (the Rawalpindi Environ-
mental Improvement Project), which
was approved in December 2005.
Operations Break Down Divisions
Guided by ADB’s Water for All Policy,
which was externally reviewed in
2005, these projects show how
ADB’s operations in rural and urban
water are cutting across sectors in The impact of these projects is proving
17 DMCs with ongoing projects. that an investment in the water sector is
In 2005, ADB approved a total of an investment across the poverty board

93
 Southeast
Asia
Indonesia, Malaysia,
Philippines, Singapore

Subregional Perspective

S
outheast Asia has made solid economic progress
since the financial crisis of 1997. Overall the
subregional economy has bounced back, with
strong performance in particular in Malaysia
and Singapore, though political uncertainty,
weak finances, and governance challenges to varying degrees
have clouded the picture in Indonesia and the Philippines.
SOUTHEAST ASIA

Significant challenges remain in poverty reduction, with a

total of more than 60 million people in poverty in Indonesia
and the Philippines.
The Philippine economy’s challenges are many, as
illustrated in the 2005 numbers. GDP growth slowed to
5.1%, from 6.0% in 2004, which ADB economists have said
is not enough for rapid progress in reducing the country’s
deep poverty. In the past, the Philippine economy has been
prone to boom and bust, rising and falling with the unstable
political climate and inconsistent policies.
It has settled down in recent years, but as the 2005
numbers show, the economy is still struggling to maintain
strong enough growth to absorb the rapidly expanding
population. Higher growth requires better public resource
management and incentives to spur private sector involve-
ment. The key to meeting the government’s hoped-for GDP
growth of 7–8% by 2010, say ADB economists, is annual
investment in capital stock of at least 10% of GDP in net
terms, substantially higher than the current rate of 3%.
The government took strong measures in 2005 to avert a
The economic future of Southeast Asia
fiscal crisis. Expansion of the value-added tax has is improving for people like this
contributed to a 20% drop in the deficit, an 8% prawn farmer in Indonesia

94
SOUTHEAST ASIA

95
 Southeast Asia: Main Indicators,a 2005
Real GDP Average Foreign
Poverty Growth Inflation Trade Direct
Rate Rate Rate Balance Investment
Country (%) (%) (%) ($ million) ($ million)

Indonesia 6.5 5.6 10.5 22,784.0 2,258.0

Malaysia 0.2 5.3 3.0 33,391.0 713.0
Philippines 14.1 5.1 7.6 (7,546.0) 970.0
Singapore – 6.4 0.4 37,953.0 14,562.0
– no data available, ( ) negative.
a
Where 2005 data are unavailable, data for the latest year have been provided.

strengthening of the peso, and a drop of more than
100 basis points in government borrowing costs.
The slower 2005 economy was in part due to
a weaker agricultural performance and slower growth
in the services sector. Exports also slowed sharply to
3.7%, from 9.8% in 2004.
A revival in investment bolstered Indonesia’s economy
in 2005, with GDP expanding by 5.6%, compared with
4.9% in 2004, fueled by an 8.1% expansion in fixed
capital investment. The pickup follows the relatively
seamless transition to a new government after elections in
2004, and expectations of greater regulatory certainty and
a recovery in infrastructure spending.
The Indonesian government earned high marks from
around the world for its firm measures to avert a fiscal
crisis threat caused by surging oil prices, while at the
same time the government provided programs to lessen
SOUTHEAST ASIA
the impact on the poor (see page 97). By slashing fuel
subsidies, it relieved pressure on finances and helped
shore up investor trust.
Inflation rose due to the fuel price increases but
by year-end, the Bank of Indonesia’s aggressive monetary
stance had stopped the surge in prices and also led to
a rebound in the rupiah, which had lost more than 10%
of its value earlier in the year.
Longer term, the private sector will be critical to
achieving the government’s growth and job creation
objectives.
In Malaysia and Singapore, strong exports fueled
growth, with GDP expanding by 5.3% in Malaysia and
6.4% in Singapore, the second outstanding year for the
city-state.
The year saw the end of the peg of the ringgit to
the US dollar and a series of reform steps, including

preparation of major consumption-based tax reforms

aimed at improving the business environment, further
cementing Malaysia’s position as one of Asia’s strongest
emerging economies.

Regional Cooperation
Indonesia, Malaysia, Philippines, and Singapore have
been at the forefront of regional cooperation initiatives
in Asia for nearly 40 years as core members of ASEAN
and as participants in the ASEAN Free Trade Area and
the ASEAN Vision 2020, which foresees an integrated

The Indonesian government

earned high marks from around
the world for its firm measures
to avert a fiscal crisis threat caused
The private sector—and a well-educated population—will be critical
for achieving growth and creating jobs by surging oil prices

96
Southeast Asian market by 2020. The countries also take
part in other leading international cooperation forums,
such as the Asia-Pacific Economic Cooperation.
A series of external and internal crises in recent years
has reinforced the need for strengthened cooperation: the
financial crisis of the late 1990s, severe acute respiratory
syndrome (SARS), HIV/AIDS, avian flu, haze from forest
fires, and terrorism and other security threats are all
spurring deeper cooperation.
ADB sees opportunities for subregional energy
resource sharing, transport, financial sector development,
and safeguarding marine and fisheries resources.
Consultations have been held in Indonesia, Malaysia,
and Philippines.
Separately, in December 2005, the heads of
government and state from the Brunei Darussalam–
Indonesia–Malaysia–Philippines East ASEAN Growth
Area and Indonesia–Malaysia–Thailand Growth Triangle
agreed to meet annually. ADB has been asked to help the
two subregional initiatives formulate methods to track
development progress and identify opportunities for
private sector investment in the poorer islands of
Southeast Asia.
Malaysia is playing a lead role in consultations for
cooperation, and participating in several subregional
technical assistance activities, including support for
strengthening institutions in the Brunei Darussalam–
Indonesia–Malaysia–Philippines East ASEAN Growth
Area, and for developing Islamic financial services.
In 2005, ADB began preparing a regional cooperation
strategy and program for the four nations, which is
targeted for completion in 2006.
ADB Assistance
ADB’s lending programs in Indonesia and the Philippines
were overhauled and revitalized during the year as the
organization more than doubled loan approvals and
disbursements, reflecting a move toward greater

Cushioning High Fuel Oil Prices

T
he cost of living for
Indonesia’s rural poor
increased overnight when
national fuel oil subsidies
were slashed in October 2005 as

SOUTHEAST ASIA
an essential measure to maintain
macroeconomic stability. The price
of kerosene, the most widely used
fuel in poor households, rose by
more than 185%.
To help lessen the impact, the
government launched programs
to bring in more investment into
rural infrastructure, health, and
education. ADB was asked to step in
and quickly approved a $50 million,
3-year loan to support the govern-
ment’s Fuel Subsidy Reduction
Compensation program in eastern
provinces, where vulnerability to the
shock was greatest. The rural poor were hard hit by the sudden increase in the price of kerosene
The loan finances community-
driven construction and repair of
village roads, bridges, culverts,
irrigation systems, water supply and
To soften the impact of reduced fuel oil
sanitation, and drainage works. subsidies, ADB approved a $50 million loan
About 1,800 mostly isolated villages
in East Java, East Nusa Tenggara, to support the Indonesian government’s Fuel
Southeast Sulawesi, and South
Sulawesi provinces will benefit. Subsidy Reduction Compensation program

97

Improving rural infrastructure is key to reducing poverty
responsiveness and relevance in its operations. Total ADB
assistance in 2005 was about $1.7 billion.
Highlights included approval of $1.3 billion for
SOUTHEAST ASIA
nine loan projects, including the private sector,
well up from $671 million in 2004; and $1.3 billion
in disbursements, a 122% increase over 2004. ADB also
provided a $300 million Asian Tsunami Fund grant
to Aceh for reconstruction after the tsunami (see page 34).
In the Philippines, the expanded assistance included
$180 million in loans to support the development of
small- and medium-sized enterprises and microfinance.
ADB has improved management of its active loan
portfolio, and is breaking with the past under a new
Southeast Asia: Approvals by Country, 2005 ($ million)
Equity and
Country Loans Guarantees
Indonesia 1,145.69
Philippines 180.00
TOTAL 1,325.69
– = nil, ATF = Asian Tsunami Fund.
a
Includes trust funds.
98
The new Philippines country
strategy and program is part
of a batch of country guides that
place acute focus on results,
in particular through identifying
clear measures that can be
monitored and evaluated
country strategy and program for 2005–2007 that changes
ADB’s operating partnership with the Philippines.
Specific annual lending targets have not been included in
ADB’s overall 3-year envelope of $1.5 billion of possible
financial support. This provides the flexibility to respond
to changes in the lending environment.
The new Philippines country strategy and program is
part of a batch of country guides that place acute focus on
results, in particular, through identifying clear measures
that can be monitored and evaluated.
In Indonesia, two major loans made up the bulk of
lending: one to support local government finance and
governance reforms, and the other for the country’s
medium-term growth and poverty reduction program.
ADB also backed the government’s program for improving
rural infrastructure with a $50 million loan in 2005.
ADB took steps to draw the private sector into its
development efforts. A major loan will back the $6.3 billion
Tangguh Gas Project in West Papua, ADB’s first private
sector project in Indonesia’s oil and gas sector, as well as
ADB’s first private sector operation in Indonesia since the
1997 financial crisis. In the Philippines, a $25 million
public-private sector loan will help boost development
of small- and medium-sized enterprises.
In Malaysia, ADB continues to expand its private
sector operations, with equity positions taken in new
funds such as the Flagship Capital Corporation.
Grant-Financed Projects
Other Technical
ATF Funds a Assistance Total
– 300.00 30.48 10.33 1,486.50
19.40 – 0.70 4.62 204.72
19.40 300.00 31.18 14.95 1,691.22
INDONESIA
Strengthening Governance
Loan approvals in 2005 reached $1.1 billion in Indonesia,
including a private sector loan, with particularly strong
focus on governance and infrastructure.
In November, ADB approved a $300 million loan
to the country to strengthen and rationalize the policy,
legal, and regulatory frameworks for decentralization,
and to establish a more effective mechanism for
coordination among different levels of government.
Local governments are assigned responsibilities for
most public functions including service delivery under
Indonesia's decentralization laws, which were approved
in 1999 and amended in 2004, but inconsistencies in
the legal and regulatory frameworks and undeveloped
local level capacity have made implementation of their
responsibilities extremely challenging. An ADB loan is financing the provision of public services by
The loan supports revisions to the original local governments in Indonesia
decentralization framework and adoption of related rules
and regulations to streamline and clarify responsibilities
among different levels of government to ensure greater
transparency and accountability in the flow of funds to

Southeast Asia: Cumulative ADB Lending by

Country as of end-2005 ($ million)
Indonesia 20,728.50
Malaysia 1,987.54
Philippines 8,799.03

SOUTHEAST ASIA
TOTAL 31,515.07

Southeast Asia: Public and Private Sector Loan Approvals by Country, 2005 ($ million)
Total Date
Country OCR ADF Total Project Costa Approved

INDONESIA
Community Water Services and Health 34.10 30.59 64.69 92.38 7 Apr
Road Rehabilitation–2 151.00 0.00 151.00 215.80 29 Sep
Local Government Finance and Governance
Reform Sector Development Program
- Program Loan 300.00 – 300.00 300.00 3 Nov
- Project Loan – 30.00 30.00 42.90 3 Nov
Tangguh Liquefied Natural Gasb 350.00 – 350.00 6,303.00 14 Dec
Rural Infrastructure Support – 50.00 50.00 60.81 19 Dec
Development Policy Support Program 200.00 – 200.00 200.80 21 Dec
PHILIPPINES
Purchase and Resolution of Equitable 5.00 – 5.00 10.00 24 Jun
PCI Bank’s Portfolio of Nonperforming
Loans and Assets b
Small and Medium Enterprise Development 25.00 – 25.00 26.00 29 Sep
Support
Microfinance Development Program 150.00 – 150.00 150.00 22 Nov
– = nil, ADF = Asian Development Fund, OCR = ordinary capital resources.
a
Total project cost includes financing by ADB, governments, borrowers, beneficiaries, and sub-borrowers; cofinancing from official, export credit, and commercial sources;
equity sponsors; and local participating private companies and financial institutions
b
Private sector loan without government guarantee.

99
 According to its medium-term development plan, Indonesia needs to
invest about $145 billion in infrastructure projects to sustain an
annual GDP growth of 6% through 2009

finance the provision of public services by local
governments. A national action plan for next steps in
fiscal decentralization is also supported. These reforms
promote development of a clear mandate for the delivery
of education, health services, and public works.
A separate $30 million loan will develop integrated
regional systems to support preparation of more reliable and
consistent financial statements by 71 local governments
and provide access to an integrated regional financial
information system to these local governments as well
as to 100 more, supporting the devolution of funding
SOUTHEAST ASIA
assistance is planned from the government of Japan.
The harmonized assistance focuses on sound public
financial management and more effective use of fiscal
resources through measures to improve governance and
combat corruption with an eye at enhancing the efficiency
of public expenditures, improving the investment
climate, and strengthening the financial sector.
Infrastructure for Growth
Investment in public infrastructure in Indonesia
collapsed after the Asian financial crisis, slumping to

to address regional inequities in basic public services
and strengthening the framework for local government
borrowing.
ADB also supported the Indonesian government’s
efforts to improve macroeconomic management. Under
its medium-term development plan for 2005–2009,
Indonesia aims to boost sustainable economic growth to
7% by 2009, from about 4% in the years before 2004.
It is also a government target to halve the poverty rate
to 8.2% by 2009, from 16.6% in 2004.
A $200 million loan for the Development Policy
Support Program is being provided in conjunction with
World Bank assistance of $400 million, and further
$1.5 billion by 2002 from $16 billion in 1996. In a recent
study, Indonesia’s infrastructural investments ranked
last among countries with populations of more than
20 million.
The rural areas are particularly poorly served: a recent
study found that only 15% of rural households had access
to piped or pumped drinking water, and just 21% had
septic tanks. More than half of rural villages were not
connected by paved roads, and a third lacked year-round
access. The number of rural poor in Indonesia in 2004 was

Southeast Asia: Cumulative ADB Disbursements

by Country as of end-2005 ($ million)
Indonesia 15,112.95
Malaysia 1,403.28
Philippines 6,280.29

TOTAL 22,796.52

100
 Upgrading Neighborhoods in Indonesia and the Philippines

H
alf the urban population
of the Philippines lives in
makeshift housing in
informal settlements,
where drinking water, sanitation,
and drainage systems are grossly
inadequate, according to official
figures.
In Indonesia, where about
91 million people live in cities,
the housing and land markets have
also not kept pace with rapid urban
growth.
Recent initiatives challenged
shortcomings in urban upgrading
projects and opened new areas of
microfinance. The Philippines’
Development of Poor Urban
Communities Sector project and the
Indonesian Neighborhood Upgrad-
ing and Shelter Sector project work
with local governments and NGOs
to make affordable plots available
and to ensure access to loans.
The Indonesian project is helping
180,000 households secure tenure.
In the Philippines, as well as helping 26 communities in eight metro area
over 20,000 poor urban households cities.
secure accommodation, microfinance Further afield, a 3-year project in
for small enterprises provided through Mindanao, run by the Notre Dame
10,000 loan packages has benefited Foundation for Charitable Activities,
about 100,000 poor urban residents. Inc.–Women in Enterprise Develop-
A $100 million Metro Manila ment—with a $1 million grant from
Urban Services for the Poor project, the fund—is providing social safety
now under preparation, will include nets for poor female market vendors
a long-term metro-wide strategy for in eight cities.
upgrading slums in the National
Capital Region.
The Strategic Private Sector Partner-
ships for Urban Poverty Reduction
The Indonesian
project has harnessed the power of housing project is
the private sector to help the poor in
Metro Manila. It brings together the helping 180,000
Philippine Business for Social Progress
and ADB. Homes are being built, households
day-care facilities set up, flood-prone
streets paved, and water systems and secure tenure
proper drainage installed. With a
$3.6 million grant from the Japan
Fund for Poverty Reduction and
$3.6 million from the Philippine
Business for Social Progress, it covers

SOUTHEAST ASIA
Housing and land markets in Indonesia
have not kept pace with rapid urban
growth (above); a grant fund is providing
social safety nets to female vendors in
Mindanao, Philippines (left)

about 24.7 million, or one fifth of the rural population.
According to its medium-term development plan,
Indonesia needs to invest about $145 billion in
infrastructure projects to sustain an annual GDP growth
of 6% through 2009.
ADB approved three infrastructure-related loans last
year: Road Rehabilitation 2, Community Water Services
and Health Project, and Rural Infrastructure Support
Program.
Road Rehabilitation 2, the second phase of an earlier
project, focuses on restoring and improving safety in key
sections of national roads in Sumatra and Kalimantan
islands. It will provide farmers and local entrepreneurs with
better access to markets; reduce transport costs; make it

101
 easier for governments to deliver administrative and social
services; and create other income-earning opportunities,
including the operation of ojek or motorcycle taxis. HIV/
AIDs awareness campaigns will also run parallel with road
construction activities in Kalimantan and Sumatra.
As part of its efforts to obtain private sector
support for major infrastructure projects, ADB approved
a $350 million loan for the Tangguh Liquefied Natural
Gas Project in West Papua, which will extract gas from
fields in the Berau and Bintuni Bay areas, a big step in the
revival of ADB’s private sector operations in Indonesia.
PHILIPPINES
A Boost for Enterprise
The $180 million in loans approved in 2005 for the
Philippines included support for financial sector
development, with a focus on microfinance and small-
and medium-sized enterprises. In addition is a loan for
$5 million, without government guarantee, for the
purchase and resolution of nonperforming loans and assets
of Equitable PCI Bank.
The lending program is also closely linked to and
supports the fiscal consolidation agenda to which the
authorities have demonstrated a strong commitment.
The budget deficit, the primary indicator of national
fiscal health, fell from 3.9% of GDP in 2004 to 2.7% in
2005. The expansion of the value-added tax removed
formerly exempted transactions in November 2005 and
set the rate at 10%. (In February 2006, the expanded
SOUTHEAST ASIA
value-added tax was raised to 12%.) Administration of the
tax system is being strengthened, and the challenge now
is to implement hard-won policy changes to ensure that
incremental revenues are collected.
A new $150 million loan for the Microfinance
Development Program aims to improve the access of
the poor to financial services. The loan supports the
102
government’s program to encourage private sector
participation in the delivery of microfinance services,
address systemic weaknesses, and promote competitively
priced financial services for the poor and their enterprises.
Microfinance is central to the government’s strategy
for reducing poverty under the Social Reform and Poverty
Alleviation Act, and the Philippines has made good
progress. More than two thirds of the country’s poor, or
17 million people, do not have access to microfinance
services and rely on costly informal sources. Access to
microfinance gives poor people the chance to build viable
businesses and livelihoods.
Among its many features, the new ADB loan will help
remove restrictions on competition for microfinance
services, improve governance, and promote efficient
operations and the expansion of private sector-led
microfinance institutions. It will make borrowing costs
clearer by introducing greater transparency and “truth in
lending” to all types of microfinance institutions. Also,
it will clarify the tax regime governing the institutions.
In September, ADB approved the loan for small- and
medium-sized enterprise development, a project that
includes a $25 million loan that will support the Small
Business Guarantee and Finance Corporation to expand
Making microfinance loans available helps provide income-generating
opportunities for women such as this basketmaker (above) and
general store owner (left)
its portfolio of loans to small- and medium-sized
enterprises. The project also includes a partial credit
guarantee facility of about $18.4 million, and an equity
investment of up to $1 million.
By 2010, the government wants the enterprises to
contribute about 40% of value-added to the economy,
up from about 32% now, but it faces constraints in
unsupportive policies, cumbersome and costly registration
and licensing processes, and the lack of a national
business and collateral registry.
The partial credit guarantee, equivalent to about
1 billion Philippine pesos ($19.5 million), will be offered
to encourage selected private sector financial institutions
to also expand their portfolios for small- and medium-
sized enterprises, particularly to medium-sized
enterprises outside the corporation’s target group. The
facility will cover up to 50% of well-defined loan
portfolios. The equity investment will help establish a
comprehensive and credible credit information system,
Urban housing is being improved in the Philippines through a
one of the factors constraining development of the sector. program that promotes the development of low-income housing
units by the private sector
Improving Housing Finance and Upgrading Slums
ADB assisted the Philippine National Home Mortgage
Finance Corporation in resolving its portfolio of highly an ADB Philippine peso-denominated bond priced in
delinquent mortgage loans through a P1.6 billion loan October 2005.
approved in December 2004, which reached financial To help alleviate the worst effects of poverty, the
closure in November 2005. The loan to Balikatan Strategic Public-Private Partnerships for Urban Poverty
Housing, Inc., a special purpose company, financed its Reduction project, with funding from the Japan Fund for
purchase of the portfolio of nonperforming loans from the Poverty Reduction, continued in 2005 to combine the

National Home Mortgage Finance Corporation. The sale
of the troubled housing portfolio through this transaction
will allow the corporation to more effectively allocate its
resources to developing and providing a secondary market
for home mortgages to low- and middle-income
households.
ADB is also taking a 10% equity stake in Bahay
Financial Services, Inc., a new loan servicing company
that will restructure and service the nonperforming loans
on behalf of Balikatan Housing, Inc. A major portion of
the funding for the peso-denominated loan came from
In 2005, ADB continued work to
strengthen the Philippines’ Energy
Regulatory Commission and to
advise the Power Sector Assets and
Liabilities Management Corporation
on the privatization of assets
SOUTHEAST ASIA
business sector, local government units, and NGOs in the
Philippines to address the delivery of basic services and
livelihood programs. Operating in 26 marginalized
communities in eight cities of Metro Manila—Caloocan,
Malabon, Marikina, Muntinlupa, Navotas, Pasig, Quezon
City, and Taguig—its many achievements have financed
construction of better homes and local infrastructure for
894 households, given micro loans for businesses, and
provided hundreds of individuals with scholarships,
business training, and skills enhancement.
Energy Restructuring
In 2005, ADB continued work to strengthen the
Philippines’ Energy Regulatory Commission and to advise
the Power Sector Assets and Liabilities Management
Corporation on the privatization of assets of the National
Power Corporation under a technical assistance grant
approved in 2004.
Restructuring the power sector has reached a crucial
juncture. While the new legal and regulatory framework
for introducing competition is largely in place, privatizing
generation and transmission assets has been slow.

103
 Appendixes
105 Appendix 1: Members, Capital Stock, and Voting Power
106 Appendix 2: Resolutions of the Board of Governors Adopted in 2005
106 Appendix 3: Selected Policy, Financial, and Administrative Papers
Considered by the Board in 2005
107 Appendix 4: Board of Governors
109 Appendix 5: Board of Directors and Voting Groups
110 Appendix 6: Committees of the Board of Directors
110 Appendix 7: ADB Institute Advisory Council
111 Appendix 8: Organizational Structure
112 Appendix 9: Former ADB Presidents and Vice Presidents
113 Appendix 10: Summary of Budget for 2006

List of Abbreviations

ADB Asian Development Bank

ADF Asian Development Fund
ASEAN Association of Southeast Asian Nations
APPENDIXES

DMC developing member country

GDP gross domestic product
GMS Greater Mekong Subregion
HIV/AIDS human immunodeficiency virus/acquired immunodeficiency syndrome
Lao PDR Lao People’s Democratic Republic
MDG Millennium Development Goal
NGO nongovernment organization
OCR ordinary capital resources
PRC People’s Republic of China
SARS severe acute respiratory syndrome
km kilometer

104
APPENDIX 1
Members, Capital Stock, and Voting Power
(as of 31 December 2005)
Year of Subscribed Voting Year of Subscribed Voting
a b a
Membership Capital Power Membership Capital Powerb
(% of total) (% of total) (% of total) (% of total)

REGIONAL NONREGIONAL
Afghanistan 1966 0.034 0.340 Austria 1966 0.343 0.587
Armenia 2005 0.301 0.553 Belgium 1966 0.343 0.587
Australia 1966 5.834 4.979 Canada 1966 5.274 4.531
Azerbaijan 1999 0.448 0.671 Denmark 1966 0.343 0.587
Bangladesh 1973 1.029 1.136 Finland 1966 0.343 0.587
Bhutan 1982 0.006 0.317 France 1970 2.347 2.190
Cambodia 1966 0.050 0.352 Germany 1966 4.361 3.802
China, People's Republic of 1986 6.496 5.510 Italy 1966 1.822 1.770
Cook Islands 1976 0.003 0.315 Luxembourg 2003 0.343 0.587
Fiji Islands 1970 0.069 0.367 The Netherlands 1966 1.034 1.140
Hong Kong, China 1969 0.549 0.752 Norway 1966 0.343 0.587
India 1966 6.383 5.419 Portugal 2002 0.343 0.587
Indonesia 1966 5.490 4.705 Spain 1986 0.343 0.587
Japan 1966 15.734 12.900 Sweden 1966 0.343 0.587
Kazakhstan 1994 0.813 0.963 Switzerland 1967 0.588 0.783
Kiribati 1974 0.004 0.316 Turkey 1991 0.343 0.587
Korea, Republic of 1966 5.079 4.375 United Kingdom 1966 2.059 1.960
Kyrgyz Republic 1994 0.302 0.554 United States 1966 15.734 12.900
Lao, People's
Democratic Republic 1966 0.014 0.324
Subtotal Nonregional 36.649 34.944
Malaysia 1966 2.745 2.509
Maldives 1978 0.004 0.316 TOTAL 100.000 100.000
Marshall Islands 1990 0.003 0.315
Micronesia,
Note: Figures may not add due to rounding. For other details, see tables
Federated States of 1990 0.004 0.316
on pages 34 and 35, Volume 2.
Mongolia 1991 0.015 0.325 a Subscribed capital refers to a member’s subscription to shares of the
Myanmar 1973 0.549 0.752 capital stock of ADB.
b The total voting power of each member consists of the sum of its basic
Nauru 1991 0.004 0.316
votes and proportional votes. The basic votes of each member consist of
Nepal 1966 0.148 0.431 such number of votes as results from the equal distribution among all

APPENDIXES
New Zealand 1966 1.548 1.551 members of 20% of the aggregate sum of the basic votes and proportional
Pakistan 1966 2.196 2.069 votes of all members. The number of proportional votes of each member
is equal to the number of shares of the capital stock of ADB held by that
Palau 2003 0.003 0.315 member.
Papua New Guinea 1971 0.095 0.388
Philippines 1966 2.402 2.234
Samoa 1966 0.003 0.315
Singapore 1966 0.343 0.587
Solomon Islands 1973 0.007 0.318
Sri Lanka 1966 0.585 0.780
Taipei,China 1966 1.098 1.191
Tajikistan 1998 0.289 0.543
Thailand 1966 1.373 1.411
Timor-Leste 2002 0.010 0.320
Tonga 1972 0.004 0.316
Turkmenistan 2000 0.255 0.517
Tuvalu 1993 0.001 0.314
Uzbekistan 1995 0.679 0.856
Vanuatu 1981 0.007 0.318
Viet Nam 1966 0.344 0.588

Subtotal Regional 63.351 65.056

105
 APPENDIX 2
Resolutions of the Board of Governors Adopted in 2005
RESOLUTION NO. SUBJECT DATE ADOPTED
303 Decisions Relating to Section 5 of the By-Laws 21 January 2005
304 Amendment to Section 7(B)(a) of the By-Laws 21 January 2005
305 Transfer of OCR Surplus to the Asian Tsunami Fund 4 March 2005
306 Place and Date of Fortieth Annual Meeting (2007) 5 May 2005
307 Financial Statements and Independent Auditors’ Reports 6 May 2005
308 Allocation of Net Income 6 May 2005
309 Procedures for the Election of Directors 26 May 2005
310 Transfer of Ordinary Capital Resources Surplus to the Pakistan
Earthquake Fund 25 November 2005
311 Conversion of ADF Resources into Other Currencies 28 November 2005
312 Development Status of the Republic of Palau 16 December 2005

APPENDIX 3
Selected Policy, Financial, and Administrative Papers Considered by the Board in 2005
SUBJECT DATE
Proposed Revision of the Water Policy of the Asian Development Bank 28 January 2005
Proposed Revisions to the Asian Development Fund Regulations and
Adoption of Special Operations Grant Regulations 7 February 2005
Asian Tsunami Fund 17 February 2005
Review of the Asian Development Bank's Loan Charges and Allocation of 2004 Net Income 12 April 2005
The Public Communications Policy of the Asian Development Bank 22 April 2005
Enhanced Separation Program 19 May 2005
Organizational Adjustments for Enhanced Operational Effectiveness 19 May 2005
Local Currency Lending 15 June 2005
Implementation of Disclosure Provisions of ADB’s Public Communications Policy Pertaining to Chair
Summaries and Minutes of Board of Directors’ Discussions, and Operations Evaluation Reports 12 July 2005
Eligibility of ADF Grant Projects for the Summary Procedure 10 August 2005
Policies and Procedures on the Use of Consultants by the Asian Development Bank and Its Borrowers 19 August 2005
Cost Sharing and Eligibility of Expenditures for Asian Development Bank Financing: A New Approach 25 August 2005
APPENDIXES

Introducing the Local Currency Loan Product 25 August 2005

Pilot Financing Instruments and Modalities 25 August 2005
Revising the Procurement Guidelines 20 September 2005
Work Program and Budget Framework (2006–2008) 11 October 2005
Special Capital Budget Proposal—The Business Continuity Facility 13 October 2005
A Review of Accounting Policy on Currency Exchange Rates Used for Financial Reporting and Transactions 13 October 2005
Japan Fund for Public Policy Training Modified Implementation Arrangements 14 October 2005
Revision of the Summary Procedure 14 October 2005
Asian Development Fund Currency Management Proposal 27 October 2005
Comprehensive Review of Compensation and Benefits for Professional Staff 3 November 2005
Pakistan Earthquake Fund 14 November 2005
Proposed Change in Asian Tsunami Fund Implementation Arrangements
and Transfer of Unutilized Amounts from the Asian Tsunami Fund and
Ordinary Capital Resources Surplus, Both to the Pakistan Earthquake Fund 14 November 2005
A Review of the Policy on Supplementary Financing: Addressing Challenges and Broader Needs 28 November 2005
Borrowing Program for 2006 06 December 2005
Budget of the Asian Development Bank for 2006 16 December 2005
Proposed Revisions to the Regulations of the Asian Development Fund
and the Special Operations Loan Regulations 19 December 2005

106
APPENDIX 4
Board of Governors
(as of 31 March 2006)

P. Chidambaram
(India)
(Chair)
Elbuchel Sadang Jean-Louis Schiltz
(Palau) (Luxembourg)
(Vice-Chair) (Vice-Chair)

MEMBER GOVERNOR ALTERNATE GOVERNOR

Afghanistan Anwar Ul-Haq Ahady Wahidullah Shahrani
Armenia Vardan Khachatryan1 David Avetissian1
Australia Peter Costello Teresa Gambaro2
Austria Karl-Heinz Grasser Marcus Heinz3
Azerbaijan Heydar Babayev 4 Avaz Alekperov
Bangladesh M. Saifur Rahman Md. Ismail Zabihullah
Belgium Didier Reynders Gino Alzetta
Bhutan Lyonpo Wangdi Norbu Daw Tenzin
Cambodia Keat Chhon Aun Porn Moniroth
Canada Peter MacKay 5 Alister M. Smith
China, People’s Republic of Jin Renqing Li Yong
Cook Islands Terepai Maoate6 Kevin Carr
Denmark Ole E. Moesby Sus Ulbæk
Fiji Islands Jone Yavala Kubuabola Savenaca Narube
Finland Marjatta Rasi 7 Anneli Vuorinen8
France Thierry Breton Xavier Musca
Germany Karin Kortmann9 Rolf Wenzel
Hong Kong, China Henry Tang Joseph Yam
India P. Chidambaram A. K. Jha10
11
Indonesia Sri Mulyani Indrawati Burhanuddin Abdullah

APPENDIXES
12
Italy Mario Draghi Ignazio Angeloni13
Japan Sadakazu Tanigaki Toshihiko Fukui
14
Kazakhstan Natalya Artemovna Korzhova Marat Apsemetovich Kusainov15
Kiribati Nabuti Mwemwenikarawa Taneti Maamau
Korea, Republic of Duck-Soo Han Seung Park
Kyrgyz Republic Akylbek Japarov Sabyrbek A. Moldokulov
Lao People's Democratic Republic Chansy Phosikham Phouphet Khamphounvong
Luxembourg Jean-Louis Schiltz Arsene Jacoby 16
Malaysia Dato’ Seri Abdullah Haji Ahmad Badawi Dato’ Izzuddin bin Dali

1 Appointed in December 2005. 9 Succeeded Uschi Eid in December 2005.

2 Succeeded Bruce Wilson in March 2006. 10 Succeeded Rakesh Mohan in July 2005.
3 Succeeded Thomas Wieser in March 2005. 11 Succeeded Jusuf Anwar in December 2005.
4 Succeeded Farhad Aliyev in October 2005. 12 Succeeded Antonio Fazio in February 2006.
5 Succeeded Pierre Pettigrew in February 2006. 13 Succeeded Lorenzo Bini Smaghi in June 2005.
6 Succeeded Geoffrey Henry in August 2005. 14 Succeeded Arman Galiaskarovich Dunayev in March 2006.
7 Succeeded Pertti Majanen in September 2005. 15 Succeeded Batyrkhan Arysbekovich Issayev in March 2006.
8 Succeeded Taisto Huimasalo in September 2005. 16 Succeeded Georges Heinen in September 2005.

107
 CONTINUED

MEMBER GOVERNOR ALTERNATE GOVERNOR

Maldives Ismail Shafeeu Riluwan Shareef

Marshall Islands Brenson S. Wase Amon Tibon
Micronesia, Fed. States of Nick L. Andon Lorin Robert
Mongolia N. Altankhuyag Ochirbat Chuluunbat
Myanmar Hla Tun Daw Myo Nwe
Nauru David Adeang Jonathon Kirkby17
18
Nepal Roop Jyoti Bhanu Prasad Acharya
The Netherlands Gerrit Zalm Agnes van Ardenne-van der
Hoeven
New Zealand Michael Cullen John Whitehead
19
Norway Anne Margareth Fagertun Stenhammer Nils Haugstveit
Pakistan Omar Ayub Khan Khalid Saeed20
Palau Elbuchel Sadang Marino Rechesengel
Papua New Guinea Bart Philemon Simon Tosali
21
Philippines Margarito B. Teves Amando M. Tetangco, Jr.22
23
Portugal Fernando Teixeira dos Santos Carlos Costa Pina24
Samoa Misa Telefoni Retzlaff Hinauri Petana
Singapore Raymond Lim Siang Keat Lim Siong Guan
Solomon Islands Peter Boyers Shadrach Fanega
Spain Pedro Solbes Mira David Vergara Figueras
Sri Lanka Mahinda Rajapaksa25 P. B. Jayasundara
Sweden Annika Soder Anders Oljelund
Switzerland Oscar Knapp Adrian Schlaepfer
Taipei,China Fai-nan Perng Shuh Chen
Tajikistan Matlubkhon S. Davlatov26 Nagmatjon Kh. Buriev
Thailand Thanong Bidaya27 Suparut Kawatkul
Timor-Leste Maria Madalena Brites Boavida Aicha Bassarewan
Tonga Siosiua T.T. ‘Utoikamanu Aisake Eke
APPENDIXES

Turkey Ali Babacan28 Ibrahim H. Çanakci29

30
Turkmenistan Geldymurat Abilov (vacant)
Tuvalu Bikenibeu Paeniu Aunese Makoi Simati31
United Kingdom Hilary Benn Gareth Thomas
United States John W. Snow Josette S. Shiner32
33
Uzbekistan Saidakhmat Rakhimov Ulugbek Rozukulov34
Vanuatu Willie Jimmy Tapangararua35 Simeon Athy
Viet Nam Le Duc Thuy Phung Khac Ke

17 Succeeded Peter Depta In February 2006. 27 Succeeded Somkid Jatusripitak in August 2005.
18 Succeeded Shumshere J.B. Rana in December 2005. 28 Succeeded Ibrahim H. Çanakci in March 2006.
19 Succeeded Leiv Lunde in October 2005. 29 Succeeded Cavit Dagdas in March 2006.
20 Succeeded Shuja Shah in June 2005. 30 Appointed in March 2006.
21 Succeeded Cesar V. Purisima in July 2005. 31 Succeeded Seve Paeniu in March 2006.
22 Succeeded Rafael Buenaventura in July 2005. 32 Appointed in October 2005.
23 Succeeded Luis Campos e Cunha in July 2005. 33 Succeeded Rustam S. Azimov in August 2005.
24 Succeeded Maria Dos Anjos Nunes Capote in July 2005. 34 Succeeded Mamarizo Nurmuratov in August 2005.
25 Succeeded Sarath Amunugama in December 2005. 35 Succeeded Moana Carcasses Kalosil in November 2005.
26 Succeeded F.S. Kholboboev in March 2006.

108
APPENDIX 5
Board of Directors and Voting Groups
(as of 20 January 2006)

DIRECTOR ALTERNATE DIRECTOR MEMBERS REPRESENTED

Volker Ducklau 1 David Taylor Austria; Germany; Luxembourg; Turkey; United

Kingdom

Emile Gauvreau Pasi Hellman2 Canada; Denmark; Finland; The Netherlands;

Norway; Sweden

Sibtain Fazal Halim 3 Marita Magpili-Jimenez4 Kazakhstan; Maldives; Marshall Islands;

Mongolia; Pakistan; Philippines; Timor-Leste

Agus Haryanto Richard Stanley Cook Islands; Fiji Islands; Indonesia; Kyrgyz
Republic; New Zealand; Samoa; Tonga

Chol-Hwi Lee Batir Mirbabayev Republic of Korea; Papua New Guinea;

Sri Lanka; Taipei,China; Uzbekistan; Vanuatu;
Viet Nam

Masaki Omura Atsushi Mizuno5 Japan

6
Patrick Pillon Niklaus Zingg Belgium; France; Italy; Portugal; Spain;
Switzerland

Ashok Saikia Nima Wangdi7 Afghanistan; Bangladesh; Bhutan; India;

Lao People's Democratic Republic; Tajikistan

Stephen Sedgwick Richard Moore Australia; Azerbaijan; Cambodia; Federated

States of Micronesia; Hong Kong, China;
Kiribati; Nauru; Palau; Solomon Islands; Tuvalu

Paul W. Speltz Paul W. Curry8 United States

Chaiyuth Sudthitanakorn Sein Tin Malaysia; Myanmar; Nepal; Singapore;

Thailand

Xiaosong Zheng 9 Xiaolong Mo10 People's Republic of China

APPENDIXES
1 Succeeded Rolf Eckermann on 1 July 2005.
2 Succeeded Geert Jan Engelsman on 1 September 2005.
3 Succeeded M. Akram Malik on 16 November 2005.
4 Succeeded M. Akram Malik on 1 July 2005.
5 Succeeded Masaichiro Yamanishi on 24 August 2005.
6 Succeeded Michele Miari Fulcis on 1 October 2005.
7 Succeeded M. Saiful Islam on 1 June 2005.
8 Succeeded Troy Wray on 20 January 2006.
9 Succeeded Ju Kuilin on 1 February 2005.
10 Succeeded Shaolin Yang on 1 February 2005.

109
 APPENDIX 6
Committees of the Board of Directors
(as of 23 January 2006)

STANDING COMMITTEES
AUDIT COMMITTEE BUDGET REVIEW COMMITTEE
Patrick Pillon (Chair) Ashok Saikia (Chair)
Batir Mirbabayev Paul Curry
Atsushi Mizuno Sibtain Fazal Halim
Paul W. Speltz Pasi Hellman
Richard Stanley Xiaolong Mo
Chaiyuth Sudthitanakorn Masaki Omura

COMPLIANCE REVIEW COMMITTEE DEVELOPMENT EFFECTIVENESS

Stephen Sedgwick (Chair) COMMITTEE
Volker Ducklau Agus Haryanto (Chair)
Chol-Hwi Lee Emile Gauvreau
Marita Magpili-Jimenez Richard Moore
Sein Tin David Taylor
Niklaus Zingg Nima Wangdi
Xiaosong Zheng

WORKING COMMITTEE
WORKING GROUP ON THE ANNUAL REPORT FOR 2005
David Taylor (Chair)
Pasi Hellman
Batir Mirbabayev
Xiaolong Mo
Sein Tin
Nima Wangdi
APPENDIXES

APPENDIX 7
ADB Institute Advisory Council
(as of 31 December 2005)

Masahiko Aoki Japan

William P. Fuller United States
Eric Girardin France
Li Yong People's Republic of China
Corattiyil Ramachandran India
Kanit Sangsubhan Thailand
Ifzal Ali ADB Chief Economist

ADB Institute Dean

Peter McCawley

110
APPENDIX 8
Organizational Structure1
(as of 31 March 2006)
BOARD OF GOVERNORS

BOARD OF DIRECTORS

PRESIDENT
H. Kuroda

MANAGING DIRECTOR OPERATIONS EVALUATION OFFICE OF THE COMPLIANCE

GENERAL DEPARTMENT2 REVIEW PANEL3
Y. Lee B. Murray, Director General R. Zelius, Secretary

VICE-PRESIDENT VICE-PRESIDENT VICE-PRESIDENT VICE-PRESIDENT

ASIAN DEVELOPMENT (Knowledge Management and
BANK INSTITUTE (Operations 1) (Operations 2) (Finance and Administration)
Sustainable Development)
P. McCawley, Dean L. Jin C. Lawrence Greenwood, Jr. K. Pholsena
G. van der Linden

REGIONAL AND SUSTAINABLE EAST AND CENTRAL ASIA

DEVELOPMENT DEPARTMENT
OFFICE OF
B. Lohani, 5 Director General
THE AUDITOR GENERAL
P. Pedersen, Auditor General
ECONOMICS AND RESEARCH
STRATEGY AND POLICY
DEPARTMENT
K. Sakai, Director General
OFFICE OF REGIONAL
ECONOMIC INTEGRATION
M. Kawai, 4 Head
OFFICE OF THE SPECIAL
PROJECT FACILITATOR
N. Samarasingha, Special
Project Facilitator
RISK MANAGEMENT UNIT
Y. Shin, Head
SOUTH ASIA DEPARTMENT
K. Senga, Director General
H. S. Rao, Director General
AFGHANISTAN
RESIDENT MISSION
B. Fawcett, Country Director
DEPARTMENT
I. Ali, Chief Economist
BANGLADESH
RESIDENT MISSION
H. Du, Country Director
OFFICE OF
COFINANCING OPERATIONS INDIA RESIDENT MISSION
W. Liepach, T. Kondo
Principal Director Country Director
NEPAL
RESIDENT MISSION
S. Rahman, Country Director
PAKISTAN
RESIDENT MISSION
P. Fedon, Country Director
SRI LANKA
RESIDENT MISSION
A. Pio, Country Director
OFFICE OF
DEPARTMENT
THE SECRETARY
J. Hovland, The Secretary
AZERBAIJAN
RESIDENT MISSION
M. Westfall, Country Director OFFICE OF THE
GENERAL COUNSEL
A. Mitchell, General Counsel
PRC RESIDENT MISSION
T. Shibuichi
Country Director
BUDGET, PERSONNEL AND
KAZAKHSTAN MANAGEMENT SYSTEMS
RESIDENT MISSION DEPARTMENT
S. Wermert7 K. Munenaga, Director General
Country Director
KYRGYZ OFFICE OF
RESIDENT MISSION ADMINISTRATIVE SERVICES
M.A. Malik, Country Director A. Wasan
Principal Director
MONGOLIA
RESIDENT MISSION
(vacant), Country Director CONTROLLER’S
DEPARTMENT
TAJIKISTAN P. Chiu, Controller
RESIDENT MISSION
N. Jain, Country Director

UZBEKISTAN TREASURY
DEPARTMENT OF EXTERNAL RESIDENT MISSION DEPARTMENT
RELATIONS MEKONG DEPARTMENT
R. Nag, 6 Director General S. O’Sullivan, Country Director M. Kashiwagi, Treasurer
J. Hiday, Director General

CAMBODIA SOUTHEAST ASIA OFFICE OF

EUROPEAN RESIDENT MISSION DEPARTMENT INFORMATION SYSTEMS
REPRESENTATIVE OFFICE S.P. Bajpai, Country Director (vacant), Director General AND TECHNOLOGY

APPENDIXES
P. Benedic R. Dawson, Principal Director
Resident Director General LAO PDR INDONESIA
RESIDENT MISSION RESIDENT MISSION
J. Nugent, Country Director E. Cua, Country Director
JAPANESE
REPRESENTATIVE OFFICE THAILAND
W. Chung PHILIPPINES
RESIDENT MISSION COUNTRY OFFICE
Resident Director General J. Verbiest, Country Director T. Crouch, Country Director

NORTH AMERICAN VIET NAM

REPRESENTATIVE OFFICE RESIDENT MISSION
A. Konishi,7 Country Director PACIFIC DEPARTMENT
T. Diaz P. Erquiaga, Director General
Resident Director General
PRIVATE SECTOR PACIFIC LIAISON AND
OPERATIONS DEPARTMENT COORDINATION OFFICE
R. Bestani, Director General N. Chakwin
Regional Director
PACIFIC
1 For a list of management and senior staff, go to www.adb.org/ SUBREGIONAL OFFICE
S. Jarvenpaa
About/management.asp. Regional Director
2 OED reports to the Board of Directors through the Board
PAPUA NEW GUINEA
Development Effectiveness Committee. RESIDENT MISSION
3 The Compliance Review Panel reports to the Board of Directors. S. van der Tak
4 Concurrent Special Advisor to the President on Regional Country Director
Economic Integration. SPECIAL LIAISON OFFICE
5 Concurrent Chief Compliance Officer and Special Advisor to the IN TIMOR-LESTE
C. Andrews
President on Clean Energy and Environment. Resident Representative
6 Concurrent Special Advisor to the President in charge of Regional
Economic Cooperation and Integration. CENTRAL OPERATIONS
SERVICES OFFICE
7 Effective upon assumption of office. P. Daltrop, Principal Director

111
 APPENDIX 9
Former ADB Presidents and Vice Presidents
(as of January 2006)

President

Takeshi Watanabe 24 November 1966–24 November 1972

Shiro Inoue 25 November 1972–23 November 1976
Taroichi Yoshida 24 November 1976–23 November 1981
Masao Fujioka 24 November 1981–23 November 1989
Kimimasa Tarumizu 24 November 1989–23 November 1993
Mitsuo Sato 24 November 1993–15 January 1999
Tadao Chino 16 January 1999–31 January 2005

Vice President

C. S. Krishna Moorthi 19 December 1966–31 March 1978

A. T. Bambawale 1 April 1978–28 October 1985
M. Narasimham 1 November 1985–31 July 1988
S. Stanley Katz 1 April 1978–28 September 1990
In Yong Chung 1 August 1988–31 July 1993
William R. Thomson 1 October 1990–30 June 1994
Günther G. Schulz 1 April 1983–30 June 1995
Bong-Suh Lee 1 August 1993–31 July 1998
Pierre Uhel 1 July 1995–24 November 1998
Peter H. Sullivan 6 July 1994–20 September 2000
Myoung-Ho Shin 1 August 1998–31 July 2003
John Lintjer 18 January 1999–16 January 2004
Joseph B. Eichenberger 15 December 2000–23 December 2005
APPENDIXES

112
APPENDIX 10
Summary of Budget for 2006
Internal Administrative Expenses
($ thousand)

2005
After 2006
Budget Transfersa Actual Budgetb
I. BOARD OF GOVERNORS 975 975 920 1,350
II. BOARD OF DIRECTORS 19,477 20,137 20,030 19,540
III. OPERATIONAL EXPENSES 222,537 222,537 221,916 236,123
Salaries 115,178 113,728 113,728 123,606
Benefits 61,799 63,919 63,919 65,008
Staff Development 3,267 2,369 1,894 3,697
Relocation 3,769 3,997 3,997 4,848
Consultants 18,906 20,303 20,303 19,327
Business Travel 19,246 17,849 17,735 19,259
Representation 372 372 340 378
IV. ADMINISTRATIVE EXPENSES 53,870 53,870 51,398 56,566
Communications 6,962 7,053 7,053 6,540
Office Occupancy 11,355 12,281 12,281 11,945
Library 925 937 937 694
Office Supplies 1,934 1,934 1,825 1,771
Office Equipment 6,288 6,288 5,518 5,518
Contractual Services 10,243 10,243 9,536 10,941
Insurance 837 837 747 3,483
Depreciation 14,839 13,810 13,019 15,271
Miscellaneous 487 487 482 403

APPENDIXES
V. TOTAL BEFORE GENERAL CONTINGENCY 296,859 297,519 294,264 313,579
VI. GENERAL CONTINGENCY 2,969 2,309 – 3,136
VII. Less: Fee Reimbursements from Trust Funds c (3,818)

TOTAL 299,828 299,828 294,264 d 312,897

a Transfers were made between budget items without exceeding the original amount of each category. An amount of $660,000 was transferred from
the General Contingency to meet overruns in the budget category Board of Directors.
b Effective from 2006 Budget, all expenses to fund ADB’s annual meeting are centralized in the budget category Board of Governors. In addition, the
subsidized premium of the postretirement group medical insurance plan will be reclassified from the Operational Expenses category (Benefits) to
Administrative Expenses category (Insurance).
c The fee reimbursement received by ADB from administering trust funds of multilateral and bilateral institutions is netted off to derive the net Internal
Administrative Expenses budget starting with the 2006 Budget.
d Excludes the following items reconciling with financial statements in compliance with generally accepted accounting principles: (i) provisions for future
liabilities with respect to severance pay (-$1,131,000), accumulated compensated absences ($1,151,000), and accrued resettlement/repatriation
allowances ($4,284,000); (ii) adjustments of actuarially determined assessment of benefit obligations with respect to pension costs ($13,967,000)
and postretirement medical benefits ($20,349,000); and (iii) expenses related to the enhanced separation program ($4,661,000); and (iv) adjustments
related to the Afghanistan Resident Mission Guest House (-$67,000). Total administrative expenses, as shown in the financial statements, amounted
to $337,478,000. This amount, after deducting $522,000 directly charged to the Japan Scholarship Program ($69,000) and Japan Fund for Poverty
Reduction ($453,000), has been distributed as follows: OCR—$135,689,000 (Ref. OCR-2) net of $24,481,000 as front-end fee offset against loan
origination costs and recognized as a reduction in administrative expenses; ADF—$175,751,000 (Ref. ADF-2), and Japan Special Fund—$1,035,000
(Ref. JSF-2).

113
 ADB Contact Addresses
(as of 31 March 2006)

Afghanistan Resident Mission Indonesia Resident Mission Nepal Resident Mission South Pacific Subregional Office
House No. 126, Street 2 Gedung BRII, 7th Floor Srikunj, Kamaladi, Ward No. 31 Level 5, Ra Marama Building
Yaqoub, Roundabout Jl. Jend Sudirman Kav. 44–46 P.O. Box 5017 91 Gordon Street
Shar-e-now, Jakarta 10210, Indonesia Kathmandu, Nepal Private Mail Bag, Suva, Fiji Islands
Nest to District 10 Police Department P.O. Box 99 JKPSA Tel +977 1 422 7779 Tel +679 331 8101
Kabul, Afghanistan Jakarta 10350A Fax +977 1 422 5063 Fax +679 331 8074
Tel +93 020 210 3602 Indonesia adbnrm@adb.org adbspso@adb.org
Tel +62 21 251 2721 www.adb.org/nrm www.adb.org/spso
Azerbaijan Resident Mission Fax +62 21 251 2749
96 Nizami St. 4th Floor adbirm@adb.org North American Sri Lanka Resident Mission
Landmark Building www.adb.org/irm Representative Office 49/14–15 Galle Road
Baku AZ1000, Azerbaijan 815 Connecticut Avenue, NW Colombo 3, Sri Lanka
Tel +994 12 496 5800 Japanese Representative Office Suite 325 Tel +94 11 238 7055/533 1111
Fax +994 12 465 9990 Yamato Seimei Building 2nd Floor Washington DC 20006, USA Fax +94 11 238 6527
adbazrm@adb.org 1–7 Uchisaiwaicho 1-Chome Tel +1 202 728 1500 adbslrm@adb.org
www.adb.org/azrm Chiyoda-ku, Tokyo 100-0011 Fax +1 202 728 1505 www.adb.org
Japan naro@adb.org
Bangladesh Resident Mission Tel +81 3 3504 3160 www.adb.org/naro Tajikistan Resident Mission
Plot E-31, Sher-e-Bangla Nagar Fax +81 3 3504 3165 107 Nozim Khikmat Street
Dhaka-1207, Bangladesh adbjro@adb.org Pacific Liaison Coordination Office Dushanbe, 734001, Tajikistan
Tel +880 2 815 6000 to 6016 www.adb.org/jro Level 18, 1 Margaret Street Tel +992 372 235314/235315/
Fax +880 2 815 6018/6019 (corner of Clarence and Margaret 210558
adbbrm@adb.org Kazakhstan Resident Mission Streets) Fax +992 372 244900
www.adb.org/brm 12 Samal Sydney, New South Wales 2000 adbtjrm@adb.org
Astana Tower Business Center Australia www.adb.org/tjrm
Cambodia Resident Mission 10th Floor, Astana 010000 Tel +61 2 8270 9444
29 Suramarit Boulevard (268/19) Kazakhstan Fax +61 2 8270 9445 Thailand Resident Mission
Sangkat Chaktomok Tel +7 3172 325053/325054 adbplco@adb.org 23 rd Floor
Khan Daun Penh Fax +7 3172 328343 www.adb.org/plco The Offices at Central World
Phnom Penh, Cambodia 999/9 Rama I Road, Pathumwan
P.O. Box 2436 20A Kazybek bi Street, Arai Building Pakistan Resident Mission Bangkok 10330, Thailand
Tel +855 23 215805/215806/ 4th Floor, Almaty 050010 Overseas Pakistanis Foundation Tel +66 2263 5300
216417 Kazakhstan Building Fax +66 2263 5301
Fax +855 23 215807 Tel +7 3272 582223/917344 Sharah-e-Jamhuriyat jpverbiest@adb.org
adbcarm@adb.org Fax +7 3272 918670 G-5/2, Islamabad www.adb.org
www.adb.org/carm adbkarm@adb.org GPO Box 1863, Islamabad, Pakistan
www.adb.org/karm Tel +92 51 282 5011 to 5016/ Uzbekistan Resident Mission
People’s Republic of China 208 7300 1 A. Khodjaev Street
Resident Mission Kyrgyz Resident Mission Fax +92 51 282 3324/227 4718 Tashkent 700027, Uzbekistan
7th Floor, Block D 52–54, Orozbekov Street adbmprm@adb.org Tel +998 71 120 7921/7922/7925
Beijing Merchants International Bishkek, 720040, Kyrgyz Republic www.adb.org/prm Fax +998 71 120 7923
Financial Center Tel +996 312 627343/612 900445 adburm@adb.org
156 Fuxingmennei Avenue Fax +996 312 627344 Papua New Guinea Resident Mission www.adb.org/urm
Xicheng District adbkyrm@adb.org Deloitte Tower, Level 13
Beijing 100031, PRC www.adb.org/kyrm P.O. Box 1992 Viet Nam Resident Mission
APPENDIXES

Tel +86 10 6642 6601 Port Moresby, NCD Units 701–706

Fax +86 10 6642 6606 Lao PDR Resident Mission Papua New Guinea Sun Red River Building
adbprcm@adb.org Corner of Lanexang Avenue and Tel +675 321 0408 23 Phan Chu Trinh Street
www.adb.org/prcm Samsenthai Road Fax +675 321 0407 Hoan Kiem District
P.O. Box 9724, Vientiane adbpnrm@adb.org Hanoi, Viet Nam
European Representative Office Lao People’s Democratic Republic www.adb.org/pnrm Tel +84 4 933 1374
Rahmhofstrasse 2 Tel +856 21 250444 Fax +84 4 933 1373
60313 Frankfurt am Main Fax +856 21 250333 Philippines Country Office adbvrm@adb.org
Germany adblrm@adb.org 6 ADB Ave., Mandaluyong City www.adb.org/vrm
Tel +49 69 2193 6400 www.adb.org/lrm 1550 Metro Manila, Philippines
Fax +49 69 2193 6444 Tel +63 2 683 1000 Asian Development Bank Institute
adbero@adb.org Mongolia Resident Mission Fax +63 2 683 3300 8th Floor, Kasumigaseki Bldg.
www.adb.org/ero MCS Plaza, 2nd Floor phco-mailbox@adb.org 2-5 Kasumigaseki 3 Chome
4 Natsagdorj Street www.adb.org/phco Chiyoda-ku, Tokyo 100, Japan
India Resident Mission Ulaanbaatar, Mongolia Tel +81 3 3593 5500
4, San Martin Marg P.O. Box 1083, Central Post Office Special Office in Timor-Leste Fax +81 3 3593 5571
Chanakyapuri Ulaanbaatar-13, Mongolia ADB-World Bank-IMF Building info@adbi.org
New Delhi 110 021 Tel +976 11 313440/323507/ Avenida Dos Direitos Humanos www.adbi.org
India 329836 P.O. Box 62, Dili, Timor-Leste
P.O. Box 5331, Chanakyapuri HPO Fax +976 11 311795 Tel +670 332 4801
Tel +91 11 2410 7200 adbmnrm@adb.org Fax +670 332 4132
Fax +91 11 2687 0955 www.adb.org/mnrm www.adb.org
adbinrm@adb.org
www.adb.org/inrm

114
2005 ANNUAL REPORT
VOLUME 2 Financial Report
Contents
FINANCIAL STATEMENTS AND REPORTS OF INDEPENDENT AUDITORS

I. Management’s Discussion and Analysis

2 Overview
4 Ordinary capital resources
18 Special Funds
20 Trust funds Managed by ADB

II. Ordinary Capital Resources (OCR)

23Report of Independent Auditors
24 OCR-1 Balance Sheet, 31 December 2005 and 2004
26 OCR-2 Statement of Income and Expenses for the Years Ended 31 December 2005 and 2004
27 OCR-3 Statement of Cash Flows for the Years Ended 31 December 2005 and 2004
28 OCR-4 Statement of Changes in Capital and Reserves for the Years Ended 31 December 2005 and 2004
30 OCR-5 Summary Statement of Loans, 31 December 2005 and 2004
32 OCR-6 Summary Statement of Borrowings, 31 December 2005 and 2004
34 OCR-7 Statement of Subscriptions to Capital Stock and Voting Power, 31 December 2005
36 OCR-8 Notes to Financial Statements, 31 December 2005 and 2004

III. Special Funds Resources

Asian Development Fund (ADF)
57Report of Independent Auditors
58 ADF-1 Special Purpose Statement of Assets, Liabilities, and Fund Balances, 31 December 2005 and 2004
59 ADF-2 Special Purpose Statement of Revenue and Expenses For the Years Ended 31 December 2005 and 2004
60 ADF-3 Special Purpose Statement of Cash Flows For the Years Ended 31 December 2005 and 2004
61 ADF-4 Special Purpose Statement of Changes in Fund Balances For the Years Ended
31 December 2005 and 2004
62 ADF-5 Special Purpose Summary Statement of Loans, 31 December 2005 and 2004
64 ADF-6 Special Purpose Statement of Resources, 31 December 2005
65 ADF-7 Notes to Special Purpose Financial Statements, 31 December 2005 and 2004

Technical Assistance Special Fund (TASF)

71Report of Independent Auditors
72 TASF-1 Statement of Financial Position, 31 December 2005 and 2004
73 TASF-2 Statement of Activities and Changes in Net Assets For the Years Ended 31 December 2005 and 2004
74 TASF-3 Statement of Cash Flows For the Years Ended 31 December 2005 and 2004
75 TASF-4 Statement of Resources, 31 December 2005
76 TASF-5 Summary Statement of Technical Assistance Approved and Effective For the Year Ended
31 December 2005
77 TASF-6 Notes to Financial Statements, 31 December 2005 and 2004
Japan Special Fund (JSF)
80Report of Independent Auditors
81 JSF-1 Statement of Financial Position, 31 December 2005 and 2004
82 JSF-2 Statement of Activities and Changes in Net Assets For the Years Ended 31 December 2005 and 2004
83 JSF-3 Statement of Cash Flows For the Years Ended 31 December 2005 and 2004
84 JSF-4 Notes to Financial Statements, 31 December 2005 and 2004

Asian Development Bank Institute Special Fund (ADBISF)

88Report of Independent Auditors
89 ADBISF-1 Statement of Financial Position, 31 December 2005 and 2004
90 ADBISF-2 Statement of Activities and Changes in Net Assets For the Years Ended 31 December 2005 and 2004
91 ADBISF-3 Statement of Cash Flows For the Years Ended 31 December 2005 and 2004
92 ADBISF-4 Notes to Financial Statements, 31 December 2005 and 2004

Asian Tsunami Fund (ATF)

97Report of Independent Auditors
98 ATF-1 Statement of Financial Position, 31 December 2005
99 ATF-2 Statement of Activities and Changes in Net Assets for the Period from 11 February
to 31 December 2005
100 ATF-3 Statement of Cash Flows For the Period from 11 February to 31 December 2005
101 ATF-4 Notes to Financial Statements, 31 December 2005

Pakistan Earthquake Fund (PEF)

103Report of Independent Auditors
104 PEF-1 Statement of Financial Position, 31 December 2005
105 PEF-2 Statement of Activities and Changes in Net Assets For the Period from 14 November
to 31 December 2005
106 PEF-3 Statement of Cash Flows For the Period from 14 November to 31 December 2005
107 PEF-4 Notes to Financial Statements, 31 December 2005

4
STATISTICAL ANNEX

Operational Data
110 Table 1: Public and Private Sector Loan Approvals by Country, 2005
113 Table 2: Special Funds Grant-Financed Projects, 2005
115 Table 3: Loan Approvals by Sector: 3-Year Moving Averages, 1968–1970—2003–2005
116 Table 4: Loan Approvals by Sector, 2005
118 Table 5: Sectoral Distribution of Loans, 2005, 1967–2005
118 Table 6: Loan Approvals by Country and Source of Funds, 2005
119 Table 7: Projects Involving Cofinancing, 2005
121 Table 8: Loan Disbursements, 2004 and 2005
121 Table 9: Program Loan Disbursements, 2005
122 Table 10: Private Sector Approvals and Total Project Costs by Country, 2005
122 Table 11: Private Sector Approvals and Total Project Costs by Sector, 2005
123 Table 12: Private Sector Approvals by Year, 1983–2005
123 Table 13: Cumulative Private Sector Approvals by Country, 1983–2005
124 Table 14: Number of Loans and Projects Approved and Under Administration, Project Completion
Reports Circulated, Projects Completed, Loans Closed, and Project/Program Performance Audit
Reports Circulated
126 Table 15: Amount of Loans Approved, Contracts Awarded, and Disbursements
128 Table 16: Contracts Awarded by Country of Origin, 2005, Project Loans—Ordinary Capital Resources (OCR)
129 Table 17: Contracts Awarded by Country of Origin, 2005, Project Loans—Asian Development Fund (ADF)
130 Table 18: Contracts Awarded by Country of Origin, 2005, Project Loans—OCR and ADF Combined
131 Table 19: Estimates of Payment to Supplying Countries for Foreign Procurement Under Program Lending, 2005
132 Table 20: Cumulative Contracts Awarded by Country of Origin—Technical Assistance Operations
133 Table 21: Contracts Awarded by Country of Origin, 2003–2005—Technical Assistance Operations
134 Table 22: Technical Assistance Grants by Country and Regional Activities, 1967–2005, 2004, 2005
136 Table 23: Technical Assistance Grants, 2005
143 Table 24: Technical Assistance Grants by Sector, 1967–2005, 2004, 2005
143 Table 25: Technical Assistance: Loan and Grant-Financed by Sector, 2005
144 Table 26: Regional Technical Assistance Activities, 2005
147 Table 27: Net Transfer of Resources (OCR and ADF), 2003–2005
148 Table 28: Net Transfer of Resources (OCR and ADF Combined), 1996–2005

Financial Resources
149 Table 29: Asian Development Fund Resources and Commitment Authority
150 Table 30: Technical Assistance Special Fund
151 Table 31: Japan Special Fund—Regular and Supplementary Contributions
151 Table 32: Japan Special Fund—Asian Currency Crisis Support Facility
152 Table 33: Japan Fund for Poverty Reduction, 2005
152 Table 34: Japan Fund for Information and Communication Technology, 2005
153 Table 35: Projects Financed by Thematic Funds, 2005
 Management’s
MANAGEMENT’S
DISCUSSION AND ANALYSIS

Discussion
and Analysis

Overview

T
he Asian Development Bank (ADB) is an
international development finance institution
whose vision is to make Asia and the Pacific free of
poverty. ADB was established in 1966 through the
“Agreement Establishing the Asian Development Bank” (the
Charter), ratified by 31 countries to promote the social and
economic development of the region and reduce poverty. As of
31 December 2005, ADB had 64 members, 46 of which are in
the region.
ADB provides various forms of financial assistance to its
developing member countries (DMCs). The main
instruments are loans, technical assistance (TA), grants,
guarantees, and equity investments. These instruments are
financed through ordinary capital resources (OCR), Special
Funds, and various trust funds. OCR and Special Funds are
used to finance operations that are solely under ADB
administration. Trust funds are externally funded and are
administered by ADB on behalf of donors. The Charter
requires that funds from each resource be kept separate from
the others.
ADB also provides policy dialogues and advisory services
and mobilizes financial resources through its cofinancing
operations tapping official, commercial, and export credit
sources to maximize the development impact of its
assistance. Cofinancing for ADB projects can be in the form of
loans, TA, grant components of loan projects, or credit
enhancement products such as guarantees.

2
MANAGEMENT’S
DISCUSSION AND ANALYSIS

3
 Ordinary Capital Resources
MANAGEMENT’S
DISCUSSION AND ANALYSIS
Funding for OCR comes from three distinct sources: funds
borrowed from private placements and capital markets,
paid-in capital provided by shareholders, and
accumulated retained income (reserves). The financial
strength of OCR is largely based on the support of
shareholders and on financial policies and practices.
Shareholder support is reflected in the form of capital
backing from members and in the record of borrowing
members in meeting their debt service obligations.
Borrowed funds, together with equity, are used to
fund OCR lending and investment activities as well as
other general operations. Loans are generally made to
DMCs that have attained a higher level of economic
development and to private borrowers. Public sector loans
are priced on a cost pass-through basis in which the cost of
funding the loans plus a lending spread is passed through
to the borrowers. Private sector loans are priced based on
market practice.
With the introduction of London interbank offered
rate (LIBOR)-based loans (LBL) and the retirement of
other loan products, ADB has evolved into a full-fledged
LIBOR-based lender. In view of the higher interest rates
charged for pool-based loans compared with LIBOR-based
loans and the general trend in the interest rate
environment, prepayments of pool-based loans of
$2.8 billion were received in 2004. During 2005 this
reduced significantly to $0.6 billion.
In addition to direct lending, ADB also provides
guarantees to assist DMC governments and private
borrowers in securing commercial funds for ADB-assisted
projects. ADB experienced strong and growing demand for
guarantees as credit enhancement products.
Basis of Financial Reporting
Statutory R eporting
Reporting
eporting. Table 1 presents financial data
for 2005. ADB prepares its financial statements in
accordance with accounting principles generally accepted
in the United States (US). ADB complies with Financial
Accounting Standards (FAS) 133, “Accounting for
Derivative Instruments and Hedging Activities,” and its
related amendments (collectively referred to as FAS 133).
FAS 133 allows hedge accounting only if certain
qualifying criteria are met. An assessment of those criteria
indicated that most of ADB’s derivative transactions are
highly effective in hedging the underlying transactions
and are appropriate for reducing funding costs. However,
applying FAS 133 hedge criteria would not entirely reflect
ADB's risk management and hedging strategies.
Compliance with hedge accounting would impose undue
4
constraints on future borrowing, loan, and hedge programs
and would likely detract from minimizing the cost of
borrowings, which ADB believes is more important.
Accordingly, ADB elected not to adopt hedge accounting
and reports all derivative instruments in the balance
sheet at fair value while recognizing changes in the fair
value of derivative instruments in the period as part of net
income.
Supplemental Reporting
Reporting. ADB manages its balance
sheet by selectively using derivatives to minimize the
interest rate and currency risks associated with its
financial assets and liabilities. Derivative instruments are
used to enhance asset/liability management of individual
positions and overall portfolios and to reduce borrowing
costs. As certain financial instruments (including all
derivatives and certain investments) are recorded at their
fair value while loans, borrowings, and certain
investments are recorded at carry value, applying FAS 133
does not fully reflect the overall economic value of ADB’s
financial positions. Therefore, to better reflect ADB’s
financial positions and risk management, two
supplemental financial statements are included: current
value and pre-FAS 133. Applications of consistent
approaches on these statements allow for better analysis
for management information and decision making.
Discussion and Analysis on Current Value
Table 2 presents estimates of the economic value of
OCR’s financial assets and liabilities taking into
consideration changes in interest rates, exchange rates,
and credit risks. Current value reflects the exit price for
financial instruments with liquid markets and is the
estimated fair value. For financial instruments with no
market quotations, current value is estimated by
discounting the expected cash flows by applying the
appropriate market data. The current value results may
differ from the actual net realizable value in the event of
liquidation. The reversal of the FAS 133 effects removes
its impact, as these effects are part of current value
adjustments (For details see tables 3 and 4.)
Current Value Balance Sheet
Loans and Related Swaps
Swaps. Most loans are made to or
guaranteed by ADB members. ADB does not sell its loans
believing that there is no comparable market for them.
The current value of loans incorporates management's
best estimate of expected cash flows including interest.
Estimated cash flows from principal repayments and
interest are discounted by the applicable market yield
curves for ADB’s funding cost plus lending spread.
The current value also includes an appropriate credit
 DISCUSSION AND ANALYSIS
MANAGEMENT’S
TABLE 1: Selected Financial Data
(31 December, amounts in $ million)

Statutory Basis
2005 2004 2003 2002 2001
Revenue and Expenses
From Loans 1,036.3 1,038.3 1,383.0 1,710.0 1,813.6
From Investments 377.4 265.6 251.2 256.6 322.6
From Other Sources 18.2 9.2 22.9 12.5 21.9

Total Revenue 1,431.9 1,313.1 1,657.1 1,979.1 2,158.1

Borrowings and Related Expenses 893.2 861.7 996.9 1,157.0 1,434.1
Administrative Expensesa 135.7 118.3 118.5 90.6 59.0
Technical Assistance to Member Countries (3.4) (2.4) (.4) 56.0 20.0
Provision for Losses (3.5) 2.2 12.9 3.9 5.0
Other Expenses 4.2 3.1 – – –

Total Expenses 1,026.2 982.9 1,127.9 1,307.5 1,518.1

Net Realized Gains 16.9 59.4 87.4 82.3 75.8
Net Unrealized (Losses) Gains on
Derivatives, as Required by FAS 133 (308.7) 41.0 (178.4) 224.8 112.8
Cumulative Effect of Change in
Accounting Principle (4.6) – – – 34.7
Net Income 109.3 430.6 438.2 978.7 863.3
Average Earning Assetsb 36,092 36,364 37,540 38,244 36,272
Annual Return on Average Earning Assets 0.30% 1.18% 1.17% 2.56% 2.28%d
Return on Loans 4.35% 4.16% 4.56% 5.93% 6.42%
Return on Investments 2.96% 2.21% 3.74% 4.26% 5.91%
Cost of Borrowings 5.04% 3.37% 4.65% 4.10% 5.54%
Equity-to-Loan Ratioe 49.36% 51.64%

Pre-FAS 133 Basis

Net Income 415.6 389.6 616.6 753.9 715.8
Average Earning Assets 36,076 36,306 37,524 38,244 36,271
Annual Return on Average Earning Assetsc 1.15% 1.07% 1.64% 1.97% 1.97%
Return on Loans 4.35% 4.16% 4.56% 5.93% 6.42%
Return on Investments 2.99% 2.34% 3.13% 4.26% 5.91%
Cost of Borrowings 3.75% 3.58% 3.70% 4.32% 5.63%
Equity-to-Loan Ratioe 49.48% 50.54%

Current Value Basis

Net Income 93.7 562.8 1,363.3 1,182.9 472.6
Average Earning Assets 37,948 39,391 40,244 40,680 38,431
Annual Return on Average Earning Assets 0.23% 1.47% 3.39% 2.91% 1.23%
Return on Loans (1.18)% 4.25% 4.97% 10.53% 3.11%
Return on Investments (1.11)% 3.51% 5.88% 9.80% 2.66%
Cost of Borrowings (1.34)% 3.56% 2.55% 9.85% 3.02%
Equity-to-Loan Ratioe 49.72% 50.27%
a Net of administration charge allocated to the Asian Development Fund and loan origination costs that are deferred.
b Composed of investments and related swaps, outstanding loans excluding unamortized front-end fees and related swaps and equity investments.
c Represents net income before net unrealized (losses) gains on derivatives, as required by FAS 133 over average earning assets.
d Excludes the one-time cumulative effect of recording the adoption of FAS 133 on 1 January 2001.
e Approved and established in February 2004 to measure ADB's risk bearing capacity.

5
 MANAGEMENT’S
DISCUSSION AND ANALYSIS

TABLE 2: Condensed Current Value Balance Sheets on 31 December 2005 and 2004
($ thousand)

31 December
31 December 2005 2004
Reversal of Current Current
Statutory FAS 133 Pre-FAS 133 Value Value Current
Basis Effects Basis Adjustments Basis Value Basis

Due from Banks 81,662 – 81,662 – 81,662 76,405

Investments and Accrued Income 11,212,091 – 11,212,091 – 11,212,091 10,780,768
Securities Transferred under
Securities Lending Arrangement 2,770,965 – 2,770,965 – 2,770,965 2,040,302
Securities Purchased under
Resale Arrangement 1,118,748 – 1,118,748 – 1,118,748 1,330,948
Loans Outstanding and Accrued
Interest 23,808,858 (757) 23,808,101 1,229,611 25,037,712 26,344,506
Less: Provision for Loan Losses
and Unamortized Front-End Fee (90,541) – (90,541) – (90,541) (112,653)
Equity Investment 404,975 – 404,975 – 404,975 257,437
Receivable from Members 173,004 – 173,004 (71,992) 101,012 134,641
Receivable from Swaps
Borrowings 9,733,074 226,683 9,959,757 (226,683) 9,733,074 9,583,846
Others 1,582,337 (10,033) 1,572,304 10,033 1,582,337 1,567,602
Other Assets 576,212 – 576,212 – 576,212 509,651

TOTAL 51,371,385 215,893 51,587,278 940,969 52,528,247 52,513,453

Borrowings and Accrued

Interest 24,660,637 74,717 24,735,354 225,597 24,960,951 25,238,996
Payable for Swaps
Borrowings 9,354,776 92,879 9,447,655 (92,879) 9,354,776 8,841,324
Others 1,586,604 19,607 1,606,211 (19,607) 1,586,604 1,809,722
Payable under Securities Lending
Arrangement 2,795,081 – 2,795,081 – 2,795,081 2,061,489
Accounts Payable and
Other Liabilities 677,147 – 677,147 – 677,147 624,198

Total Liabilities 39,074,245 187,203 39,261,448 113,111 39,374,559 38,575,729

Paid-In Capital 3,449,154 – 3,449,154 – 3,449,154 3,725,823

Net Notional Maintenance of
Value Receivable (586,105) – (586,105) – (586,105) (642,944)
Ordinary Reserve 8,957,392 – 8,957,392 882,858 9,840,250 9,575,099
Special Reserve 193,629 – 193,629 – 193,629 189,539
Loan Loss Reserve 167,000 – 167,000 – 167,000 218,800
Surplus 117 – 117 – 117 312,117
Cumulative Revaluation
Adjustments Account 234,833 (234,833) – – – –
Net Income After Appropriation 105,202 306,275 411,477 (321,834) 89,643 559,290
Accumulated Other
Comprehensive Income (224,082) (42,752) (266,834) 266,834 – –

Total Equity 12,297,140 28,690 12,325,830 827,858 13,153,688 13,937,724

TOTAL 51,371,385 215,893 51,587,278 940,969 52,528,247 52,513,453

– Nil.
() Negative.

6
 DISCUSSION AND ANALYSIS
MANAGEMENT’S
TABLE 3: Condensed Current Value Income Statements for the Years Ended 31 December 2005 and 2004
($ thousand)

31 December
31 December 2005 2004
Reversal of Current Current
Statutory FAS 133 Pre-FAS 133 Value Value Current
Basis Effects Basis Adjustments Basis Value Basis

REVENUE
From Loans 1,036,329 – 1,036,329 – 1,036,329 1,038,345
From Investments 377,379 – 377,379 – 377,379 265,557
From Other Sources—Net 18,210 499 18,709 – 18,709 9,166

Total Revenue 1,431,918 499 1,432,417 – 1,432,417 1,313,068

EXPENSES
Borrowings and Related Expenses 893,218 2,967 896,185 – 896,185 861,667
Administrative Expenses 135,689 – 135,689 – 135,689 118,321
Technical Assistance to Member
Countries (3,446) – (3,446) – (3,446) (2,404)
Provision for Losses (3,477) – (3,477) 3,477 – –
Other Expenses 4,248 – 4,248 – 4,248 3,044

Total Expenses 1,026,232 2,967 1,029,199 3,477 1,032,676 980,628

Net Realized Gains 16,968 – 16,968 (111) 16,857 62,100

Net Unrealized Losses on
Derivatives, as Required
by FAS 133a (308,743) 308,743 – – – –
Cumulative Effect of Change in
Accounting Principle (4,619) – (4,619) (3,624) (8,243) –
Current Value Adjustments – – – (321,834) (321,834) 173,173
Provision for Losses – – – 7,212 7,212 (4,950)

Net Income 109,292 306,275 415,567 (321,834) 93,733 562,763

Appropriation of Guarantee Fees to
Special Reserve 4,090 – 4,090 – 4,090 3,473

NET INCOME AFTER APPROPRIATION 105,202 306,275 411,477 (321,834) 89,643 559,290

() Negative
a FAS 133 adjustments are reversed as the current value adjustments incorporate the effect of net unrealized losses on derivatives, as required by FAS 133
adjustments.

TABLE 4: Summary of Current Value Adjustments

($ thousand)

Balance Sheet Effects Income Statement Effects

as of 31 December 2005 Year-to-Date
Loans Investments Borrowings Other Less Prior 31 December 31 December
after Swaps after Swaps after Swaps Assets Year Effectsa 2005 2004
Total Current Value Adjustments
on Balance Sheet 1,224,283 34,967 (359,401) (71,992) (943,406) (115,549) 99,703
Unrealized Gains (Losses) on
Investments b 15,825 c
(31,232) c

d c c
Accumulated Translation Adjustments (227,605) 105,826
c c
Minimum Pension Liability Adjustment 5,495 (1,124)

Total Current Value Adjustments (321,834) 173,173

a Prior Year Effects include cumulative current value adjustments on all financial instruments made in the prior years.
b Relates to unrealized gain/losses of investments and equity investments classified as available for sale.
c These have been moved from the other comprehensive income under the statutory basis and included as part of current value adjustments for current value reporting.
d Relates to the accumulated translation adjustments for the period, net of current translation effects from FAS 133 reversals.

7
 risk assessment. To recognize the risk inherent in these
MANAGEMENT’S
DISCUSSION AND ANALYSIS
and other potential overdue payments, the value of the
loan is adjusted through loan loss provisioning. ADB has
never suffered a loss on public sector loans except
opportunity losses resulting from the difference between
payments for interest and charges not in accordance with
the loan’s contractual terms.
The positive adjustment of $1.2 billion indicates
that the average interest on loans on an after swap basis
are higher than ADB would currently originate on similar
loans .
Investments and Related Swaps Swaps. Under both
the statutory and current value basis, investment
securities and related derivatives are reported at fair
values based on market quotations when available.
Otherwise, the current value is calculated using market-
based valuation models incorporating observable market
data. The net positive adjustment of $35.0 million
resulted from unrealized gains on asset swaps due to
increasing interest rates in certain markets.
Equity Investments
Investments. Under both statutory and
current value basis, equity investments are reported (i) at
fair value when market values are readily determinable,
(ii) by applying equity method for investments in limited
partnership and certain limited liability companies, or for
investments where ADB has the ability to exercise
significant influence, or (iii) at cost less impairment,
which represents a fair approximation of the current value.
Receivable from Members
Members. These consist of
unrestricted and maybe restricted promissory notes. The
current value is based on the cash flow of the projected
encashment of the promissory notes discounted using
appropriate interest rates.
Borrowings after Swaps
Swaps. The current value of
these liabilities includes the fair value of the borrowings
and associated financial derivative instruments. The
current value of these liabilities is calculated using
market-based valuation models incorporating observable
market data.
The $359.4 million unfavorable current value
adjustment is due to the fact that the average cost of the
borrowings on an after swap basis is higher than the
market rate at which ADB can currently obtain new
funding.
Current Value Income Statement
The total current value adjustment of $321.8 million
($173.2 million in 2004) in Table 4 represents the change
in the current value of all ADB financial instruments
during the year. The adjustment reflects changes in both
interest rates and in currency exchange rates.
8
Current V alue Adjustments
Value Adjustments. All unrealized gains
and losses are presented as current value adjustments.
Thus, the change in net unrealized gains on investments
and equity investments of $15.8 million as well as the
$7.2 million write-back on loan losses are presented as
part of the adjustment.
For 2005, current value net income is $93.7 million
compared with pre-FAS 133 net income of $415.6 million
and statutory reported net income of $109.3 million (see
Table 3). The $321.8 million decrease from the pre-FAS
133 basis to current value basis (i.e., current value
adjustment) comprises a net unfavorable adjustment of
$115.5 million from the change in the valuation of all
outstanding financial instruments, $227.6 million from
unfavorable translation adjustments offset by $81.3
million unrealized gains on equity investments net of
$65.5 million of unrealized losses on investments and
$5.5 million adjustment to minimum pension liability
(see Table 4).
Impact of Changes in Interest Rates Rates. The net
decrease in the current value adjustments on the balance
sheet during 2005 was $115.5 million. It was a result of a
$456.2 million decrease in unrealized losses in the
borrowing portfolio, and a $0.6 million decrease in
unrealized gains in other assets offset by an increase in
unrealized gains in the loan and investment swap
portfolios of $567.1 million and $5.2 million, respectively.
The current value changes reflect the effects of the
increase in interest rates in the U.S. market for the year
where the majority of ADB’s portfolios are held.
Impact of Changes in Exchange Rates Rates.
Translation adjustments, reflected as part of
“accumulated other comprehensive income” under the
statutory basis, are presented as current value
adjustments. The general strengthening of the US dollar
against other major currencies in 2005 resulted in a
significant negative translation adjustment of $227.6
million. This is in contrast to favorable translation
adjustment of $105.8 million in 2004.
Operating Activities
In pursuing its objectives, ADB provides financial
assistance through loans, TA, guarantees, and equity
investments to its DMCs to help them meet their
development needs.
Loans
Loans. Until 30 June 2001, ADB's three windows for
loans from OCR were the pool-based multicurrency loan
(PMCL), the pool-based single-currency loan (PSCL) in
US dollars, and the market-based loan (MBL). With the
introduction of LBL on 1 July 2001, PMCL and MBL are
no longer offered and on 1 July 2002, the PSCL in US
dollars was retired. The LBL is a timely response to
borrower demand for loan products that suit project needs
and effectively manage their external debt. LBL products
give borrowers a high degree of flexibility in managing
interest rate and exchange rate risks and at the same time
provide low intermediation risk to ADB. With the
introduction of the LBL, ADB offered borrowers to
transform their undisbursed balances of outstanding
PSCLs in US dollar to LBLs if the undisbursed balance
was not less than 40% of loan amount. Total undisbursed
balance of $6.8 billion of 97 PSCLs was transformed to
LBLs in 2002. In November 2003, ADB offered borrowers
to transform their outstanding PMCLs of $6.5 billion into
PSCLs in Japanese yen to become effective on 1 January
2004. The transformation has eased borrower’s
administration for loan service payments and loan
accounting. Since November 2002, ADB has been offering
local currency loans (LCLs) to private sector borrowers
and expanded this to the public sector borrowers in
August 2005.
OCR Loan Approvals, Disbursements,
Repayments, and P repayments
Prepayments
repayments. In 2005, 32 OCR
public and private loans totaling $4.4 billion were
approved compared with 33 OCR public and private
sector loans totaling $4.1 billion in 2004. Disbursements
in 2005 totaled $3.5 billion which represented an
increase of 39.5% from the $2.5 billion disbursements in
2004. Regular principal repayments for the year were
$2.9 billion ($1.2 billion in 2004) while prepayments
amounted to $0.6 billion ($2.8 billion in 2004). In 2005,
11 loans were fully prepaid and one was partially prepaid.
As of 31 December 2005, the total loans outstanding after
provision for losses and unamortized front-end fees
amounted to $23.5 billion.
Status of Loans.
Loans One public sector OCR loan to
Nauru and 10 private sector loans were in nonaccrual
status at the end of 2005; the total outstanding balance
was $2.3 million ($2.3 million in 2004) and
$49.2 million ($50.4 million in 2004), respectively.
Private sector loans in nonaccrual status decreased due to
sale of an Indonesian loan. The total loans in nonaccrual
status of $51.5 million represented 0.2% of the total of
outstanding OCR loans.
Lending Rates.
Rates The lending rates for PSCLs are
based on the previous semester’s average cost of
borrowings. Interest rates for MBLs are either fixed or
floating. The lending rates for MBLs are determined on
the basis of 6-month LIBOR with reset dates of either 15
March and 15 September or 15 June and 15 December.
Effective 2001, all public sector loans without specific
provisions in the loan agreements were charged with a
lending spread of 60 basis points over the base lending
DISCUSSION AND ANALYSIS
MANAGEMENT’S
rate. In 2004, 20 basis points of the lending spread were
waived on public sector loans outstanding from 1 July
2004 to 30 June 2005 for borrowers that do not have loans
in arrears. In 2005, the policy was extended to cover the
period up to June 2006. ADB’s variable lending rates for
PSCLs in US dollars and PSCLs in Japanese yen are
shown below.
For private sector loans, the lending spread is
determined on a case-by-case basis to cover ADB’s risk
exposure to specific borrowers and projects.
ADB also normally charges a front-end fee of 1% to
cover the administrative costs incurred in loan
origination. In 2004, the Board of Governors approved the
waiver of the entire front-end fee on all new public sectors
loans approved from 1 January 2004 to 30 June 2005. In
2005, the policy was extended to cover the period up to
June 2006. Prior to that, 50 basis points waiver was
applied to all public sector loans approved on or after
1 January 2003. In addition, ADB currently applies a
progressive commitment fee of 75 basis points on
undisbursed loan balances for public sector project loans
and a flat commitment fee of 75 basis points for public
sector program loans.
Rebates and surcharges are standard features of
public sector LBLs. To maintain the principle of cost
pass-through pricing, ADB returns the actual sub-LIBOR
funding cost margin to its LBL public sector borrowers
through rebates. A surcharge could arise if ADB’s funding
cost exceeds the 6-month LIBOR, but that is a remote
possibility unless ADB experiences serious credit
deterioration. Rebate or surcharge rates are set on
1 January and 1 July every year and are based on the
actual average funding cost margin for the preceding
6-month period. Based on rebate rates, ADB returned an
actual sub-LIBOR funding cost margin of $19.5 million
to its LBL public sector borrowers during 2005. (See table
on next page.)
Lending Ratesa
(% per annum)
2005 2004 PSCLs
1 January 1.73 2.13 Japanese yen
6.06 6.27 US dollar
1 July 1.71 1.93 Japanese yen
6.14 6.09 US dollar
a Lending rates are set on 1 January and 1 July every year and are valid for
six months and are represented net of 20 basis points lending spread
waiver from July 2004.
9
 Technical Assistance
Assistance. From 1967 to 1991, TA
MANAGEMENT’S
DISCUSSION AND ANALYSIS
expenses were charged to OCR and other TA funding
resources—the Technical Assistance Special Fund
(TASF), the Japan Special Fund (JSF), and trust/grant
funds. From 1992 to 2000, no TA expenses were charged
to OCR. In 2001, the Board of Directors approved the
financing of high-priority TA programs out of OCR current
income within a rolling 4-year financing framework. The
amount of financing required varies between years and is
subject to the approval of the Board. In 2003, the Board
reverted to the practice of allocating OCR net income to
the TASF and of financing TA activities through it and
various other funding resources.
Guarantees
Guarantees. ADB provides guarantees as credit
enhancements for eligible projects to cover risks that the
private sector cannot easily absorb or manage on its own.
Reducing these risks can make a significant difference in
mobilizing debt funding for projects. ADB has used its
guarantee instruments successfully for infrastructure
projects, financial institutions, capital markets, and trade
finance. These instruments generally are not recognized
in the balance sheet and have off-balance sheet risks. For
guarantees issued and modified after 31 December 2002
in accordance with Financial Accounting Standards Board
(FASB) Interpretation No. 45 (FIN 45), “Guarantor’s
Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness to
Others,” ADB recognized at the inception of a guarantee
the non-contingent aspect of its obligations. ADB’s total
exposure on signed and effective loan guarantees is
disclosed in Note F of OCR Financial Statements.
ADB offers two guarantee products—political risk
and partial credit—designed to mitigate risk exposure of
commercial lenders and capital market investors. These
guarantees are not issued on a stand-alone basis but are
provided for projects in which ADB participates. ADB
cooperates with other multilateral, official, and private
sector lenders and insurers to provide guarantee products.
Political Risk Guarantees
Guarantees. A political risk guarantee
Rebate Rates
(% per annum)
US Japanese
dollar yen
1 January 2005 0.35 0.39
1 July 2005 0.32 0.39
10
(PRG) is designed to facilitate cofinancing by providing
lenders/capital market investors of ADB-assisted projects
with coverage against specifically defined political risks.
Coverage is available against any combination of the risks
of expropriation, currency inconvertibility or
nontransferability, political violence, and breach of
contract, and is available for loans and other forms of debt
instruments. Equity instruments are ineligible for PRG
coverage. Tenors are based on the merits of the underlying
project. All or part of outstanding debt service obligations
to a lender may be covered. The cover may be for principal
and/or interest payment obligations. For private sector
projects, ADB can issue a PRG without a counter
guarantee from the host government; however, PRG
exposure to such a project is currently subject to a
maximum of $150 million or 50% of the project cost,
whichever is lower. Fees are market-based composed of
guarantee fees, front-end fees, and standby fees. A PRG is
callable when a guaranteed event has occurred and such
an event has resulted in debt service default to the lender.
In 2005, ADB approved a $50 million PRG cover with
partial government counter indemnity to mobilize
commercial debt for the Nam Theun 2 Hydroelectric
Project in the Greater Mekong Subregion. The guarantee
was also made effective in 2005.
Partial Credit Guarantees
Guarantees. A partial credit
guarantee (PCG) provides comprehensive cover (of
commercial and political risks) for a specific portion of
the debt service provided by cofinanciers. PCG is
particularly useful for projects in DMCs with restricted
access to financial markets but which ADB considers
creditworthy and financially sound. Since the 1997 Asian
financial crisis, borrowers, project sponsors, cofinanciers,
and host governments have increasingly sought to hedge
currency mismatch risks by borrowing in the same
currency as the revenues generated by the project. A PCG
can cover local currency debt including domestic bond
issues or long-term loans from local financial institutions.
For private sector transactions not supported by a counter
Outstanding Guarantee Exposurea
($ million)
2005 2004
Partial credit guarantees 1,011.3 1,153.6
Political risk guarantees 179.3 152.8
Others 1.0 –
Total 1,191.6 1,306.4
a None of these amounts were subject to call as of 31 December 2005 and
2004.
guarantee from the host government, the exposure limit
currently stands at $75 million or 25% of the project cost,
whichever is less. Guarantee fees for private sector
transactions are market based. Fees for transactions
backed by the host government guarantee comprise a
standard guarantee fee of 40 basis points per annum on
the present value of the outstanding guarantee obligation
plus a front-end fee to cover processing costs. Fees can be
charged to the borrower or to the lender. In 2005, ADB
approved a PCG facility without government counter
guarantee equivalent to $18.4 million for the Philippine
Small and Medium Enterprise (SME) Development
Support Project to encourage selected private sector
financial institutions to expand their SME portfolios.
Cofinancing
Cofinancing. ADB coordinates with development
partners to maximize the impact of its assistance
programs to all DMCs by identifying official and/or
commercial cofinancing opportunities that directly
complement ADB projects. This includes the application
of credit enhancement products, such as guarantees, in
support of commercially attractive public and private
sector projects and programs. Identifying the best
financing solutions for public and private projects and
programs, especially with the use of ADB’s credit
enhancement products, has been the core of the
cofinancing dialogue with DMCs. Total cofinancing in
2005 amounted to $7.4 billion for 31 public and 3 private
sector projects, comprising of $5.2 billion of commercial
loan cofinancing (including $68.4 million guarantee
support for two projects); $1.8 billion of official loan
cofinancing; and $353 million of grant cofinancing. In
addition, $78.5 million in grants were mobilized to
cofinance 97 TA projects.
Private Sector Equity Investments and
Loans
Loans. ADB’s Charter mandates that its private sector
operations promote the investment of private capital in
the region for development and empowers it to provide
assistance in the form of equity investments, loans and
other financing schemes without government guarantees.
The Charter allows the use of OCR for equity
investments in private enterprises of up to 10% of its
unimpaired paid-in capital together with reserves and
surplus, exclusive of special reserves. In 2005, the total
equity portfolio of both outstanding and undisbursed
amounts, net of provision for probable losses totaled
$714.5 million. This represented about 56% of the ceiling
defined by the Charter.
As of 31 December 2005, the overall private sector
portfolio (equity investments, loans, and guarantees) was
about $1.7 billion. As an interim arrangement, pending
the implementation of an objective capital allocation
mechanism, approvals of private sector operations in
DISCUSSION AND ANALYSIS
MANAGEMENT’S
excess of $1.5 billion have been allowed by the Board
since September 2001. Private sector guarantee
operations include PRG commitments of $246.4 million
in five projects and PCG commitment of $120.1 million
in three projects. Approximately $145.6 million in PRG
commitments have counter guarantees from the
respective governments.
ADB actively seeks to recycle funds in existing
investments after its development role in such
investments has been limited. Divestments have been
carried out in a manner consistent with good business
practices and without destabilizing the companies
concerned. In 2005, ADB actively sought full and partial
divestments of equity investments in the amount of
$76.2 million while $54.7 million in principal
repayments were received. ADB disbursed a total of
$131.8 million in equity investments and $204.4 million
in loans in 2005.
Capital and Resources
Capital
Capital. Total shareholders’ equity on a statutory basis
decreased from $13.3 billion as of 31 December 2004 to
$12.3 billion as of 31 December 2005. This was primarily
due to (i) allocations to Asian Tsunami Fund (ATF),
Pakistan Earthquake Fund (PEF), Asian Development
Fund (ADF), TASF of $560 million, $80 million, $40
million, and $32 million, respectively; (ii) the net effect
of change in special drawing rights (SDR) value on capital
and reserves of $175 million; (iii) unfavorable translation
adjustments of $226 million, offset by (iv) net unrealized
gain on investments and equity investments of $15.8
million; (v) net income for the period of $109.3 million;
and (vi) capital subscriptions of $9 million.
On 31 December 2005, authorized and subscribed
capital was $50,163.5 million. Of the subscribed capital,
$3,528.2 million was paid-in and $46,635.3 million was
callable. Callable capital can be called only if required to
meet ADB’s obligations incurred on borrowings or
guarantees under OCR. No call has ever been made on
ADB’s callable capital.
To ensure it has adequate risk-bearing capacity, ADB
reviews its income outlook annually. Based on that review,
the Board of Directors allocates a portion of the previous
year’s net income to reserves to ensure that the level is
commensurate with the income planning framework. In
addition, to the extent feasible, it allocates part of the net
income to support development activities in its DMCs. In
May 2005, the Board of Governors approved allocations of
2004 net income as following: $288.0 million to ATF,
$40.0 million to surplus, $40.0 million to the ADF, $37.9
11
 million to ordinary reserve, $32 million to the TASF, diversify its funding sources across markets, instruments,
MANAGEMENT’S
DISCUSSION AND ANALYSIS

increased cumulative reserve adjustment account by $41.0
million and reduced the loan loss reserve by $51.8 million.
In February 2004, the Board of Directors reviewed
ADB’s lending and borrowing limitations and approved
the following policies: (i) gross outstanding borrowings are
limited to no more than the sum of callable capital from
non-borrowing members, paid-in capital, and reserves
(including surplus), subject to the Charter limit of 100%
of callable capital; (ii) outstanding loan commitments
measured by the sum of outstanding disbursed and
undisbursed loans, equity investments, and guarantees,1
are limited to no more than the sum of the total callable
paid-in capital and reserves (including surplus but
excluding special reserve).
In March 2005, the Board of Directors reviewed the
OCR resource position. The review followed a medium-
term capital management approach within the approved
financial framework for assessing the adequacy of current
and prospective lending and borrowing headroom. The
review concluded that ADB’s capital position is sufficient
to support projected lending operations through 2007 and
to maintain a prudent buffer against exchange rate
fluctuations and a margin for unutilized lending capacity.
As of 31 December 2005, headrooms for lending and
borrowings were $18.8 billion and $16.2 billion,
respectively (compared with $22.5 billion and $19.6
billion, respectively in 2004).
Borrowings
Borrowings. ADB’s primary borrowing objective is to
ensure availability of funds at the lowest possible cost for
its operations. Subject to this objective, ADB seeks to
and maturities. To achieve that objective, ADB continued
in 2005 a strategy of (i) issuing liquid benchmark bonds
to maintain ADB's strong presence in key currency bond
markets, (ii) raising funds through cost-efficient
opportunistic and private placement transactions to
minimize borrowing costs, and (iii) emphasizing
borrowings with longer maturity ranges to smooth ADB’s
debt redemption profile. Also, in 2005 ADB pursued the
objective of contributing to the development of regional
bond markets and of providing local currency financing for
ADB’s private sector operations through local currency
bond issues. All proceeds from new funding transactions
are invested until they are required for ADB’s ordinary
operations. Funding raised in any given year is utilized for
ADB’s ordinary operations, including loan disbursements
and refinancing of maturing funding obligations.
2005 F unding Operations
Funding Operations. In 2005, ADB
completed 64 borrowing transactions raising about $4.0
billion in long- and medium-term funds compared with
$1.6 billion in 2004. The new borrowings were raised in
Japanese yen, New Zealand dollar, Philippine peso,
renminbi, South African rand, Thai baht, and US dollar.
After swaps, $3.7 billion or 93% of the 2005 borrowings
were in US dollars and the remaining 7% were in Japanese
yen, Philippine peso, and renminbi. The average maturity
of 2005 borrowings was 4.3 years compared with 7.9 years
in 2004. Of the total 2005 borrowings, $1.5 billion was
raised through two US dollar public offerings, $270
million through three local currency bond issues, and the
rest through private placements. Additionally, ADB raised

TABLE 5: Borrowings
($ million)

2005 2004 2003 2002

Long Term
Total Principal Amount 3,965.6 1,629.5 4,141.0 5,944.9
Average Maturity to First Call (years) 4.3 7.9 7.6 7.2
Average Final Maturity (years) 8.0 10.7 13.7 9.9
Number of Transactions
Public Offerings 5 5 2 3
Private Placements 59 14 62 77
Number of Currencies (before swaps)
Public Offerings 4 5 2 1
Private Placements 4 1 4 5
Short Terma
Total Principal Amountb 761.0 90.0 28.0 2,830.0
Number of Transactions 13 1 1 36
Number of Currencies 2 1 1 2
a All euro-commercial paper.
b At year-end, the outstanding principal amount was $268 million in 2005, nil in 2004 and 2003, and $200 million in 2002.

1
ADB's financial policies require that political risk guarantee be charged against lending limitations at the nominal value of the guaranteed obligation,
plus the interest that will accrue for the succeeding interest period and partial credit guarantee at the present value of the guaranteed obligation.

12
$761 million in short-term funds under its Euro interest rate structure and currency composition of ADB’s

DISCUSSION AND ANALYSIS

MANAGEMENT’S
Commercial Paper Program. Table 5 shows details of 2005 outstanding borrowings as of 31 December 2005.
borrowings as compared to borrowings from 2002 to 2004.
Local Currency Bond Issues Issues. ADB’s local Liquidity Portfolio
currency bond issuances in 2005 are shown in Table 6. The liquidity portfolio helps to ensure the uninterrupted
The Thai baht, renminbi (RMB), and the Philippine peso availability of funds to meet loan disbursements, debt
bond issues are ADB’s inaugural issues in the domestic servicing, and other cash requirements. It also contributes
capital markets of those countries. The Thai baht and to ADB’s earning base. ADB’s Investment Authority
Philippine peso issues are also the first issues by a foreign governs liquid asset investments. Its primary objective is
and a supranational entity in those domestic markets as to maintain security and liquidity of funds invested.
well as the first issues in those countries rated triple A by
Fitch, Moody’s, and Standard and Poor’s. For the RMB,
ADB, together with the International Finance Corporation, TABLE 6: Local Currency Bond Issues
was the first foreign issuer of RMB-denominated bonds in
Market Principal Coupon Maturity
the People’s Republic of China (PRC). Amount Rate (%) (years)
Use of Derivatives
Derivatives. ADB undertakes currency and
People’s Republic
interest rate swaps to raise, on a fully hedged basis, of China RMB 1 billion 3.34 10
currencies needed for operations in a cost-efficient way Philippines PhP 2.5 billion 0.00 5
while maintaining its borrowing presence in major capital Thailand THB 4 billion 3.87 5
markets. Figures 1 and 2 show the effects of swaps on the

Figure 1: Effect on Currency Composition

a
Other currencies include Australian dollar, Canadian dollar, Euro, Hong Kong dollar, Indian rupee, Malaysian ringgit, New Taiwan dollar, New Zealand dollar,
Philippine peso, Pound Sterling, renmimbi, Singapore dollar, South African rand, Swiss franc, and Thai baht.
b
Other currencies include Indian rupee, Philippine peso, Pound Sterling, renminbi, and Swiss franc.

Figure 2: Effect on Interest Rate Structures

13
 Subject to these two parameters, ADB seeks to maximize
MANAGEMENT’S
DISCUSSION AND ANALYSIS
the total return on its investments. In compliance with
its Charter, ADB does not convert currencies for
investment; investments are made in the same currencies
in which they are received. At present, liquid investments
are held in 20 currencies.
Liquid assets are held in government and
government-related debt instruments, time deposits, and
other unconditional obligations of banks and financial
institutions, and, to a limited extent, in corporate bonds,
mortgage-backed securities, asset-backed securities of
high credit quality, and derivatives. They are held in four
subportfolios—core, operational cash, cash cushion, and
discretionary liquidity—all of which have different risk
profiles and performance benchmarks. The year-end
balance of the portfolios in 2005 and 2004 including
receivables for securities repurchased under resale
arrangements and excluding securities transferred under
securities lending arrangements and pending sales and
purchases is presented in the table below.
The core portfolio is invested to ensure that the
primary objective of a liquidity buffer is met. Cash inflows
and outflows are minimized to maximize the total return
relative to a defined level of risk. The portfolio is funded
largely by equity, and performance is measured against
external benchmarks with an average duration of about 2
years. The remaining part of the core portfolio is funded
by debt and is invested to maximize the spread earned
between borrowing cost and investment income on high-
quality investments.
TABLE 7: Year-End Balance of Liquidity Portfolio
($ million)
2005
Core Portfolio 7,353.1
Operational Cash Portfolio 933.4
Cash Cushion Portfolio 450.1
Discretionary Liquidity Portfolio 3,401.4
TOTAL 12,138.0 11,664.8
TABLE 8: Return on Liquidity Portfolio
(%)
Annualized Financial Return
2005
Core Portfolio 2.09
Operational Cash Portfolio 2.64
Cash Cushion Portfolio 1.76
Discretionary Liquidity Portfolio 0.40a
a Spread over funding cost.
14
The operational cash portfolio is designed to meet
net cash requirements over a 1-month horizon. It is
funded by equity and invested in short-term, highly liquid
money market instruments. The portfolio performance is
measured against short-term external benchmarks.
The cash cushion portfolio holds the proceeds of
ADB’s borrowing transactions pending disbursement. It is
invested in short-term instruments, and the performance
is measured against short-term external benchmarks.
The discretionary liquidity portfolio is funded by
issuing floating rate debt and is invested to maximize the
spread earned between borrowing cost and investment
income on high-quality instruments. For 2005, the target
size of the discretionary liquidity portfolio was set at
$3.65 billion.
Contractual Obligations
In the normal course of business, ADB enters into various
contractual obligations that may require future cash
payments. The table below summarizes ADB’s significant
contractual cash obligations on 31 December 2005 and
2004. Long-term debt includes direct medium- and long-
term borrowings excluding swaps but does not include any
adjustment for unamortized premiums, discounts, or
effects of applying FAS 133. Other long-term liabilities
include accrued liabilities and unfunded pension and
postretirement benefits.
Risk Management
In its development banking operations, ADB assumes
various credit, market (interest rate and foreign
exchange), liquidity, and operational risks. Of these,
credit risks in the loan and guarantee portfolios are the
most significant. ADB has adopted an integrated risk
2004 management infrastructure designed to ensure that credit
7,387.3 and other risks are appropriately identified, measured,
319.3 monitored and managed. In November 2005, ADB
1,491.5 established an independent Risk Management Unit
2,466.7
TABLE 9: Contractual Cash Obligations
($ million)
2005 2004
Long-Term Debt 24,189.6 24,212.1
Undisbursed Loan Commitments 15,501.8 15,555.6
2004 Undisbursed Equity
2.16 Investment Commitments 309.5 279.8
1.00 Guarantee Commitments 1,276.9 1,512.1
0.65 Other Long-Term Liabilities 458.6 378.2
0.42 a
TOTAL 41,736.4 41,937.8
(RMU) with the mandate to manage credit risk of the
public and private sector loan and guarantee portfolios
and ADB’s market and treasury-related risks.
Risk Bearing Capacity
Capacity. ADB’s income planning
framework establishes the equity-to-loan ratio (ELR) as
the key measure of ADB’s risk bearing capacity. The ELR
measures the adequacy of equity capital to absorb
unexpected losses from a major credit event in the public
sector loan and guarantee portfolios as well as the ability
to generate adequate net income to absorb loss of loan
income while also matching growth in the loan and
guarantee portfolios. Because ADB’s loan and guarantee
portfolios are unavoidably highly concentrated in Asia, a
credit event of one borrower could have a significant
impact due to high correlations. ADB has established a
target ELR of 35% to accommodate this volatility.
In determining ELR, ADB’s equity capital is defined
as the sum of useable paid-in capital, the ordinary reserve,
the special reserve, and surplus. At 31 December 2005,
ELR was 49.5% under the pre-FAS 133 basis (50.5% on
31 December 2004). ADB’s higher-than- target ELR
represents a very strong equity capital position relative to
the credit risk of the loan and guarantee portfolios
indicating that both net income and equity capital are
adequate to sustain a major credit event. ADB also
protects the ELR from exchange rate fluctuations by
periodically aligning the currency composition of its
equity to that of its loans.
Under the income planning framework, ADB utilizes
the Loan Loss Reserve (LLR) to absorb expected losses
from public sector loan and guarantee portfolios. Hence
both expected and unexpected losses for public sector
loans and guarantees are addressed through adequate
LLR and ELR. On the other hand, loan loss provisions are
made against impaired private sector loans and
recognized in the Net Income. During 2006, RMU will
review the loan loss provisioning and reserve policy for
private sector operations in conjunction with revising the
internal risk system to enhance the credit risk
management.
Country Credit Risks
Risks. The income framework
links the adequacy of net income and equity capital to
the country credit risk of the public sector loan and
guarantee portfolios. A credit risk model is used to
estimate expected and unexpected losses in these
portfolios, incorporating borrower’s default probability,
loss given default, projected exposure, and default
correlations. In addition, ADB stress tests net income
projections to ensure net income is adequate to absorb the
loss of loan income due to credit shocks and to support
sufficient growth.
In December 2004, ADB adopted an internal country
DISCUSSION AND ANALYSIS
MANAGEMENT’S
credit risk rating system to assess independently the
creditworthiness of its borrowers. ADB also began
enhancing the credit risk model to incorporate Monte
Carlo simulations expected to be completed in early
2006.
Credit Risk of P rivate Sector Operations
Private Operations.
ADB's private sector investments are usually not backed
by government guarantees and are exposed to commercial
and political risks. Managing and monitoring those risks
are important aspects in the project cycle. ADB evaluates
not only the development impact of a project but also
analyzes its credit strength, financial, commercial, and
technical viability, and good corporate governance. Each
private sector project undergoes an in-depth credit
analysis and appraisal prior to approval with emphasis
being given to the project’s financial sustainability and
ability to pay its debt. RMU reviews the risk of new
proposals for loans and equity investments and ensures
that they are in line with ADB’s credit risk policy and
that ADB is compensated properly for the risk undertaken
on an overall portfolio basis.
The current private sector strategy focuses on the
infrastructure and financial market sectors. Nevertheless,
ADB remains responsive to the changing needs of DMCs
and private investment opportunities in other sectors.
The objective is to build a diversified private sector
portfolio in terms of both countries and sectors while
managing concentration risks by establishing appropriate
limits for countries, industries, and groups. The total
amount of ADB assistance to a single project, including
equity investments, loans, and guarantees, must not
exceed 25% of the total project cost or $75 million,
whichever is lower. ADB uses an internal rating system to
classify its exposure based on international credit
standards that reflect the risk of timely and full recovery
of investments. The rating system is used to monitor risk
exposure to individual projects.
ADB streamlined approval of investment recovery
operations. They generally involve negotiations for
financial restructuring, foreclosure, or other remedies,
including liquidation. Restructuring is undertaken only
when it is expected to improve ADB’s prospects for
recovery. If the financial condition of the entity has
deteriorated beyond recovery, ADB may have to proceed
with liquidation or other legally permissible forms of
recovery.
Counterparty Credit Risks Risks. Counterparty credit
risk is the risk of loss when a derivative counterparty does
not honor its obligations measured by the aggregate
positive replacement cost or the net positive marked-to-
15
 market value of the derivatives. To mitigate counterparty
MANAGEMENT’S
DISCUSSION AND ANALYSIS
credit risk, ADB has strict counterparty eligibility criteria.
In general, ADB will undertake swap transactions with
counterparts that have a minimum credit rating of A3/A-
with Moody’s and/or Standard and Poor’s and have
executed an International Swaps and Derivatives
Association Master Agreement and a credit support annex
(CSA) with ADB.
ADB utilizes a sophisticated computerized system
that allows for daily monitoring and managing of
counterparty credit risk exposure. Under the CSA
arrangements, derivatives’ positions are marked-to-market
daily, and collateral calls, transfers, and adjustments with
counterparties are made in coordination with an external
collateral manager. ADB also sets exposure limits on
individual counterparties based on their credit ratings and
equity and daily monitors current and potential
counterparty exposure against the limits.
Market Risks.
Risks ADB controls the market risk of its
liquid asset investments by adopting investment policy
guidelines which only allow for investments in
government and government-related debt instruments,
time deposits, and other unconditional obligations of
banks and financial institutions, and to a limited extent,
in corporate bonds, mortgage-backed securities, and asset-
backed securities of high credit quality. The principal
source of investment risk arises from income volatility
due to interest rate movements. ADB monitors and
manages interest rate risks by employing various
quantitative methods. All positions are marked-to-
market, and risk-sensitive measures, including potential
exposure, are calculated and compared to internally
established risk limits on a daily basis.
ADB manages its currency risk to ensure that the
ELR as the measure of equity capital adequacy and risk-
bearing capacity is immune from fluctuations in exchange
rates. ADB can achieve this by periodically aligning the
currency composition of loans with that of equity thus
ensuring that fluctuations in exchange rates would have
similar effects on both. ADB mitigates the market risks
associated with the loan portfolio by passing on all
associated costs to borrowers and employing derivatives to
closely match the characteristics of loans with those of
borrowings.
ADB has an infrastructure designed to ensure that the
market risks associated with its activities are fully
identified, measured, monitored, and managed. In this
regard, ADB has broadened its market risk management
capabilities by (i) improving the risk metrics and
assumptions that are used in the valuation and risk
analysis of its treasury activities and (ii) enhancing the
16
performance measurements and attribution
methodologies used for investment portfolios. Stress
testing and scenario analyses have been incorporated as
supplementary risk management tools, and ADB has
continued to expand on the architecture used to value
highly structured borrowings and related swap
transactions.
In 2004, ADB upgraded its treasury system and
automated a number of manual procedures related to
pricing and trade reconciliation. Currently, a daily risk,
performance, and attribution system is used to measure
and monitor ADB’s investment portfolios, thus providing
regular and timely risk and performance feedback to
treasury management. In addition, ADB has outsourced
much of the risk analyses of its externally managed
investment portfolios, thereby allowing ADB to
significantly bolster risk-metrics, stress testing, and
scenario analyses for its investments in mortgage- and
asset-backed securities and corporate bonds.
Liquidity Risks.
Risks The objective of ADB’s liquidity
policy is to ensure the availability of sufficient cash flows
to meet all financial commitments despite uncertain
conditions in the capital markets. The policy establishes
minimum levels of liquidity to maintain expected
operations. ADB's liquidity requirements are primarily
determined by expected lending volumes and
disbursements, redemption of current borrowings,
repayments and prepayments of loans, and cash from net
income. The policy defines ADB’s annual net cash
requirement (NCR) to meet large contractual obligations
for loan disbursements and debt redemption. ADB relies
on borrowings to meet most of these obligations. The
proxy NCR is the sum of loan disbursements net of
repayments and debt redemption for the year.
Prudential minimum liquidity is set at 40% of the
next 3 years’ proxy NCR and represents the minimum
amount of liquidity necessary for ADB to continue
operations even if its access to capital markets is
temporarily denied. Maintaining that level enables ADB
to cover normal NCR for 20 months and stressed NCR for
14 months without borrowing. In addition, ADB can raise
discretionary liquidity, funded entirely by borrowings, to
provide flexibility in the funding and debt redemption
schedule over time. The policy limits discretionary
liquidity to 50% of prudential minimum liquidity. Levels
of liquidity, NCR, and proxy NCR are monitored on an
ongoing basis and reviewed by the Board of Directors
quarterly.
Operational Risks
Risks. Operational risk represents the
potential for loss resulting from inadequate or failed
internal processes or systems, human factors, or external
events including business disruptions and system failure,
transaction processing failures, and failure in execution of
legal, fiduciary, and agency responsibilities. ADB is
exposed to many types of operational risks and attempts
to mitigate them by maintaining a system of internal
controls and processes, and system upgrades. In addition,
ADB has a rigorous process for approving transactions that
requires reviews and authorization by all relevant parties
to ensure all transactions are properly approved,
documented, monitored, and controlled. ADB recently
approved a strategy to strengthen the business continuity
plan to reduce the impact of disruption affecting business
processes.
Summary of Financial Performance
Net Income
Income. Net income before net unrealized losses on
derivatives, as required by FAS 133 and cumulative
change in accounting principle was $422.7 million,
compared with $389.6 million in 2004. The increase of
$33.1 million (8.5%) was predominantly due to the
following:
• $77.9 million increase in investment income,
including realized gains on sales, reflected the
improved realized returns on the investment
portfolio due to higher interest rates in some capital
markets;
• $9.0 million increase in income from other sources
associated primarily with increase in share in the
net gain of equity investments accounted under the
equity method;
• $5.7 million decrease in provisions associated with
write-offs and write-downs resulting from
repayments and disposals of private sector loans,
offset by;
• $33.6 million reduction in net loan income after
borrowings and related expenses associated with
$2.0 million decrease in loan income and $31.6
million increase in borrowing costs. The decrease in
loan income is primarily associated with the effect
of the reduction in loan income due to $33.1 million
increase in lending spread waiver, $43.0 million
decrease in prepayment premium received, offset by
$74.1 million increase in interest and other charges.
The $31.6 million increase in borrowing cost is
associated mainly with the increase in the borrowing
costs on pre-FAS 133 basis to 3.75% in 2005 (3.58%
in 2004) resulting from the general increase in
interest rates in the U.S.;
• $17.4 million increase in administrative expenses
associated with increase in staff salaries, benefits
and consultant expenses;
• $10.0 million reduction in gains realized from sales
DISCUSSION AND ANALYSIS
MANAGEMENT’S
of equity investments.
Net unrealized (losses) gains on derivatives,
as required by F AS 133
FAS 133. Net unrealized losses on
derivatives of $308.7 million (net unrealized gains of
$41.0 million in 2004) were primarily due to the
weakening of certain major currencies against the US
dollars. This resulted in the reduction of the value of
embedded derivatives in the structured borrowings, which
are required to be separately reported in the balance
sheet, with changes in the fair value reported as part of
net income. As the majority of the embedded derivatives
are highly sensitive to the expected foreign exchange rates
movements, the weakening of certain major currencies
decreased the value of the embedded derivatives in 2005.
In contrast, the unrealized gains on derivatives of $41.0
million as of 31 December 2004 resulted primarily due to
the favorable impact of the expected strengthening of
certain major currencies on the value of the embedded
derivatives (see Note M of OCR Financial Statements).
Cumulative Effect of Change in Accounting
Principle
rinciple. The cumulative effect arising from the adoption
of the equity method for certain limited liability companies
that have characteristics of partnership (EITF 03-16) in
2005 resulted to a reversal of prior years’ income of $8.2
million, net of a release of provisions of $3.6 million.
Critical Accounting Policies
and Estimates
Significant accounting policies are contained in Note B of
OCR’s financial statements. In the financial statements,
Management makes estimates in determining the fair
value of financial instruments. Estimates by their nature
are based on judgment and available information;
therefore, actual results could differ and could have a
material impact on the financial statements.
Fair V alue of F
Value inancial Instruments
Financial Instruments. Under
statutory reporting, ADB carries its investments and
derivatives, as defined by FAS 133, on a fair value basis.
These derivatives include embedded derivatives in the
structured borrowing portfolio that are required to be
separately valued and accounted for in the balance sheet.
Fair values are usually based on quoted market prices. If
market prices are not readily available, fair values are
usually determined using market-based pricing models
incorporating readily observable market data and require
judgment and estimates.
The pricing models used for determining fair values
of ADB’s financial instruments are based on discounted
17
 expected cash flows using observable market data. ADB qualification that payment of all installments except the
MANAGEMENT’S
DISCUSSION AND ANALYSIS

reviews the pricing models to assess the appropriateness
of assumptions to reasonably reflect the valuation of the
financial instruments. In addition, the fair values derived
from the models are subject to ongoing internal and
external verification and review. The models use market-
sourced inputs such as interest rates, exchange rates, and
option volatilities. Selection of these inputs may involve
some judgment and may impact net income. ADB
believes that the estimates of fair values are reasonable
given existing controls and processes.
Special Funds
ADB is authorized by its Charter to establish and
administer Special Funds. These are the Asian
Development Fund; Technical Assistance Special Fund;
the Japan Special Fund, including the Asian Currency
Crisis Support Facility; ADB Institute Special Fund
(ADBISF); the Asian Tsunami Fund; and the Pakistan
Earthquake Fund. Financial statements for each fund are
prepared in accordance with generally accepted
accounting principles except for ADF’s which are special
purpose financial statements prepared in accordance with
ADF Regulations.
first is subject to subsequent budgetary appropriations.
Donors made their first payment with a total amount of
$562.8 million2 that includes $497.6 million to ADF
operations, $37.7 million for TASF, and $27.5 million for
financing forgone interest of grants. In addition, the
following donor countries participated in the Accelerated
Note Encashment program: Norway to increase its burden
share; Canada, Denmark, Finland, Sweden, Republic of
Korea and New Zealand to make additional
contributions; and Austria and Spain to meet their burden
share. (For details of amounts released for operational
commitment in 2005, see the column labeled “Addition” in Table 29
in the Statistical Annex.)
ADF VIII
VIII. Contributions pledged under ADF VIII
amounting to $151.8 million were paid and used for loan
commitments in 2005. The remaining unpaid
contributions as of 31 December 2005 totaled
$158.5 million, including $102.1 million of the US
contributions in arrears and $56.4 million of the amount
withheld by other donors.
TABLE 10: Asian Development Fund
Commitment Authority
($ million)

Asian Development Fund 2005 2004

The ADF is ADB’s concessional financing window for Carryover from ADF VIII 114.9 a
b
DMCs with low per capita gross national products and ADF IX Contributions 497.6
ADF VII and VIII Contributions 151.8 3,464.2
limited debt repayment capacities. It is the only
OCR Net Income Transfer 40.0 350.0
multilateral source of concessional assistance dedicated
Loans Savings and
exclusively to reducing poverty and to improving the Cancellation 495.2 c

quality of life in Asia and the Pacific. Thirty donor Expanded Advance
members (regional and nonregional) have contributed to Commitment Authority 899.3 3,200.0
the Fund. Less: Provision for
Disbursement Risk 44.8 280.1
ADF IX IX. During the eighth replenishment of the
Total ADF IX Commitment
ADF (ADF IX), donors recommended a replenishment of Authority 1,658.8 d
7,229.3 e
$7.0 billion, consisting of $3.3 billion in new Less:
contributions from donors and $3.7 billion from internal Loans and Grants Committed 1,619.0 6,383.9
resources based on the exchange rate specified in Carryover of Conditional
Loans Committed 720.9
Resolution No. 300 of the Board of Governors. ADF IX
became effective on 29 April 2005 after instruments of ADF Commitment Authority
Available for Future Commitmentse 39.8 124.5 a
contribution deposited with ADB for unqualified
contribution reached an amount equivalent to 0.0 Less than 0.1 million.
a The US dollar equivalent of SDR 80.39 million at each year-end exchange
$1,169,951,232 or more than 50% of all pledged rates.
b Contributions received to finance forgone interest of grants are excluded
contributions, based on Board Resolution No. 300 foreign as they have been incorporated in the computation of EACA.

exchange rates. In 2005, 21 donors submitted their
Instruments of Contribution totaling $2,263.6 million.2
Canada and Taipei,China deposited qualified
Instruments of Contributions, containing the
c Refers to resources made available from loan savings and cancellations to
directly finance additional loans under a special arrangement applicable
during 2003 and 2004.
d Includes resources made available under the ADF IX period (starting 1
January 2005).
e Includes resources made available under ADF VIII period (2001-2004).
f Total may not add due to rounding.

2 US dollar equivalent at exchange rates as of 31 December 2005.

18
 Currency Management.
Management With a view to make ADB to $70,000 and Rs2.25 million ($52,000 equivalent),

DISCUSSION AND ANALYSIS

more relevant, responsive and client oriented, ADB is
changing its currency management practices to benefit
ADB borrowers. On 27 October 2005, the Board of
Directors approved a currency management framework for
ADF loans to be implemented beginning 1 January 2006.
Under the new framework, while ADF donor contributions
will continue to be made in national currencies, US
dollars or SDR, ADB will convert these contributions
along with ADF loan reflows and liquidity portfolio into
the currencies that constitute the SDR. In addition, the
borrowers’ obligations for new ADF loans will be
determined in SDR. The current practice of managing
ADF resources in as many as 15 currencies will be
discontinued and an approach based on SDR will be
introduced.
ADF Loan Approvals, Disbursements, and
Repayments
Repayments. In 2005, 40 ADF loans totaling $1.4
billion were approved compared with 47 loans totaling
$1.2 billion in 2004. Disbursements during 2005 totaled
$1.2 billion, an increase of 18.2% from $1.1 billion in
2004. At the end of the year, cumulative disbursements
from ADF resources were $22.1 billion. Loan repayments
during the year amounted to $433.7 million. At year-end,
outstanding ADF loans amounted to $20.2 billion.
Status of L oans
Loans
oans. At the end of the year, 28 public
sector loans to Myanmar were in nonaccrual status. The
total of outstanding loans to Myanmar amounted to
$461.3 million comprising about 2.3% of the total
outstanding ADF loans.
Investment P ortfolio P
Portfolio osition
Position
osition. The ADF
investment portfolio3 amounted to $5.7 billion on 31
December 2005 compared with $5.6 billion in 2004.
About 56% of the portfolio was invested in bank deposits,
and 44% was invested in fixed income securities. The
annualized rate of return on ADF investments in 2005
and 2004 was 3.4%. The portfolio was denominated in 11
currencies. Euros, pounds sterling, Australian dollars, and
Canadian dollars accounted for 84% of the portfolio.
MANAGEMENT’S
respectively. At the end of 2005, total TASF resources
amounted to $1,257.5 million. Of this, $1,042.0 million
was committed leaving an uncommitted balance of
$215.5 million. (For details, see Table 30 in the Statistical
Annex.)
Operations and R esource P
Resource osition
Position
osition. TA
commitments (approved and effective) increased from
$73.5 million in 2004 to $77.0 million in 2005 for 175
TA projects made effective during the year. In 2005, $11.3
million ($6.3 million in 2004) representing completed
and canceled TA projects were written back as a reduction
in TA, and the corresponding undisbursed commitment
was eliminated. Revenue from investments increased
from $5.0 million in 2004 to $7.2 million in 2005
because of higher yields in some capital markets. As a
result, the uncommitted balance available for future
commitments increased from $99.2 million in 2004 to
$215.5 million in 2005. TASF funded 45% of all TA
approved in 2005.
At the end of the year, TASF investments stood at
$254.2 million, up 5.7% from 2004. Other assets—due
from banks and contributors, advances to consultants, and
others—totaled $124.4 million. Accounts payable to
OCR and others amounted to $2.5 million.
Japan Special Fund
Review of Activities
Activities. TA funded by the JSF continued
to support ADB operations aimed at reducing poverty. In
March 2005, Japan contributed 2.8 billion yen ($27.2
million equivalent) as a regular contribution. As of 31
December 2005, Japan’s cumulative contribution to the
JSF since its inception in 1988 amounted to 104.8 billion
yen (about $904.2 million equivalent) comprising regular
contributions of 86.7 billion yen ($753.4 million
TABLE 11: Technical Assistance Special Fund
Cumulative Resources
($ million)

Technical Assistance Special Fund 2005 2004

Review of Activities
Activities. In 2005, the Board of Governors Regularized Replenishment
approved an allocation of $32 million from 2004 OCR net Contributions 368.4 213.1
income to the TASF. With the effectivity of the eighth Allocations from OCR Net Income 663.0 631.0
replenishment of ADF (ADF IX) and the third regularized Direct Voluntary Contributions 88.8 88.6
replenishment of TASF, contributions of $155.4 million Income from Investment and
from 21 donors have been committed and $37.7 million Other Sources 140.8 132.8

have been received. In addition, Pakistan and India made Transfers from the TASF to the ADF (3.5) (3.5)

a wholly untied, direct, voluntary contribution amounting TOTAL 1,257.5 1,062.0

3
Includes securities purchased under resale arrangement.

19
 equivalent) and supplementary contributions of 18.1 Asian Tsunami Fund
MANAGEMENT’S
DISCUSSION AND ANALYSIS

billion yen ($150.8 million equivalent). In 2005, ADB
approved 49 TA for the JSF totaling $28.4 million
inclusive of those that were approved but not yet effective
(see table below). The uncommitted balance including
approved TA not yet effective as of 31 December 2005
was $126.4 million. (For details, see Tables 31 and 32 in the
Statistical Annex.)
Sector Activities
Activities. In 2005, the JSF financed 14%
of the total amount of TA approved by ADB including
33% of the total amount of project preparation TA during
the year. The breakdown of JSF approvals by sector is
shown in the table below.
The Asian Tsunami Fund was established on 11 February
2005 in response to the special circumstances
surrounding the DMCs that were stricken by the effects of
the tsunami on 26 December 2004. ADB contributed
$600 million to the Fund, of which $40 million
unutilized funds, were transferred back to OCR. In
addition, Australia and Luxembourg contributed $3.8
million and $1.0 million, respectively.
Review of Activities
Activities. At 31 December 2005, eight
TAs and grants amounting to $572 million were made
effective. The uncommitted resources of the Fund at year-
end amounted to $6.3 million.

ADB Institute Special Fund Pakistan Earthquake Fund

The costs for operating the ADB Institute are met from The Pakistan Earthquake Fund was established in
the ADBISF which is administered by ADB in accordance November 2005 in response to the special needs of
with the Statute of ADB Institute. Japan made its 10th Pakistan subsequent to the earthquake on 8 October
contribution in the amount of ¥1.52 billion ($13.9 2005. The PEF is to serve as a dedicated fund to deliver
million equivalent) in June 2004. emergency grant financing for investment projects and
As of 31 December 2005, cumulative commitments TAs to support immediate reconstruction, rehabilitation
amounted to ¥13.2 billion (about $110.1 million and associated development activities. ADB contributed
equivalent) excluding translation adjustments. Of the $80 million to the Fund and $5.4 million contributions
total contributions received, $93.6 million had been used have been committed by Finland. The full contribution is
by the end of the year mainly for research and capacity- available for future commitments.
building activities including organizing symposia, forums,
and training; preparing research reports, publications, and Trust funds Managed by ADB
websites; and for associated administrative expenses. The
balance of net current assets excluding property, furniture, In addition to OCR and the Special Funds, ADB also
and equipment available for future projects and programs manages and administers the Japan Scholarship Program
was about $16.5 million. (JSP), the Japan Fund for Poverty Reduction (JFPR), the
Japan Fund for Information and Communication
Technology (JFICT), and channel financing arrangements
TABLE 12: Japan Special Fund Technical Assistance
of a number of trust funds provided by bilateral donors to
by Sector, 2005
support TA and soft components of loans. These funds do
$ Million %
not form part of ADB’s own resources.
Transport and Communications 6.8 24
Finance 5.9 21 Japan Scholarship Program
Agriculture and Natural Resources 3.3 12 The JSP was established in 1988 to provide an
Law, Economic Management
and Public Policy 3.0 11
opportunity for well-qualified citizens of DMCs to
Energy 2.8 10 undertake postgraduate studies in economics,
Water Supply, Sanitation management, science and technology, and other
and Waste Management 2.4 8 development-related fields at selected educational
Education 2.0 7 institutions in Asia and the Pacific. The JSP is funded by
Industry and Trade 1.0 3
Japan and administered by ADB. Currently, 20
Health, Nutrition, and Social Protection 0.7 2
institutions in 10 countries participate.
Multisector 0.5 2
Between 1988 and 2005, Japan contributed
TOTAL 28.4 100 $76.2 million. A total of 1,927 scholarships has been
Totals may not add due to rounding. awarded to recipients from 35 members. Of the total,
1,574 already completed their courses. Women have

20
received 612 scholarships. The number of new
scholarships awarded annually grew from 49 in 1988 to
148 in 2005 (see www.adb.org/JSP).
Channel Financing Arrangements
Official grant cofinancing plays a vital role in ADB
operations, particularly in view of the continuing
constraints on TASF and ADF resources. These grant
funds support TA and finance mostly soft components of
loan projects. Most grants are provided by bilateral donors
under channel financing arrangements (CFAs). ADB acts
as administrator of the funds and applies its own
guidelines and procedures in recruiting consultants,
making disbursements, and supervising projects.
Under a CFA, the donor enters into a comprehensive
agreement with ADB whereby the donor provides an
untied grant fund to be administered by ADB, but the
fund does not become part of ADB’s own resources. The
donor indicates its preferred sectors and recipient
countries. ADB regularly provides a list and description of
proposed TA projects that satisfy the donor’s preferences,
and they agree on the specific activities to be financed.
Funds provided under a CFA are usually transferred to an
interest-bearing account and may also be invested by
ADB pending disbursement. Donors are provided with
regular financial statements and progress reports on the
use of the funds. ADB is responsible for project
preparation, processing, and administration. CFAs may be
replenished with additional funds at the donor’s
discretion.
The primary advantage of CFAs is that funding for
several individual TA projects may be provided under a
single agreement. Accordingly, they minimize the need for
detailed negotiations on a case-by-case basis and foster
administrative efficiency. The first CFA was negotiated in
1980. Since then, ADB has entered into CFAs with the
following bilateral development partners: Australia,
Belgium, Canada, Denmark, Finland, France, Italy, the
Netherlands, New Zealand, Norway, PRC, Spain, Sweden,
Switzerland, and United Kingdom. In 2005, PRC made a
contribution of $20 million to establish its first trust fund
(PRC Poverty Reduction and Regional Cooperation
Fund). United Kingdom provided an additional £30.0
million ($56.6 million equivalent) to its existing trust
fund while Australia has used its existing channel
financing facility with ADB to channel $1.9 million of its
contributions to seven projects.
In addition to the traditional type of CFA which may
be used for several sectors, thematic CFAs with bilateral
agencies have increased sharply in recent years in such
DISCUSSION AND ANALYSIS
MANAGEMENT’S
areas as renewable energy, climate change, poverty
reduction, governance, water, gender and development,
and poverty and environment. Several thematic CFAs
have been packaged as umbrella facilities to allow more
than one donor to contribute.
In 2005, ADB, with an initial contribution of $12.78
million from Sweden, established the Cooperation Fund
for Fighting HIV/AIDs in Asia and the Pacific. Norway
also contributed $1.25 million to an existing Cooperation
Fund in Support of Managing for Development Results.
Efforts continued to mobilize grant funds not only
from official sources but also from private sector entities.
Funds mobilized from private sector entities mostly
cofinanced regional TA projects in the environment
sector.
Japan Fund for Poverty Reduction
The JFPR was established in May 2000 as a trust fund to
support poverty reduction and social development
activities that can add substantial value to ADB projects.
Since 2000, Japan has contributed $344.9 million in
total. To date, $174.4 million for 72 projects have been
approved of which 19 projects valued at $28.4 million
were approved in 2005. (See www.adb.org/JFPR and Table 32
in the Statistical Annex.)
Japan Fund for Information and
Communication Technology
The JFICT was established in July 2001 to assist DMCs
in bridging the digital divide to help reduce poverty. The
JFICT had an initial contribution of ¥1.3 billion (about
$10.7 million) for a 3-year period. JFICT was originally
scheduled to close by 31 July 2004 but was extended to
accommodate new proposals. To date, $9.46 million for
11 projects have been approved for implementation.
(See www.adb.org/Documents/others/CLICK/R21_03.pdf.)
Japan Fund for Public Policy Training
The JFPPT was established in March 2004 as a trust
fund to enhance DMCs capacity building for public
policy management focusing on regional economies in
transition.
Since its inception, JFPPT was under the
administration of ADBI. During the 4th quarter of 2005,
its administration was transferred to ADB. Since its
inception, Japan has contributed about $15.3 million in
total, out of which, $2.0 million had been spent on
program support.
21
 MANAGEMENT’S
DISCUSSION AND ANALYSIS

22
 STATEMENTS
FINANCIAL
Report of Independent Auditors to the Asian Development Bank

In our opinion, the accompanying balance sheets and the related statements of income and
expenses, cash flows, and changes in capital and reserves present fairly, in all material respects,
in terms of United States dollars, the financial position of the Asian Development Bank—
Ordinary Capital Resources at 31 December 2005 and 2004, and the results of its operations and
its cash flows for the years then ended, in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the responsibility of
the management of the Asian Development Bank. Our responsibility is to express an opinion
on these financial statements based on our audits. We conducted our audits of these statements
in accordance with auditing standards generally accepted in the United States of America.
Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by man-
agement, and evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

Our audits were conducted for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying summary statements of loans and of borrowings
as at 31 December 2005 and 2004, and of statement of subscriptions to capital stock and voting
power as at 31 December 2005 are presented for purposes of additional analyses and are not
required parts of the basic financial statements. Such information has been subjected to the
auditing procedures applied in the audits of the basic financial statements and in our opinion,
is fairly stated in all material respects in relation to the basic financial statements taken as a
whole.

PricewaterhouseCoopers
Certified Public Accountants

Singapore
8 March 2006

23
 ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
BALANCE SHEET
31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

ASSETS

2005 2004

DUE FROM BANKS (Notes B and C) $ 81,662 $ 76,405

INVESTMENTS (Notes B, C, D, and L)

Government and government-guaranteed obligations $ 4,034,905 $ 4,882,882
Time deposits 3,707,813 2,842,131
Other securities 3,370,039 11,112,757 2,965,082 10,690,095

SECURITIES TRANSFERRED UNDER SECURITIES

LENDING ARRANGEMENT (Notes B and D) 2,770,965 2,040,302

SECURITIES PURCHASED UNDER

RESALE ARRANGEMENT (Notes B and D) 1,118,748 1,330,948

LOANS OUTSTANDING (OCR-5) (Notes A, B, E, and Q)

(Including FAS 133 adjustment of $757 - 2005 and
$870 - 2004 and unamortized front-end fee of
$11,077 - 2005 and $28,349 - 2004)
Members and guaranteed by members 22,923,271 23,790,425
Private sector 634,982 490,476

23,558,253 24,280,901
Less—provision for loan losses 79,464 23,478,789 84,304 24,196,597

EQUITY INVESTMENTS (Notes A, B, and G) 404,975 257,437

ACCRUED INCOME
On investments 99,334 90,673
On loans 239,528 338,862 238,899 329,572

RECEIVABLE FROM MEMBERS (Note K)

Nonnegotiable, noninterest-bearing demand
obligations (Note C) 172,966 207,181
Subscription installments 38 173,004 - 207,181

RECEIVABLE FROM SWAPS (Notes B, H, and Q)

Borrowings 9,733,074 9,583,846
Others 1,582,337 11,315,411 1,567,602 11,151,448

OTHER ASSETS
Property, furniture, and equipment (Notes B and I) 163,586 164,274
Investment related receivables 244,718 175,440
Unamortized issuance cost of borrowings 39,257 48,584
Miscellaneous (Note N) 128,651 576,212 121,353 509,651

TOTAL $ 51,371,385 $ 50,789,636

The accompanying notes are an integral part of these financial statements (OCR-8).

24
 OCR-1
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
BALANCE SHEET
31 December 2004 and 2003
Expressed in Thousands of United States Dollars (Note B)

STATEMENTS
FINANCIAL
LIABILITIES, CAPITAL, AND RESERVES

2005 2004

BORROWINGS (OCR-6) (Notes B and J)

(Including FAS 133 adjustment of $2,519 - 2005
and $2,585 - 2004) $ 24,398,499 $ 23,921,444

ACCRUED INTEREST ON BORROWINGS 262,138 264,682

PAYABLE FOR SWAPS (Notes B, H, J, and Q)

Borrowings $ 9,354,776 $ 8,841,324
Others 1,586,604 10,941,380 1,809,722 10,651,046

PAYABLE UNDER SECURITIES LENDING ARRANGEMENT

(Note B) 2,795,081 2,061,489

ACCOUNTS PAYABLE AND OTHER LIABILITIES

Investment related payables 345,535 325,508
Undisbursed technical assistance commitments (Note M) 9,731 20,806
Miscellaneous (Notes B, E, I, and N) 321,881 677,147 277,884 624,198

TOTAL LIABILITIES 39,074,245 37,522,859

CAPITAL AND RESERVES (OCR-4)

Capital stock (OCR-7) (Notes B and K)
Authorized and subscribed
(SDR35,097,280,000 - 2005,
SDR34,991,710,000 - 2004) 50,163,489 54,161,568
Less—”callable” shares subscribed 46,635,308 50,352,179

“Paid-in” shares subscribed 3,528,181 3,809,389

Less—subscription installments not due 10,980 9,874

Subscription installments matured 3,517,201 3,799,515

Less—capital transferred to the
Asian Development Fund 68,047 73,692

3,449,154 3,725,823

Net notional amounts required to maintain value of

currency holdings (Notes B and K) (586,105) (642,944)
Ordinary reserve (Note L) 8,957,392 8,865,414
Special reserve (Note L) 193,629 189,539
Loan loss reserve (Note L) 167,000 218,800
Surplus (Note L) 117 312,117
Cumulative revaluation adjustments account (Note K) 234,833 193,870
Net income after appropriation (OCR-2) (Note L) 105,202 427,080
Accumulated other comprehensive income (OCR-4)
(Notes B and L) (224,082) 12,297,140 (22,922) 13,266,777

TOTAL $ 51,371,385 $ 50,789,636

25
 OCR-2
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
STATEMENT OF INCOME AND EXPENSES
For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

2005 2004

REVENUE (Note M)
From loans (Notes B and E)
Interest $967,387 $926,955
Commitment charge 50,898 50,521
Other 18,044 $1,036,329 60,869 $1,038,345

From investments (Notes B and D)

Interest 377,379 265,557

From other sources—net (Notes E and R) 18,210 9,166

TOTAL REVENUE $1,431,918 $1,313,068

EXPENSES (Note M)
Borrowings and related expenses (Note J) 893,218 861,657
Administrative expenses (Note O) 135,689 118,321
Technical assistance to member countries (3,446) (2,404)
Provision for losses (Notes B and E) (3,477) 2,254
Other expenses 4,248 3,044

TOTAL EXPENSES 1,026,232 982,872

NET REALIZED GAINS (LOSSES)

From investments (Note M) (2,097) 31,812
From equity investments 17,736 27,729
From borrowings 1,023 11
Others 306 (158)

NET REALIZED GAINS 16,968 59,394

NET UNREALIZED (LOSSES) GAINS ON

DERIVATIVES, AS REQUIRED BY FAS 133 (308,743) 40,963

NET INCOME BEFORE CUMULATIVE EFFECT OF

CHANGE IN ACCOUNTING PRINCIPLE 113,911 430,553

CUMULATIVE EFFECT OF CHANGE

IN ACCOUNTING PRINCIPLE (Note B) (4,619) –

NET INCOME 109,292 430,553

APPROPRIATION OF GUARANTEE FEES

TO SPECIAL RESERVE (Note L) 4,090 3,473

NET INCOME AFTER APPROPRIATION

TO SPECIAL RESERVE $ 105,202 $ 427,080
The accompanying notes are an integral part of these financial statements (OCR-8).

26
 OCR-3
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
STATEMENT OF CASH FLOWS
For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)

STATEMENTS
FINANCIAL
2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES
Interest and other charges on loans received $ 918,237 $ 956,798
Interest on investments received 378,032 297,764
Interest received for securities under resale arrangement 4,898 2,092
Interest and other financial expenses paid (768,295) (787,601)
Administrative expenses paid (80,164) (69,895)
Technical assistance disbursed (6,962) (16,805)
Others–net 7,714 18,386
Net Cash Provided by Operating Activities 453,460 400,739
CASH FLOWS FROM INVESTING ACTIVITIES
Sales of investments 11,265,412 8,686,524
Maturities of investments 91,142,586 100,823,059
Purchases of investments (103,542,060) (110,933,031)
Net receipts from securities under resale arrangement 107,904 909,387
Principal collected on loans 3,491,031 3,952,679
Loans disbursed (3,401,301) (2,393,583)
Net currency and interest rate swaps 4 1,323
Property, furniture, and equipment acquired (11,473) (8,266)
Purchases of equity investments (131,757) (41,718)
Sales of equity investments 82,798 47,859
Net Cash (Used in) Provided by Investing Activities (996,856) 1,044,233
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds of new borrowings 4,681,615 1,720,375
Borrowings redeemed (3,580,596) (4,482,563)
Matured capital subscriptions collected1 3,190 2,830
Borrowing issuance expenses paid (6,286) (719)
Demand obligations of members encashed 36,442 40,639
Net currency and interest rate swaps 127,655 151,559
Resources transferred to ADF (40,000) (150,000)
Resources transferred to TASF (32,000) (50,000)
Resources transferred to ATF (560,000) –
Resources transferred to PEF (80,000) –
Net Cash Provided by (Used in) Financing Activities 550,020 (2,767,879)
Effect of Exchange Rate Changes on Due from Banks (1,367) 1,364
Net Increase (Decrease) in Due from Banks 5,257 (1,321,543)
Due from Banks at Beginning of Year 76,405 1,397,948
Due from Banks at End of Year $ 81,662 $ 76,405
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net Income (OCR-2) $ 109,292 $ 430,553
Adjustments to reconcile net income to net cash provided by operating activities:
Net unrealized losses (gains) on derivatives 308,743 (40,963)
Depreciation and amortization 98,633 146,632
Change in accrued income, including interest and commitment charges added to loans (136,808) (88,928)
Net gain from sales of investments and early redemption of borrowings (11,821) (62,248)
Change in accrued interest and other expenses 112,451 16,881
Change in undisbursed technical assistance commitments (11,075) (19,886)
Provision for losses charged (7,212) 4,950
Change in administrative expenses receivable from ADF (7,070) 3,693
Others–net (1,673) 10,055
Net Cash Provided by Operating Activities $ 453,460 $ 400,739
1 Supplementary disclosure of noncash financing activities:
Nonnegotiable, noninterest-bearing demand promissory notes amounting to $4,225 ($2,912 - 2004) were received from members.
The accompanying notes are an integral part of these financial statements (OCR-8). 27
 ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
STATEMENT OF CHANGES IN CAPITAL AND RESERVES
For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Notes B and K)
FINANCIAL
STATEMENTS

Net Cumulative Accumulated

Notional Revaluation Net Income Other
Capital Maintenance Ordinary Special Loan Loss Adjustments After Comprehensive
Stock of Value Reserve Reserve Reserve Surplus Account Appropriations Income Total
Balance–
1 January 2004 $3,570,562 $(620,805) $8,892,584 $186,066 $ – $116,645 $ 372,257 $ 435,886 $(100,755) $12,852,440

Comprehensive income
for the year 2004
(Note L) 3,473 427,080 77,833 508,386
Change in SDR value
of paid-in shares
subscribed 153,065 153,065
Change in subscription
installments not due 5,142 5,142
Change in SDR value of
capital transferred to
Asian Development Fund (2,946) (2,946)
Change in notional
maintenance of value (22,139) (22,139)
Allocation of 2003 net
income to surplus
(Note L) 195,472 (195,472) –
Allocation of 2003 net
income to TASF and
ADF (Note L) (200,000) (200,000)
Allocation of 2003 net
income to loan loss
reserve (Note L) 218,800 (218,800) –
Reduction of cumulative
revaluation account by
2003 FAS 133 adjustment
(Note L) (178,387) 178,387 –
Charge to ordinary reserve
for change in SDR value
of capital stock (Note L) (27,170) (27,170)
Balance–
31 December 2004 $3,725,823 $(642,944) $8,865,414 $189,539 $218,800 $312,117 $ 193,870 $ 427,080 $ (22,922) $13,266,777
(Forward)

28
 OCR-4

STATEMENTS
FINANCIAL
Net Cumulative Accumulated
Notional Revaluation Net Income Other
Capital Maintenance Ordinary Special Loan Loss Adjustments After Comprehensive
Stock of Value Reserve Reserve Reserve Surplus Account Appropriations Income Total

Balance–
31 December 2004 $3,725,823 $(642,944) $8,865,414 $189,539 $ 218,800 $ 312,117 $193,870 $ 427,080 $ (22,922) $13,266,777
(Forward)

Comprehensive income
for the year 2005
(Note L) 4,090 105,202 (201,160) (91,868)
Change in SDR value of
paid-in shares subscribed (289,693) (289,693)
Change in subscription
installments not due (1,572) (1,572)
Additional paid-in shares
subscribed during the year 8,951 8,951
Change in SDR value of
capital transferred to
Asian Development Fund 5,645 5,645
Change in notional
maintenance of value 56,839 56,839
Allocation of 2004 net
income to ordinary
reserve, surplus and
cumulative revaluation
account and transfer from
loan loss reserve (Note L) 37,917 (51,800) 40,000 40,963 (67,080) –
Allocation of 2004 net
income to ATF, TASF, and
ADF (Note L) (360,000) (360,000)
Allocation of Surplus to
ATF and PEF (Note L) (352,000) (352,000)
Credit to ordinary reserve
for change in SDR value of
capital stock (Note L) 54,061 54,061

Balance–
31 December 2005 $3,449,154 $(586,105) $8,957,392 $193,629 $ 167,000 $ 117 $234,833 $ 105,202 $(224,082) $12,297,140

Note: Figures may not add due to rounding.

Accumulated Other Comprehensive Income (Note L)

For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)

FAS 133 Accumulated Unrealized Minimum Accumulated Other

Adjustments and Translation Investment Holding Pension Liability Comprehensive
Amortization Adjustments Gains (Losses) Adjustment Income

2005 2004 2005 2004 2005 2004 2005 2004 2005 2004

Balance, 1 January $(6,442) $(11,437) $ (20,326) $(125,520) $14,272 $45,504 $(10,426) $ (9,302) $ (22,922) $(100,755)
Amortization 3,876 4,995 – – – – – – 3,876 4,995
Other comprehensive
income for the year – – (226,356) 105,194 15,825 (31,232) 5,495 (1,124) (205,036) 72,838

Balance, 31 December $(2,566) $ (6,442) $(246,682) $ (20,326) $30,097 $14,272 $ (4,931) $(10,426) $(224,082) $ (22,922)

The accompanying notes are an integral part of these financial statements (OCR-8).

29
 ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
SUMMARY STATEMENT OF LOANS
31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

Undisbursed Loans
Loans Balances of Not Yet Total Percent of
Borrowers/Guarantors Outstanding1 Effective Loans2 Effective3 Loans Total Loans

Afghanistan $ 35,000 $ – $ – $ 35,000 0.09

Azerbaijan – – 59,000 59,000 0.15
Bangladesh 288,034 403,404 225,000 916,438 2.34
China, People’s Rep. of 5,552,543 3,580,611 1,363,800 10,496,954 26.87
Fiji Islands 72,596 81,711 – 154,307 0.39
India 3,111,471 3,244,836 1,139,533 7,495,840 19.18
Indonesia 8,365,416 947,044 535,100 9,847,560 25.20
Kazakhstan 70,399 40,680 – 111,079 0.28
Korea, Rep. of 139,341 – – 139,341 0.36
Lao People’s Dem. Rep. 26,121 43,879 – 70,000 0.18
Malaysia 314,858 6,629 – 321,487 0.82
Marshall Islands 3,816 – – 3,816 0.01
Micronesia, Fed. States of – – 4,800 4,800 0.01
Mongolia 4,500 – – 4,500 0.01
Myanmar – – – – –
Nauru 2,300 – – 2,300 0.01
Nepal 31,243 – – 31,243 0.08
Pakistan 1,834,274 1,281,408 387,300 3,502,982 8.97
Papua New Guinea 170,276 71,298 – 241,574 0.62
Philippines 2,676,084 605,894 223,337 3,505,315 8.97
Sri Lanka 203,166 200,558 150,000 553,724 1.42
Thailand 201,238 24,599 – 225,837 0.58
Uzbekistan 329,437 352,662 – 682,099 1.75
Viet Nam 137,217 123,750 360,000 620,967 1.59
23,569,330 11,008,963 4,447,870 39,026,163 99.88
Regional – 16,500 28,500 45,000 0.12
TOTAL – 31 December 2005 23,569,330 11,025,463 4,476,370 39,071,163 100.00
Provision for losses (79,464) – – (79,464)
Unamortized front-end fee (11,077) – – (11,077)
NET BALANCE – 31 December 2005 $23,478,789 $11,025,463 $4,476,370 $38,980,622
Made up of loans to:
Members and guaranteed by members $ 22,920,971 $ 10,934,499 $ 3,788,345 $ 37,643,815
Private sector 557,818 90,964 688,025 1,336,807
Net balance – 31 December 2005 $ 23,478,789 $ 11,025,463 $ 4,476,370 $ 38,980,622
TOTAL – 31 December 2004 $24,309,250 $10,501,879 $5,053,684 $39,864,813
Provision for losses (84,304) – – (84,304)
Unamortized front-end fee (28,349) – – (28,349)
NET BALANCE – 31 December 2004 $24,196,597 $10,501,879 $5,053,684 $39,752,160
Made up of loans to:
Members and guaranteed by members $ 23,788,125 $ 10,344,131 $ 4,700,180 $ 38,832,436
Private sector 408,472 157,748 353,504 919,724
Net balance – 31 December 2004 $ 24,196,597 $ 10,501,879 $ 5,053,684 $ 39,752,160

1 Amounts outstanding on the multicurrency fixed lending rate loans totaled $200,030 ($286,791 - 2004), on pool-based loans totaled $12,828,090
($14,879,834 - 2004) and on LIBOR-based loans and market-based loans totaled $10,541,209 ($9,142,625 - 2004). The average yield on loans was 4.35%
(4.16% - 2004).
2 Of the undisbursed balances, ADB has made irrevocable commitments to disburse various amounts totalling $205,674 ($205,928 - 2004).
3 Excludes multitranche financing facilities of $1,520,000 (nil - 2004). No loan from these facilities was approved in 2005.
4 Includes undisbursed commitment relating to Revolving Credit Facility of Trade Financing Facilitation Program amounting to $16,500.
The accompanying notes are an integral part of these financial statements (OCR-8)

30
 OCR-5

STATEMENTS
FINANCIAL
MATURITY OF EFFECTIVE LOANS

Twelve Months Five Years

Ending Ending
31 December Amount 31 December Amount

2006 $1,391,705 2015 10,400,279

2007 1,486,394 2020 7,971,305
2008 1,676,088 2025 5,276,228
2009 1,862,284 2030 2,484,811
2010 1,973,074 2035 57,565
2037 15,060

Total $34,594,793 4

SUMMARY OF CURRENCIES RECEIVABLE ON LOANS OUTSTANDING

Currency 2005 2004 Currency 2005 2004

Euro $ 2,436 $ 6,025 Philippine peso 34,856 –

Japanese yen 4,961,336 6,034,805 Swiss franc 23,262 37,050
Indian rupee 75,977 20,836 United States dollar 18,471,463 18,210,534

Total $23,569,330 $24,309,250

31
 ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
SUMMARY STATEMENT OF BORROWINGS
31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

Borrowings Swap Arrangements2

Principal Outstanding1 Payable (Receivable)3
2005 2004 2005 2004
Australian dollar $ 1,781,100 $ 1,854,960 $(1,765,589) $(1,841,031)
Canadian dollar 516,840 479,169 (527,379) (476,539)
Chinese yuan 123,913 – – –
Euro 1,300,396 1,495,866 (1,382,359) (1,635,741)
Hong Kong dollar 167,632 205,756 (164,330) (211,344)
Indian rupee 111,123 114,482 7,160 11,800
(8)
Japanese yen 3,779,260 4,718,762 2,894,589 3,400,155
(1,721,168) (1,772,389)
Malaysian ringgit 105,834 105,263 (105,675) (104,585)
New Taiwan dollar 213,242 218,955 (204,263) (209,561)
New Zealand dollar 319,153 – (308,832) –
Philippine peso 31,168 – (129) –
Pound sterling 316,125 5 189,613 3,548 –
Singapore dollar 120,301 122,268 (117,923) (122,363)
South African rand 677,131 – (662,065) –
Swiss franc 525,343 861,432 (234,229) (546,636)
Thai baht 97,501 – (91,116) –
United States dollar 14,267,934 6 13,845,588 6,449,479 5,429,369
(2,448,017) (2,663,649)
Subtotal 24,453,996 24,212,114 $ (378,298) $ (742,522)
Unamortized discounts/
premiums and transition adjustments 99,680 74,302
Embedded derivatives (155,177) (364,972)
FAS 133 Adjustments – –
Total $24,398,499 $23,921,444

MATURITY STRUCTURE OF BORROWINGS OUTSTANDING7

Twelve Months Five Years
Ending Ending
31 December Amount 31 December Amount
2006 $3,497,383 2015 5,460,727
2007 5,818,405 2020 1,315,894
2008 3,209,866 2025 299,928
2009 2,543,882 2030 460,979
2010 1,777,261 2035 65,423
over 2035 4,248 8
Total $24,453,996

1 Includes zero coupon and deep discount borrowings which have been recorded at their discounted values. The aggregate face amounts and discounted values
of these borrowings (in United States dollar equivalents) are:

Aggregate Face Amount Discounted Value

Currency 2005 2004 2005 2004
Australian dollar $ 966,174 $1,028,940 $ 730,752 $ 736,378
Canadian dollar 689,388 664,424 516,840 479,169
Philippine peso 47,143 – 31,168 –
South African rand 15,760 – 12,056 –
Swiss franc 371,891 431,502 221,632 244,313
United States dollar 1,772,903 1,782,903 1,084,934 1,055,588
2 Include currency and interest rate swaps. At 31 December 2005, the remaining maturity of swap agreements ranged from less than one year to 30 years.
Approximately 71.67% of the swap receivables and 75.46% of the payables are due before 1 January 2011.

32
 OCR-6

STATEMENTS
FINANCIAL
Net Currency Obligation3 Weighted Average
2005 2004 Cost (%) After Swaps4
$ 15,511 $ 13,929 31.81
(10,539) 2,630 (6.80)
123,913 – 3.45
(81,963) (139,875) 0.16
3,302 (5,588) 0.03
118,283 126,274 5.39

4,952,681 6,346,528 1.19

159 678 7.95

8,979 9,394 (11.33)
10,321 – 1.53
31,039 – 19.08
319,673 189,613 12.21
2,378 (95) 0.36
15,066 – 0.26
291,114 314,796 5.35
6,385 – 0.40
18,269,396 16,611,308 4.35

$24,075,698 $23,469,592 3.76

1.28
5.04

INTEREST RATE SWAP ARRANGEMENTS

Average Rate (%)
Receive Pay
Notional Amount Fixed Floating9 Maturing Through10
Receive Fixed Swaps:
Australian dollar11 $ 67,972 2.68 (0.33) 2022-2032
Euro12 84,965 4.40 3.62 2010
Indian rupee 111,124 5.40 6.02 2014
Philippine peso 30,789 7.76 2010
United States dollar 8,303,627 3.61 3.93 2006-2018
United States dollar13 42,483 2.14 (0.33) 2016-2027
Receive Floating Swaps:
Japanese yen 654,658 0.28 0.62 (0.33) 2009-2032
Total $9,295,618

3 Adjusted by the cumulative effect of the adoption of FAS 133 effective 1 January 2001.
4 Calculation is based on average carry book value of borrowings net of fair value of swaps. Thus, the weighted average cost may be negative if the related swaps
payable exposure is in a different currency and the fair value of swaps receivable exceeds the carry book value of borrowings.
5 Consists of long-term borrowings of $169,691 and short-term borrowings of $146,434.
6 Consists of long-term borrowings of $14,149,934 and short-term borrowings of $118,000.
7 Bonds with put and call options were considered maturing on the first put or call date.
8 Of this amount, $4,248 will mature in March 2036.
9 Represent average current floating rates, net of spread.
10 Swaps with early termination date were considered maturing on the first termination date.
11 Consists of dual currency swaps with interest receivable in Australian dollar and interest payable in Japanese yen.
12 Consists of a dual currency swap with interest receivable in Euro and interest payable in Japanese yen.
13 Consists of dual currency swaps with interest receivable in United States dollar and interest payable in Japanese yen.
The accompanying notes are an integral part of these financial statements (OCR-8).

33
 ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
STATEMENT OF SUBSCRIPTIONS TO CAPITAL STOCK AND VOTING POWER
31 December 2005
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

SUBSCRIBED CAPITAL VOTING POWER

Number of Percent Par Value of Shares Number of Percent
MEMBER Shares of Total Total Callable Paid-in Votes of Total

REGIONAL
Afghanistan 1,195 0.034 $ 17,080 $ 11,620 $ 5,460 14,904 0.340
Armenia 10,557 0.301 150,888 140,283 10,605 24,266 0.553
Australia 204,740 5.834 2,926,287 2,721,359 204,929 218,449 4.979
Azerbaijan 15,736 0.448 224,910 209,088 15,822 29,445 0.671
Bangladesh 36,128 1.029 516,367 480,206 36,161 49,837 1.136
Bhutan 220 0.006 3,144 2,816 329 13,929 0.317
Cambodia 1,750 0.050 25,012 20,753 4,259 15,459 0.352
China, People’s Rep. of 228,000 6.496 3,258,736 3,030,467 228,269 241,709 5.510
Cook Islands 94 0.003 1,344 1,258 86 13,803 0.315
Fiji Islands 2,406 0.069 34,388 31,973 2,415 16,115 0.367
Hong Kong, China 19,270 0.549 275,420 256,125 19,295 32,979 0.752
India 224,010 6.383 3,201,708 2,977,498 224,210 237,719 5.419
Indonesia 192,700 5.490 2,754,203 2,561,338 192,866 206,409 4.705
Japan 552,210 15.734 7,892,572 7,339,845 552,727 565,919 12.900
Kazakhstan 28,536 0.813 407,856 379,285 28,571 42,245 0.963
Kiribati 142 0.004 2,030 1,887 143 13,851 0.316
Korea, Rep. of 178,246 5.079 2,547,617 2,369,229 178,387 191,955 4.375
Kyrgyz Republic 10,582 0.302 151,245 140,654 10,591 24,291 0.554
Lao PDR 492 0.014 7,032 6,274 758 14,201 0.324
Malaysia 96,350 2.745 1,377,102 1,280,655 96,447 110,059 2.509
Maldives 142 0.004 2,030 1,887 143 13,851 0.316
Marshall Islands 94 0.003 1,344 1,258 86 13,803 0.315
Micronesia, Fed. States of 142 0.004 2,030 1,887 143 13,851 0.316
Mongolia 532 0.015 7,604 7,075 529 14,241 0.325
Myanmar 19,270 0.549 275,420 256,125 19,295 32,979 0.752
Nauru 142 0.004 2,030 1,887 143 13,851 0.316
Nepal 5,202 0.148 74,351 69,134 5,217 18,911 0.431
New Zealand 54,340 1.548 776,665 722,282 54,384 68,049 1.551
Pakistan 77,080 2.196 1,101,681 1,024,529 77,152 90,789 2.069
Palau 114 0.003 1,629 1,515 114 13,823 0.315
Papua New Guinea 3,320 0.095 47,452 44,150 3,302 17,029 0.388
Philippines 84,304 2.402 1,204,932 1,120,562 84,370 98,013 2.234
Samoa 116 0.003 1,658 1,486 172 13,825 0.315
Singapore 12,040 0.343 172,084 160,035 12,049 25,749 0.587
Solomon Islands 236 0.007 3,373 3,144 229 13,945 0.318
Sri Lanka 20,520 0.585 293,286 272,748 20,539 34,229 0.780
Taipei,China 38,540 1.098 550,841 512,279 38,562 52,249 1.191
Tajikistan 10,134 0.289 144,842 134,652 10,191 23,843 0.543
Thailand 48,174 1.373 688,537 640,313 48,224 61,883 1.411
Timor-Leste 350 0.010 5,002 4,645 357 14,059 0.320
Tonga 142 0.004 2,030 1,887 143 13,851 0.316
Turkmenistan 8,958 0.255 128,034 119,030 9,004 22,667 0.517
Tuvalu 50 0.001 715 657 57 13,759 0.314
Uzbekistan 23,834 0.679 340,652 316,798 23,855 37,543 0.856
Vanuatu 236 0.007 3,373 3,144 229 13,945 0.318
Viet Nam 12,076 0.344 172,599 152,803 19,795 25,785 0.588
Total Regional (Forward) 2,223,452 63.351 $31,779,132 $29,538,523 $2,240,609 2,854,066 65.056

34
 OCR-7

STATEMENTS
FINANCIAL
SUBSCRIBED CAPITAL VOTING POWER
Number of Percent Par Value of Shares Number of Percent
MEMBER Shares of Total Total Callable Paid-in Votes of Total

Total Regional (Forward) 2,223,452 63.351 $31,779,132 $29,538,523 $2,240,609 2,854,066 65.056

NONREGIONAL
Austria 12,040 0.343 172,084 160,035 12,049 25,749 0.587
Belgium 12,040 0.343 172,084 160,035 12,049 25,749 0.587
Canada 185,086 5.274 2,645,379 2,460,131 185,248 198,795 4.531
Denmark 12,040 0.343 172,084 160,035 12,049 25,749 0.587
Finland 12,040 0.343 172,084 160,035 12,049 25,749 0.587
France 82,356 2.347 1,177,090 1,094,649 82,440 96,065 2.190
Germany 153,068 4.361 2,187,755 2,034,537 153,218 166,777 3.802
Italy 63,950 1.822 914,018 850,001 64,017 77,659 1.770
Luxembourg 12,040 0.343 172,084 159,978 12,106 25,749 0.587
The Netherlands 36,294 1.034 518,739 482,422 36,318 50,003 1.140
Norway 12,040 0.343 172,084 160,035 12,049 25,749 0.587
Portugal 12,040 0.343 172,084 159,978 12,106 25,749 0.587
Spain 12,040 0.343 172,084 160,035 12,049 25,749 0.587
Sweden 12,040 0.343 172,084 160,035 12,049 25,749 0.587
Switzerland 20,650 0.588 295,144 274,463 20,682 34,359 0.783
Turkey 12,040 0.343 172,084 160,035 12,049 25,749 0.587
United Kingdom 72,262 2.059 1,032,819 960,498 72,321 85,971 1.960
United States 552,210 15.734 7,892,572 7,339,845 552,727 565,919 12.900
Total Nonregional 1,286,276 36.649 18,384,357 17,096,785 1,287,572 1,533,038 34.944

TOTALS 3,509,728 100.000 $50,163,489 $46,635,308 $3,528,181 4,387,104 100.000

Notes: Figures may not add due to rounding.
The accompanying notes are an integral part of these financial statements (OCR-8).

35

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS
NOTE A—NATURE OF OPERATIONS AND
LIMITATIONS ON LOANS, GUARANTEES,
AND EQUITY INVESTMENTS
Nature of Operations
The Asian Development Bank (ADB), a multilateral
development finance institution, was established in 1966
with its headquarters in Manila, Philippines. ADB and
its operations are governed by the Agreement Establish-
ing the Asian Development Bank (the Charter). Its
purpose is to foster economic development and co-
operation in the Asian and Pacific region and to contri-
bute to the acceleration of the process of economic
development of the developing member countries
(DMCs) in the region, collectively and individually. With
the adoption of its poverty reduction strategy at the end
of 1999, ADB made reducing poverty in the region its
main goal. ADB provides financial and technical assis-
tance (TA) for projects and programs, which will con-
tribute to achieving this purpose.
Mobilizing financial resources, including cofinancing,
is an integral part of ADB’s operational activities. In addi-
tion, ADB, alone or jointly, administers on behalf of donors,
including members, their agencies and other development
institutions, funds restricted for specific uses, which in-
clude TA grants as well as regional programs.
ADB’s ordinary operations comprise loans, equity
investments, and guarantees. During the years 2001 and
2002, limited technical assistance to member countries
to support high priority TA programs was included. ADB
finances its ordinary operations through borrowings, paid-
in capital, and reserves.
Limitations on Loans, Guarantees, and
Equity Investments
Article 12, paragraph 1 of the Charter provides that the
total amount outstanding of loans, equity investments,
and guarantees made by ADB shall not exceed the total
of ADB’s unimpaired subscribed capital, reserves, and
surplus, exclusive of the special reserve. At 31 Decem-
ber 2005, the total of such loans, equity investments,
and guarantees aggregated approximately 68.3% (64.7%
– 2004) of the total subscribed capital, reserves, and
surplus as defined.
36
OCR-8
Article 12, paragraph 3 of the Charter provides that
equity investments shall not exceed 10% of the unim-
paired paid-in capital together with reserves and surplus,
exclusive of the special reserve. At 31 December 2005,
such equity investments represented approximately 5.6%
(4.0% – 2004) of the paid-in capital, reserves, and sur-
plus, as defined.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Functional Currencies and Reporting Currency
The currencies of members are all functional currencies
as these are the currencies of the primary economic
environment in which ADB generates and expends cash.
The reporting currency is the United States dollar, and
the financial statements are expressed in thousands of
current United States dollars.
Translation of Currencies
Assets and liabilities are translated from their functional
currencies to the reporting currency at the applicable
rates of exchange at the end of the reporting period.
Income and expense amounts are translated for each semi-
monthly period generally at the applicable rates of ex-
change at the beginning of each period; such practice
approximates the application of average rates in effect
during the period. Translation adjustments other than
those relating to maintenance of Special Drawing Right
(SDR) capital values (see Notes K and L), are charged or
credited to “Accumulated translation adjustments” and
reported in “CAPITAL AND RESERVES” as part of
“Accumulated other comprehensive income.”
In October 2005, the Board of Directors approved
the adoption of daily exchange rates for accounting and
financial reporting purposes effective 1 January 2006. The
use of daily exchange rates will allow transactions de-
nominated in non-US dollar to be translated using ex-
change rates at time of transactions.
Valuation of Capital Stock
The authorized capital stock of ADB is defined in Arti-
cle 4, paragraph 1 of the Charter “in terms of United

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
States dollars of the weight and fineness in effect on 31
January 1966” (the 1966 dollar) and the value of each
share is defined as 10,000 1966 dollars. The capital stock
had historically been translated into the current United
States dollar (ADB’s unit of account) on the basis of its
par value in terms of gold. From 1973 until 31 March
1978, the rate arrived at on this basis was $1.20635 per
1966 dollar. Since 1 April 1978, at which time the Sec-
ond Amendment to the Articles of Agreement of the
International Monetary Fund (IMF) came into effect,
currencies no longer have par values in terms of gold.
Pending ADB’s selection of the appropriate successor to
the 1966 dollar, the capital stock has been valued for
purposes of these financial statements in terms of the
SDR at the value in current United States dollars as
computed by the IMF, with each share valued at
SDR10,000.
As of 31 December 2005, the value of the SDR in
terms of the current United States dollar was $1.42927
($1.54784 – 2004) giving a value for each share of ADB’s
capital equivalent to $14,292.70 ($15,478.40 – 2004).
However, ADB could decide to fix the value of each share
at $12,063.50 based on the 31 March 1978 par value of
the United States dollar in terms of gold.
Derivative Financial Instruments
All derivative transactions are reported in accordance with
Statement of Financial Accounting Standards (FAS) No.
133, “Accounting for Derivative Instruments and Hedg-
ing Activities,” along with its amendments, collectively
referred as FAS 133, effective 1 January 2001. FAS 133
requires that derivative instruments be recorded in the
Balance Sheet as either assets or liabilities measured at
fair value.
ADB uses derivative instruments for asset/liability
management of individual positions and portfolios, as well
as for the reduction of transaction costs. In applying FAS
133 for purposes of financial statement reporting, ADB
has elected not to define any qualifying hedging rela-
tionships. Rather, all derivative instruments, as defined
by FAS 133, have been marked to fair value, and all
changes in fair value have been recognized in net income.
ADB has elected not to define any qualifying hedging
relationships, not because economic hedges do not exist,
but rather because the application of FAS 133 hedging
OCR-8
CONTINUED
STATEMENTS
FINANCIAL
criteria does not make fully evident ADB’s risk manage-
ment strategies.
The initial application of FAS 133 gave rise to a
transition loss of $81,657,000 in other comprehensive in-
come and a gain of $34,656,000 was reported in net
income. The allocation between net income and other
comprehensive income was based upon the economic
hedging relationships that existed before the initial
application of this statement.
The amount recorded in other comprehensive in-
come as transition loss is being reclassified into earnings
in the same period or periods in which the underlying
transaction affect earnings.
Investments
All investment securities and negotiable certificate of
deposits held by ADB other than derivative instruments
are considered by Management to be “Available for Sale”
and are reported at estimated fair value, which repre-
sents their fair market value. Time deposits are report-
ed at cost. Unrealized gains and losses are reported in
“CAPITAL AND RESERVES” as part of “Accumulated
other comprehensive income.” Realized gains and losses
are included in income from investments and are mea-
sured by the difference between amortized cost and the
net proceeds of sales. With respect to exchange traded
futures, realized gain or loss is reported based on daily
settlement of the net cash margin.
Interest on investment securities and time depo-
sits are recognized as realized and reported, net of
amortizations of premium and discounts.
Securities Transferred Under Securities Lending
Arrangement and Securities Purchased Under
Resale Arrangement
ADB accounts for transfers of financial assets in accor-
dance with FAS 140, “Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
Liabilities - a replacement of FAS 125.” In general, trans-
fers are accounted for as sales when control over the
transferred assets has been relinquished. Otherwise the
transfers are accounted for as repurchase/resale agree-
ments and collateralized financing arrangements. Secu-
rities transferred under securities lending arrangements
37

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS
are recorded as assets and reported at estimated fair value
and the cash collateral received recorded as a liability.
Securities received under resale arrangements are nei-
ther recorded on ADB’s balance sheet nor repledged under
securities lending arrangements. ADB monitors the fair
value of the securities received under resale arrangements,
and if necessary, requires additional collateral.
Loans
ADB’s loans are made to or guaranteed by members, with
the exception of loans to the private sector, and have
maturities ranging between 3 and 30 years. ADB requires
its borrowers to absorb exchange risks attributable to
fluctuations in the value of the currencies which it has
disbursed. Loan interest income and loan commitment
fees are recognized on accrual basis. In line with ADB’s
principle of cost pass through pricing, any variation in
the actual cost of borrowings is passed to LIBOR-based
borrowers as surcharge or rebate.
It is the policy of ADB to place loans in nonaccrual
status for which principal, interest, or other charges are
overdue by six months. Interest and other charges on
nonaccruing loans are included in income only to the
extent that payments have been received by ADB. ADB
maintains a position of not taking part in debt resche-
duling agreements with respect to public sector loans.
In the case of private sector loans, ADB may agree to
debt rescheduling only after alternative courses of ac-
tion have been exhausted.
ADB determines that a loan is impaired and there-
fore subject to provisioning when principal or interest is
in arrears for one year for public sector loans (unless there
is clear and convincing evidence warranting the defer-
ment or acceleration of such provisioning) and six months
for private sector loans. If the present value of expected
future cash flows discounted at the loan’s effective in-
terest rate is less than the carrying value of the loan, a
valuation allowance is established with a corresponding
charge to provision for loan losses.
ADB’s periodic evaluation of the adequacy of the
provision for loan losses is based on its past loan loss ex-
perience, known and inherent risks in existing loans, and
adverse situations that may affect a borrower’s ability to
repay.
38
OCR-8
Effective 2000, ADB levies front-end fees on all new
public sector loans. These fees are deferred and amor-
tized over the life of the loans after offsetting deferred
direct loan origination costs. In 2004, entire front-end
fee on all new public sector loans approved during the
year was waived. In 2005, the policy was extended to
cover the period up to June 2006.
ADB levies a commitment charge on the undis-
bursed balance of effective loans. Unless otherwise pro-
vided by the loan agreement, the charges take effect
commencing on the 60th day after the loan signing date
and are credited to loan income.
Guarantees
ADB extends guarantees to public sector and private
sector borrowers. Guarantees are regarded as outstand-
ing when the underlying financial obligation of the bor-
rower is incurred. ADB would be required to perform
under its guarantees if the payments guaranteed were
not made by the debtor, and the guaranteed party called
the guarantee by demanding payments from ADB in
accordance with the term of the guarantee.
Prior to 1 January 2003, guarantees in the absence
of any call, were not reflected in the financial statements
but disclosed as a note to the financial statements (see
Note F) in accordance with the provisions of FASB No.
5, Accounting for Contingencies. FASB Interpretation
No. 45 (FIN 45), “Guarantor’s Accounting and Disclo-
sure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others,” which came into
effect in 2003, requires the recognition of two types of
liabilities that are associated with guarantees: (a) the
stand-by ready obligation to perform, and (b) the con-
tingent liability. ADB recognizes at the inception of a
guarantee, a liability for the stand-by ready obligation to
perform on guarantees issued and modified after 31
December 2002. The liability is included in “Miscella-
neous liabilities”.
Front-end fee income on guarantees received is de-
ferred and amortized over the period of the guarantee
contract and the unamortized balance of deferred front-
end fee of guarantee is included in “Miscellaneous
liabilities.”

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
Equity Investments
Investments in equity securities which are considered
as “Available for Sale” are reported at estimated fair value.
Investments in equity securities without readily deter-
minable fair values are reported at cost less impairment.
ADB applies equity method of accounting to in-
vestments where the ADB has the ability to exercise
significant influence, limited partnership (LLPs) with
larger than 3% ownership, and to certain limited liabil-
ity companies (LLCs) that maintain a specific owner-
ship account for each investor.
Equity investments with poor credit ratings are as-
sessed for impairment at each quarter. When an impair-
ment is identified and is deemed to be other than
temporary, the equity investment is written down to the
impaired value, which becomes the new cost basis of the
equity investments. Impairment losses are not reversed
for subsequent recoveries in the value of the equity in-
vestments, until it is sold.
Equity investments with readily determinable fair
values are reported at fair value, with unrealized gains
and losses excluded from net income and reported in
“CAPITAL AND RESERVES” as part of “Accumulated
other comprehensive income.”
Property, Furniture, and Equipment
Property, furniture, and equipment are stated at cost and,
except for land, depreciated over estimated useful lives
on a straight-line basis. Maintenance, repairs, and minor
betterments are charged to expense.
Accounting Estimates
The preparation of the financial statements in confor-
mity with generally accepted accounting principles re-
quires Management to make estimates and assumptions
that affect the reported amounts of assets and liabilities
and disclosure of contingent liabilities at the end of the
year and the reported amounts of revenues and expen-
ses during the year. The actual results could differ from
those estimates.
OCR-8
CONTINUED
STATEMENTS
FINANCIAL
Accounting and Reporting Developments
In March 2004, the Emerging Issues Task Force (EITF)
issued EITF 03-16 which requires that investments in
limited liability companies (LLC) that have characte-
ristics of partnership to be accounted using equity
method. This became effective for ADB in 2005.
In May 2005, FASB issued FAS No. 154, Accounting
Changes and Error Corrections. This statement is effective
for accounting changes and corrections of errors made in
the calendar years beginning after 15 December 2005.
As this standard requires that, in the absence of specific
transitional provisions applying to a change in account-
ing policy (including adoption of a new standard), any
such change should be applied retroactively, it will af-
fect ADB’s application and presentation of accounting
change in its financial reporting in future fiscal years.
In November 2005, FASB issued an FASB Staff
Position (FSP) FAS 115-1/124-1, The Meaning of Other-
Than-Temporary Impairment and Its Application to Certain
Investments. This FSP addresses the determination as to
when an investment is considered impaired, whether that
impairment is other than temporary, and the measure-
ment of an impairment loss. The statement is effective
for reporting periods beginning after 15 December 2005
and will affect ADB’s financial reporting in future fiscal
years.
In January 2003, FASB issued FASB Interpretation
No. 46 (FIN 46). During December 2003, FASB replaced
FIN 46 with FASB Interpretation No. 46, Consolidation
of Variable Interest Entities – an interpretation of ARB
No. 51 (FIN 46R). Fin 46 and FIN 46R (collectively
referred to as FIN 46) define certain variable interest
entities (VIE) and requires parties to such entities to
assess and measure variable interests in the VIE for the
purpose of determining possible consolidation of the VIE.
Variable interests can arise from equity investments,
loans, and guarantees. An entity that will absorb a ma-
jority of VIE’s expected losses or receive expected resid-
ual return is deemed to be the primary beneficiary of
the VIE and is subject to consolidation according to the
provisions of FIN 46. ADB is required to disclose infor-
mation about its involvement in VIE where ADB holds
significant variable interest.
39
 OCR-8
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS

Statement of Cash Flows to limited amounts, investments may be made in corpo-

For the purposes of the Statement of Cash Flows, ADB
considers that its cash and cash equivalents are limited
to “DUE FROM BANKS.”
Reclassification
Certain reclassifications of prior year’s amounts and in-
formation have been made to conform to the current year’s
presentation.
NOTE C—RESTRICTIONS ON USE OF
CURRENCIES AND DEMAND
OBLIGATIONS OF MEMBERS
In accordance with Article 24, paragraph 2(i) of the
Charter, the use by ADB or by any recipient from ADB
of certain currencies may be restricted by members to
payments for goods or services produced and intended
for use in their territories. With respect to the curren-
cies of 42 DMCs for 2005 (39 – 2004), cash in banks
(due from banks) and demand obligations totaling
$51,124,000 ($50,625,000 – 2004) and $170,856,000
($173,672,000 - 2004), respectively, may be, but are not
currently so restricted.
rate bonds rated A or better, AAA-rated asset-backed
securities, and AAA-rated mortgage-backed securities.
Securities may be lent, borrowed, and sold short.
In addition, ADB may purchase and sell exchange
traded financial futures and option contracts, and enter
into currency and interest rate swaps, and forward rate
agreements. Exposure to interest rate risk may be ad-
justed within defined bands to reflect changing market
conditions. These adjustments are made through the pur-
chase and sale of securities, and financial futures. Ac-
cordingly, financial futures are held for risk management
purposes. At 31 December 2005, the notional amount of
outstanding purchase and sales futures contracts were
$103,750,000 and $27,700,000, respectively,
($110,900,000 and $21,800,000 – 2004).
Included in “Other securities” as of 31 December
2005 were corporate bonds and other obligations of banks
amounting to $2,653,610,000 ($2,300,457,000 – 2004)
and asset/mortgage-backed securities of $716,429,000
($664,625,000 - 2004).
The currency compositions of the investment port-
folio as of 31 December 2005 and 2004 expressed in
United States dollars are as follows:
Currency 2005 2004

In accordance with Article 24, paragraphs 2(i) and Australian dollar $ 351,594,000 $ 352,369,000
(ii) of the Charter, one member (one – 2004) has res- Canadian dollar 232,121,000 216,094,000
Euro 656,701,000 636,785,000
tricted the use by ADB or by any recipient from ADB of Japanese yen 2,765,649,000 3,066,061,000
its currency to payments for goods or services produced Pound sterling 254,016,000 220,103,000
Swiss franc 224,222,000 249,739,000
in its territory. As such, cash in banks (due from banks) United States dollar 6,071,043,000 5,460,428,000
and investments totaling $19,000 ($1,000 – 2004) and Others 557,411,000 488,516,000

$2,824,000 ($2,789,000 – 2004), respectively, have been Total $ 11,112,757,000 $10,690,095,000

restricted. None of the demand obligations held by ADB
in 2005 was restricted (nil – 2004).
The estimated fair value and amortized cost of the
NOTE D—INVESTMENTS investments by contractual maturity at 31 December 2005
are as follows:
The main investment management objective is to main- Estimated Amortized
tain security and liquidity. Subject to these parameters, Fair Value Cost
ADB seeks the highest possible return on its investments. Due in one year or less $ 4,930,902,000 $ 4,933,838,000
Investments are governed by the Investment Authority Due after one year
through five years 3,987,196,000 4,006,123,000
approved by the Board of Directors in 1999. ADB is Due after five years
restricted by its Investment Authority to invest in go- through ten years 2,194,659,000 2,216,830,000
vernment and government-related debt instruments and Total $11,112,757,000 $11,156,791,000
in time deposits. In the US dollar portfolio only and up

40
 OCR-8
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004 CONTINUED

STATEMENTS
FINANCIAL
Additional information relating to investments in As of 31 December 2005, gross unrealized losses
government and government-guaranteed obligations and amounted to $57,248,000 ($40,671,000 – 2004) from go-
other securities is as follows: vernment and government-guaranteed obligations, corpo-
2005 2004 rate bonds and mortgage/asset-backed securities,
As of 31 December resulting from the market movement. There were 17 gov-
Amortized cost $ 7,448,978,000 $ 7,858,833,000 ernment and government obligations (four – 2004), 52
Estimated fair value 7,404,944,000 7,847,964,000
Gross unrealized gains 13,214,000 29,802,000 corporate obligations (two – 2004), 78 mortgage/asset-
Gross unrealized losses (57,248,000) (40,671,000) backed security positions (23 – 2004) that sustained
For the years ended unrealized losses for over one year, representing 12.05%
31 December: (4.33% - 2004) of the investments. Comparative details
Change in net unrealized
losses from prior year (33,165,000) (46,687,000) for 2005 and 2004 are as follows:
Proceeds from sales 11,265,412,000 8,686,523,000
Gross gain on sales 18,941,000 54,363,000
Gross loss on sales (21,025,000) (21,167,000)

One year or less Over one year Total

For the year 2005 Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
Government and government-guaranteed
obligations $1,734,260,000 $ 7,963,000 $ 618,592,000 $21,432,000 $2,352,852,000 $29,395,000
Corporate bonds 740,136,000 5,682,000 632,562,000 14,663,000 1,372,698,000 20,345,000
Mortgage/Asset-backed securities 390,275,000 5,287,000 88,117,000 2,221,000 478,392,000 7,508,000

Total $2,864,671,000 $18,932,000 $1,339,271,000 $38,316,000 $4,203,942,000 $57,248,000

One year or less Over one year Total

For the year 2004 Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
Government and government-guaranteed
obligations $ 943,767,000 $15,177,000 $423,984,000 $14,511,000 $1,367,751,000 $29,688,000
Corporate bonds 850,070,000 7,864,000 6,749,000 153,000 856,819,000 8,017,000
Mortgage/Asset-backed securities 233,935,000 2,215,000 31,746,000 751,000 265,681,000 2,966,000

Total $2,027,772,000 $25,256,000 $462,479,000 $15,415,000 $2,490,251,000 $40,671,000

Asset/Mortgage-backed Securities
Securities: Asset/Mortgage-
backed securities are instruments whose cash flow is based
on the cash flows of a pool of underlying assets or mort-
gage loans managed by a trust.
Exchange Traded Futures
Futures: Futures are contracts for
delayed delivery of securities or money market instru-
ments in which the seller agrees to make delivery at a
specified future date of a specified instrument at a spe-
cified price or yield. Initial margin requirements are met
with cash or securities, and changes in the market prices
are generally settled daily in cash. ADB generally closes
out open positions prior to maturity. Therefore, cash
receipts or payments are limited to the change in mar-
ket value of the future contracts.
NOTE E—LOANS
Loans
ADB does not currently sell its loans, nor does it believe
there is a comparable market for its loans. The estima-
ted fair value of all loans is based on the estimated cash
flows from principal repayments, interest and other

41
 OCR-8
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS

charges discounted at the applicable market yield curves its borrowers. Provision for loan losses is made against
for ADB’s borrowing cost plus lending spread. The esti- impaired public sector and private sector loans.
mated fair value of public sector loans is not generally The carrying amount and estimated fair value of loans
affected by credit risks based on ADB’s experience with outstanding at 31 December 2005 and 2004 are as follows:

2005 2004
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value

Fixed rate multicurrency loans $ 148,881,000 $ 177,136,000 $ 228,457,000 $ 280,769,000

Pool-based single currency (JPY) loans* 3,893,573,000 4,420,741,000 4,994,867,000 5,703,209,000
Pool-based single currency (US$) loans 8,930,128,000 9,739,443,000 9,879,842,000 11,095,700,000
LIBOR-based loans 10,370,249,000 10,465,957,000 9,040,796,000 9,091,361,000
Fixed rate loans 27,292,000 31,537,000 33,840,000 41,011,000
Local currency loans 108,666,000 112,357,000 18,795,000 19,803,000

Total $23,478,789,000 $24,947,171,000 $24,196,597,000 $26,231,853,000

* Transformed from pool-based multicurrency loans effective 1 January 2004.

Prior to 1 July 1986, the lending rate of ADB was based
on a multicurrency fixed lending rate system under which
loans carried interest rates fixed at the time of loan appro-
val for the entire life of the loans. Effective 1 July 1986,
ADB adopted a multicurrency pool-based variable lending
rate system. In addition, in July 1992, ADB introduced a
United States dollar pool-based variable lending rate
system, and in November 1994, a market-based lending
rate system was made available to financial intermediaries
in the public sector and to the private sector borrowers.
Commencing 1 July 2001, ADB offered LIBOR-
based loans (LBLs) in the following currencies – Euro,
Japanese yen, and United States dollar. The new LBL
lending facility offers borrowers the flexibility of (i) choice
of currency and interest rate basis; (ii) options to link
repayment schedules to actual disbursements for finan-
cial intermediary borrowers; (iii) change the original loan
terms (currency and interest rate basis) at any time during
the life of the loan; and (iv) options to cap or collar the
floating lending rate at any time during the life of the
loan. LBL terms are available for all loans for which the
invitation to negotiate is issued on or after 1 July 2001.
With the introduction of LBLs, all other loan windows
are no longer offered to borrowers. In November 2002,
ADB offered local currency loans (LCLs) to private sec-
tor borrowers. In August 2005, ADB also offered LCLs
to public sector borrowers.
In November 2003, ADB offered borrowers to trans-
form their outstanding pool-based multicurrency loans
of $6.5 billion to pool-based single currency loans in
Japanese yen. The transformation facilitates borrower’s
administration for loan service payments and loan ac-
counting. The transformation became effective on
1 January 2004.
In 2005, ADB received prepayments for 12 loans
amounting to $597,423,000 ($2,790,488,000 – 2004) and
collected prepayment premiums of $16,457,000
($59,427,000 – 2004) which have been included in “Other
income from loans.” Ninety-five percent of the prepaid
amounts were pool-based single currency US dollar loans
in 2005 compared to 51% for pool-based single currency
US dollar and 42% for Japanese yen loans, in 2004.
Since 1988, ADB has charged front-end fees for
private sector loans. Effective 1 January 2000, ADB le-
vies front-end fee of 1% for public sector loans for which
the loan negotiations are completed after that date. In
addition, a flat commitment fee of 0.75% is charged for
new program loans and the progressive commitment fee
of 0.75% is maintained for project loans. Effective 1
January 2000, the lending spread applied to all outstan-
ding pool-based OCR public sector loans and new pub-
lic sector market-based loans was increased from 0.4%
to 0.6%.

42
 OCR-8
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004 CONTINUED

STATEMENTS
FINANCIAL
Waivers of Lending Spread and Front-End Fee Loans in Nonaccrual Status

In 2004, the Board of Governors approved the waiver of One public sector loan to Nauru remained in nonaccrual
the entire 1% front-end fee on all new public sector loans status as of 31 December 2005 (one to Nauru - 2004).
approved during 1 January 2004 to 30 June 2005 (waiver The principal outstanding for this loan as of 31 Decem-
of 50 basis points on public sector loans approved in 2003) ber 2005 was $2,300,000 ($2,300,000 – 2004) of which
and waiver of 20 basis points of the lending spread on $596,000 ($462,000 – 2004) was overdue. The loan in
public sector loans outstanding from 1 July 2004 – 30 nonaccrual status resulted in $144,000 ($144,000 - 2004)
June 2005 for borrowers that do not have loans in ar- not being recognized as income from public sector loans
rears. In 2005, the policy was extended to cover the period for the year ended 31 December 2005. The accumulat-
up to June 2006. ed interest and other charges on this loan that were not
The front-end fees received for the year ended 31 recognized as income as of 31 December 2005 would have
December 2005 were $11,714,000 ($23,734,000 – 2004). totaled $846,000 ($702,000 - 2004).
Administrative expenses relating to direct loan origina- Ten private sector loans were in nonaccrual status
tion of $24,481,000 for the year ended 31 December 2005 as of 31 December 2005 (eleven – 2004). The principal
($22,421,000 – 2004) were deferred and offset against outstanding at that date was $49,162,000 ($50,426,000
front-end fees earned. The excess, if any, is amortized – 2004) of which $40,585,000 ($38,735,000 – 2004) was
over the life of each loan. overdue. Loans in nonaccrual status resulted in
Undisbursed loan commitments and an analysis of $11,096,000 ($9,582,000 – 2004) not being recognized
loans by borrowing member countries as of 31 Decem- as income from private sector loans for the year ended
ber 2005 are shown in OCR-5. The carrying amounts of 31 December 2005. The accumulated interest and other
loan outstanding by loan products at 31 December 2005 charges on these loans, net of loan charges of $4,745,000
and 2004 are as follows: waived and written off due to restructuring of loans in
2005 2004 nonaccrual status of prior year, that were not recognized
Public Sector as income as of 31 December 2005 would have totaled
Fixed rate multicurrency loans $ 148,881,000 $ 228,457,000 $52,839,000 ($46,488,000 – 2004).
Pool-based single currency (JPY) loans* 3,889,612,000 4,988,817,000
Pool-based single currency (US$) loans 8,933,196,000 9,882,950,000
LIBOR-based loans 9,960,837,000 8,717,307,000 Loan Loss Provision
22,932,526,000 23,817,531,000
ADB has not suffered any losses of principal on public
Less: Provision for loan losses (2,300,000) (2,300,000)
Unamortized front-end fee (9,255,000) (27,106,000) sector loans. During the year, no additional loan loss
provision ($2,060,000 – 2004) was provided against public
(11,555,000) (29,406,000)
sector loans. Loan loss provisions have been made against
Sub-total 22,920,971,000 23,788,125,000
impaired private sector loans (see Note M).
Private Sector Information pertaining to loans which were sub-
Pool-based single currency (JPY) loans* 5,282,000 8,067,000
Fixed rate loans 51,150,000 58,334,000 ject to loan loss provisions at 31 December 2005 and 2004
LIBOR-based loans 469,539,000 404,482,000 is as follows:
Local currency loans 110,833,000 20,836,000 2005 2004
636,804,000 491,719,000 Loans not subject to loss provisions $23,487,887,000 $24,218,977,000
Loans subject to loss provisions 81,443,000 90,273,000
Less: Provision for loan losses (77,164,000) (82,004,000)
Total $23,569,330,000 $24,309,250,000
Unamortized front-end fee (1,822,000) (1,243,000)
Average amount of loans
(78,986,000) (83,247,000) subject to loss provisions $ 88,184,000 $ 94,680,000
Related interest income on
Sub-total 557,818,000 408,472,000 such loans recognized
in the year $ 1,209,000 $ 1,585,000
Total $23,478,789,000 $24,196,597,000 Cash received on related
interest income on
*Transformed from pool-based multicurrency loans effective 1 January 2004. such loans $ 1,195,000 $ 1,531,000

43
 OCR-8
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS

The changes in the provision for loan losses during 2005 and 2004 are as follows:

2005 2004

Public Private Public Private

Sector Sector Total Sector Sector Total

Balance 1 January $2,300,000 $82,004,000 $84,304,000 $ 240,000 $82,141,000 $82,381,000

Provision(written back) charged during the year – (3,477,000) (3,477,000) 2,060,000 194,000 2,254,000
Provision written off – (664,000) (664,000) – (565,000) (565,000)
Translation adjustment – (699,000) (699,000) – 234,000 234,000

Balance 31 December $2,300,000 $77,164,000 $79,464,000 $2,300,000 $82,004,000 $84,304,000

Cofinancing NOTE F—GUARANTEES

ADB functions as lead lender in cofinancing arrangements ADB extends guarantees to public sector and private
with other participating financial institutions who also sector borrowers. Such guarantees include (i) partial
provide funds to ADB’s public and private sector bor- credit guarantees where only certain principal and/or
rowers. In such capacity, ADB provides loan administra- interest payments are covered; and (ii) political risk
tion services, which include loan disbursements and loan guarantees, which provide coverage against well-defined
collections. The participating financial institutions have sovereign risks. While counterguarantees from the host
no recourse to ADB for their outstanding loan balances. government are required for all public sector guarantees,
Loans administered by ADB on behalf of partici- guarantees for private sector projects may be provided
pating institutions as at 31 December 2005 and 2004 with or without a host government counterguarantee. A
are as follows: counterguarantee takes the form of a member govern-
ment agreement to indemnify ADB for any payments it
2005 makes under the guarantee. In the event that a guaran-
No.of tee is called, ADB has the contractual right to require
Amount Loans
payment from the government, on demand, or as ADB
Public sector loans $802,678,000 40 may otherwise direct.
Private sector loans 107,609,000 10
Guaranteed payments under partial credit guaran-
Total $910,287,000 50 tees are generally due 10 or more years from the loan
inception date. ADB’s political risk guarantee is callable
2004 when a guaranteed event has occurred and such an event
No.of has resulted in debt service default to the guaranteed
Amount Loans lender.
Public sector loans $815,777,000 39 The committed and outstanding amount of these
Private sector loans 121,480,000 10 guarantee obligations as of 31 December 2005 and 31
Total $937,257,000 49 December 2004 covered:

During the year ended 31 December 2005, a total of

$965,000 ($735,000 - 2004) was received as compensa-
tion for arranging and administering such loans. This
amount has been included in “Income from other
sources.”

44
 OCR-8
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004 CONTINUED

STATEMENTS
FINANCIAL
2005 2004
Committed Outstanding Committed Outstanding
Amount Amount Amount Amount

Partial Credit Guarantees

with counterguarantee $1,024,030,000 $1,006,123,000 $1,156,735,000 $1,153,593,000
without counterguarantee 5,502,000 5,219,000 – –

$1,029,532,000 $1,011,342,000 $1,156,735,000 $1,153,593,000

Political Risk Guarantees

with counterguarantee 145,558,000 113,237,000 253,167,000 100,508,000
without counterguarantee 100,858,000 66,098,000 102,233,000 52,252,000

246,416,000 179,335,000 355,400,000 152,760,000

Others 950,000 950,000 – –

Total $1,276,898,000 $1,191,627,000 $1,512,135,000 $1,306,353,000

None of these amounts were subject to call as of
31 December 2005 (nil – 31 December 2004). The com-
mitted amount represents the maximum potential
amount of undiscounted future payment that ADB could
be required to make, inclusive of standby portion for
which ADB is committed but not currently at risk. The
outstanding amount represents the guaranteed amount
utilized under the related loans, which have been dis-
bursed as of the end of a reporting period, exclusive of
the standby portion. ADB estimates that the present value
of guarantees outstanding at 31 December 2005 was
$754,542,000 ($715,733,000 – 2004).
As of 31 December 2005, a total liability of
$15,839,000 ($10,842,000 – 2004) relating to stand-by
ready obligation for one partial credit risk guarantee (nil
– 2004) and three political risk guarantees (two -2004)
has been included in “Miscellaneous liabilities” on the
balance sheet.
NOTE G—EQUITY INVESTMENTS
ADB’s investments in equity securities issued by private
enterprises located in DMCs include $87,427,000 invest-
ments in limited partnership and limited liability com-
panies which are accounted for on the equity method
($20,016,000 in limited partnership and $7,472,000 in
Asian Finance and Investment Corporation Ltd. (AFIC)
– 2004). In June 2005, ADB divested its holdings in AFIC.
Accumulated net unrealized gains on equity invest-
ments reported at market value were $110,331,000 at
31 December 2005 ($28,946,000 – 2004) and were re-
ported in “CAPITAL AND RESERVES” as part of “Ac-
cumulated other comprehensive income.”
As of 31 December 2005, there were eight equity
investments (eight – 2004) with total fair value of
$1,786,000 ($1,504,000 – 2004) that sustained unreal-
ized losses for over one year amounting to $309,000
($488,000 - 2004).
Approved equity investment facility that has not
been disbursed was $309,528,000 at 31 December 2005
($279,815,000 – 2004).
NOTE H—DERIVATIVE INSTRUMENTS
The fair value of outstanding currency swap agreements
and interest rate swap agreements is determined at the
estimated amount that ADB would receive or pay to
terminate the agreements using market-based valuation
models. The basis of valuation is the present value of
expected cash flows based on observable market data.
Interest rate swaps:
swaps Under a typical interest rate
swap agreement, one party agrees to make periodic pay-
ments based on a notional principal amount and an in-
terest rate that is fixed at the outset of the agreement.
The counterparty agrees to make floating rate payments
based on the same notional principal amount. The terms
of ADB’s interest rate swap agreements usually match
the terms of particular borrowings.
Currency swaps:
swaps Under a typical currency swap
agreement, one party agrees to make periodic payments

45

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS
in one currency while the counterparty agrees to make
periodic payments in another currency. The payments
may be fixed at the outset of the agreement or vary based
on interest rates. A receivable is created for the currency
swapped out, and a payable is created for the currency
swapped in. The terms of ADB’s currency swap agree-
ments usually match the terms of particular borrowings.
Included in Receivable/Payable from Swaps-Others
are interest rate and currency swaps that ADB has en-
tered for the purpose of hedging specific investments
and loans.
ADB entered into investments related swap tran-
sactions with total notional amount of $2,087,111,000
as of 31 December 2005 ($2,125,611,000 – 2004).
ADB entered into currency and interest rate swaps,
amounting to $10,804,000 and $17,284,000 as at 31
December 2005, respectively ($5,342,000 and
$12,525,000 – 2004 respectively) to better align the
composition of outstanding loans with funding sources
and assist borrower’s financial management.
NOTE I—PROPERTY, FURNITURE, AND
EQUIPMENT
In 1991, under the terms of an agreement with the
Philippines (Government), ADB returned the former
headquarters premises, which had been provided by the
Government. In accordance with the agreement as sup-
plemented by a memorandum of understanding, ADB
was compensated $22,657,000 for the return of these
premises. The compensation is in lieu of being provided
premises under the agreement and accordingly, is de-
ferred and amortized over the estimated life of the new
headquarters building as a reduction of occupancy ex-
pense. The amortization for the year ended 31 Decem-
ber 2005 amounted to $337,000 ($331,000 – 2004)
reducing depreciation expense for the new headquarters
building from $4,471,000 ($4,471,000 – 2004) to
$4,134,000 ($4,140,000 – 2004). At 31 December 2005,
the unamortized deferred compensation balance (inclu-
ded in “ACCOUNTS PAYABLE AND OTHER LIABI-
LITIES - Miscellaneous”) was $8,639,000 ($8,639,000
– 2004). At 31 December 2005 accumulated deprecia-
tion for property, furniture, and equipment was
$124,312,000 ($112,545,000 – 2004).
46
OCR-8
NOTE J—BORROWINGS
The key objective of ADB’s borrowing strategy is to raise
funds at the lowest possible cost for the benefit of its
borrowers. ADB uses financial derivative instruments in
connection with its borrowing activities to increase cost
efficiency, while achieving risk management objectives.
Currency swaps enable ADB to raise operationally need-
ed currencies in a cost-efficient way and to maintain its
borrowing presence in the major capital markets. Inte-
rest rate swaps are used generally to reduce interest rate
mismatches arising from lending operations.
ADB issues structured debt, which includes em-
bedded derivatives and simultaneously enters into cur-
rency and/or interest rate swaps to fully hedge the effects
of such embedded derivatives. Borrowings are reported
on the balance sheet at their carrying book value adjus-
ted for any unamortized premium or discounts, and in-
clude the fair value of embedded derivatives of
$155,177,000 as of 31 December 2005 ($364,972,000 –
2004) that are required to be separately accounted for
under FAS 133.
NOTE K—CAPITAL STOCK, CAPITAL TRANSFERRED
TO ASIAN DEVELOPMENT FUND,
MAINTENANCE OF VALUE OF
CURRENCY HOLDINGS, AND
MEMBERSHIP
Capital Stock
The authorized capital stock of ADB as of the end of
2005 consists of 3,509,728 shares (3,499,171 – 2004), all
of which have been subscribed by members (3,499,171
– 2004). Of the subscribed shares, 3,262,876 (3,253,061
– 2004) are “callable” and 246,852 (246,110 – 2004) are
“paid-in.” The “callable” share capital is subject to call
by ADB only as and when required to meet ADB’s obli-
gations incurred on borrowings of funds for inclusion in
its ordinary capital resources (OCR) or on guarantees
chargeable to such resources. The “paid-in” share capital
has been paid or is payable in installments, partly in
convertible currencies and partly in the currency of the
subscribing member which may be convertible. In ac-
cordance with Article 6, paragraph 3 of the Charter, ADB
accepts nonnegotiable, noninterest-bearing demand

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
obligations in satisfaction of the portion payable in the
currency of the member, provided such currency is not
required by ADB for the conduct of its operations. The
settlement of such amounts is not determinable and,
accordingly, it is not practicable to determine a fair val-
ue for these receivables.
As of 31 December 2005, all matured installments
amounting to $3,517,201,000 ($3,799,515,000 – 2004)
were received except for $38,000 from one country (nil
– 2004). Installments not due aggregating $10,980,000
($9,874,000 – 2004 are receivable as follows:
For the Year ending 31 December:
2006 $5,678,000 2007 $2,651,000 2008 $2,651,000
Capital Transferred to Asian Development Fund
Pursuant to the provisions of Article 19, paragraph 1(i)
of the Charter, the Board of Governors has authorized
the setting aside of 10% of the unimpaired “paid-in”
capital paid by members pursuant to Article 6, paragraph
2(a) of the Charter and of the convertible currency portion
paid by members pursuant to Article 6, paragraph 2(b)
of the Charter as of 28 April 1973 to be used as a part of
the Special Funds of ADB. The resources so set aside
amounting to $68,047,000 as of 31 December 2005
($73,692,000 - 2004) expressed in terms of the SDR on
the basis of $1.42927 ($1.54784 - 2004) per SDR
($57,434,000 in terms of $1.20635 per 1966 dollar—see
Note B), were allocated and transferred to the Asian
Development Fund.
Maintenance of Value of Currency Holdings
Prior to 1 April 1978, the effective date of the Second
Amendment to the IMF Articles, ADB implemented
maintenance of value (MOV) in respect of holdings of
member currencies in terms of 1966 dollars, in accor-
dance with the provisions of Article 25 of the Charter
and relevant resolutions of the Board of Directors. Since
then, settlement of MOV has been put in abeyance.
Inasmuch as the valuation of ADB’s capital stock
and the basis of determining possible MOV obligations
are still under consideration, notional amounts have been
calculated provisionally as receivable from or payable to
OCR-8
CONTINUED
STATEMENTS
FINANCIAL
members in order to maintain the value of currency
holdings in terms of the SDR. In view thereof, the no-
tional MOV amounts of receivables and payables are offset
against one another and shown as net notional amounts
to maintain value of currency holdings in the “CAPITAL
AND RESERVES” portion of the Balance Sheet. The
carrying book value for such receivables and payables
approximates its fair value.
The net notional amounts as of 31 December 2005
consisted of (a) the increase of $497,298,000
($732,935,000 - 2004) in amounts required to maintain
the value of currency holdings to the extent of matured
and paid capital subscriptions due to the increase in the
value of the SDR in relation to the United States dollar
during the period from 1 April 1978 to 31 December 2005
and (b) the net decrease of $88,807,000 (increase of
$89,991,000 – 2004) in the value of such currency hold-
ings in relation to the United States dollar during the
same period. In terms of receivable from and payable to
members, they are as follows:
2005 2004
Notional MOV Receivables $791,945,000 $912,255,000
Notional MOV Payables 205,840,000 269,311,000
Total $586,105,000 $642,944,000
Membership
As of 31 December 2005, ADB is owned by 64 member
countries, 46 countries from the region and 18 countries
from outside the region (see OCR–7). During 2005, Arme-
nia has subscribed to 10,557 shares of ADB’s capital stock.
NOTE L—RESERVES
Ordinary Reserve and Net Income
Under the provisions of Article 40 of the Charter, the
Board of Governors shall determine annually what part
of the net income shall be allocated, after making pro-
vision for reserves, to surplus and what part, if any, shall
be distributed to the members. As of 31 December 2005,
of the net income for the year ended 31 December 2004,
$37,917,000 was allocated to ordinary reserve (nil – 2004),
$40,000,000 to Surplus ($195,472,000 – 2004), and
$288,000,000, $40,000,000 and $32,000,000 were
47

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS
allocated to ATF, ADF and TASF, respectively
($150,000,000 and $50,000,000 to ADF and TASF,
respectively – 2004).
The restatement of the capital stock for purposes
of these financial statements on the basis of the SDR
instead of the 1966 dollar (see Note B) resulted in a net
credit of $54,061,000 to the Ordinary Reserve during the
year ended 31 December 2005 (charge of $27,170,000 –
2004). That credit is the decrease in the value of the
matured and paid capital subscriptions caused by the
change during the year in the value of the SDR in rela-
tion to the United States dollar not allocated to mem-
bers as notional maintenance of value adjustments in
accordance with resolutions of the Board of Directors.
Cumulative Revaluation Adjustments Account
In May 2002, the Board of Governors approved the allo-
cation of net income representing the cumulative net
unrealized gains (losses) on derivatives, as required by
FAS 133 to a separate category of Reserves - “Cumula-
tive Revaluation Adjustments Account.” During the year,
the 2004 net unrealized gains on derivatives of
$40,963,000 resulted in an increase (decrease of
$178,387,000 – 2004) of the balance of the Cumulative
Revaluation Adjustments account at 31 December 2005
to $234,833,000($193,870,000 – 2004).
Special Reserve
The Special Reserve includes commissions on loans and
guarantee fees on guarantees set aside pursuant to Article
17 of the Charter. Special Reserve assets consist of term
deposits and government and government-guaranteed ob-
ligations and are included under the heading “INVEST-
MENTS.” For the year ended 31 December 2005,
guarantee fees amounting to $4,090,000 ($3,473,000 –
2004) were appropriated to Special Reserve.
Loan Loss Reserve
In 2004, the Board of Directors approved the creation of
Loan Loss Reserve through an allocation of $218,800,000
out of prior year net income. The Loan Loss Reserve
forms part of Capital and Reserves to be used as a basis
for capital adequacy against the estimated expected loss
48
OCR-8
in ADB’s public sector loans and guarantees portfolio. In
2005, the estimated loan loss reserve requirement was
$167,000,000 resulting to a decrease of $51,800,000. The
estimated expected loss is determined using ADB’s credit
risk model net of loan loss provisions taken up in accor-
dance with generally accepted accounting principles.
Surplus
Surplus represents funds for future use to be determined
by the Board of Governors. In the first half of 2005, the
Board of Governors approved the initial transfer of
$312,000,000 from Surplus to the Asian Tsunami Fund
(ATF) to finance the needs of the tsunami-affected
developing member countries and allocated $40,000,000
out of 2004 net income to Surplus ($195,472,000 – 2004).
In the last quarter of 2005, unutilized ATF fund of
$40,000,000 was transferred back to Surplus and
$80,000,000 was transferred from Surplus to the Pakistan
Earthquake Fund.
Comprehensive Income
Comprehensive income has two major components: net
income and other comprehensive income comprising gains
and losses affecting equity that, under generally accept-
ed accounting principles, are excluded from net income.
Other comprehensive income includes such items as the
effects of the implementation of FAS 133, unrealized
gains and losses on available-for-sale securities and list-
ed equity investments, currency translation adjustments
and minimum pension liability adjustment.
NOTE M—INCOME AND EXPENSES
Total income from loans for the year ended 31 Decem-
ber 2005 was $1,036,329,000 ($1,038,345,000 – 2004).
The average yield on the loan portfolio during the year
was 4.35% (4.16% – 2004), excluding premium received
on prepayment and other loan income. Premium on
prepaid loans collected during 2005 amounted to
$16,457,000 ($59,427,000 – 2004).
Total income from investments including net rea-
lized losses on sales, net unrealized losses on derivatives,
and interest earned for securities transferred under
securities lending and resale arrangements for the year
 OCR-8
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004 CONTINUED

STATEMENTS
FINANCIAL
ended 31 December 2005 was $371,357,000 As of 31 December 2005, the net cumulative amount
($281,793,000 – 2004). The annualized rate of return of TA commitments that had been charged to OCR cur-
on the average investments held during the year, based rent income in the prior years amounted to $69,751,000
on the portfolio held at the beginning and end of each ($73,197,000 – 31 December 2004) out of which
month, was 2.96% (2.21% – 2004) excluding unrealized $60,020,000 ($52,391,000 – 2004) had been disbursed.
gains and losses on investments and 2.44% (1.81% – 2004) For the year ended 31 December 2005, write-back
including unrealized gains and losses on investments. of provision for losses of $3,477,000 corresponded to pri-
Income from other sources primarily includes div- vate sector loans. For the year ended 31 December 2004,
idends received for the year ended 31 December 2005 the provision for losses totaled $2,254,000 which includes
amounting to $3,409,000 ($10,540,000 – 2004) and $194,000 for private sector loans and $2,060,000 for public
share in the net gain of equity investments of sector loans.
$3,497,000 (net loss of $13,185,000 – 2004) accounted Other expenses of $4,248,000 ($3,044,000 – 2004)
for on the equity method. included non-borrowings related financial expenses such
Total interest expense incurred for the year ended as fees paid to external asset managers and bank charges.
31 December 2005 amounted to $881,540,000 Net unrealized losses on derivatives of $308,743,000
($845,304,000 – 2004). Other borrowings and related ex- (net unrealized gains of $40,963,000 – 2004) were made
penses consist of amortization of borrowings’ issuance costs up of:
and other expenses of $11,678,000 ($16,353,000 – 2004). 2005 2004
Administrative expenses (other than those pertai- Unrealized (losses) gains on
ning directly to ordinary operations and special opera- Borrowings related swaps $ (55,522,000) $(123,277,000)
Investments related swaps (3,925,000) (15,577,000)
tions) for the year ended 31 December 2004 were Loan related swaps 258,000 (2,012,000)
apportioned between OCR and the Asian Development Embedded derivatives in
structured borrowings (241,700,000) 186,604,000
Fund in proportion of the relative volume of operational FX Forward (3,548,000) –
activities of each fund. Of the total administrative Amortization of the FAS 133
transition adjustment (4,306,000) (4,775,000)
expenses of $335,921,000 ($305,893,000 – 2004),
$175,751,000 ($165,151,000 – 2004) was accordingly Total $(308,743,000) $ 40,963,000
charged to the Asian Development Fund. The balance of
administrative expenses after allocation was reduced by NOTE N—OTHER ASSETS AND LIABILITIES—
the deferral of direct loan origination costs of $24,481,000 MISCELLANEOUS
($22,421,000 – 2004) related to new loans for the year ended
31 December 2005 (see Notes B and E). At 31 December 2005 and 2004, ADB had the following
During 2005, the Bank offered an enhanced sepa- receivables from/payables to special funds and trust funds
ration program to eligible staff to resign before their resulting from administrative arrangements and opera-
normal retirement date. Administrative expenses for 2005 ting activities.
include the $4,661,000 termination benefits for staff who 2005 2004
accepted the program. Amounts receivable from:
Following the approval by the Board of Directors Asian Development Fund (Note M) $ 32,064,000 $ 24,994,000
Technical Assistance Special Fund – 51,000
in June 2003 of the resumption of direct net income Japan Special Fund 109,000 50,000
allocation to TASF to finance technical assistance (TA) Asian Development Bank Institute
Special Fund 177,000 186,000
operations, no new TA commitments during the year were Staff Retirement Plan 584,000 1,015,000
charged to OCR current income as “TECHNICAL Agency Trust Funds (net) – 808,000
ASSISTANCE TO MEMBER COUNTRIES.” Total $ 32,934,000 $ 27,104,000
Accordingly the write-back in the amount of $3,446,000 Amounts payable to:
for the year represented cancellations of the undisbursed Technical Assistance Special Fund $ 24,000 $ –
Agency Trust Funds (net) 328,000 –
amounts of completed TA projects committed in prior
Total $ 352,000 $ –
periods ($2,404,000 – 2004).

49
 OCR-8
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS

NOTE O—STAFF RETIREMENT PLAN AND and tolerance for risk, taking into account the nature and
POSTRETIREMENT MEDICAL BENEFITS duration of the Plan’s liabilities. The Plan’s assets are
diversified among different markets and different asset
Staff Retirement Plan classes. The use of derivatives for speculation, leverage
or taking risks is prohibited. Selected derivatives are used
ADB has a contributory defined benefit Staff Retirement for hedging and transactional efficiency purposes.
Plan (the Plan). Every employee, as defined under the The Plan’s investment policy is periodically re-
Plan, shall, as a condition of service, become a partici- viewed and revised to reflect the best interest of the
pant from the first day of service, provided that at such Plan’s participants and beneficiaries. The current poli-
a date, the employee has not reached the normal retire- cy, adopted in January 2003, specifies an asset-mix struc-
ment age of 60. The Plan applies also to members of the ture of 70% of assets in equities and 30% in fixed income
Board of Directors who elect to join the Plan. Retire- securities. At present, investments of the Plan’s assets
ment benefits are based on length of service and highest are divided into three categories: US equity, Non-US
average remuneration during two years of eligible service. equity, and US fixed income.
The Plan assets are segregated and are not included in As of 31 December 2005 and 2004, the breakdown
the accompanying Balance Sheet. The costs of adminis- of the fair value of plan assets held is as follows:
tering the Plan are absorbed by ADB, except for fees paid
2005
to the investment managers and related charges, inclu-
Amount Percentage
ding custodian fees, which are borne by the Plan.
Equity Securities
Participants are required to contribute 9 1/3% of US $ 471,767,000
their salary to the Plan and may also make additional Non-US 300,554,000
voluntary contributions. ADB’s contribution is deter- 772,321,000 71.4%
mined at a rate sufficient to cover that part of the costs Fixed Income Securities 299,334,000 27.7
of the Plan not covered by the participants’ contributions. Other Assets(Liabilities)–net 9,478,000 0.9
Total $1,081,133,000 100.0%

Expected Contributions
2004
Amount Percentage
The expected amount of contributions to the Plan for 2006
amounts to $66,287,000 ($64,020,000 – 2004) representing Equity Securities
US $ 441,188,000
ADB’s contributions of $20,627,000 ($19,734,000 – 2004), Non-US 247,264,000
based on budgeted contribution rate of 16% (16% – 2004), 688,452,000 70.1%
participants’ mandatory contributions of $12,025,000 Fixed Income Securities 236,099,000 24.1
($11,507,000 – 2004) and discretionary contributions of Other Assets(Liabilities)–net 56,733,000 5.8
$33,635,000 ($32,779,000 – 2004). Total $ 981,284,000 100.0%

Investment Strategy All investments excluding time deposits are valued

Contributions in excess of current benefits payments are
invested in international financial markets and in a variety
of investment vehicles. The Plan employs six external
asset managers and one global custodian who function
within the guidelines established by the Plan’s Invest-
ment Committee. The investment of these assets, over
the long term, is expected to produce higher returns than
short-term investments. The investment policy incor-
porates the Plan’s package of desired investment return,
using market prices. Time deposits are reported at cost.
Fixed income securities include US government and
government guaranteed obligations, corporate bonds and
time deposits. Other assets include forward exchange
contracts in various foreign currencies transacted to hedge
currency exposure in the investment portfolio, which are
reported at fair value.
For the year ended 31 December 2005 the net return
on the Plan assets was 8.0% (11.1% – 2004). ADB expects
the long-term rate of return on the assets to be 8%.

50
 OCR-8
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004 CONTINUED

STATEMENTS
FINANCIAL
Assumptions Postretirement Medical Benefits Plan

The assumed overall rate of return takes into account
long-term return expectations of the underlying asset
classes within the investment portfolio mix, and the
expected duration of the Plan’s liabilities. Return ex-
pectations are forward looking and, in general, not much
weight is given to short-term experience. Unless there
is a drastic change in investment policy or market envi-
ronment, the assumed investment return of 8% on the
Plan’s assets is expected to remain broadly the same,
year to year.
In 1993, ADB adopted a cost-sharing plan for retirees’
medical insurance premiums. Under the plan, ADB is obli-
gated to pay 75% of the Group Medical Insurance Plan pre-
miums for retirees, including retired members of the Board
of Directors, and their eligible dependents who elected to
participate. The cost-sharing plan is currently unfunded.
Generally accepted accounting principles require
an actuarially determined assessment of the periodic cost
of postretirement medical benefits.
The following table sets forth the pension and post-
retirement medical benefits at 31 December 2005 and
2004:

Pension Benefits Postretirement Medical Benefits

2005 2004 2005 2004

Change in benefit obligation:

Benefit obligation at beginning of year $1,111,357,000 $ 975,471,000 $ 173,874,000 $ 149,181,000
Service cost 35,993,000 32,952,000 8,112,000 6,930,000
Interest cost 68,057,000 62,290,000 10,823,000 9,672,000
Participants’ contributions 43,495,000 40,732,000 – –
Actuarial loss 12,203,000 37,256,000 (43,783,000) 10,191,000
Amendments – – 80,480,000 –
Benefits paid (44,652,000) (37,344,000) (2,168,000) (2,100,000)

Benefit obligation at end of year $1,226,453,000 $1,111,357,000 $ 227,338,000 $ 173,874,000

Change in plan assets:

Fair value of plan assets at beginning of year $ 981,284,000 $ 858,593,000 $ – $ –
Actual return on plan assets 81,916,000 102,393,000 – –
Employer’s contribution 19,090,000 16,910,000 2,168,000 2,100,000
Plan participants’ contributions 43,495,000 40,732,000 – –
Benefits paid (44,652,000) (37,344,000) (2,168,000) (2,100,000)

Fair value of plan assets at end of year $1,081,133,000 $ 981,284,000 $ – $ –

Funded status $ (145,320,000) $ (130,073,000) $(227,338,000) $(173,874,000)

Unrecognized actuarial loss 97,825,000 92,302,000 130,580,000 53,588,000
Unrecognized prior service cost 24,121,000 28,359,000 (45,940,000) (2,542,000)
Unrecognized transition obligation – – – 479,000

Net amount recognized $ (23,374,000) $ (9,412,000) $(142,698,000) $(122,349,000)

Amounts recognized in the Balance sheet

consist of:
Accrued benefit liability $ (52,426,000) $ (48,197,000) $(142,698,000) $(122,349,000)
Intangible asset 24,121,000 28,359,000 N/A N/A
Accumulated other comprehensive income 4,931,000 10,426,000 N/A N/A

Net amount recognized $ (23,374,000) $ (9,412,000) $(142,698,000) $(122,349,000)

Weighted-average assumptions as of 31 December

Discount rate 5.75% 6.00% 5.75% 6.00%
Expected return on plan assets 8.00% 8.00% N/A N/A
Rate of compensation increase varies with age
and averages 4.75% 5.00% 4.75% 5.00%

51
 OCR-8
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS

For measurement purposes, a 9.0% annual rate of 31 December 2005. The rate was assumed to decrease
increase in the per capita cost of covered health care gradually to 5.0% for 2010 and remain at that level
benefits was assumed for the valuation as at thereafter.

Pension Benefits Postretirement Medical Benefits

2005 2004 2005 2004

Components of net periodic benefit cost:

Service cost $ 35,993,000 $ 32,952,000 $ 8,112,000 $ 6,930,000
Interest cost 68,057,000 62,290,000 10,823,000 9,672,000
Expected return on plan assets (75,822,000) (71,317,000) – –
Amortization of prior service cost 4,238,000 4,238,000 (385,000) (385,000)
Amortization of transition obligation – (7,000) 479,000 2,409,000
Recognized actuarial (gain) loss 586,000 (73,000) 3,488,000 3,266,000
Net periodic benefit cost $ 33,052,000 $ 28,083,000 $22,517,000 $21,892,000

The accumulated benefit obligation of the pension NOTE P—FAIR VALUE OF FINANCIAL
plan as of 31 December 2005 was $1,133,559,000 INSTRUMENTS
($1,029,412,000 – 2004).
A one-percentage-point change in assumed health The carrying amounts and estimated fair values of ADB’s
care trend rates would have the following effects: significant financial instruments as of 31 December 2005
and 2004 are summarized on the next page.
1- Percentage- 1-Percentage- Additional fair value information, including methods
Point Increase Point Decrease
used to estimate certain values, is included in the notes
Effect on total service and referenced in the table.
interest cost components $ 4,802,000 $ (3,647,000)
Fair value of a financial instrument is defined as
Effect on postretirement
benefit obligation 46,241,000 (36,257,000) the amount at which the instrument could be exchanged
in a current transaction between willing parties, other
than in a forced or liquidation sale.
Estimated Future Benefits Payments The carrying amount of time deposits is a reaso-
nable estimate of fair value.
The following table shows the benefit payments expected If available, quoted market values are used to de-
to be paid in each of the next five years and subsequent termine fair values. Financial instruments for which
five years. The expected benefit payments are based on market quotations are not readily available are valued
the same assumptions used to measure the benefit ob- using valuation models. The basis of valuation is the
ligation at 31 December 2005: present value of expected cash flows based on observable
market data.
Postretirement
Pension Benefits Medical Benefits
NOTE Q—CREDIT RISK
2006 $ 48,163,000 $ 4,213,000
2007 52,207,000 4,995,000 ADB is exposed to risk if the borrowers fall in arrears on
2008 56,402,000 5,842,000
2009 59,367,000 6,729,000 payments. ADB manages country risk for lending ope-
2010 61,517,000 7,610,000 rations through continuous monitoring of creditworthi-
2011-2015 364,097,000 51,262,000 ness of the borrowers and rigorous capital adequacy
framework. Guarantees involve elements of credit risk
which are also not reflected on the balance sheet. Cre-

52
 OCR-8
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004 CONTINUED

STATEMENTS
FINANCIAL
2005 2004

Carrying Estimated Carrying Estimated

Amounta Fair Value Amounta Fair Value

On-balance sheet financial instruments:

ASSETS:

Due from banks $ 81,662,000 $ 81,662,000 $ 76,405,000 $ 76,405,000

Investments (Note D) 11,112,757,000 11,112,757,000 10,690,095,000 10,690,095,000
Securities transferred under
securities lending arrangement 2,770,965,000 2,770,965,000 2,040,302,000 2,040,302,000
Securities purchased under
resale arrangement 1,118,748,000 1,118,748,000 1,330,948,000 1,330,948,000
Loans outstanding (Note E) 23,478,789,000 24,947,171,000 24,196,597,000 26,231,853,000
Equity investments (Note G) 404,975,000 404,975,000 257,437,000 257,437,000
Other assets
Nonnegotiable, noninterest-bearing
demand obligations 172,966,000 100,974,000 207,181,000 134,641,000
Receivable from swaps - others (Note H) 1,582,337,000 1,582,337,000 1,567,602,000 1,567,602,000
Receivable from swaps - borrowings (Note H) 9,733,958,000 9,733,958,000 9,583,846,000 9,583,846,000
Future guarantee receivable 15,839,000 15,839,000 10,842,000 10,842,000

LIABILITIES:

Borrowings (Note J) 24,660,637,000 24,960,951,000 24,186,126,000 25,238,996,000

Other liabilities
Payable for swaps - others (Note H) 1,586,604,000 1,586,604,000 1,809,722,000 1,809,722,000
Payable for swaps - borrowings (Note H) 9,354,776,000 9,354,776,000 8,841,324,000 8,841,324,000
Guarantee liability 15,839,000 15,839,000 10,842,000 10,842,000

2005 2004

Outstanding Present Outstanding Present

Amount Value Amount Value

Off-balance sheet financial instruments:

Guarantees (Note F) $ 1,107,048,000 $ 691,908,000 $ 1,254,101,000 $ 679,908,000

a
The carrying amount for borrowings and swaps are inclusive of accrued interest.

dit risk represents the potential loss due to possible non-
performance by obligors and counterparties under the
terms of the contract.
As of 31 December 2005, ADB has a significant con-
centration of credit risk to Asian and the Pacific region
associated with loan and guarantee products with credit
exposure determined based on fair value of loans and
outstanding guarantees amounting to $26,138,798,000
($27,538,206,000 – 2004).
ADB undertakes derivative transactions with its
eligible counterparties and transacts in various financial
instruments as part of liquidity and asset/liability ma-
nagement purposes that may involve credit risks. For all
securities, ADB manages credit risks by following the
guidelines set forth in the Investment Authority. (See
Note D.)
ADB has a potential risk of loss if the swap coun-
terparty fails to perform its obligations. In order to re-
duce such credit risk, ADB only enters into long-term
swap transactions with counterparties eligible under
ADB’s swap guidelines which include a requirement that
the counterparties have a credit rating of A-/A3 or higher
and requires certain counterparties with executed Credit
Support Annex, to provide collateral in form of cash or
other approved liquid securities based on mark-to-mar-
ket exposure.
As of 31 December 2005, ADB had received colla-
teral of $213,954,000 ($219,421,000 – 2004) in connec-
tion with the swap agreements. ADB has also entered
into master swap agreements which contain legally en-
forceable close-out netting provisions for all counterpar-
ties with outstanding swap transactions.

53
 OCR-8
ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS

NOTE R—SPECIAL AND TRUST FUNDS
ADB’s operations include special operations, which are
financed from special fund resources, consisting of the
Asian Development Fund, the Technical Assistance
Special Fund, Japan Special Fund, the Asian Develop-
ment Bank Institute Special Fund, the Asian Tsunami
Fund and the Pakistan Earthquake Fund.
The OCR and special fund resources are at all times
used, committed, and invested entirely separate from
each other. The Board of Governors may approve alloca-
tion of the net income of OCR to special funds, based
on the funding and operational requirements for the
funds. The administrative and operational expenses
pertaining to the OCR and special funds are charged to
the respective special funds. The administrative expenses
of ADB are allocated amongst OCR and special funds
and are settled on a regular basis between the OCR and
the special funds.
In addition, ADB, alone or jointly with donors, ad-
ministers on behalf of the donors, including members of
ADB, their agencies and other development institutions,
projects/programs supplementing ADB’s operations. Such
projects/programs are funded with external funds admi-
nistered by ADB and with external funds not under ADB’s
administration. ADB charges administrative fees for
external funds administered by ADB. The funds are
restricted for specific uses including technical assistance
to borrowers and technical assistance for regional pro-
grams. The responsibilities of ADB under these arrange-
ments range from project processing to project
implementation including the facilitation of procurement
of goods and services. These funds are held in trust with
ADB and are held in a separate investment portfolio which
is not commingled with ADB’s funds, nor are they in-
cluded in the assets of ADB.
Special funds and funds administered by ADB on
behalf of the donors are not included in the assets of
OCR. The breakdown of the total of such funds together
with the funds of the special operations as of 31 Decem-
ber 2005 and 2004 is as follows:

2005 2004

Total Net No.of Total Net No.of

Assets Funds Assets Funds

Special Funds
Asian Development Fund $27,605,408,000 1 $29,571,195,000 1
Technical Assistance Special Fund 215,467,000 1 99,185,000 1
Japan Special Fund 177,661,000 1 178,116,000 1
Asian Development Bank Institute Special Fund 16,839,000 1 16,845,000 1
Asian Tsunami Fund 6,344,000 1 – –
Pakistan Earthquake Fund 85,497,000 1 – –

Subtotal 28,107,216,000 6 29,865,341,000 4

Trust Funds
Funds administered by ADB 949,947,000 48 940,601,000 40
Funds not administered by ADB 8,684,000 2 9,472,000 2

Subtotal 958,631,000 50 950,073,000 42

Total $29,065,847,000 56 $30,815,414,000 46

During the year ended 31 December 2005, a total
of $2,297,000 ($1,303,000 – 2004) was recorded as com-
pensation for administering projects/programs under
Trust Funds. The amount has been included in “Income
from other sources.”
NOTE S—VARIABLE INTEREST ENTITIES
As of 31 December 2005, ADB did not identify any VIE
in which ADB is the primary beneficiary, requiring con-
solidation in OCR financial statements. ADB may hold
significant variable interests in VIE, which requires dis-
closures.

54

ASIAN DEVELOPMENT BANK—ORDINARY CAPITAL RESOURCES
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FIN 46 does not require application of VIE created
before 31 December 2003, if after making exhaustive
effort, it is unable to obtain the information necessary
to (i) determine whether the entity is a VIE; (ii) deter-
mine whether the entity is variable interest entity’s
primary beneficiary, or (iii) perform accounting required
to consolidate the variable interest entity for which it is
determined to be the primary beneficiary. As of 31
December 2005, this applied to 14 private sector enter-
prises where, ADB issues loans and guarantees to. ADB’s
maximum exposure to losses as a result of its involve-
ment was $312.3 million and recognized $19.1 million
income.
OCR-8
STATEMENTS
FINANCIAL
In addition, the review of ADB’s loan, equity in-
vestments, and guarantee portfolio, has identified 4 in-
vestments in VIEs in which ADB is not the primary
beneficiary, but in which it is reasonably possible that
ADB could be deemed to hold significant variable inte-
rest. ADB’s total investment in these entities, compri-
sing disbursed and committed but undisbursed balances,
corresponded to the maximum exposure to loss totaling
$95.2 million as of 31 December 2005. Based on the most
recent available information from these VIEs, the assets
of these VIEs totaled $347.2 million.
55
 STATEMENTS
FINANCIAL
Report of Independent Auditors to the Asian Development Bank

We have audited the accompanying special purpose statements of assets, liabilities and fund
balances of the Asian Development Bank—Asian Development Fund as of December 31, 2005
and 2004 and the related special purpose statements of revenues and expenses, cash flows and
changes in fund balances for the years then ended. These financial statements are the respon-
sibility of the management of the Asian Development Bank. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosure
in the financial statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
As discussed in Note B, the Board of Directors approved in May 2001 the adoption of special
purpose financial statements for the Asian Development Bank—Asian Development Fund.
With the adoption of the special purpose financial statements, loan loss provisioning has been
eliminated. The accompanying financial statements are not intended to be a presentation in
conformity with accounting principles generally accepted in the United States of America.
In our opinion, the special purpose financial statements referred to above present fairly, in all
material respects, the assets, liabilities and fund balances of Asian Development Bank—Asian
Development Fund at 31 December 2005 and 2004, and the revenues and expenses and cash
flows for the years then ended, on the basis explained in Note B.
Our audits were conducted for the purpose of forming an opinion on the special purpose
financial statements taken as a whole. The accompanying special purpose statements of loans
as at 31 December 2005 and 2004, and of resources as at 31 December 2005 are presented for
purposes of additional analyses and are not required parts of the special purpose financial
statements. Such information has been subjected to the auditing procedures applied in the
audits of the special purpose financial statements and in our opinion is fairly stated in all
material respects in relation to the special purpose financial statements taken as a whole.
This report is intended solely for the information and use of the Board of Governors, Board of
Directors, management and members of the Asian Development Bank—Asian Development
Fund.

PricewaterhouseCoopers
Certified Public Accountants

Singapore
8 March 2006

57
 ADF-1
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
SPECIAL PURPOSE STATEMENT OF ASSETS, LIABILITIES, AND FUND BALANCES
31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

2005 2004
ASSETS
DUE FROM BANKS (Note B) $ 21,557 $ 8,701
INVESTMENTS (Notes B, C, and L)
Government and government-guaranteed obligations $ 956,618 $ 1,599,194
Time deposits 3,039,051 1,903,259
Corporate bonds 1,537,511 5,533,180 2,028,398 5,530,851
SECURITIES TRANSFERRED UNDER SECURITIES LENDING
ARRANGEMENT (Notes B, C, and L) 225,683 198,010
SECURITIES PURCHASED UNDER
RESALE ARRANGEMENT (Notes B, C, and L) 182,048 60,962
LOANS OUTSTANDING (ADF–5) (Notes B, D, and L) 20,238,051 21,627,140
ACCRUED REVENUE
On investments 41,492 63,029
On loans 44,669 86,161 48,858 111,887
DUE FROM CONTRIBUTORS (Notes B, E, and L) 1,737,594 2,323,652
OTHER ASSETS
Investment related receivables 215 246
Others 3,950 4,165 2,657 2,903

TOTAL $28,028,439 $29,864,106

LIABILITIES AND FUND BALANCES

PAYABLE UNDER SECURITIES
LENDING ARRANGEMENT (Notes B and L) $ 229,134 $ 203,327
PAYABLE TO RELATED FUNDS (Notes F and H) 36,778 24,994
ADVANCE PAYMENTS ON CONTRIBUTIONS (ADF–6) (Note B) 99,040 63,945
UNDISBURSED COMMITMENTS (Notes B, K, and L) 24,000 –
OTHER LIABILITIES (Note G) 34,079 645
TOTAL LIABILITIES 423,031 292,911
FUND BALANCES
Amounts available for operational commitments (ADF–6)
Contributed Resources (Notes B and G) $24,425,701 $26,292,598
Unamortized Discount (Note B) (21,234) –
24,404,467 26,292,598
Set-Aside Resources (Note I) 68,047 73,692
Transfers from Ordinary Capital Resources and
Technical Assistance Special Fund (Note A) 623,283 583,717
25,095,797 26,950,007
Accumulated surplus (ADF–4) 2,342,886 2,132,274
Accumulated other comprehensive income (ADF–4)
(Notes B and J) 166,725 27,605,408 488,914 29,571,195

TOTAL $28,028,439 $29,864,106

The accompanying notes are an integral part of these special purpose financial statements (ADF–7).

58
 ADF-2
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
SPECIAL PURPOSE STATEMENT OF REVENUE AND EXPENSES
For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)

STATEMENTS
FINANCIAL
2005 2004

REVENUE
From loans (Notes B and D) $ 202,264 $ 195,451
From investments (Notes B and C)
Interest 207,494 170,768
From other sources—net 310 $410,068 159 $366,378

EXPENSES
Financial expenses 24 39
Administrative expenses (Note H) 175,751 165,152
Grants (Notes B and K) 24,000 –
Amortization of discounts on contributions (Notes B and G) 611 200,386 – 165,191

NET REALIZED GAINS (LOSSES) 930 (470)

EXCESS OF REVENUE OVER EXPENSES $210,612 $200,717

The accompanying notes are an integral part of these special purpose financial statements (ADF-7).

59
 ADF-3
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
SPECIAL PURPOSE STATEMENT OF CASH FLOWS
For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

2005 2004

CASH FLOWS FROM OPERATING ACTIVITIES

Interest charges on loans received $ 178,667 $ 176,423
Interest on investments received 209,440 173,383
Interest on resale arrangement received 135 83
Cash received from other sources 310 159
Administrative expenses paid (168,356) (168,845)
Grants disbursed (1,400) –
Financial expenses paid (24) (39)
Net Cash Provided by Operating Activities 218,772 181,164
CASH FLOWS FROM INVESTING ACTIVITIES
Sales of investments 166,824 242,123
Maturities of investments 73,307,627 81,943,860
Purchases of investments (73,953,089) (83,059,264)
Net payments for securities under resale arrangement (131,107) (56,139)
Principal collected on loans 433,667 390,173
Loans disbursed (1,227,972) (1,033,031)
Net Cash Used in Investing Activities (1,404,050) (1,572,278)
CASH FLOWS FROM FINANCING ACTIVITIES
Contributions received and encashed 1 1,163,536 1,206,985
Net cash received from Ordinary Capital Resources 40,000 150,000
Net Cash Provided by Financing Activities 1,203,536 1,356,985
Effect of Exchange Rate Changes on Due from Banks (5,402) 7,300
Net increase (decrease) in Due from Banks 12,856 (26,829)
Due from Banks at Beginning of Year 8,701 35,530
Due from Banks at End of Year $ 21,557 $ 8,701
RECONCILIATION OF EXCESS OF REVENUE OVER EXPENSES
TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Excess of revenue over expenses (ADF–2) $ 210,612 $ 200,717
Adjustments to reconcile excess of revenue over expenses
to net cash provided by operating activities:
Capitalized charges on loans (22,076) (20,003)
Amortization of discounts/premiums (17,261) 6,742
Undisbursed grants 24,000 –
Change in accrued revenue on investments and loans 17,821 (3,069)
Change in accrued administrative expenses 7,395 (3,693)
Amortization of discount under ANE 611 –
Advances under TA grants (1,400) –
Net (gain) loss on sales of investments (930) 470
Net Cash Provided by Operating Activities $ 218,772 $ 181,164

1 Supplementary disclosure on noncash financing activities:

Nonnegotiable, noninterest-bearing demand promissory notes amounting to $801,955 ($1,010,945 - 2004) were received from contributing members.
The accompanying notes are an integral part of these special purpose financial statements (ADF-7).

60
 ADF-4
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
SPECIAL PURPOSE STATEMENT OF CHANGES IN FUND BALANCES
For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)

STATEMENTS
FINANCIAL
Accumulated
Transfers Other
Contributed Set-Aside from OCR Accumulated Comprehensive
Resources Resources and TASF Surplus Income Total

Balance–
1 January 2004 $24,016,828 $70,746 $433,458 $1,931,557 $ 305,992 $26,758,581

Comprehensive income
for the year 2004 (Note J) 200,717 182,922 383,639
Change in amount of contributed resources
available for loan commitments 2,275,770 2,275,770
Transfer from ordinary capital resources 150,000 150,000
Change in SDR value of
set-aside resources 2,946 2,946
Change in value of transfers from
Technical Assistance Special Fund 259 259

Balance–
31 December 2004 $26,292,598 $73,692 $583,717 $2,132,274 $ 488,914 $29,571,195

Comprehensive income
for the year 2005 (Note J) 210,612 (322,189) (111,577)
Change in amounts available
for operational commitments
Contributed Resources (1,866,897) (1,866,897)
Unamortized Discount (21,234) (21,234)
Transfer from ordinary capital resources 40,000 40,000
Change in SDR value of
set-aside resources (5,645) (5,645)
Change in value of transfers from
Technical Assistance Special Fund (434) (434)

Balance–
31 December 2005 $24,404,467 $68,047 $623,283 $2,342,886 $ 166,725 $27,605,408

Accumulated Other Comprehensive Income (Note J)

For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)

Accumulated Translation Unrealized Investment Accumulated Other

Adjustments Holding Gains (Losses) Comprehensive Income
2005 2004 2005 2004 2005 2004
Balance, 1 January $ 484,739 $ 300,135 $ 4,175 $ 5,857 $ 488,914 $305,992
Other comprehensive income for the year (314,584) 184,604 (7,605) (1,682) (322,189) 182,922
Balance, 31 December $ 170,155 $484,739 $(3,430) $ 4,175 $ 166,725 $488,914

The accompanying notes are an integral part of these special purpose financial statements (ADF-7).

61
 ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
SPECIAL PURPOSE SUMMARY STATEMENT OF LOANS
31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

Undisbursed Loans
Loans Balances of Not Yet Total Percent of
Borrowers/Guarantors1 Outstanding Effective Loans2 Effective2 Loans Total Loans

Afghanistan $ 233,044 $ 270,985 $ 133,522 $ 637,551 2.34

Azerbaijan 449 21,492 22,375 44,316 0.16
Bangladesh 4,733,276 1,171,547 65,995 5,970,818 21.89
Bhutan 92,245 34,172 – 126,417 0.46
Cambodia 558,400 262,528 9,666 830,594 3.04
Cook Islands 24,855 1,692 – 26,547 0.10
Indonesia 805,365 415,179 78,643 1,299,187 4.76
Kazakhstan 54,757 422 – 55,179 0.20
Kiribati 12,627 382 – 13,009 0.05
Kyrgyz Republic 456,312 108,607 22,877 587,796 2.15
Lao PDR 836,528 224,956 – 1,061,484 3.89
Maldives 52,619 23,673 5,579 81,871 0.30
Marshall Islands 60,276 7,250 – 67,526 0.25
Micronesia, Fed. States of 37,141 18,607 13,844 69,592 0.25
Mongolia 479,932 117,576 9,886 607,394 2.23
Myanmar 461,263 – – 461,263 1.69
Nepal 1,233,734 477,993 48,404 1,760,131 6.45
Pakistan 4,645,163 995,920 385,737 6,026,820 22.10
Papua New Guinea 274,942 54,469 – 329,411 1.21
Philippines 844,532 4,812 – 849,344 3.11
Samoa 81,208 17,376 8,083 106,667 0.39
Solomon Islands 48,448 7,539 – 55,987 0.21
Sri Lanka 2,153,417 603,648 68,749 2,825,814 10.36
Tajikistan 97,833 132,351 50,719 280,903 1.03
Thailand 47,830 – – 47,830 0.18
Tonga 46,216 – – 46,216 0.17
Tuvalu 4,264 3,645 – 7,909 0.03
Uzbekistan 19,341 – 53,882 73,223 0.27
Vanuatu 49,147 – – 49,147 0.18
Viet Nam 1,792,887 864,899 215,970 2,873,756 10.54
Regional – – 1,476 1,476 0.01

BALANCE – 31 December 2005 $20,238,051 $5,841,720 $1,195,407 $27,275,178 100.00

BALANCE – 31 December 2004 $21,627,140 $6,203,083 $1,350,339 $29,180,562

1 Loans other than those made directly to a member or to its central bank have been guaranteed by the member with the exception of loans to the private sector
amounting to $5,186 ($6,074 - 2004).
2 Loans negotiated before 1 January 1983 were denominated in current United States dollars. Loans negotiated after that date are denominated in Special
Drawing Rights (SDR) for the purpose of commitment. The undisbursed portions of such SDR loans are translated into United States dollars at the applicable
exchange rates as of the end of a reporting period. Of the undisbursed balances, ADB has entered into irrevocable commitments to disburse various amounts
totalling $55,359 ($53,400 - 2004).
The accompanying notes are an integral part of these special purpose financial statements (ADF-7).

62
 ADF-5

STATEMENTS
FINANCIAL
MATURITY OF EFFECTIVE LOANS

Twelve Months Five Years

Ending 31 December Amount Ending 31 December Amount

2006 $656,088 2015 5,312,279

2007 541,952 2020 5,819,479
2008 628,092 2025 5,272,741
2009 743,243 2030 3,670,754
2010 840,731 2035 2,101,695
2040 397,215
2045 95,502

Total $26,079,771

SUMMARY OF CURRENCIES RECEIVABLE ON LOANS OUTSTANDING

Currency 2005 2004 Currency 2005 2004

Australian dollar $ 230,271 $ 313,536 New Zealand dollar 15,516 19,443

Canadian dollar 833,564 866,622 Norwegian krone 223,766 216,761
Danish krone 70,034 82,593 Pound sterling 125,453 185,677
Euro 3,440,043 3,377,058 Singapore dollar 2,258 1,776
Japanese yen 11,406,668 12,744,460 Swedish krona 239,644 97,525
Korean won 89,656 74,093 Swiss franc 317,191 354,169
Malaysian ringgit 6,053 5,574 Thai baht 2,977 2,692
United States dollar 3,234,957 3,285,161

Total $20,238,051 $21,627,140

63
 ADF-6
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
SPECIAL PURPOSE STATEMENT OF RESOURCES
31 December 2005
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

Effective Effective Amounts

Amounts Amounts Committed Not Yet Amounts
Committed At Exchange At 31 December 2005 Available For Available For
During Rates Per Exchange Operational Operational Amounts Amounts
2005 Resolutions Rates Commitments Commitments Received Receivable

CONTRIBUTED RESOURCES
Australia $ 201,816 $ 1,528,867 $ 1,394,557 $ 151,362 $ 1,243,195 $ 1,243,195 $ –
Austria 26,551 196,897 228,238 27,473 200,765 200,765 –
Belgium – 159,126 175,736 – 175,736 175,736 –
Canada 172,410 1,565,215 1,699,638 130,426 1,569,212 1,569,212 –
China, People’s
Republic of 28,004 28,004 28,004 21,003 7,001 7,001 –
Denmark 28,111 208,660 222,538 21,329 201,209 201,209 –
Finland 15,776 130,919 123,559 11,921 111,638 111,638 –
France – 957,755 1,010,276 – 1,010,276 1,010,276 –
Germany 176,969 1,479,254 1,723,973 180,768 1,543,205 1,543,205 –
Hong Kong 17,909 54,459 54,459 13,432 41,027 41,027 –
Indonesia – 14,960 14,960 – 14,960 14,960 –
Italy – 818,732 676,464 – 676,464 676,464 –
Japan 1,009,757 8,602,366 12,096,260 757,318 11,338,942 11,338,942 –
Korea, Rep. of 123,174 264,087 281,332 92,440 188,892 188,892 –
Luxembourg – 35,000 37,040 – 37,040 37,040 –
Malaysia 4,692 14,667 11,437 3,519 7,918 7,918 –
Nauru – 1,933 1,933 – 1,933 1,433 500
The Netherlands 88,505 587,468 672,376 66,378 605,998 605,998 –
New Zealand 23,210 112,518 118,307 17,417 100,890 100,890 –
Norway 35,744 200,475 195,179 28,159 167,020 167,020 –
Portugal – 47,142 60,611 – 60,611 60,611 –
Singapore 3,839 7,734 7,894 2,879 5,015 5,015 –
Spain 61,038 295,384 323,484 47,066 276,418 276,418 –
Sweden 42,095 333,771 273,187 31,907 241,280 241,280 –
Switzerland 37,641 288,698 358,463 28,231 330,232 330,232 –
Taipei,China 17,530 63,475 60,555 13,053 47,502 47,502 –
Thailand 2,723 9,470 7,647 2,042 5,605 5,605 –
Turkey 5,134 110,520 110,520 5,090 105,430 105,430 –
United Kingdom – 862,613 854,265 – 854,265 854,265 –
United States – 3,336,928 3,336,928 102,140 3,234,788 3,234,788 –
Totals 2,122,628 22,317,097 26,159,820 1 1,755,353 2 24,404,467 3 24,403,967 4 500
SET-ASIDE RESOURCES – – 68,047 – 68,047 – –
TRANSFER FROM
ORDINARY CAPITAL
RESOURCES 40,000 – 620,000 – 620,000 – –
TRANSFERS FROM
TECHNICAL ASSISTANCE
SPECIAL FUND5 – – 3,283 – 3,283 – –

TOTALS $2,162,628 $22,317,097 $26,851,150 $1,755,353 $25,095,797 $24,403,967 $500

1 Represents amounts committed per Instrument of Contribution including the undiscounted amount of contribution of $21,854 due to accelerated note
encashment for ADF IX based on donor’s encashment profile.
2 Includes the balance of unamortized discount on contributions of $21,234.
3 Includes amortized discount translated at exchange rates at reporting date of $620.
4 Excludes advance payments received from donors of $99,040, which have not been made available for operational commitments as of 31 December 2005.
5 Includes translation adjustments amounting to $188 as of 31 December 2005.
The accompanying notes are an integral part of these special purpose financial statements (ADF-7).

64

ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
31 December 2005 and 2004
NOTE A—NATURE OF OPERATIONS
The Asian Development Fund (ADF) was established
on 28 June 1974 to more effectively carry out the special
operations of the Asian Development Bank (ADB) by
providing resources on concessional terms which are made
available almost exclusively to the least developed bor-
rowing countries.
The resources of ADF have been subsequently aug-
mented by eight replenishments, the most recent of
which became effective in April 2005 consisting of
$3,302,547,000 in contributions from donors and
$3,700,000,000 from internal resources to cover the
operational requirements for the four-year period from
January 2005. Under the new replenishment, ADB is
authorized to provide financing in the form of grants for
projects and programs of high developmental priority.
During the year, an allocation in the amount of
$40,000,000 ($150,000,000 – 2004) was made to ADF
from the 2004 net income of ADB’s ordinary capital
resources (OCR).
In November 2005, to improve ADF currency ma-
nagement practices, the Board of Governors adopted re-
solution to a full-fledged SDR approach to facilitate
resource administration and operational planning to
benefit borrowers and to bring the ADF in line with the
currency practices of the soft lending facilities of other
multilateral development banks. The currency manage-
ment framework for ADF loans is for implementation
beginning 1 January 2006. In this connection, ADB is
authorized to convert ADF resources held in various
currencies into the currencies which constitute the SDR;
to value disbursements, repayments and charges under
loans from resources of the Fund in terms of SDR; and
to determine in case of withdrawal of a Contributor from
ADF or the termination of ADF, the value of Contrib-
utors’ paid-in contributions and the value of all other
resources of the Fund in terms of SDR.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
In May 2001, the Board of Directors approved the adop-
tion of the special purpose financial statements for ADF.
ADF-7
STATEMENTS
FINANCIAL
Due to the nature and organization of ADF, these finan-
cial statements have been prepared for the specific
purpose of reflecting the sources and applications of mem-
ber subscriptions and are presented at US dollar equiv-
alents at reporting date. With the adoption of the special
purpose financial statements, loan loss provisioning has
been eliminated. With the exceptions of the aforemen-
tioned, the ADF financial statements are prepared in
accordance with accounting principles generally accept-
ed in the United States of America.
Functional Currencies and Reporting Currency
The currencies of contributing member countries are
functional currencies as these represent the currencies
of the primary economic environments in which ADF
generates and expends cash. The reporting currency is
the United States dollar, and the special purpose finan-
cial statements are expressed in thousands of current
United States dollars.
Translation of Currencies
Assets, liabilities, amounts available for operational com-
mitments and advance payments on contributions are
translated from their functional currencies to the report-
ing currency at the applicable rates of exchange at the
end of the reporting period. Revenue and expense
amounts are translated for each semi-monthly period,
generally at the applicable rates of exchange at the be-
ginning of each period; such practice approximates the
application of average rates in effect during the period.
Translation adjustments relating to set-aside resources
(see Note I) are recorded as notional amounts receivable
from or payable to OCR. All other translation adjustments
are charged or credited to “Accumulated translation
adjustments” and reported in “FUND BALANCES” as
part of “Accumulated other comprehensive income.”
In October 2005, the Board of Directors approved
the adoption of daily exchange rates for accounting and
financial reporting purposes effective from 1 January 2006.
The use of daily exchange rates will allow transactions
denominated in non-US dollar to be translated using
exchange rates at time of transactions.
65

ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS
Investments
Investment securities and negotiable certificate of de-
posits held are classified as “Held-to-Maturity” or “Avail-
able for Sale.” Investments are classified as
“Held-to-Maturity” when ADB has the intent to hold
until maturity and are carried at amortized cost. Invest-
ments classified as “Available for Sale” are reported at
estimated fair value, which represents their fair market
value. Unrealized gains and losses are reported in “FUND
BALANCES” as part of “Accumulated other comprehen-
sive income.” Realized gains and losses are included in
revenue from investments and are measured by the dif-
ference between amortized cost and the net proceeds of
sales. Time deposits are reported at cost.
Interest on investment securities and time depo-
sits are recognized as realized and reported, net of amor-
tizations of premium and discounts.
Securities Transferred Under Securities Lending
Arrangement and Securities Purchased Under
Resale Arrangement
ADF accounts for transfers of financial assets in accordance
with FAS 140, “Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities - a
replacement of FAS 125.” In general, transfers are accounted
for as sales when control over the transferred assets has been
relinquished. Otherwise the transfers are accounted as
repurchase/resale agreements and collateralized financing
arrangements. Securities transferred under securities lending
arrangements are recorded as assets and reported at esti-
mated fair value and the cash collateral received recorded
as a liability. Securities received under resale arrangements
are neither recorded on ADF’s balance sheets nor repledged
under securities lending arrangements. ADB monitors the
fair value of the securities received under resale arrange-
ments, and if necessary, requires additional collateral.
Loans
Loan interest income is recognized on accrual basis. It
is the policy of ADF to place in nonaccrual status loans
made to eligible borrowing member countries if the
principal or interest with respect to any such loans is
overdue by six months. Interest on nonaccruing loans is
66
ADF-7
included in revenue only to the extent that payments
have actually been received by ADF. ADB maintains a
position of not taking part in debt rescheduling agree-
ments with respect to public sector loans. In the case of
private sector loans, ADB may agree to debt reschedul-
ing only after alternative courses of action have been
exhausted. When ADB decides that a particular loan is
no longer collectible, the entire amount will be expensed
during the period.
Contributed Resources
Contributions by member countries are included in the
financial statements as amounts committed and are re-
ported in “Contributed Resources” as part of “FUND
BALANCES” from the date Instruments of Contribu-
tion are deposited and related formalities are completed.
Contributions are generally received or to be received
in the currency of the contributor either in cash or notes.
Under ADF IX, contributors have the option to pay
their contributions under accelerated note encashment
(ANE) program and receive a discount. ADF invests the
cash generated from this program and the investment
income is used to finance operations. The related con-
tributions are recorded at the full undiscounted amount,
and the discount is amortized over the standard encash-
ment period of 10 years.
Advanced Payments on Contributions
Payments received in advance or as qualified contribu-
tions that cannot be made available for operational com-
mitment are recorded as advance payments and included
under Liabilities.
Grants and Undisbursed Commitments
Grants are recognized in the financial statements when
the related grant is approved and becomes effective.
Undisbursed grant commitments represent effective
grants, which have not been disbursed.
Accounting Estimates
The preparation of special purpose financial statements
in conformity with generally accepted accounting prin-
 ADF-7
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
31 December 2005 and 2004 CONTINUED

STATEMENTS
FINANCIAL
ciples requires Management to make estimates and as- The estimated fair value and amortized cost of the
sumptions that affect the reported amounts of assets, investments as of 31 December 2005 are as follows:
liabilities, and fund balances as at the end of the year
and the reported amounts of revenue and expenses during Estimated Amortized
Fair Value Cost
the year. The actual results could differ from those
estimates. Available-for-Sale
Investments
Due in one year or less $1,958,801,000 $1,959,698,000
Special Purpose Statement of Cash Flows
Due in one year through
five years 473,002,000 475,335,000
For the purposes of the Special Purpose Statement of
2,431,803,000 2,435,033,000
Cash Flows, ADF considers that its cash and cash equiv-
alents are limited to “DUE FROM BANKS.” Held-to-Maturity
Investments
Due in one year or less 3,041,607,000 3,041,607,000
Reclassification Due after five years
through ten years 59,770,000 59,770,000
Certain reclassifications of prior year’s amounts and in- 3,101,377,000 3,101,377,000
formation have been made to conform to the current year’s
Total $5,533,180,000 $5,536,410,000
presentation.

NOTE C—INVESTMENTS Additional information relating to investments in

government and government-guaranteed obligations and
The main investment management objective is to main- corporate bonds is as follows:
tain security and liquidity. Subject to these parameters,
ADB seeks the highest possible return on its investments. 2005 2004
Investments are governed by the Investment Authority As of 31 December:
approved by the Board of Directors in 1999. ADB is Amortized cost $2,497,359,000 $3,623,117,000
restricted by its Investment Authority to invest in gov- Estimated fair value 2,494,129,000 3,627,592,000
Gross unrealized gains 877,000 6,137,000
ernment and government-related debt instruments and Gross unrealized losses (4,107,000) (1,662,000)
in time deposits. In the US dollar portfolio only and up
to limited amounts, investments may be made in corpo- For the years ended
31 December:
rate bonds rated A or better, AAA-rated asset-backed Change in net unrealized
securities, and AAA-rated mortgage-backed securities. losses from prior year (7,705,000) (1,382,000)
Proceeds from sales 166,824,000 242,123,000
Securities may be lent or borrowed.
Gross gain on sales 959,000 327,000
The currency compositions of the investment port- Gross loss on sales (29,000) (797,000)
folio as of 31 December 2005 and 2004 expressed in
United States dollars are as follows:
The rate of return on the average investments held
during the year, including securities transferred under
Currency 2005 2004 securities lending arrangement and securities purchased
Australian dollar $1,170,029,000 $1,030,790,000 under resale arrangement, based on the portfolio held at
Canadian dollar 947,873,000 732,119,000 the beginning and end of each month, was 3.54% (3.43%
Euro 1,726,303,000 2,167,278,000
Pound sterling 928,774,000 974,282,000
– 2004) excluding unrealized gains and losses on invest-
United States dollar 496,135,000 183,555,000 ment securities, and 3.41% (3.39% – 2004) including
Others 264,066,000 442,827,000 unrealized gains and losses on investments.
Total $5,533,180,000 $5,530,851,000 As of 31 December 2005, gross unrealized losses
amounted to $4,107,000 ($1,662,000 – 2004) from

67
 ADF-7
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS

government and government-guaranteed obligations and sustained unrealized losses for over one year, represent-
corporate bonds, resulting from market movements. ing only 2.2% (4.2% - 2004) of the investments. Com-
There are eleven positions in 2005 (ten – 2004) that parative details for 2005 and 2004 are as follows:

One year or less Over one year Total

For the year 2005 Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
Government and
government-guaranteed
obligations $ 810,419,000 $2,634,000 $ 83,426,000 $ 432,000 $ 893,845,000 $3,066,000
Corporate bonds 275,224,000 873,000 38,035,000 168,000 313,259,000 1,041,000

Total $1,085,643,000 $3,507,000 $121,461,000 $ 600,000 $1,207,104,000 $4,107,000

One year or less Over one year Total

For the year 2004 Fair Unrealized Fair Unrealized Fair Unrealized
Value Losses Value Losses Value Losses
Government and
government-guaranteed
obligations $ 306,202,000 $ 606,000 $122,088,000 $ 641,000 $ 428,290,000 $1,247,000
Corporate bonds 132,806,000 181,000 111,253,000 234,000 244,059,000 415,000

Total $ 439,008,000 $ 787,000 $233,341,000 $ 875,000 $ 672,349,000 $1,662,000

NOTE D—LOANS AND LOAN LOSS PROVISION
Loans
Prior to 1 January 1999, loans of ADF were extended to
eligible borrowing member countries, which bore a ser-
vice charge of 1% and required repayment over periods
ranging from 35 to 40 years. On 14 December 1998, the
Board of Directors approved an amendment to ADF loan
terms, as follows: (i) for loans to finance specific projects,
the maturity was shortened to 32 years including an 8-
year grace period; (ii) for program loans to support sec-
tor development, the maturity was shortened to 24 years
including an 8-year grace period; and (iii) all new loans
bear a 1% interest charge during the grace period, and
1.5% during the amortization period, with equal amor-
tization. The revised ADF lending terms took effect on
1 January 1999 for loans for which formal loan negotia-
tions were completed on or after 1 January 1999. ADF
requires borrowers to absorb exchange risks attributable
to fluctuations in the value of the currencies disbursed.
ADB believes that there is no comparable market,
nor ADB intends to sell its loans. The use of market data
to arrive at the loan at fair value will give meaningless
results. As such, the fair value of loans is determined
using an entry value method. Under this method, fair
value is determined based on the terms at which a simi-
lar loan would currently be made by ADB to a similar
borrower. For such loans, fair value approximates the
carrying amount. The estimated fair value of loans is not
affected by credit risks because the amount of any such
adjustment is not considered to have a material effect
based on ADB’s experience with its borrowers.
Undisbursed loan commitments and an analysis of
loans by country as of 31 December 2005 are shown in
ADF-5.
The principal amount outstanding of public sector
loans in nonaccrual status as of 31 December 2005 was
$461,263,000 ($515,326,000 – 2004) of which
$150,301,000 ($135,776,000 – 2004) was overdue. Loans
in nonaccrual status resulted in $4,880,000 ($4,906,000
– 2004) not being recognized as income from loans for

68

ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
31 December 2005 and 2004
the year ended 31 December 2005. The accumulated
interest on these loans that was not recognized as in-
come as of 31 December 2005 would have totaled
$38,067,000 ($33,187,000 – 2004). The loans in nonac-
crual status as of 31 December 2005 and 2004 were 28
loans made to Myanmar.
Private sector loan outstanding as of 31 December
2005 was $5,186,000 ($6,074,000 – 2004), and there was
no undisbursed loan commitment in both years.
No private sector loan was in nonaccrual status as
of 31 December 2005 and 2004.
NOTE E—DUE FROM CONTRIBUTORS
Included in “Due from contributors” are notes of contri-
butors and contributions receivable. Notes of contributors
are nonnegotiable, noninterest-bearing and, subject to
certain restrictions imposed by applicable Board of Gover-
nors’ resolutions, encashable by ADB at par upon demand.
ADB currently expects that the notes outstanding
at 31 December 2005 will be encashed in varying amounts
over a nine-year period ending 31 December 2014.
The fair value of notes of contributors is determined
using an entry value method, whereby fair value is de-
termined based on the terms at which notes are current-
ly being accepted from contributors. On this basis, the
fair value of outstanding notes of contributors approxi-
mates their carrying amount.
NOTE F—PAYABLE TO RELATED FUNDS
The OCR and special fund resources are at all times used,
committed, and invested entirely separate from each oth-
er. The Board of Governors may approve allocation of
the net income of OCR to ADF, based on the funding
and operational requirements for the funds. The admin-
istrative and operational expenses pertaining to the OCR
and ADF are allocated based on operational activities and
are settled regularly. Under ADF IX and third regular-
ized replenishment of Technical Assistance Special Fund
(TASF), a specific portion of the total contributions are
to be allocated to TASF. ADF receives all contributions
of members and subsequently transfers TASF’s portion
to TASF.
ADF’s outstanding payables as of 31 December 2005
comprised a payable to OCR representing administra-
ADF-7
CONTINUED
STATEMENTS
FINANCIAL
tion charges of $32,064,000 ($24,994,000 – 2004) and a
payable to TASF of $4,714,000 (nil – 2004) represent-
ing contributions from donors incorporated in ADF IX
for the third regularized replenishment of TASF.
NOTE G—CONTRIBUTED RESOURCES/
OTHER LIABILITIES
As of 31 December 2005, Instruments of Contributions
from 21 donors were received for ADF IX. Of these,
contributions totaling $525,776,000, including amortized
discount of $620,000 at translated amounts were received
and recorded in “Contributed Resources.”
The contributions do not include $33,647,000 con-
tributions received from France pending the completion
of formalities to accept their Instrument of Contribu-
tions. This has been temporarily recorded in Deferred
Credits and included in other liabilities.
NOTE H—ADMINISTRATIVE EXPENSES AND
ADMINISTRATION CHARGE
Administrative expenses for 2005 represented adminis-
tration charge from OCR amounting to $175,751,000
(administrative charge of $165,151,000 and direct
identifiable expense of $1,000 – 2004). The charge
represents an apportionment of all administrative expen-
ses of ADB (other than those pertaining directly to or-
dinary operations and special operations), in the
proportion of the relative volume of operational activi-
ties of each fund.
NOTE I—SET-ASIDE RESOURCES
Pursuant to the provisions of Article 19, paragraph 1(i)
of the Articles of Agreement Establishing the Asian
Development Bank (the Charter), the Board of Gover-
nors has authorized the setting aside of 10% of the un-
impaired “paid-in” capital paid by member countries
pursuant to Article 6, paragraph 2(a) of the Charter and
of the convertible currency portion paid by member
countries pursuant to Article 6, paragraph 2(b) of the
Charter as of 28 April 1973, to be used as a part of the
Special Funds of ADB. The capital so set aside was al-
located and transferred from the OCR to ADF as Set-
Aside Resources.
69

ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT FUND
NOTES TO SPECIAL PURPOSE FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS
The capital stock of ADB is defined in Article 4,
paragraph 1 of the Charter, “in terms of United States
dollars of the weight and fineness in effect on 31 Janu-
ary 1966” (the 1966 dollar). Therefore, Set-Aside Re-
sources had historically been translated into the current
United States dollar (ADB’s unit of account), on the basis
of its par value in terms of gold. From 1973 until 31 March
1978, the rate arrived at on this basis was $1.20635 per
1966 dollar. Since 1 April 1978, at which time the Se-
cond Amendment to the Articles of Agreement of the
International Monetary Fund (IMF) came into effect,
currencies no longer had par values in terms of gold.
Pending ADB’s selection of the appropriate successor to
the 1966 dollar, the Set-Aside Resources have been va-
lued for purposes of the accompanying financial state-
ments in terms of the Special Drawing Right (SDR), at
the value in current United States dollars as computed
by the IMF. As of 31 December 2005, the value of the
SDR in terms of the current United States dollar was
$1.42927 ($1.54784 - 2004). On this basis, Set-Aside
Resources amounted to $68,047,000 ($73,692,000 -
2004). If the capital stock of ADB as of 31 December
2005 had been valued in terms of $12,063.50 per share,
Set-Aside Resources would have been $57,434,000.
NOTE J—COMPREHENSIVE INCOME
Comprehensive income has two major components: ex-
cess of revenue over expenses and other comprehensive
income. Other comprehensive income includes unreal-
ized gains and losses on available-for-sale securities and
currency translation adjustments.
70
ADF-7
NOTE K—GRANTS AND UNDISBURSED
COMMITMENTS
The ADF IX introduced financing in the form of grants
for the first time. As of 31 December 2005, 19 grants
amounting to $246,640,000 were approved, of which
$24,000,000 became effective.
The fair value of undisbursed commitments approx-
imates the amount of undisbursed commitments because
ADB expects that grants will be made for all projects/
programs covered by the commitments.
NOTE L—FAIR VALUE OF FINANCIAL
INSTRUMENTS
Fair value of a financial instrument is defined as the
amount at which the instrument could be exchanged in
a current transaction between willing parties, other than
in a forced or liquidation sale.
The carrying amount of time deposits is a reason-
able estimate of fair value.
If available, quoted market values are used to de-
termine fair values. Financial instruments for which
market quotations are not readily available are valued
using valuation models. The basis of valuation is the
expected cash flows discounted based on observable
market data.
See Notes B, C, D, E, and K for discussions relat-
ing to investments, loans, due from contributors and
undisbursed commitments. In all other cases, the carry-
ing amounts of ADF’s assets, liabilities, and fund balances
are considered to approximate fair values for all signif-
icant financial instruments.
 STATEMENTS
FINANCIAL
Report of Independent Auditors to the Asian Development Bank

In our opinion, the accompanying statements of financial position and the related statements
of activities and changes in net assets and cash flows present fairly, in all material respects, in
terms of United States dollars, the financial position of the Asian Development Bank—Technical
Assistance Special Fund at 31 December 2005 and 2004, and the results of its activities and
changes in net assets and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial statements are
the responsibility of the management of the Asian Development Bank. Our responsibility is to
express an opinion on these financial statements based on our audits. We conducted our audits
of these statements in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

Our audits were conducted for the purpose of forming an opinion on the basic financial
statements taken as a whole. The accompanying statement of resources as at 31 December 2005
and summary statement of technical assistance approved and effective for the year ended
31 December 2005 are presented for purposes of additional analyses and are not required parts
of the basic financial statements. Such information has been subjected to the auditing proce-
dures applied in the audits of the basic financial statements and in our opinion, is fairly stated
in all material respects in relation to the basic financial statements taken as a whole.

PricewaterhouseCoopers
Certified Public Accountants

Singapore
8 March 2006

71
 TASF-1
ASIAN DEVELOPMENT BANK—TECHNICAL ASSISTANCE SPECIAL FUND
STATEMENT OF FINANCIAL POSITION
31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

2005 2004

ASSETS

DUE FROM BANKS (Note B) $ 1,493 $ 1,600

INVESTMENTS (Notes B, C, and G)

Time deposits 254,164 240,425

ACCRUED REVENUE 609 425

DUE FROM CONTRIBUTORS (Notes B and D) 109,598 –

OTHER ASSETS (Note F) 12,658 6,908

TOTAL $378,522 $249,358

LIABILITIES AND UNCOMMITTED BALANCES

MISCELLANEOUS LIABILITIES (Note F) $ 2,489 $ 52

UNDISBURSED COMMITMENTS (Notes B, E, and G) 160,566 150,121

UNCOMMITTED BALANCES (TASF-2 and TASF-4) (Note B)

Unrestricted net assets 215,467 99,185

TOTAL $378,522 $249,358

The accompanying notes are an integral part of these financial statements (TASF-6).

72
 TASF-2
ASIAN DEVELOPMENT BANK—TECHNICAL ASSISTANCE SPECIAL FUND
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS
For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)

STATEMENTS
FINANCIAL
2005 2004

CHANGES IN UNRESTRICTED NET ASSETS

CONTRIBUTIONS (TASF-4) (Notes B and D) $187,515 $ 50,050

REVENUE
From investments (Notes B and C) 7,223 5,025
From other sources—net (Note E) 753 1,371

Total 195,491 56,446

EXPENSES
Technical assistance (TASF-5) (Notes B and E) 76,959 73,519
Financial expenses 13 16

Total 76,972 73,535

CONTRIBUTIONS AND REVENUE IN EXCESS OF

(LESS THAN) EXPENSES 118,519 (17,089)

EXCHANGE (LOSSES) GAINS—net (Note B) (2,237) 12,162

INCREASE (DECREASE) IN NET ASSETS 116,282 (4,927)

NET ASSETS AT BEGINNING OF YEAR 99,185 104,112

NET ASSETS AT END OF YEAR $215,467 $ 99,185

The accompanying notes are an integral part of these financial statements (TASF-6).

73
 TASF-3
ASIAN DEVELOPMENT BANK—TECHNICAL ASSISTANCE SPECIAL FUND
STATEMENT OF CASH FLOWS
For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

2005 2004

CASH FLOWS FROM OPERATING ACTIVITIES

Contributions received $ 71,354 $ 50,383
Interest on investments received 6,908 6,686
Cash received from other activities 1,638 1,354
Technical assistance disbursed (67,576) (58,235)
Financial expenses paid (13) (16)

Net Cash Provided by Operating Activities 12,311 172

CASH FLOWS FROM INVESTING ACTIVITIES

Sales of investments – 12,129
Maturities of investments 8,490,973 6,163,639
Purchases of investments (8,502,974) (6,176,504)
Net payments for securites under resale arrangement (110) –

Net Cash Used in Investing Activities (12,111) (736)

Effect of Exchange Rate Changes on Due from Banks (307) 48

Net Decrease in Due from Banks (107) (516)

Due from Banks at Beginning of Year 1,600 2,116

Due from Banks at End of Year $ 1,493 $ 1,600

RECONCILIATION OF INCREASE (DECREASE) IN NET ASSETS

TO NET CASH PROVIDED BY OPERATING ACTIVITIES:

Increase (decrease) in net assets (TASF-2) $ 116,282 $ (4,927)

Adjustments to reconcile increase (decrease) in net assets
to net cash provided by operating activities:
Change in due from contributors (116,161) 333
Change in undisbursed commitments 10,445 14,568
Translation adjustments 3,072 (12,179)
Amortization of discounts/premiums – 917
Change in advances for technical assistance to member countries (1,019) 691
Change in accrued interest receivable and others (308) 772
Change in unrealized investment gains – (4)
Loss on sale of investments – 1

Net Cash Provided by Operating Activities $ 12,311 $ 172

The accompanying notes are an integral part of these financial statements (TASF-6).

74
 TASF-4
ASIAN DEVELOPMENT BANK—TECHNICAL ASSISTANCE SPECIAL FUND
STATEMENT OF RESOURCES
31 December 2005
Expressed in Thousands of United States Dollars (Note B)

STATEMENTS
FINANCIAL
Contributions Direct
Committed Voluntary Regularized Total
During 2005 Contributions Replenishment1 Contributions

DIRECT VOLUNTARY CONTRIBUTIONS

Australia $ 14,537 $ 2,484 $ 29,368 $ 31,852

Austria 1,949 159 3,793 3,952
Bangladesh – 47 – 47
Belgium – 1,394 1,594 2,988
Canada 10,438 3,346 26,638 29,984
China, People’s Rep. of 1,996 1,600 1,996 3,596
Denmark 1,994 1,963 4,034 5,997
Finland 1,120 237 2,058 2,295
France – 1,697 11,091 12,788
Germany 12,947 3,315 26,641 29,956
Hong Kong, China 1,277 100 1,397 1,497
India 52 2,958 – 2,958
Indonesia – 250 40 290
Italy – 774 9,371 10,145
Japan 78,400 47,710 157,606 205,316
Korea, Rep. of 7,504 1,900 8,104 10,004
Malaysia 333 909 333 1,242
Nauru – – 67 67
The Netherlands 6,496 1,338 11,823 13,161
New Zealand 1,568 1,096 2,234 3,330
Norway 2,486 3,279 4,308 7,587
Pakistan 70 1,666 – 1,666
Singapore 266 1,100 266 1,366
Spain 4,480 190 6,189 6,379
Sri Lanka – 6 – 6
Sweden 3,069 862 6,855 7,717
Switzerland 2,755 1,035 5,463 6,498
Taipei,China 1,210 200 1,710 1,910
Thailand 202 – 202 202
Turkey 366 – 2,720 2,720
United Kingdom – 5,617 8,222 13,839
United States – 1,500 34,352 35,852

Total $ 155,515 $ 88,732 $ 368,475 457,207

Transfers to Asian Development Fund (3,472)

Allocation from OCR Net Income 32,000 663,000

Other Resources2 140,726

TOTAL $187,515 $1,257,461
1 Represents TASF portion of contributions to the replenishment of the Asian Development Fund and the Technical Asistance Special Fund authorized by
Governors’ Resolution Nos. 182, 214 and 300 at historical values.
2 Represents income, repayments, and reimbursement accruing to TASF since 1980, including unrealized investment holding gains (losses).
The accompanying notes are an integral part of these financial statements (TASF-6).

75
 TASF-5
ASIAN DEVELOPMENT BANK—TECHNICAL ASSISTANCE SPECIAL FUND
SUMMARY STATEMENT OF TECHNICAL ASSISTANCE APPROVED AND EFFECTIVE
For the Year Ended 31 December 2005
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

Project
Project Implementation/
Recipient Preparation Advisory Total

Afghanistan $ 1,736 $ 4,503 $ 6,239

Armenia – 150 150
Azerbaijan – 980 980
Bangladesh 1,113 1,506 2,619
Bhutan 396 892 1,288
Cambodia 150 2,992 3,142
China, People’s Rep. of 6,318 4,482 10,800
Cook Islands – 300 300
Fiji Islands 700 104 804
India 1,046 (590) 456
Indonesia 340 1,928 2,268
Kazakhstan – 736 736
Kiribati 800 (2) 798
Kyrgyz Republic 500 645 1,145
Lao PDR (49) 811 762
Maldives 500 250 750
Marshall Islands – 741 741
Micronesia, Fed. States of – 233 233
Mongolia 350 252 602
Nauru – (54) (54)
Nepal – 821 821
Pakistan 1,178 2,803 3,981
Papua New Guinea 1,064 – 1,064
Philippines 685 3,805 4,490
Samoa – (130) (130)
Solomon Islands – 638 638
Sri Lanka – 75 75
Tajikistan 1,200 683 1,883
Thailand – 1,010 1,010
Timor-Leste – 628 628
Tonga (70) (103) (173)
Tuvalu – (146) (146)
Uzbekistan 557 (142) 415
Vanuatu – 470 470
Viet Nam 142 569 711

Total $18,656 $31,840 50,496

Regional Activities 26,463

TOTAL $76,959
Negative amounts represent net undisbursed commitments written back to balances available for future commitments (Notes B and E).
The accompanying notes are an integral part of these financial statements (TASF-6).

76

ASIAN DEVELOPMENT BANK—TECHNICAL ASSISTANCE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
NOTE A—NATURE OF OPERATIONS
The Technical Assistance Special Fund (TASF) was
established to provide technical assistance on a grant basis
to developing member countries of the Asian Develop-
ment Bank (ADB) and for regional technical assistance.
TASF resources consist of direct voluntary contributions
by members, allocations from the net income of ordi-
nary capital resources (OCR) and Asian Development
Fund (ADF) contributions, and revenue from invest-
ments and other sources.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Presentation of the Financial Statements
The financial statements of the TASF are presented on
the basis of those for not-for-profit organization.
TASF reports contributed cash and other assets as
unrestricted asset as these are made available without
conditions other than for the purpose of pursuing the
objectives of the TASF.
Investments
All investment securities held by TASF are reported at
estimated fair value, which represents their fair market
value. Realized and unrealized gains and losses are
included in revenue. Time deposits are reported at cost.
Securities Purchased Under Resale Arrangements
TASF accounts for transfer of financial assets in accor-
dance with FAS 140, “Accounting for Transfers and Ser-
vicing of Financial Assets and Extinguishments of
Liabilities – a replacement of FAS 125.” In general, trans-
fers are accounted for as sale under FAS 140 when con-
trol over the transferred assets has been relinquished.
Otherwise, the transfers are accounted for as repurchase/
resale arrangements and collateralized financing arrange-
ments. Securities received under resale arrangement are
not recorded on TASF’s balance sheet. Securities received
under resale arrangement are neither recorded on TASF’s
balance sheet nor repledged under securities lending ar-
rangements. ADB monitors the fair value of the securi-
TASF-6
STATEMENTS
FINANCIAL
ties received under resale arrangements, and if neces-
sary, requires additional collateral.
Contributions
Contributions from members are included in the finan-
cial statements from the date contribution agreements
become effective.
Technical Assistance to Member Countries and
Undisbursed Commitments
Technical assistance is recognized in the financial state-
ments when the related project is approved and becomes
effective. Upon completion of the TA project, any un-
disbursed amount is written back as a reduction in tech-
nical assistance for the period and the corresponding
undisbursed commitment is eliminated accordingly.
Reporting Currency
The financial statements of TASF are expressed in thou-
sands of current United States dollars. The United States
dollar is the functional and reporting currency and is used
to measure exchange gains and losses.
Translation of Currencies
Assets, liabilities, and uncommitted balances in
currencies other than United States dollars are trans-
lated at the applicable rates of exchange at the end of
the reporting period. Contributions included in the
financial statements during the year are recognized at
applicable exchange rates as of the respective dates
of commitment. Revenue and expense amounts in cur-
rencies other than United States dollars are transla-
ted for each semi-monthly period generally at the
applicable rates of exchange at the beginning of each
period; such practice approximates the application of
average rates in effect during the period. Translation
adjustments are accounted for as exchange gains or
losses and are credited or charged to operations.
In October 2005, the Board of Directors approved
the adoption of daily exchange rates for accounting and
financial reporting purposes effective from 1 January 2006.
The use of daily exchange rates will allow transactions
77
 TASF-6
ASIAN DEVELOPMENT BANK—TECHNICAL ASSISTANCE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS

denominated in non-US dollar to be translated using

exchange rates at time of transactions.
Accounting Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
Management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
uncommitted balances as at the end of the year and the
reported amounts of revenue and expenses during the
year. The actual results could differ from those estimates.
Statement of Cash Flows
For the purposes of the Statement of Cash Flows, the
TASF considers that its cash and cash equivalents are
limited to “DUE FROM BANKS.”
Reclassification
Certain reclassifications of prior year’s amounts and in-
formation have been made to conform to the current year’s
presentation.
NOTE C—INVESTMENTS
The main investment management objective is to main-
tain security and liquidity. Subject to these parameters,
ADB seeks the highest possible return on its investments.
Investments are governed by the Investment Authority
approved by the Board of Directors in 1999. ADB is re-
stricted by its Investment Authority to invest in govern-
ment and government-related debt instruments and in
time deposits. In the US dollar portfolio only and up to
limited amounts, investments may be made in corpo-
rate bonds rated A or better, AAA-rated asset-backed
securities, and AAA-rated mortgage-backed securities.
The currency compositions of the investment port-
folio as of 31 December 2005 and 2004 expressed in
United States dollars are as follows:
Currency 2005 2004
Australian dollar $ 12,840,000 $ 9,208,000
Canadian dollar 156,567,000 144,221,000
Euro 20,573,000 16,934,000
United States dollar 61,238,000 64,841,000
Others 2,946,000 5,221,000
Total $254,164,000 $240,425,000
The annualized rate of return on the average in-
vestments held during the year, based on the portfolio
held at the beginning and end of each month was 2.95%
(2.14% – 2004).
NOTE D—CONTRIBUTIONS
Since inception in 1967, direct contributions have been
made by 29 member countries. In 2005, Pakistan and
India made direct and voluntary contributions of $70,000
and $52,000, respectively.
In 1986, 1992 and 2005, the Board of Governors, in
authorizing a replenishment of the ADF, provided for an
allocation to the TASF in an aggregate amount equiva-
lent to $72,000,000, $140,000,000 and $221,000,000,
respectively, to be used for technical assistance to ADF
borrowing developing member countries and for region-
al technical assistance.
In 2005, $32,000,000 was allocated out of OCR net
income to TASF bringing the accumulated allocation out
of OCR net income to $663,000,000.
Some of the direct contributions received can be
subject to restricted procurement sources, while some
are given on condition that the technical assistance be
made on a reimbursable basis. The total contributions
received for the years ended 31 December 2005 and 2004
were without restrictions.
NOTE E—UNDISBURSED COMMITMENTS
Undisbursed commitments are denominated in United
States dollars and represent effective ongoing grant-
financed TA projects/programs which are not yet dis-
bursed as of the end of the year. During 2005, an amount
of $11,339,000 ($6,283,000 – 2004) representing
completed and canceled TA projects has been written
back as a reduction in technical assistance of the period

78
 TASF-6
ASIAN DEVELOPMENT BANK—TECHNICAL ASSISTANCE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004

STATEMENTS
FINANCIAL
and the corresponding undisbursed commitment has been The interfund account balances included in other
eliminated. The fair value of undisbursed commitments assets and miscellaneous liabilities are as follows:
approximates the amounts undisbursed because ADB
expects that grants will be made for all projects/programs 2005 2004
covered by the commitments. For technical assistances Receivable from:
approved prior to 1 January 2002, and provided as a project OCR $ 24,000 $ –
ADF 4,714,000 –
preparatory grant leading to an ADB loan, the amount of JSF 9,000 –
the grant exceeding $250,000 are refunded by the bor- Agency Trust Funds 12,000 28,000
rower through the loan proceeds under the terms of that Total $ 4,759,000 $ 28,000
ADB loan. Refinanced amount of $677,000 ($1,337,000
Payable to:
- 2004) was charged to such loans and credited to revenue OCR $ – $ 51,000
from other sources of the TASF during the year ended JSF – 1,000
31 December 2005. All project preparatory technical Agency Trust Funds 90,000 –
assistances (PPTA) funded from TASF and OCR cur- Total $ 90,000 $ 52,000
rent income approved on or after 1 January 2002 are no
longer subject to cost recovery.
At 31 December 2005, miscellaneous liabilities in-
NOTE F—OTHER ASSETS AND MISCELLANEOUS cluded advanced contribution of $2,398,000 (€2,026,000)
LIABILITIES from the Government of France for TASF’s third regu-
larized replenishment, which pending the completion
The OCR and special fund resources are at all times used, of formalities, has not been recognized. The Instrument
committed, and invested entirely separate from each oth- of Contribution was formally acknowledged in January
er. The Board of Governors may approve allocation of 2006.
the net income of OCR to special funds, based on the
funding and operational requirements for the funds. NOTE G—FAIR VALUE OF FINANCIAL
Under ADF IX and third regularized replenishment of INSTRUMENTS
TASF, a specific portion of the total contributions are to
be allocated to TASF. ADF receives all contributions of Fair value of a financial instrument is defined as the
members and subsequently transfers TASF’s portion to amount at which the instrument could be exchanged in
TASF. Regional technical assistance projects and pro- a current transaction between willing parties, other than
grams may be combined activities between special and in a forced or liquidation sale.
trust funds. Interfund accounts are settled on a regular The carrying amount of time deposits is a reason-
basis between TASF and the other funds. able estimate of its fair value.
See Notes C and E for discussions with respect to
investments and undisbursed commitments, respectively.
In all other cases, the carrying amounts of TASF’s assets,
liabilities, and uncommitted balances are considered to
approximate fair values for all significant financial
instruments.

79
 FINANCIAL
STATEMENTS

Report of Independent Auditors to the Asian Development Bank

In our opinion, the accompanying statements of financial position and the related statements
of activities and changes in net assets and cash flows present fairly, in all material respects, in
terms of United States dollars, the financial position of the Asian Development Bank—Japan
Special Fund at 31 December 2005 and 2004, and the results of its activities and changes in net
assets and its cash flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America. These financial statements are the respon-
sibility of the management of the Asian Development Bank. Our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements, assessing the accounting principles used and significant estimates made
by management, and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers
Certified Public Accountants

Singapore
8 March 2006

80
 JSF-1
ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND
STATEMENT OF FINANCIAL POSITION
31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)

STATEMENTS
FINANCIAL
2005 2004
JSF JSF
Regular and Regular and
ACCSF Supplementary Total ACCSF Supplementary Total

ASSETS

DUE FROM BANKS (Note B) $ 1,742 $ 3,616 $ 5,358 $ 327 $ 1,017 $ 1,344

INVESTMENTS (Notes A, B, C, and H)

Government and government-guaranteed obligations – – – 5,019 25,095 30,114
Time deposits 25,645 182,047 207,692 17,324 83,506 100,830
Other securities 5,884 24,595 30,479 11,324 102,018 113,342

31,529 206,642 238,171 33,667 210,619 244,286

ACCRUED REVENUE 170 2,101 2,271 396 1,682 2,078

OTHER ASSETS (Note E) 60 1,706 1,766 71 2,579 2,650

TOTAL $33,501 $214,065 $247,566 $34,461 $215,897 $250,358

LIABILITIES AND UNCOMMITTED BALANCES

ACCOUNTS PAYABLE AND OTHER LIABILITIES (Note E) $ 149 $ 197 $ 346 $ 604 $ 120 $ 724

UNDISBURSED COMMITMENTS (Notes B, F, and H)

Technical assistance 2,566 66,993 69,559 4,970 66,548 71,518

TOTAL LIABILITIES 2,715 67,190 69,905 5,574 66,668 72,242

NET ASSETS (JSF-2) (Note B), represented by:

Uncommitted balances (Notes A and G)
Unrestricted – 146,875 146,875 – 149,229 149,229
Temporarily restricted 26,895 – 26,895 26,022 – 26,022

26,895 146,875 173,770 26,022 149,229 175,251

Net accumulated investment income (Notes A and G)

Temporarily restricted 3,891 – 3,891 2,865 – 2,865

30,786 146,875 177,661 28,887 149,229 178,116

TOTAL $33,501 $214,065 $247,566 $34,461 $215,897 $250,358

The accompanying notes are an integral part of these financial statements (JSF-4).

81
 JSF-2
ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS
For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

2005 2004
JSF JSF
Regular and Regular and
ACCSF Supplementary Total ACCSF Supplementary Total

CHANGES IN UNRESTRICTED NET ASSETS

CONTRIBUTIONS (Notes B and G) $ – $ 27,237 $ 27,237 $ – $ 24,238 $ 24,238

REVENUE FROM INVESTMENTS (Notes B and C) – 6,975 6,975 – 3,302 3,302

REVENUE FROM EQUITY INVESTMENTS (Note D) – – – – 900 900

REVENUE FROM OTHER SOURCES – 129 129 – 111 111

NET ASSETS REVERTED BACK TO TEMPORARILY

RESTRICTED ASSETS (Notes B and G) (826) – (826) (925) – (925)
Total (826) 34,341 33,515 (925) 28,551 27,626

TRANSFER TO COOPERATION FUND FOR REGIONAL

TRADE AND FINANCIAL SECURITY INITIATIVE (Note G) – – – – (1,000) (1,000)

EXPENSES
Technical assistance (Notes B, F, and G) (847) 34,923 34,076 (951) 18,553 17,602
Administrative expenses 21 1,014 1,035 26 1,125 1,151
Financial expenses – – – – 1 1
Total (826) 35,937 35,111 (925) 19,679 18,754

CONTRIBUTIONS AND REVENUE (LESS THAN) IN EXCESS

OF EXPENSES – (1,596) (1,596) – 7,872 7,872

EXCHANGE (LOSSES) GAINS (Note B) – (758) (758) – 1,149 1,149

(DECREASE) INCREASE IN UNRESTRICTED NET ASSETS – (2,354) (2,354) – 9,021 9,021

CHANGES IN TEMPORARILY RESTRICTED NET ASSETS

REVENUE FROM INVESTMENTS AND OTHER SOURCES

(Notes B and C) 1,073 – 1,073 493 – 493

NET ASSETS REVERTED BACK TO TEMPORARILY

RESTRICTED ASSETS (Notes B and G) 826 – 826 925 – 925

INCREASE IN TEMPORARILY RESTRICTED NET ASSETS 1,899 – 1,899 1,418 – 1,418

INCREASE (DECREASE) IN NET ASSETS 1,899 (2,354) (455) 1,418 9,021 10,439

NET ASSETS AT BEGINNING OF YEAR 28,887 149,229 178,116 27,469 140,208 167,677

NET ASSETS AT END OF YEAR $30,786 $146,875 $177,661 $28,887 $149,229 $178,116
The accompanying notes are an integral part of these financial statements (JSF-4).

82
 JSF-3
ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND
STATEMENT OF CASH FLOWS
For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)

STATEMENTS
FINANCIAL
2005 2004
JSF JSF
Regular and Regular and
ACCSF Supplementary Total ACCSF Supplementary Total

CASH FLOWS FROM OPERATING ACTIVITIES

Contributions received $ – $ 27,237 $ 27,237 $ – $ 24,238 $ 24,238
Interest on investments received 1,376 7,258 8,634 858 11,035 11,893
Technical assistance disbursed (2,000) (33,589) (35,589) (4,441) (39,667) (44,108)
Transfer to Cooperation Fund for Regional Trade
and Financial Security Initiative – – – – (1,000) (1,000)
Administrative expenses paid (21) (941) (962) (26) (1,220) (1,246)
Financial expenses paid – – – – (1) (1)
Others–net 27 (642) (615) 4 112 116

Net Cash Used in Operating Activities (618) (677) (1,295) (3,605) (6,503) (10,108)

CASH FLOWS FROM INVESTING ACTIVITIES

Maturities of investments 3,494,396 9,224,295 12,718,691 2,949,375 5,475,306 8,424,681
Purchases of investments (3,492,363) (9,221,018) (12,713,381) (2,946,083) (5,472,021) (8,418,104)
Net (payments for) receipts from securities under
resale arrangement – (469) (469) – 339 339
Sales of equity investments – – – – 1,017 1,017

Net Cash Provided by Investing Activities 2,033 2,808 4,841 3,292 4,641 7,933

Effect of Exchange Rate Changes on Due from Banks – 468 468 – 902 902

Net Increase (Decrease) in Due from Banks 1,415 2,599 4,014 (313) (960) (1,273)

Due from Banks at Beginning of Year 327 1,017 1,344 640 1,977 2,617

Due from Banks at End of Year $ 1,742 $ 3,616 $ 5,358 $ 327 $ 1,017 $ 1,344

RECONCILIATION OF INCREASE (DECREASE) IN

NET ASSETS TO NET CASH USED IN
OPERATING ACTIVITIES:
Increase (decrease) in net assets (JSF-2) $ 1,899 $ (2,354) $ (455) $ 1,418 $ 9,021 $ 10,439
Adjustments to reconcile increase in net assets
to net cash used in operating activities:
Change in undisbursed commitments (2,404) 445 (1,959) (4,789) (21,973) (26,762)
Amortization of discounts/premiums 124 852 976 562 6,074 6,636
Translation adjustment – (1) (1) – (1,228) (1,228)
Gain from sales of equity investments – – – – (900) (900)
Unrealized investment (gains) losses (20) (151) (171) 31 125 156
Others–net (217) 532 315 (827) 2,378 1,551

Net Cash Used in Operating Activities $ (618) $ (677) $ (1,295) $ (3,605) $ (6,503) $ (10,108)

The accompanying notes are an integral part of these financial statements (JSF-4).

83

ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS
NOTE A—NATURE OF OPERATIONS
The Japan Special Fund (JSF) was established in March
1988 when Japan and the Asian Development Bank (ADB)
entered into a financial arrangement whereby Japan
agreed to make an initial contribution and ADB became
the administrator. The purpose of JSF is to help devel-
oping member countries (DMCs) of ADB restructure
their economies and broaden the scope of opportunities
for new investments, thereby assisting the recycling of
funds to DMCs of ADB. While JSF resources are used
mainly to finance technical assistance (TA) operations,
these resources may also be used for equity investment
operations in ADB’s DMCs. Under the agreement be-
tween ADB and Japan, ADB may invest the proceeds of
JSF pending disbursement.
In March 1999, the Board approved the acceptance
and administration by ADB of the Asian Currency Crisis
Support Facility (ACCSF) to assist Asian currency cri-
sis-affected member countries (CAMCs). Funded by
Japan, ACCSF was established within JSF to assist in
the economic recovery of CAMCs through interest pay-
ment assistance (IPA) grants, TA grants, and guarantees.
With the general fulfillment of the purpose of the facil-
ity, Japan and ADB agreed to terminate the ACCSF on
22 March 2002. The ACCSF account is to be kept open
until the completion of all TA disbursements and the
settlement of all administrative expenses.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Presentation of the Financial Statements
The financial statements of JSF are presented on the
basis of those for not-for-profit organizations and as
unrestricted and temporarily restricted net assets.
ACCSF funds are separately reported in the financial
statements.
JSF reports the contributions of cash and other
assets as restricted support if they are received with donor
stipulations that limit the use of the donated assets. When
the donor restriction expires, that is, when a stipulated
time or purpose restriction is accomplished, temporarily
restricted net assets are reclassified to unrestricted net
assets and reported in the Statement of Activities and
84
JSF-4
Changes in Net Assets as “NET ASSETS RELEASED
FROM RESTRICTIONS.”
Investments
All investment securities held by JSF are reported at
estimated fair value, which represents their fair market
value. Realized and unrealized gains and losses are in-
cluded in revenue. Time deposits are reported at cost.
Interest on investment securities and time depo-
sits are recognized as realized and reported, net of
amortizations of premium and discounts.
Securities Purchased Under Resale Arrangements
JSF accounts for transfer of financial assets in accordance
with FAS 140, “Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities –
a replacement of FAS 125.” In general, transfers are
accounted for as sale under FAS 140 when control over
the transferred assets has been relinquished. Otherwise,
the transfers are accounted for as repurchase/resale ar-
rangements and collateralized financing arrangements.
Securities received under resale arrangement are neither
recorded on JSF’s balance sheet nor repledged under
securities lending arrangements. ADB monitors the fair
value of the securities received under resale arrangements,
and if necessary, requires additional collateral.
Contributions
Contributions by Japan are included in the financial
statements from the date indicated by Japan that funds
are expected to be made available. Contributions which
are restricted by the donor for specific TA projects/pro-
grams or for IPA grants are classified as temporarily re-
stricted contributions. Those without any stipulation as
to specific use are accounted for and reported as unre-
stricted contributions.
Technical Assistance and Undisbursed Commitment
Technical assistance is recognized in the financial
statements when the related project is approved and
becomes effective. Upon completion of the TA project
or cancellation of a grant, any undisbursed amount is

ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
written back as a reduction in TA for the year and the
corresponding undisbursed commitment is eliminated,
accordingly.
Functional Currency and Reporting Currency
The financial statements are expressed in thousands of
current United States dollars. The United States dollar
is the functional and reporting currency, representing
the currency of the primary economic operating envi-
ronment of JSF.
Translation of Currencies
Assets, liabilities, and uncommitted balances are trans-
lated to the reporting currency at the applicable rates of
exchange at the end of the reporting period. Contribu-
tions included in the financial statements during the year
are translated at the applicable exchange rates as of the
respective dates of commitment. Revenue and expense
amounts are translated for each semi-monthly period at
the applicable rates of exchange at the beginning of each
period; such practice approximates the application of
average rates in effect during the period. Exchange gains
or losses on currency transactions arise on exchange dif-
ferences between the date a project/program is commit-
ted and the timing of disbursements. Exchange gains or
losses are credited or charged to operations.
In October 2005, the Board of Directors approved
the adoption of daily exchange rates for accounting and
financial reporting purposes effective from 1 January 2006.
The use of daily exchange rates will allow transactions
denominated in non-US dollar to be translated using
exchange rates at time of transactions.
Equity Investments
Equity investments with readily determinable fair values
are reported at fair value using quoted market prices.
Accounting Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
Management to make estimates and assumptions that
JSF-4
CONTINUED
STATEMENTS
FINANCIAL
affect the reported amounts of assets and liabilities as at
the end of the year and the reported amounts of income
and expenses during the year. The actual results could
differ from those estimates.
Statement of Cash Flows
For the purposes of the Statement of Cash Flows, the
JSF considers that its cash and cash equivalents are lim-
ited to “DUE FROM BANKS.”
Reclassification
Certain reclassifications of prior year’s amounts and
information have been made to conform to the current
year’s presentation.
NOTE C—INVESTMENTS
The main investment management objective is to main-
tain security and liquidity. Subject to these parameters,
ADB seeks the highest possible return on its investments.
Investments are governed by the Investment Authority
approved by the Board of Directors in 1999. ADB is
restricted by its Investment Authority to invest in gov-
ernment and government-related debt instruments and
in time deposits. In the US dollar portfolio only and up
to limited amounts, investments may be made in corpo-
rate bonds rated A or better, AAA-rated asset-backed
securities, and AAA-rated mortgage-backed securities.
The investment portfolios of both JSF and ACCSF as of
31 December 2005 and 2004 are comprised of United
States dollars holdings. Other securities consisted of
corporate bonds.
The annualized rates of return on the average in-
vestments held under ACCSF and JSF funds during the
year, based on the portfolio held at the beginning and
end of each month were 3.20% and 3.25%, respectively
(1.35% and 1.47%, respectively - 2004).
NOTE D—EQUITY INVESTMENTS
ADB used JSF resources to make an equity investment
in India in 1990. In 2004, JSF sold this equity invest-
ment and realized a gain of $900,000.
85
 JSF-4
ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS

NOTE E—OTHER ASSETS AND LIABILITIES partially canceled TA projects ($8,428,000 – 2004) have
been written back as a reduction in technical assistance
The ordinary capital resources (OCR) and special fund for the year, and the corresponding undisbursed com-
resources are at all times used, committed, and invested mitments have been eliminated. $847,000 ($951,000 –
entirely separate from each other. The administrative 2004) of this amount corresponds to ACCSF. The fair
and operational expenses pertaining to the OCR and value of undisbursed commitments approximates the
special fund resources will be charged to the respective amounts outstanding because ADB expects that disburse-
funds. The administrative expenses of JSF are settled ments will substantially be made for all the projects/
on regular basis between the OCR and JSF. Regional programs covered by the commitments.
technical assistance projects and programs may be com-
bined activities between special and trust funds. Inter- NOTE G—CONTRIBUTIONS AND
fund accounts are settled on a regular basis between JSF UNCOMMITTED BALANCES
and the other funds.
The interfund balances between other funds, which All contributions for the years ended 31 December 2005
are included in other assets and liabilities are as follows: and 2004 were received during the respective years.
Effective 31 December 2002, all remaining tem-
2005 2004 porarily restricted net assets under JSF were transferred
Amounts Receivable by JSF from: and integrated into the unrestricted regular net assets,
ACCSF $ 149,000 $ 604,000
as concurred by Japan, in order to optimize the use of
Technical Assistance JSF. Similarly, Japan lifted the restriction over the use
Special Fund (TASF) – 1,000 of net accumulated investment income, which under the
Total $ 149,000 $ 605,000 original terms of agreement between ADB and Japan,
may only be used for defraying JSF’s administrative ex-
Amounts Payable by:
penses. Japan agreed to use the net accumulated invest-
JSF to : OCR $ 109,000 $ 50,000 ment income as additional resources for funding future
TASF 9,000 – ADB’s TA operations.
Agency Trust Funds 1,000 –
In June 2004, the Cooperation Fund for Regional
Total $ 119,000 $ 50,000 Trade and Financial Security Initiative was established
as a multi-donor umbrella facility to support TA to de-
ACCSF to : JSF $ 149,000 $ 604,000
veloping member countries for enhancing port security
and combating money laundering and terrorist financ-
ing. In July 2004, the Government of Japan agreed to
NOTE F—UNDISBURSED COMMITMENTS transfer US$1,000,000 to the fund from the investment
income of JSF.
Undisbursed commitments are denominated in United Uncommitted balances comprised of amounts which
States dollars and represent TA projects/programs which have not been committed by ADB as at 31 December
have become effective but not yet disbursed. During 2005, 2005. These balances include approved TA projects/
an amount of $7,145,000 representing completed and programs that are not yet effective.

86
 JSF-4
ASIAN DEVELOPMENT BANK—JAPAN SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004

STATEMENTS
FINANCIAL
As of 31 December 2005 and 2004 these balances are as follows:

2005 2004
JSF JSF
Regular and Regular and
ACCSF Supplementary Total ACCSF Supplementary Total

Uncommitted balances $26,895,000 $146,875,000 $173,770,000 $26,022,000 $149,229,000 $175,251,000

TA projects/programs
approved by Japan and
ADB but not yet effective – (15,050,000) (15,050,000) – (27,422,000) (27,422,000)

TA projects/programs
approved by Japan and
not yet effective – (5,400,000) (5,400,000) – (3,575,000) (3,575,000)

Uncommitted balances
available for new
commitments $26,895,000 $126,425,000 $153,320,000 $26,022,000 $118,232,000 $144,254,000

The temporarily restricted uncommitted balance
remaining available as of 31 December 2005 corresponds
to funds under ACCSF of $26,895,000 ($26,022,000 –
2004) to cover completion of TA disbursements and the
amount of net accumulated investment income of
$3,891,000 ($2,865,000 – 2004) for settlement of all
administrative expenses.
Net assets reverted back to temporarily restricted
assets under ACCSF relate to savings on financially com-
pleted technical assistance net of amount from accumu-
lated investment income, released from restrictions to
defray the administrative expenses of the Fund.
NOTE H—FAIR VALUE OF FINANCIAL
INSTRUMENTS
a current transaction between willing parties, other than
in a forced or liquidation sale.
The carrying amount of time deposits is a reason-
able estimate of its fair value.
If available, quoted market values are used to de-
termine fair values. Financial instruments for which
market quotations are not readily available are valued
using valuation models. The basis of valuation is the
expected cash flows discounted based on observable
market data.
See Notes B, C, and F for discussions relating to
investments and undisbursed commitments. In all other
cases, the carrying amounts of JSF’s assets, liabilities,
and uncommitted balances are considered to approxi-
mate fair values for all significant financial instruments.

Fair value of a financial instrument is defined as the

amount at which the instrument could be exchanged in

87
 FINANCIAL
STATEMENTS

Report of Independent Auditors to the Asian Development Bank

In our opinion, the accompanying statements of financial position and the related statements
of activities and changes in net assets, and cash flows present fairly, in all material respects, in
terms of United States dollars, the financial position of the Asian Development Bank—Asian
Development Bank Institute Special Fund at 31 December 2005 and 2004, and the results of
its operations and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America. These financial statements are
the responsibility of the management of the Asian Development Bank Institute. Our respon-
sibility is to express an opinion on these financial statements based on our audits. We conducted
our audits of these statements in accordance with auditing standards generally accepted in the
United States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers
Certified Public Accountants

Singapore
8 March 2006

88
 ADBISF-1
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
STATEMENT OF FINANCIAL POSITION
31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)

STATEMENTS
FINANCIAL
2005 2004

ASSETS

DUE FROM BANKS (Notes B and G) $ 699 $ 1,326

INVESTMENTS (Notes B, C, and H)

Time deposits 1,274 1,460

SECURITIES PURCHASED UNDER

RESALE ARRANGEMENT (Notes B and C) 15,464 14,013

PROPERTY, FURNITURE, AND EQUIPMENT (Notes B and E)

Leasehold Improvements $1,699 $1,946
Less–allowance for depreciation 1,428 271 1,441 505

Furniture and Equipment 2,211 2,980

Less–allowance for depreciation 2,106 105 2,784 196

OTHER ASSETS (Notes F and G) 1,791 2,472

TOTAL $19,604 $19,972

LIABILITIES AND UNCOMMITTED BALANCES

ACCOUNTS PAYABLE AND OTHER LIABILITIES (Notes B, E, G, and H) $ 2,765 $ 3,127

UNCOMMITTED BALANCES (ADBISF-2)

Unrestricted net assets 16,839 16,845

TOTAL $19,604 $19,972

The accompanying notes are an integral part of these financial statements (ADBISF-4).

89
 ADBISF-2
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS
For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

2005 2004

CHANGES IN UNRESTRICTED NET ASSETS

CONTRIBUTIONS (Note B) $13,890 $13,142

REVENUE
Income from investments (Notes B and C) 0 0
Income from other sources—net 3 1

Total 13,893 13,143

EXPENSES
Administrative expenses 8,392 8,963
Program expenses 2,935 2,519

Total 11,327 11,482

CONTRIBUTIONS AND REVENUE IN EXCESS OF EXPENSES 2,566 1,661

EXCHANGE GAINS—NET 86 44

TRANSLATION ADJUSTMENTS (Note B) (2,658) 925

(DECREASE) INCREASE IN UNRESTRICTED NET ASSETS

AFTER TRANSLATION ADJUSTMENTS (6) 2,630

NET ASSETS AT BEGINNING OF YEAR 16,845 14,215

NET ASSETS AT END OF YEAR $16,839 $16,845

0 Less than $1 million.
The accompanying notes are an integral part of these financial statements (ADBISF-4).

90
 ADBISF-3
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
STATEMENT OF CASH FLOWS
For the Years Ended 31 December 2005 and 2004
Expressed in Thousands of United States Dollars (Note B)

STATEMENTS
FINANCIAL
2005 2004

CASH FLOWS FROM OPERATING ACTIVITIES

Contributions received $ 13,890 $ 13,142
Interest on investments received 0 0
Expenses paid (10,141) (11,266)
Other (747) 747

Net Cash Provided by Operating Activities 3,002 2,623

CASH FLOWS FROM INVESTING ACTIVITIES1

Maturity and sales of investment 5,479 9,421
Purchases of investment (5,496) (9,727)
Net payments for securities under resale arrangement (3,385) (13,216)

Net Cash Used in Investing Activities (3,402) (13,522)

Effect of Exchange Rate Changes on Cash (227) 282

Net Decrease in Due from Banks (627) (10,617)

Due from Banks at Beginning of Year 1,326 11,943

Due from Banks at End of Year $ 699 $ 1,326

RECONCILIATION OF (DECREASE) INCREASE IN UNRESTRICTED NET ASSETS

TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
(Decrease) Increase in net unrestricted assets (ADBISF-2) $ (6) $ 2,630
Adjustments to reconcile (decrease) increase in net unrestricted assets
to net cash provided by operating activities:
Translation adjustments 2,658 (925)
Due to JFPPT (747) 747
Depreciation 253 255
Others—net 844 (84)

Net Cash Provided by Operating Activities $ 3,002 $ 2,623

0 Less than $1 million.

1 Includes cashflows associated with securities purchased under resale arrangement.
The accompanying notes are an integral part of these financial statements (ADBISF-4).

91

ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS
NOTE A—NATURE OF OPERATIONS
In 1996, the Asian Development Bank (ADB) approved
the establishment of the Asian Development Bank
Institute (the Institute) in Tokyo, Japan as a subsidiary
body of ADB. The Institute commenced its operations
upon the receipt of the first funds from Japan on 24 March
1997, and it was inaugurated on 10 December 1997. The
Institute’s funds may consist of voluntary contributions,
donations, and grants from ADB member countries, non-
government organizations, and foundations. The objec-
tives of the Institute, as defined under its Statute, are
the identification of effective development strategies and
capacity improvement for sound development manage-
ment in developing member countries. In 2004, a new
trust fund, Japan Fund for Public Policy Training
(JFPPT) was set up under ADBI’s administration. The
administration of JFPPT was transferred to ADB on
14 October 2005.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Presentation of the Financial Statements
The financial statements of the Institute are presented
on the basis of those for not-for-profit organizations.
The Institute reports donor’s contributed cash and
other assets as unrestricted support as these are made avail-
able to the Institute without conditions other than for the
purposes of pursuing the objectives of the Institute.
Investments
All investment securities held by the Institute are
reported at estimated fair value which represents their fair
market value. Realized and unrealized gains and losses are
included in revenue. Time deposits are reported at cost.
Securities Purchased Under Resale Arrangement
ADBI accounts for transfers of financial assets in accor-
dance with FAS 140, “Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of
Liabilities – a replacement of FAS 125.” In general, trans-
fers are accounted for as sale under FAS 140 when con-
92
ADBISF-4
trol over the transferred assets has been relinquished.
Otherwise, the transfers are accounted for as repurchase/
resale agreements and collateralized financing arrange-
ments. Securities received under resale arrangements are
not recorded on ADBI’s balance sheet.
Property, Furniture, and Equipment
Property, furniture, and equipment are stated at cost and
depreciated over their estimated useful lives using the
straight-line method. Maintenance, repairs and minor
betterments are charged to expense.
Contributions
Contributions from donors are included in the financial
statements from the date committed.
Functional Currency and Reporting Currency
The functional currency of the Institute is the Japanese
yen. The reporting currency is the United States dollar,
and the financial statements are expressed in thousands
of current United States dollars.
Translation of Currencies
Assets, liabilities, and uncommitted balances are trans-
lated from the functional currency to the reporting cur-
rency at the applicable rates of exchange at the end of
a reporting period. Contributions included in the finan-
cial statements during the year are recognized at the
applicable exchange rates as of the respective dates of
commitment. Revenue and expense amounts in curren-
cy other than the United States dollar are translated for
each semi-monthly period generally at the applicable rates
of exchange at the beginning of each period; such prac-
tice approximates the application of average rates in ef-
fect during the period. Translation adjustments are
accounted for as exchange gains or losses and are credited
or charged to operations.
Accounting Estimates
The preparation of the financial statements in confor-
mity with generally accepted accounting principles re-

ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
quires Management to make estimates and assumptions
that affect the reported amounts of assets and liabilities
as at the end of the year and the reported amounts of
revenue and expenses during the year. Actual results could
differ from those estimates.
Statement of Cash Flows
For the purposes of the Statement of Cash Flows, the
Institute considers that its cash and cash equivalents are
limited to “DUE FROM BANKS”. Due from banks
includes bank accounts held on behalf of the JFPPT
(Note G).
Reclassification
Certain reclassification of prior year’s amounts and in-
formation has been made to conform to the current year’s
presentation.
NOTE C—INVESTMENTS
The main investment management objective is to main-
tain security and liquidity. Subject to these parameters,
ADB administers the Institute’s investments and seeks
the highest possible return on its investments. Invest-
ments are governed by the Investment Authority ap-
proved by the Board of Directors in 1999. ADB is
restricted by its Investment Authority to invest in
government and government-related debt instruments
and in time deposits.
The investment portfolio was composed wholly of
investments denominated in Japanese yen as of
31 December 2005 and 2004. Time deposits are reported
at cost. All such investments are due within one year.
The total investment income reported as of 31 Decem-
ber 2005 consisted of interest income earned during the
year.
The annualized rate of return on the average in-
vestments held during the year including receivable for
securities purchased under resale arrangement, based on
the portfolio held at the beginning and end of each month
was 0.002% (0.002% - 2004).
As of 31 December 2005, ADBI did not hold any
investments in an unrealized loss position.
ADBISF-4
CONTINUED
STATEMENTS
FINANCIAL
NOTE D—STAFF RETIREMENT PLAN AND
POSTRETIREMENT MEDICAL BENEFITS
Staff Retirement Plan
The Institute participates in the contributory defined
benefit Staff Retirement Plan (the Plan) of ADB. Every
employee, as defined under the Plan, shall, as a condi-
tion of service, become a participant from the first day
of service, provided that at such a date, the employee
has not reached the normal retirement age of 60. Retire-
ment benefits are based on length of service and highest
average remuneration during two years of eligible ser-
vice. The Plan assets are segregated and are not included
in the Statement of Financial Position. The costs of
administering the Plan are absorbed by ADB, except for
fees paid to the investment managers and related charges,
including custodian fees, which are borne by the Plan.
Participants are required to contribute 9 1/3% of
their salary to the Plan and may also make voluntary con-
tributions. The Institute’s contribution is determined
at a rate sufficient to cover that part of the costs of the
Plan not covered by the participants’ contributions.
Expected Contributions
The expected amount of contributions to the Plan for
2006, based on the Institute’s contribution rate for the
coming year of 16%, and the participants’ mandatory
contribution are $154,000 and $90,000, respectively (2005
– $151,000 and $88,000).
Investment Strategy
Contributions in excess of current benefits payments are
invested in international financial markets and in a va-
riety of investment vehicles. The Plan employs six ex-
ternal asset managers and one global custodian who
function within the guidelines established by the Plan’s
Investment Committee. The investment of these assets,
over the long term, is expected to produce higher re-
turns than short-term investments. The investment
policy incorporates the Plan’s package of desired invest-
ment returns, and tolerance for risk, taking into account
the nature and duration of the Plan’s liabilities. The Plan’s
assets are diversified among different markets and
93
 ADBISF-4
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS

different asset classes. The use of derivatives for
speculation, leverage or taking risks is prohibited.
Selected derivatives are used for hedging and transac-
tional efficiency purposes.
The Plan’s investment policy is periodically
reviewed and revised to reflect the best interest of the
Plan’s participants and beneficiaries. The current policy,
adopted in January 2004, specifies an asset-mix struc-
ture of 70% of assets in equities and 30% in fixed in-
come securities. At present, investments of the Plan’s
assets are divided into three categories: US equity, Non-
US equity, and US fixed income.
As of 31 December 2005 and 2004, the breakdown
of the fair value of plan assets held is as follows:

2005 2004
Amount Percentage Amount Percentage

Equity Securities
US $ 945,000 $ 881,000
Non-US 602,000 494,000

1,547,000 71.4% 1,375,000 70.1%

Fixed income securities 599,000 27.7 471,000 24.1

Other Assets–net 19,000 0.9 113,000 5.8

Total $2,165,000 100.0% $1,959,000 100.0%

All investments, excluding time deposits, are valued
using market prices. Time deposits are reported at cost.
Fixed income securities include US government and go-
vernment guaranteed obligations, corporate bonds and
time deposits. Other assets include forward exchange
contracts in various foreign currencies transacted to hedge
currency exposure in the investment portfolio, which are
reported at fair value.
For the year ended 31 December 2005 the net return
on the Plan assets was 8% (11.1% – 2004). ADB expects
the long-term rate of return on the assets to be 8%.
Assumptions
The assumed overall rate of return takes into account
long-term return expectations of the underlying asset
classes within the investment portfolio mix, and the
expected duration of the Plan’s liabilities. Return ex-
pectations are forward looking and, in general, not much
weight is given to short-term experience. Unless there
is a drastic change in investment policy or market envi-
ronment, the assumed investment return of 8% on the
Plan’s assets is expected to remain broadly the same,
year to year.
Postretirement Medical Benefits Plan
The Institute participates in the cost-sharing plan of ADB
for retirees’ medical insurance premiums. Under the plan,
the Institute is obligated to pay 75% of the Group Medical
Insurance Plan premiums for retirees and their eligible
dependents who elect to participate. The cost-sharing
plan is currently unfunded.
Generally accepted accounting principles require
an actuarially determined assessment of the periodic cost
of postretirement medical benefits.
The following table sets forth the pension and post-
retirement benefits at 31 December 2005 and 31
December 2004:

94
 ADBISF-4
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
CONTINUED
31 December 2005 and 2004

STATEMENTS
FINANCIAL
Pension Benefits Postretirement Medical Benefits

2005 2004 2005 2004

Change in benefit obligation:

Benefit obligation at beginning of year $ 2,971,000 $ 2,029,000 $ 403,000 $ 468,000
Service cost 260,000 298,000 22,000 12,000
Interest cost 194,000 149,000 25,000 30,000
Plan participants’ contributions 59,000 444,000 – –
Amendments – – (87,000) –
Actuarial loss (gain) 43,000 51,000 106,000 (85,000)
Benefits paid (149,000) (18,000) (15,000) (22,000)

Benefit obligation at end of year $ 3,378,000 $ 2,953,000 $ 454,000 $ 403,000

Change in plan assets:

Fair value of plan assets at beginning of year $ 1,959,000 $ 1,206,000 $ – $ –
Actual return on plan assets 165,000 159,000 – –
Employer’s contribution 131,000 150,000 15,000 22,000
Plan participants’ contributions 59,000 444,000 – –
Benefits paid (149,000) (18,000) (15,000) (22,000)

Fair value of plan assets at end of year $ 2,165,000 $ 1,941,000 $ – $ –

Funded status $(1,213,000) $(1,012,000) $(454,000) $(403,000)

Unrecognized actuarial gain (41,000) (73,000) (53,000) (176,000)
Unrecognized prior service cost 25,000 30,000 (94,000) (9,000)

Net amount recognized $(1,229,000) $(1,055,000) $(601,000) $(588,000)

Amounts recognized in the statement of financial position consist of:

Accrued benefit liability $(1,229,000) $(1,055,000) $(601,000) $(588,000)

Net amount recognized $(1,229,000) $(1,055,000) $(601,000) $(588,000)

Weighted-average assumptions as of 31 December

Discount rate 5.75% 6.00% 5.75% 6.00%
Expected return on plan assets 8.00% 8.00% N/A N/A
Rate of compensation increase varies with age and averages 4.75% 5.00% 4.75% 5.00%

For measurement purposes, a 9.0% annual rate of 31 December 2005. The rate was assumed to decrease
increase in the per capita cost of covered health care gradually to 5.0% for 2010 and remain at that level
benefits was assumed for the valuation as at thereafter.

Pension Benefits Postretirement Medical Benefits

2005 2004 2005 2004

Components of net periodic benefit cost:

Service cost $ 260,000 $ 298,000 $ 22,000 $ 12,000
Interest cost 194,000 149,000 25,000 30,000
Expected return on plan assets (154,000) (159,000) – –
Amortization of prior service cost 5,000 69,000 (2,000) (2,000)
Recognized actuarial loss – – (17,000) (10,000)

Net periodic benefit cost $ 305,000 $ 357,000 $ 28,000 $ 30,000

95
 ADBISF-4
ASIAN DEVELOPMENT BANK—ASIAN DEVELOPMENT BANK INSTITUTE SPECIAL FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005 and 2004
FINANCIAL
STATEMENTS

The accumulated benefit obligation of the pension NOTE F—DUE FROM AND DUE TO ADB
plan as of 31 December 2005 was $3,169,000 ($2,715,000
– 2004). Accounts receivable include amounts due from ADB of
A one-percentage-point change in assumed health $4,000 and $94,000 at 31 December 2005 and 2004,
care cost trend rates would have the following effects: respectively. Accounts payable and other liabilities
include amounts due to ADB of $177,000 and $186,000
1-Percentage- 1-Percentage- at 31 December 2005 and 2004, respectively.
Point Increase Point Decrease
Effect on total service and NOTE G—DUE FROM AND DUE TO JFPPT
interest cost components $14,000 $ (9,000)
Effect on postretirement
benefit obligation 83,000 (68,000) Other assets including amounts due from JFPPT at 31
December 2005 were nil ($247,000 – 2004). Due from
Estimated Future Benefits Payments banks and accounts payable and other liabilities includ-
ing money held in bank accounts on behalf of JFPPT
The following table shows the benefit payments expected and due to JFPPT for the money received at 31 Decem-
to be paid in each of the next five years and subsequent ber 2005 were also nil ($747,000 – 2004).
five years. The expected benefit payments are based on
the same assumptions used to measure the benefit NOTE H—FAIR VALUE OF FINANCIAL
obligation at 31 December 2005: INSTRUMENTS

Postretirement Fair value of a financial instrument is defined as the

Pension Benefits Medical Benefits
amount at which the instrument could be exchanged in
2006 $ 271,000 $ 7,000 a current transaction between willing parties, other than
2007 131,000 9,000
2008 132,000 14,000 in a forced or liquidation sale.
2009 107,000 16,000 The carrying amount of time deposits is a reason-
2010 125,000 17,000 able estimate of fair value.
2011-2015 967,000 100,000
The Institute’s statements of financial position
carrying amounts are considered to approximate fair values
NOTE E—LEASED ASSETS
for all significant financial instruments.
The Institute leases office space and other assets. Rental
NOTE I—SUBSEQUENT EVENTS
expenses under operating leases for the years ended
31 December 2005 and 2004 were $2,905,000 and
$3,019,000, respectively. The minimum rental payments On 6 January 2006, an agreement to lease network
instruments commenced. Under this agreement, the
required under operating leases that have initial or non-
Institute will pay $205,000 over 60 months.
cancelable lease terms in excess of one year at
31 December 2005 follow:

Year ending 31 December Minimum future rentals

2006 $2,691,000
2007 2,691,000
2008 673,000

96
 STATEMENTS
FINANCIAL
Report of Independent Auditors to the Asian Development Bank

In our opinion, the accompanying statement of financial position and the related statement of
activities and changes in net assets and cash flows present fairly, in all material respects, in
terms of United States dollars, the financial position of the Asian Development Bank—Asian
Tsunami Fund at 31 December 2005, and the results of its activities and changes in net assets
and its cash flows for the period from 11 February 2005 (establishment of the Fund) to
31 December 2005, in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the management of the
Asian Development Bank. Our responsibility is to express an opinion on these financial state-
ments based on our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

PricewaterhouseCoopers
Certified Public Accountants

Singapore
8 March 2006

97
 ATF-1
ASIAN DEVELOPMENT BANK—ASIAN TSUNAMI FUND
STATEMENT OF FINANCIAL POSITION
31 December 2005
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

ASSETS

DUE FROM BANKS (Note B) $ 553

INVESTMENTS (Notes C and G)

Time deposits 513,338

ACCRUED INCOME 1,936

ADVANCES FOR GRANTS 43,036

TOTAL $558,863

LIABILITIES AND UNCOMMITTED BALANCES

ACCOUNTS PAYABLE AND OTHER LIABILITIES (Note E) $ 102

UNDISBURSED COMMITMENTS (Notes B, F, and G) 552,417

UNCOMMITTED BALANCES (ATF-2) (Note D)

Unrestricted net assets 6,344

TOTAL $558,863
The accompanying notes are an integral part of these financial statements (ATF-4).

98
 ATF-2
ASIAN DEVELOPMENT BANK—ASIAN TSUNAMI FUND
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS
For the Period from 11 February to 31 December 2005
Expressed in Thousands of United States Dollars (Note B)

STATEMENTS
FINANCIAL
CHANGES IN UNRESTRICTED NET ASSETS

CONTRIBUTIONS (Notes B and D) $564,796

REVENUE
From investments (Note C) $ 13,782
From other sources 54 13,836

Total 578,632

EXPENSES
Grants (Note B) $572,000
Administrative expenses 392 572,392

CONTRIBUTIONS AND REVENUE IN EXCESS OF EXPENSES 6,240

EXCHANGE GAINS (Note B) 104

NET ASSETS AT END OF YEAR $ 6,344

The accompanying notes are an integral part of these financial statements (ATF-4).

99
 ATF-3
ASIAN DEVELOPMENT BANK—ASIAN TSUNAMI FUND
STATEMENT OF CASH FLOWS
For the Period from 11 February to 31 December 2005
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

CASH FLOWS FROM OPERATING ACTIVITIES

Contributions received $ 564,893
Interest on investments received 11,846
Cash received from other activities 61
Grant disbursed (62,619)
Administrative expenses paid (290)

Net Cash Provided by Operating Activities 513,891

CASH FLOWS FROM INVESTING ACTIVITIES

Maturities of investments 15,884,225
Purchases of investments (16,397,563)

Net Cash Used in Investing Activities (513,338)

Due from Banks at End of Year $ 553

RECONCILIATION OF INCREASE IN NET ASSETS

TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Increase in net assets $ 6,344
Adjustments to reconcile increase in net assets
to net cash provided by operating activities:
Undisbursed commitments 552,417
Accounts payable and other liabilities 102
Advances under TA grants (43,036)
Accrued income from investments (1,936)

Net Cash Provided by Operating Activities $ 513,891

The accompanying notes are an integral part of these financial statements (ATF-4).

100

ASIAN DEVELOPMENT BANK—ASIAN TSUNAMI FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005
NOTE A—NATURE OF OPERATIONS
The Asian Tsunami Fund (ATF) was established on
11 February 2005 in response to the special circumstances
surrounding the developing member countries (DMCs) that
were stricken by the effects of the tsunami on 26 Decem-
ber 2004. The purpose of ATF is to provide emergency grant
financing promptly and effectively to affected DMCs in the
form of technical assistance (TAs) and investment projects
to support reconstruction, rehabilitation and associated
development activities following the tsunami disaster.
ATF will serve as a dedicated source of grant finan-
cing to support priority rehabilitation and reconstruction
needs on a multi-sector basis. Resources from the Fund will
be available to central governments and other suitable
entities including, non-governmental organizations.
ATF’s resources may consist of allocations from the
net income of ordinary capital resources (OCR) and contri-
butions from bilateral, multilateral and individual sources.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Presentation of the Financial Statements
The financial statements of the ATF are presented on the
basis of those for not-for-profit organizations.
ATF reports donor’s contributions of cash and other
assets as unrestricted asset as these are made available to
ATF without conditions other than for the purposes of
pursuing its objectives.
Contributions
Contributions from donors are included in the financial
statements from the date committed.
Grants and Undisbursed Commitments
Grants are recognized in the financial statements when the
related project is approved and becomes effective. Upon
completion of the project, any undisbursed amount is writ-
ten back as a reduction in grants for the period and the
corresponding undisbursed commitment is accordingly eli-
ATF-4
STATEMENTS
FINANCIAL
minated. Total undisbursed commitments are denominated
in United States dollars and represent effective grant for
projects, which have not been disbursed.
Functional and Reporting Currency
The financial statements are expressed in thousands of
current United States dollars. The United States dollar is
the functional and reporting currency, representing the
currency of the primary economic operating environment
of ATF.
Translation of Currencies
Assets, liabilities, and uncommitted balances in currencies
other than United States dollars are translated at the ap-
plicable rates of exchange at the end of the reporting pe-
riod. Contributions included in the financial statements
during the year are recognized at applicable exchange rates
as of the respective dates of commitment. Revenue and
expense amounts in currencies other than United States
dollars are translated for each semi-monthly period gene-
rally at the applicable rates of exchange at the beginning of
each period; such practice approximates the application of
average rates in effect during the period. Translation ad-
justments are accounted for as exchange gains or losses and
are credited or charged to operations.
In October 2005, the Board of Directors approved the
adoption of daily exchange rates for accounting and finan-
cial reporting purposes effective from 1 January 2006. The
use of daily exchange rates will allow transactions denomi-
nated in non-US dollar to be translated using exchange rates
at time of transactions.
Accounting Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires Manage-
ment to make estimates and assumptions that affect the
reported amounts of assets and liabilities and uncommit-
ted balances as at the end of the year and the reported
amounts of revenue and expenses during the year. The actual
results could differ from those estimates.
101

ASIAN DEVELOPMENT BANK—ASIAN TSUNAMI FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005
FINANCIAL
STATEMENTS
Statement of Cash Flows
For the purposes of the Statement of Cash Flows, ATF
considers that its cash and cash equivalents are limited to
“DUE FROM BANKS.”
NOTE C—INVESTMENTS
The main investment management objective is to main-
tain security and liquidity. Subject to these parameters, ADB
seeks the highest possible return on its investments. In-
vestments are governed by the Investment Authority ap-
proved by the Board of Directors in 1999. ATF is restricted
by its Investment Authority to invest in government and
government-related debt instruments and in time deposits.
In the US dollar portfolio only and up to limited amounts,
investments may be made in corporate bonds rated A or
better, AAA-rated asset-backed securities, and AAA-rated
mortgage-backed securities.
All investments comprised of holdings in time depo-
sits denominated in United States dollar as of 31 Decem-
ber 2005. Time deposits are reported at cost. The total
investment income reported as of 31 December 2005 con-
sisted of interest income earned during the year.
The annualized rate of return on the average invest-
ments held during the period ended 31 December 2005,
based on the portfolio held at the beginning and end of
each month was 3.46%.
NOTE D—OTHER LIABILITIES
The OCR and special fund resources are at all times used,
committed, and invested entirely separate from each other.
The Board of Governors may approve allocation of the net
income of OCR to special funds, based on the funding and
operational requirements of the funds. The administrative
and operation expenses pertaining to ATF are settled on
regular basis between the OCR and ATF. As of 31 Decem-
ber 2005, $417 was payable to OCR by ATF for adminis-
trative expenses.
102
ATF-4
NOTE E—CONTRIBUTIONS AND
UNCOMMITTED BALANCES
In April and May 2005, ADB initially contributed
$600,000,000 to ATF. Due to the special circumstance
surrounding the 8 October 2005 earthquake, the Board of
Governors adopted Resolution to transfer back $40,000,000
of ATF’s uncommitted fund to the OCR, which was sub-
sequently transferred to Pakistan Earthquake Fund in
November 2005. In addition, Australia and Luxembourg
contributed $3,796,000 and $1,000,000, respectively.
Uncommitted balances comprised of amounts which
have not been committed by ATF as at 31 December 2005.
NOTE F—UNDISBURSED COMMITMENTS
Undisbursed commitments are denominated in United
States dollars and represent grants not yet disbursed. The
fair value of undisbursed commitments approximates the
amounts outstanding because ADB expects that disburse-
ments will substantially be made for all the projects/pro-
grams covered by the commitments.
NOTE G—FAIR VALUE OF FINANCIAL
INSTRUMENTS
Fair value of a financial instrument is defined as the amount
at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced
or liquidation sale.
The carrying amount of time deposits is a reasonable
estimate of its fair value.
See Notes B and C for discussions relating to invest-
ments and undisbursed commitments. In all other cases,
the carrying amounts of ATF’s assets, liabilities, and un-
committed balances are considered to approximate fair
values for all significant financial instruments.
 STATEMENTS
FINANCIAL
Report of Independent Auditors to the Asian Development Bank

In our opinion, the accompanying statement of financial position and the related statement of
activities and changes in net assets and cash flows present fairly, in all material respects, in
terms of United States dollars, the financial position of the Asian Development Bank—Pakistan
Earthquake Fund at 31 December 2005, and the results of its activities and changes in net
assets and its cash flows for the period from 14 November 2005 (establishment of the Fund)
to 31 December 2005, in conformity with accounting principles generally accepted in the
United States of America. These financial statements are the responsibility of the management
of the Asian Development Bank. Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States of America. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

PricewaterhouseCoopers
Certified Public Accountants

Singapore
8 March 2006

103
 PEF-1
ASIAN DEVELOPMENT BANK—PAKISTAN EARTHQUAKE FUND
STATEMENT OF FINANCIAL POSITION
31 December 2005
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

ASSETS

DUE FROM BANKS (Note B) $ 200

INVESTMENTS (Notes C and F)

Time deposits 79,865

ACCRUED INCOME 105

DUE FROM CONTRIBUTORS (Notes B and D) 5,327

TOTAL $85,497

UNCOMMITTED BALANCES

UNCOMMITTED BALANCES (PEF-2) (Notes E and F)

Unrestricted net assets $85,497

TOTAL $85,497
The accompanying notes are an integral part of these financial statements (PEF-4).

104
 PEF-2
ASIAN DEVELOPMENT BANK—PAKISTAN EARTHQUAKE FUND
STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS
For the Period from 14 November to 31 December 2005
Expressed in Thousands of United States Dollars (Note B)

STATEMENTS
FINANCIAL
CHANGES IN UNRESTRICTED NET ASSETS

CONTRIBUTIONS (Notes B and D) $85,379

REVENUE FROM INVESTMENTS (Note C) 170

CONTRIBUTIONS AND REVENUE 85,549

EXCHANGE LOSSES (Note B) (52)

NET ASSETS AT END OF YEAR $85,497

The accompanying notes are an integral part of these financial statements (PEF-4).

105
 PEF-3
ASIAN DEVELOPMENT BANK—PAKISTAN EARTHQUAKE FUND
STATEMENT OF CASH FLOWS
For the Period from 14 November to 31 December 2005
Expressed in Thousands of United States Dollars (Note B)
FINANCIAL
STATEMENTS

CASH FLOWS FROM OPERATING ACTIVITIES

Contributions received $ 80,000
Interest on investments received 65

Cash Provided by Operating Activities 80,065

CASH FLOWS FROM INVESTING ACTIVITIES

Maturities of investments 79,000
Acquisition of investments (158,865)

Net Cash Used in Investing Activities (79,865)

Due from Banks at End of Year $ 200

RECONCILIATION OF INCREASE IN NET ASSETS

TO CASH PROVIDED BY OPERATING ACTIVITIES:

Increase in net assets $ 85,497

Adjustments to reconcile increase in net assets
to cash provided by operating activities:
Accrued interest receivable (105)
Due from contributors (5,327)

Cash Provided by Operating Activities $ 80,065

The accompanying notes are an integral part of these financial statements (PEF-4).

106

ASIAN DEVELOPMENT BANK—PAKISTAN EARTHQUAKE FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005
NOTE A—NATURE OF OPERATIONS
The Pakistan Earthquake Fund (PEF) was established on
14 November 2005 in response to the special circumstan-
ces confronted by Pakistan resulting from the effects of an
earthquake on 8 October 2005. The objective of the PEF
is to deliver emergency grant financing promptly and
effectively to Pakistan for technical assistance and invest-
ment projects to support reconstruction, rehabilitation, and
associated development activities.
PEF resources will be available to the Government of
Pakistan and other suitable entities acceptable to the
Government of Pakistan and ADB, including, where appro-
priate, non-government organizations.
PEF’s resources may consist of contributions from ADB
and other contributions from bilateral, multilateral, and other
sources.
NOTE B—SUMMARY OF SIGNIFICANT
ACCOUNTING PRINCIPLES
Presentation of the Financial Statements
The financial statements of the PEF are presented on the
basis of those for not-for-profit organizations.
PEF reports donor’s contributions of cash and other
assets as unrestricted asset as these are made available
without conditions other than for the purposes of pursuing
the objectives of the PEF.
Functional and Reporting Currency
The financial statements are expressed in thousands of
current United States dollars. The United States dollar is
the functional and reporting currency, representing the
currency of the primary economic operating environment.
Contributions
Contributions from donors included in the financial state-
ments are recognized as income from the date committed.
Translation of Currencies
Assets, liabilities, and uncommitted balances in currencies
other than United States dollars are translated at the
PEF-4
STATEMENTS
FINANCIAL
applicable rates of exchange at the end of the reporting
period. Contributions included in the financial statements
during the year are recognized at applicable exchange rates
as of the respective dates of commitment. Revenue and
expense amounts in currencies other than United States
dollars are translated for each semi-monthly period gene-
rally at the applicable rates of exchange at the beginning of
each period; such practice approximates the application of
average rates in effect during the period. Translation
adjustments are accounted for as exchange gains or losses
and are credited or charged to operations.
In October 2005, the Board of Directors approved the
adoption of daily exchange rates for accounting and finan-
cial reporting purposes effective from 1 January 2006. The
use of daily exchange rates will allow transactions deno-
minated in non-US dollar to be translated using exchange
rates at time of transactions.
Statement of Cash Flows
For the purposes of the Statement of Cash Flows, PEF
considers that its cash and cash equivalents are limited to
“DUE FROM BANKS.”
NOTE C—INVESTMENTS
The main investment management objective is to main-
tain security and liquidity. Subject to these parameters, ADB
seeks the highest possible return on its investments. In-
vestments are governed by the Investment Authority ap-
proved by the Board of Directors in 1999. PEF is restricted
by its Investment Authority to invest in government and
government-related debt instruments and in time deposits.
In the US dollar portfolio only and up to limited amounts,
investments may be made in corporate bonds rated A or
better, AAA-rated asset-backed securities, and AAA-rated
mortgage-backed securities.
All investments comprised of holdings in time deposits
denominated in United States dollar as of 31 December
2005. Time deposits are reported at cost. The total invest-
ment income reported as of 31 December 2005 consisted
of interest income earned during the year.
The annualized rate of return on the average invest-
ments held during the period ended 31 December 2005,
based on the portfolio held at the beginning and end of each
month, including unrealized gains and losses, was 4.25%.
107
 PEF-4
ASIAN DEVELOPMENT BANK—PAKISTAN EARTHQUAKE FUND
NOTES TO FINANCIAL STATEMENTS
31 December 2005
FINANCIAL
STATEMENTS

NOTE D—CONTRIBUTIONS See Notes C and E for discussions relating to invest-

In November 2005, ADB transferred $80,000,000 from OCR
Surplus to the PEF. In addition, Finland committed con-
tributions equivalent to $5,379,000, which is included in
Due from Contributors.
NOTE E—UNCOMMITTED BALANCES
Uncommitted balances comprised of amounts which have
not been committed by PEF as at 31 December 2005.
NOTE F—FAIR VALUE OF FINANCIAL
INSTRUMENTS
Fair value of a financial instrument is defined as the amount
at which the instrument could be exchanged in a current
transaction between willing parties, other than in a forced
or liquidation sale.
The carrying amount of time deposits is a reasonable
estimate of its fair value.
ments and uncommitted balances. In all other cases, the
carrying amount of PEF’s assets and uncommitted balances
are considered to approximate fair values for all significant
financial instruments.
NOTE G—FUND ADMINISTRATION
The ordinary capital resources (OCR) and special fund
resources are at all times used, committed, invested en-
tirely separate from each other. The Board of Governors
may approve allocation of the net income of OCR to spe-
cial funds, based on the funding and operational require-
ments for the funds. The administrative and operational
expenses pertaining to the OCR and special fund resources
will be charged to the respective funds. The administra-
tive expenses of ADB are allocated amongst OCR and spe-
cial funds and are settled on regular basis between the OCR
and the special funds.

108
 Statistical Annex

Every effort has been made to ensure the accuracy

of the data used in this publication. However, source
and interpretation of the data may vary among ADB’s
publications. ADB, therefore, accepts no responsi-
bility whatsoever from any consequence of their use.

stat annex divider (p109).pmd 109 08/04/2006, 3:08 PM

 Operational Data
Table 1
PUBLIC AND PRIVATE SECTOR LOAN APPROVALS BY COUNTRY, 2005
($ million)

Total Date
OCR ADF Total Project Costa Approved

AFGHANISTAN
Power Transmission and Distribution – 26.50 26.50 50.00 14 Apr
Fiscal Management and Public Administration Reform Program
(Subprogram I) – 48.00 48.00 55.00 14 Dec
Western Basins Water Resources Management – 60.50 60.50 87.60 20 Dec
STATISTICAL
ANNEX

Subtotal – 135.00 135.00 192.60

AZERBAIJAN
East-West Highway Improvement 49.00 3.00 52.00 93.20 08 Dec
Subtotal 49.00 3.00 52.00 93.20
BANGLADESH
Emergency Flood Damage Rehabilitation – 152.30 152.30 240.00 20 Jan
Second Urban Primary Health Care – 30.00 30.00 90.00 31 May
Gas Transmission and Development 225.00 5.00 230.00 413.00 27 Oct
Agribusiness Development – 42.50 42.50 60.00 27 Oct
Southwest Area Integrated Water Resources Planning and
Management – 20.00 20.00 43.40 23 Nov
Subtotal 225.00 249.80 474.80 846.40
BHUTAN
Road Network – 27.30 27.30 34.10 30 Sep
Subtotal – 27.30 27.30 34.10
CAMBODIA
Financial Sector Program (Subprogram III) – 10.00 10.00 10.00 29 Sep
Subtotal – 10.00 10.00 10.00
CHINA, PEOPLE’S REPUBLIC OF
Sanjiang Plain Wetlands Protection 15.00 – 15.00 55.55 14 Mar
Jilin Water Supply and Sewerage Development 100.00 – 100.00 232.20 18 Jul
Fuzhou Environmental Improvement 55.80 – 55.80 185.50 29 Jul
Business Development Bank Limitedb 20.72 – 20.72 20.72 11 Aug
Central Sichuan Roads Development 600.00 – 600.00 2,077.00 22 Sep
Zhengzhou-Xi’an Railway 400.00 – 400.00 4,131.93 22 Sep
Henan Wastewater Management and Water Supply Sector 100.00 – 100.00 200.00 09 Dec
Hunan Roads Development III 208.00 – 208.00 519.51 15 Dec
Subtotal 1,499.52 – 1,499.52 7,422.41
COOK ISLANDS
Cyclone Emergency Assistance – 2.83 2.83 7.87 30 Jun
Subtotal – 2.83 2.83 7.87
FIJI ISLANDS
Alternative Livelihoods Development 25.00 – 25.00 49.78 28 Mar
Subtotal 25.00 – 25.00 49.78
INDIA
Chhattisgarh Irrigation Development 46.11 – 46.11 66.61 29 Mar
Tsunami Emergency Assistance (Sector) 100.00 – 100.00 218.60 14 Apr
Infrastructure Development Finance Company Limitedb 50.00 – 50.00 50.00 19 Apr
Yes Bank Limitedb 23.00 – 23.00 23.00 23 Aug
Kerala Sustainable Urban Development 221.20 – 221.20 316.10 20 Dec
Subtotal 440.31 – 440.31 674.31

– Nil; ADF = Asian Development Fund; OCR = ordinary capital resources.

a Total project cost includes financing by ADB, governments, borrowers, beneficiaries, and subborrowers; cofinancing from official, export credit, and commercial
sources; equity sponsors; and local participating private companies and financial institutions.
b Private sector loan without government guarantee.

110
CONTINUED

Total Date
OCR ADF Total Project Costa Approved

INDONESIA
Community Water Services and Health 34.10 30.59 64.69 92.38 07 Apr
Road Rehabilitation–2 151.00 – 151.00 215.80 29 Sep
Local Government Finance and Governance Reform Sector
Development Program

ANNEX
STATISTICAL
– Program Loan 300.00 – 300.00 300.00 03 Nov
– Project Loan – 30.00 30.00 42.90 03 Nov
Tangguh Liquefied Natural Gasb 350.00 – 350.00 6,303.00 14 Dec
Rural Infrastructure Support – 50.00 50.00 60.81 19 Dec
Development Policy Support Program 200.00 – 200.00 200.00 21 Dec
Subtotal 1,035.10 110.59 1,145.69 7,214.89
KYRGYZ REPUBLIC
Banking Sector and Capital Market Development Program – 15.50 15.50 15.50 20 Dec
Subtotal – 15.50 15.50 15.50
LAO PEOPLE’S DEMOCRATIC REPUBLIC
Greater Mekong Subregion: Nam Theun 2 Hydroelectric
– Private Sector Loan 50.00 – 50.00 { 1,450.00 04 Apr
– Public Sector Loan 20.00 – 20.00 04 Apr
Subtotal 70.00 – 70.00 1,450.00
MALDIVES
Tsunami Emergency Assistance – 1.80 1.80 25.30 31 Mar
Regional Development Project, Phase II – Environmental
Infrastructure and Management – 6.00 6.00 7.50 28 Apr
Subtotal – 7.80 7.80 32.80
MONGOLIA
Financial Regulation and Governance Program – 10.00 10.00 10.00 15 Dec
Subtotal – 10.00 10.00 10.00
PAKISTAN
Agribusiness Development – 31.00 31.00 49.00 19 May
Infrastructure Development – 25.00 25.00 33.67 18 Aug
New Bong Escape Hydropowerb 37.30 – 37.30 149.20 21 Nov
Balochistan Devolved Social Services Program
– Program Loan 130.00 65.00 195.00 200.00 08 Dec
– TA Loan – 5.00 5.00 6.25 08 Dec
National Highway Development Sector Investment Program – 3.00 3.00 3.00 13 Dec
Rawalpindi Environmental Improvement 20.00 40.00 60.00 85.70 13 Dec
Earthquake Emergency Assistance – 220.00 220.00 374.20 13 Dec
Punjab Resource Management Program–Subprogram 2 200.00 – 200.00 200.00 14 Dec
Subtotal 387.30 389.00 776.30 1,101.02
PHILIPPINES
Purchase and Resolution of Equitable PCI Bank’s Portfolio of
Nonperforming Loans and Assetsb 5.00 – 5.00 5.00 24 Jun
Small and Medium Enterprise Development Support 25.00 – 25.00 26.00 29 Sep
Microfinance Development Program 150.00 – 150.00 150.00 22 Nov
Subtotal 180.00 – 180.00 181.00
SAMOA
Education Sector II – 8.06 8.06 30.00 16 Dec
Subtotal – 8.06 8.06 30.00

– Nil; ADF = Asian Development Fund; OCR = ordinary capital resources; TA = technical assistance.
a Total project cost includes financing by ADB, governments, borrowers, beneficiaries, and subborrowers; cofinancing from official, export credit, and commercial
sources; equity sponsors; and local participating private companies and financial institutions.
b Private sector loan without government guarantee.

111
 CONTINUED

Total Date
OCR ADF Total Project Costa Approved

SRI LANKA
Tsunami-Affected Areas Rebuilding – 7.00 7.00 249.30 14 Apr
North East Community Restoration and Development II – 26.00 26.00 55.00 14 Apr
Technical Education Development – 20.00 20.00 26.70 21 Nov
STATISTICAL

Local Government Infrastructure Improvement – 50.00 50.00 66.70 24 Nov

ANNEX

National Highways Sector 150.00 – 150.00 208.00 15 Dec

Subtotal 150.00 103.00 253.00 605.70
TAJIKISTAN
Dushanbe-Kyrgyz Border Road Rehabilitation (Phase II) – 29.50 29.50 39.50 17 Nov
Subtotal – 29.50 29.50 39.50
UZBEKISTAN
Information and Communications Technology in Basic Education – 30.00 30.00 43.00 27 Oct
Kashkadarya and Navoi Rural Water Supply and Sanitation Sector – 25.00 25.00 36.00 12 Dec
Subtotal – 55.00 55.00 79.00
VIET NAM
Preventive Health System Support – 27.90 27.90 47.54 25 Aug
Support the Implementation of the Poverty Reduction Program II – 15.00 15.00 225.00 03 Nov
Central Region Transport Networks Improvement Sector – 94.50 94.50 138.00 11 Nov
Greater Mekong Subregion: Kunming-Haiphong Transport
Corridor—Noi Bai-Lao Cai Highway Technical Assistance – 6.00 6.00 8.00 19 Dec
Central Region Water Resources – 74.30 74.30 99.00 19 Dec
Northern Power Transmission Expansion Sector 360.00 – 360.00 452.70 21 Dec
Subtotal 360.00 217.70 577.70 970.24
REGIONAL
Establishment of the Pacific Aviation Safety Office – 1.50 1.50 2.10 22 Sep
Subtotal – 1.50 1.50 2.10

TOTAL 4,421.23 1,375.58 5,796.81 21,062.41

– Nil; ADF = Asian Development Fund; OCR = ordinary capital resources.

a Total project cost includes financing by ADB, governments, borrowers, beneficiaries, and subborrowers; cofinancing from official, export credit, and commercial
sources; equity sponsors; and local participating private companies and financial institutions.

112
Table 2
SPECIAL FUNDS GRANT-FINANCED PROJECTS, 2005a

Date
$ Million Approved

A. ASIAN DEVELOPMENT FUND (ADF IX)

AFGHANISTAN
Power Transmission and Distributionb 23.50 14 Apr
Qaisar-Bala Murghab Road 55.00 12 Jul
Fiscal Management and Public Administration Reform Programb 7.00 14 Dec
Western Basins Water Resources Managementb 14.50 20 Dec

ANNEX
STATISTICAL
Subtotal 100.00

BANGLADESH
Second Urban Primary Health Care – HIV/AIDS and Infectious Disease Controlb 10.00 31 May

Subtotal 10.00

CAMBODIA
Tonle Sap Rural Water Supply and Sanitation Sector 18.00 20 Oct
GMS Regional Communicable Diseases Control (Cambodia)c 9.00 21 Nov
Tonle Sap Sustainable Livelihoods 15.00 21 Dec

Subtotal 42.00

KYRGYZ REPUBLIC
Second Education 15.50 27 Oct

Subtotal 15.50

LAO PEOPLE’S DEMOCRATIC REPUBLIC

Northern and Central Regions Water Supply and Sanitation Sector 10.00 25 Aug
GMS Regional Communicable Diseases Control (Lao PDR)c 6.00 21 Nov

Subtotal 16.00

PAKISTAN
Balochistan Devolved Social Services - HIV/AIDs and Infectious Diseases Controlb 5.00 08 Dec

Subtotal 5.00

SRI LANKA
North East Community Restoration and Development IIb 14.00 14 Apr

Subtotal 14.00

TAJIKISTAN
Dushanbe-Kyrgyz Border Road Rehabilitation (Phase II) - HIV/AIDS and Migrationb 0.50 17 Nov

Subtotal 0.50

TIMOR-LESTE
Road Sector Improvement 10.00 27 Sep

Subtotal 10.00

VIET NAM
Preventive Health System Supportb 10.14 25 Aug
Central Region Transport Networks Improvement Sectorb 0.50 11 Nov
GMS Regional Communicable Diseases Control (Viet Nam)c 15.00 21 Nov

Subtotal 25.64

a See Table 34 for projects financed by thematic funds.

b Grant component of the loan project.
c Component of the GMS Regional Communicable Diseases Control project.

113
 CONTINUED

Date
$ Million Approved

REGIONAL
HIV/AIDS Prevention and Capacity Development in the Pacific 8.00 08 Nov

Subtotal 8.00

TOTAL ADF IX 246.64

STATISTICAL
ANNEX

B. ASIAN TSUNAMI FUND (ATF)

INDIA
Tsunami Emergency Assistance (Sector)b 100.00 14 Apr

Subtotal 100.00

INDONESIA
Earthquake and Tsunami Emergency Support 290.00 7 Apr
Contribution to the Multidonor Trust Fund 10.00 7 Apr

Subtotal 300.00

MALDIVES
Tsunami Emergency Assistanceb 20.00 31 Mar

Subtotal 20.00

SRI LANKA
Tsunami-Affected Areas Rebuildingb 150.00 14 Apr

Subtotal 150.00

TOTAL ATF 570.00

C. PAKISTAN EARTHQUAKE FUND (PEF)

PAKISTAN
Earthquake Emergency Assistance 80.00 13 Dec

TOTAL PEF 80.00

GRAND TOTAL 896.64

a See Table 34 for projects financed by thematic funds.

b Grant component of the loan project.
c Component of the GMS Regional Communicable Diseases Control project.

114
Table 3
LOAN APPROVALS BY SECTOR: 3-YEAR MOVING AVERAGES, 1968–1970—2003–2005

Law, Water
Health, Economic Transport Supply,
Total Agriculture Nutrition, Management, and Sanitation,
Lendinga and Natural and Social Industry and Public Commu- and Waste Multi-
($ million) Resources Education Energy Finance Protection and Trade Policy nications Management sector

Average during (percent of total lending)

1968-1970 128.44 18.32 0.78 11.98 14.27 0.00 24.92 0.00 24.03 5.32 0.38

ANNEX
STATISTICAL
1969-1971 199.25 19.16 0.50 25.38 13.45 0.00 15.89 0.00 21.68 3.70 0.24
1970-1972 271.92 13.86 0.82 33.06 10.71 0.00 9.95 0.00 21.49 9.93 0.18

1971-1973 330.53 12.72 1.02 32.18 11.29 0.00 7.68 0.00 23.88 11.23 0.00
1972-1974 428.42 14.17 0.79 26.71 12.73 0.00 8.46 0.00 21.32 13.33 2.49
1973-1975 543.15 16.57 1.28 23.03 13.36 0.00 16.03 0.00 17.68 9.16 2.89

1974-1976 661.29 17.48 0.73 20.74 14.67 0.00 14.53 0.00 16.61 9.06 6.18
1975-1977 774.22 17.85 1.49 21.50 13.09 0.00 12.17 0.00 16.97 8.42 8.51
1976-1978 940.36 17.56 2.95 21.11 11.01 1.36 10.16 0.00 15.98 8.97 10.90

1977-1979 1,098.92 19.65 5.13 22.84 9.54 1.17 9.55 0.00 12.10 8.71 11.31
1978-1980 1,282.01 22.81 5.56 23.74 7.71 1.41 8.42 0.00 12.38 8.04 9.93
1979-1981 1,454.96 24.70 5.35 26.21 7.28 1.72 9.21 0.00 9.41 7.67 8.45

1980-1982 1,598.97 29.52 4.41 27.61 6.04 2.00 7.43 0.00 11.53 5.87 5.59
1981-1983 1,751.46 31.78 5.19 26.60 6.61 2.91 8.00 0.00 7.52 6.87 4.52
1982-1984 1,937.03 34.36 5.33 28.98 4.09 1.88 4.05 0.00 12.12 5.94 3.25

1983-1985 1,978.52 31.63 5.27 24.63 4.48 2.42 3.75 0.00 12.75 8.36 6.71
1984-1986 2,013.77 32.17 4.95 25.27 3.82 2.02 2.23 0.00 14.40 6.02 9.12
1985-1987 2,081.84 27.37 3.97 17.47 7.80 2.19 7.53 0.00 20.54 4.75 8.38

1986-1988 2,512.17 22.78 5.20 18.76 8.07 1.60 12.68 0.00 23.12 1.47 6.32
1987-1989 3,053.72 19.80 4.97 16.07 12.25 1.91 12.47 0.00 23.47 3.42 5.65
1988-1990 3,564.93 22.53 6.33 20.48 10.96 1.35 7.58 0.00 20.68 3.38 6.71

1989-1991 4,115.49 22.51 5.25 25.79 9.43 1.43 6.79 0.00 17.93 3.09 7.77
1990-1992 4,610.39 18.03 5.00 28.91 7.96 1.14 6.40 0.00 20.60 2.04 9.91
1991-1993 5,022.89 11.37 5.18 31.01 6.60 1.26 8.48 0.09 23.47 3.07 9.47

1992-1994 4,665.65 9.19 4.90 29.63 6.11 1.56 5.08 0.09 29.31 4.43 9.70
1993-1995 4,791.51 10.83 5.74 31.66 5.61 1.13 3.58 0.09 26.79 6.34 8.22
1994-1996 4,806.49 14.06 5.64 27.55 6.15 1.65 1.52 1.77 25.64 5.63 10.39

1995-1997 6,718.17 10.34 6.71 18.66 30.05 1.70 1.31 1.84 16.33 5.21 7.85
1996-1998 6,883.72 7.34 5.46 11.67 34.77 5.50 1.21 2.02 18.49 3.87 9.67
1997-1999 6,776.72 5.50 4.64 9.76 34.13 6.76 2.00 4.38 16.83 4.92 11.08

1998-2000 5,499.56 7.77 4.01 13.94 12.54 8.09 4.64 5.30 23.49 4.64 15.58
1999-2001 5,284.95 10.83 4.96 15.92 3.60 3.58 5.02 10.96 23.99 4.23 16.91
2000-2002 5,526.40 11.09 5.35 17.02 8.60 1.58 3.83 9.51 27.04 2.98 13.00

2001-2003 5,693.81 9.18 4.10 14.27 7.44 1.35 2.61 10.40 33.23 5.32 12.10
2002-2004 5,660.59 6.45 4.24 14.62 8.72 2.62 2.99 8.55 36.99 4.93 9.89
2003-2005 5,706.88 5.29 2.89 14.82 5.08 2.70 2.27 9.71 36.98 7.39 12.87

Cumulative
(1968-2005) 116,040.44 15,711.56 5,497.93 23,341.85 13,975.20 3,031.57 5,507.54 4,396.94 27,022.48 5,863.08 11,692.28
a Totals may not add due to rounding.

115
 Table 4
LOAN APPROVALS BY SECTOR, 2005

$ Million

OCR ADF Total

AGRICULTURE AND NATURAL RESOURCES

AFG Western Basins Water Resources Management – 60.50 60.50
BAN Agribusiness Development – 42.50 42.50
BAN Southwest Area Integrated Water Resources Planning and Management – 20.00 20.00
FIJ Alternative Livelihoods Development 25.00 – 25.00
IND Chhattisgarh Irrigation Development 46.11 – 46.11
STATISTICAL
ANNEX

PAK Agribusiness Development – 31.00 31.00

PRC Sanjiang Plain Wetlands Protection 15.00 – 15.00
VIE Central Region Water Resources – 74.30 74.30
Subtotal 86.11 228.30 314.41
EDUCATION
SAM Education Sector II – 8.06 8.06
SRI Technical Education Development – 20.00 20.00
UZB Information and Communications Technology in Basic Education – 30.00 30.00
Subtotal – 58.06 58.06
ENERGY
AFG Power Transmission and Distribution – 26.50 26.50
BAN Gas Transmission and Development 225.00 5.00 230.00
INO Tangguh Liquefied Natural Gasa 350.00 – 350.00
LAO Greater Mekong Subregion: Nam Theun 2 Hydroelectric
– Private Sector Loan 50.00 – 50.00
– Public Sector Loan 20.00 – 20.00
PAK New Bong Escape Hydropowera 37.30 – 37.30
VIE Northern Power Transmission Expansion Sector 360.00 – 360.00
Subtotal 1,042.30 31.50 1,073.80
FINANCE
CAM Financial Sector Program (Subprogram III) – 10.00 10.00
IND Infrastructure Development Finance Company Limiteda 50.00 – 50.00
IND Yes Bank Limiteda 23.00 – 23.00
KGZ Banking Sector and Capital Market Development Program – 15.50 15.50
MON Financial Regulation and Governance Program – 10.00 10.00
PHI Purchase and Resolution of Equitable PCI Bank’s Portfolio of
Nonperforming Loans and Assetsa 5.00 – 5.00
PHI Microfinance Development Program 150.00 – 150.00
PRC Business Development Bank Limiteda 20.72 – 20.72
Subtotal 248.72 35.50 284.22
HEALTH, NUTRITION, AND SOCIAL PROTECTION
BAN Second Urban Primary Health Care – 30.00 30.00
VIE Preventive Health System Support – 27.90 27.90
Subtotal – 57.90 57.90
INDUSTRY AND TRADE
PHI Small and Medium Enterprise Development Support 25.00 – 25.00
Subtotal 25.00 – 25.00

– Nil; ADF = Asian Development Fund; OCR = ordinary capital resources.

a Private sector loan without government guarantee.
Key: AFG (Afghanistan), BAN (Bangladesh), CAM (Cambodia), FIJ (Fiji Islands), IND (India), INO (Indonesia), KGZ (Kyrgyz Republic), LAO (Lao PDR), MON (Mongolia),
PAK (Pakistan), PHI (Philippines), PRC (People’s Republic of China), SAM (Samoa), SRI (Sri Lanka), UZB (Uzbekistan), and VIE (Viet Nam).

116
CONTINUED

$ Million

OCR ADF Total

LAW, ECONOMIC MANAGEMENT, AND PUBLIC POLICY

AFG Fiscal Management and Public Administration Reform Program (Subprogram I) – 48.00 48.00
INO Local Government Finance and Governance Reform Sector Development Program 300.00 30.00 330.00
INO Development Policy Support Program 200.00 – 200.00
PAK Punjab Resource Management Program–Subprogram 2 200.00 – 200.00

ANNEX
STATISTICAL
Subtotal 700.00 78.00 778.00
TRANSPORT AND COMMUNICATIONS
AZE East-West Highway Improvement 49.00 3.00 52.00
BHU Road Network – 27.30 27.30
INO Road Rehabilitation-2 151.00 – 151.00
PAK National Highway Development Sector Investment Program – 3.00 3.00
PRC Central Sichuan Roads Development 600.00 – 600.00
PRC Zhengzhou-Xi’an Railway 400.00 – 400.00
PRC Hunan Roads Development III 208.00 – 208.00
REG Establishment of the Pacific Aviation Safety Office – 1.50 1.50
SRI National Highways Sector 150.00 – 150.00
TAJ Dushanbe-Kyrgyz Border Road Rehabilitation (Phase II) – 29.50 29.50
VIE Central Region Transport Networks Improvement Sector – 94.50 94.50
VIE Greater Mekong Subregion: Kunming-Haiphong Transport Corridor –
Noi Bai-Lao Cai Highway Technical Assistance – 6.00 6.00
Subtotal 1,558.00 164.80 1,722.80
WATER SUPPLY, SANITATION, AND WASTE MANAGEMENT
IND Kerala Sustainable Urban Development 221.20 – 221.20
MLD Regional Development Project, Phase II –
Environmental Infrastructure and Management – 6.00 6.00
PAK Rawalpindi Environmental Improvement 20.00 40.00 60.00
PRC Jilin Water Supply and Sewerage Development 100.00 – 100.00
PRC Fuzhou Environmental Improvement 55.80 – 55.80
PRC Henan Wastewater Management and Water Supply Sector 100.00 – 100.00
SRI Local Government Infrastructure Improvement – 50.00 50.00
UZB Kashkadarya and Navoi Rural Water Supply and Sanitation Sector – 25.00 25.00
Subtotal 497.00 121.00 618.00
MULTISECTOR
BAN Emergency Flood Damage Rehabilitation – 152.30 152.30
COO Cyclone Emergency Assistance – 2.83 2.83
IND Tsunami Emergency Assistance (Sector) 100.00 – 100.00
INO Community Water Services and Health 34.10 30.59 64.69
INO Rural Infrastructure Support – 50.00 50.00
MLD Tsunami Emergency Assistance – 1.80 1.80
PAK Infrastructure Development – 25.00 25.00
PAK Balochistan Devolved Social Services Program
– Program Loan 130.00 65.00 195.00
– TA Loan – 5.00 5.00
PAK Earthquake Emergency Assistance – 220.00 220.00
SRI Tsunami-Affected Areas Rebuilding – 7.00 7.00
SRI North East Community Restoration and Development II – 26.00 26.00
VIE Support the Implementation of the Poverty Reduction Program II – 15.00 15.00
Subtotal 264.10 600.52 864.62

TOTAL 4,421.23 1,375.58 5,796.81

– Nil; ADF = Asian Development Fund; OCR = ordinary capital resources; TA = technical assistance.
a Private sector loan without government guarantee.
Key: AFG (Afghanistan), AZE (Azerbaijan), BAN (Bangladesh), BHU (Bhutan), COO (Cook Islands), IND (India), INO (Indonesia), MLD (Maldives), PAK (Pakistan), PRC
(People’s Republic of China), REG (Regional), SRI (Sri Lanka), TAJ (Tajikistan), UZB (Uzbekistan), VIE (Viet Nam).

117
 Table 5
SECTORAL DISTRIBUTION OF LOANS,a 2005, 1967–2005

2005
OCR ADF Total Cumulative as of 2005c
No. of No. of No. of No. of
Loans $ Million Loans $ Million Projectsb $ Million % Loans $ Million %

Agriculture and Natural Resources 3 86.11 5 228.30 8 314.41 5.42 476 15,711.56 13.54
Education – – 3 58.06 3 58.06 1.00 147 5,497.93 4.74
Energy 6 1,042.30 2 31.50 6 1,073.80 18.52 329 23,341.85 20.11
STATISTICAL
ANNEX

Finance 5 248.72 3 35.50 8 284.22 4.90 185 13,975.20 12.04

Health, Nutrition, and
Social Protection – – 2 57.90 2 57.90 1.00 69 3,031.57 2.61
Industry and Trade 1 25.00 – – 1 25.00 0.43 172 5,507.54 4.75
Law, Economic Management,
and Public Policy 3 700.00 2 78.00 4 778.00 13.42 64 4,396.94 3.79
Transport and Communications 6 1,558.00 7 164.80 12 1,722.80 29.72 361 27,022.48 23.29
Water Supply, Sanitation, and
Waste Management 5 497.00 4 121.00 8 618.00 10.66 151 5,863.08 5.05
Multisector 3 264.10 12 600.52 12 864.62 14.92 244 11,692.28 10.08

TOTALc 32 4,421.23 40 1,375.58 64 5,796.81 100.00 c 2,198 116,040.44 100.00

– Nil; ADF = Asian Development Fund; OCR = ordinary capital resources.

a Includes private sector loans.
b A project with multiple loans is counted as one project.
c Totals may not add due to rounding.

Table 6
LOAN APPROVALS BY COUNTRY AND SOURCE OF FUNDS,a 2005
(amounts in $ million)

OCR ADF Total %

Afghanistan – 135.00 135.00 2.33

Azerbaijan 49.00 3.00 52.00 0.90
Bangladesh 225.00 249.80 474.80 8.19
Bhutan – 27.30 27.30 0.47
Cambodia – 10.00 10.00 0.17
China, People’s Republic of 1,499.52 – 1,499.52 25.87
Cook Islands – 2.83 2.83 0.05
Fiji Islands 25.00 – 25.00 0.43
India 440.31 – 440.31 7.60
Indonesia 1,035.10 110.59 1,145.69 19.76
Kyrgyz Republic – 15.50 15.50 0.27
Lao People’s Democratic Republic 70.00 – 70.00 1.21
Maldives – 7.80 7.80 0.13
Mongolia – 10.00 10.00 0.17
Pakistan 387.30 389.00 776.30 13.39
Philippines 180.00 – 180.00 3.10
Samoa – 8.06 8.06 0.14
Sri Lanka 150.00 103.00 253.00 4.36
Tajikistan – 29.50 29.50 0.51
Uzbekistan – 55.00 55.00 0.95
Viet Nam 360.00 217.70 577.70 9.97
Regional – 1.50 1.50 0.03

TOTALb 4,421.23 1,375.58 5,796.81 100.00

– Nil; ADF = Asian Development Fund; OCR = ordinary capital resources.

a Includes loans to private sector without government guarantee.
b Totals may not add due to rounding.

118
Table 7
PROJECTS INVOLVING COFINANCING, 2005
($ million)

Cofinancinga
ADB Official Com- Source of Cofinancing
Amount Grants Loans mercialb

EAST AND CENTRAL ASIA

AZERBAIJAN
East-West Highway Improvement 52.00 10.40 Islamic Development Bank (IsDB)
11.00 Saudi Fund for Development

ANNEX
STATISTICAL
CHINA, PEOPLE’S REPUBLIC OF
Central Sichuan Roads Development 600.00 544.90 China Development Bank (CDB),
People’s Republic of China (PRC)
Fuzhou Environmental Improvement 55.80 27.19 Industrial and Commercial Bank of China, PRC
Henan Wastewater Management and
Water Supply Sector 100.00 27.20 Domestic banks in PRC
Hunan Roads Development III 208.00 157.19 State Development Bank, PRC
Jilin Water Supply and Sewerage Development 100.00 5.80 Domestic banks in PRC
Sanjiang Plain Wetlands Protection 15.00 12.14c Global Environment Facility
Zhengzhou-Xi’an Railway 400.00 1,667.27 CDB, PRC

UZBEKISTAN
Western Uzbekistan Rural Water Supply 38.00d 12.00 Iran
Subtotal 1,568.80 12.14 33.40 2,429.55

MEKONG
CAMBODIA
Tonle Sap Sustainable Livelihoods 15.00 e 4.74 c Finland
Commune Council Development 10.00d 0.57 c Swedish International Development Agency (Sida)
LAO PEOPLE’S DEMOCRATIC REPUBLIC
Greater Mekong Subregion
Nam Theun 2 Hydroelectric 20.00 6.50 Agence Française de Développement (AFD), France
52.00 European Investment Bank
20.00 International Development Agency (IDA)
Northern and Central Regions Water Supply and
Sanitation Sector 10.00e 1.70 Norwegian Agency for International Development
9.00 c OPEC Fund for International Development
(OPEC Fund)
Nam Theun 2 Power Company Limited for the
GMS Nam Theun 2 Hydroelectric 50.00 27.00 AFD
45.00 Commercial lenders with a guarantee from IDA
45.00 Commercial lenders with a guarantee from
Multilateral Investment Guarantee Agency
166.50 Compagnie Française d’Assurance pour le
Commerce Exterieure
27.00 Nordic Investment Bank
50.00c Commercial lenders with ADB Political Risk
Guarantee
27.00 Societé de Promotion et de Participation pour le
Coopération Economique, France
450.00 Thai commercial lenders
22.50 Thai Exim Bank
VIET NAM
Support the Implementation of the Poverty
Reduction Program II 15.00 5.00 Canadian International Development Agency (CIDA)
10.80 Danish International Development Agency
35.90 Department for International Development,
United Kingdom (DFID)
9.80 European Commission (EC)
100.00 IDA
1.80 Ireland
22.80 Japan Bank for International Cooperation (JBIC) official
development assistance

a Cofinancing is provided in conjunction with ADB-financed projects and programs. Cofinancing opportunities therefore depend on ADB’s lending and investment
program.
b Comprising debt cofinancing (e.g., syndicated loans, bonds, and floating rate notes) from commercial/market sources and guarantees.
c ADB provides full or partial administration.
d Anchor loan was approved in prior years with cofinancing arranged this year.
e Funding is a grant from either Asian Development Fund (ADF), Asian Tsunami Fund (ATF), or Pakistan Earthquake Fund (PEF).

119
 CONTINUED

Cofinancinga
ADB Official Com- Source of Cofinancing
Amount Grants Loans mercialb

9.80 The Netherlands

2.40 Spain
Central Region Transport Networks Improvement
Sector 95.00c 13.92 Nordic Development Fund
REGIONAL
GMS: Regional Communicable Diseases Control 30.00d 0.90 World Health Organization
Subtotal 245.00 109.91 278.72 779.00
STATISTICAL
ANNEX

PACIFIC
FIJI ISLANDS
Alternative Livelihoods Development 25.00 8.82 Fiji Development Bank
SAMOA
Education Sector II 8.06 8.60e Australian Agency for International Development
8.60e New Zealand Agency for International Development
Subtotal 33.06 17.20 – 8.82

SOUTH ASIA
AFGHANISTAN
Emergency Infrastructure Rehabilitation and
Reconstruction 150.00f 22.00 Kreditstantalt fur Wieraufbau (KfW), Germany
BANGLADESH
Emergency Flood Damage Rehabilitation 152.30 13.00e The Netherlands
14.70e Sida
Gas Transmission and Development 230.00 5.00e Norway
Second Urban Primary Health Care 40.00c 25.00e DFID
5.00e Sida
2.00 United Nations Population Fund
Southwest Area Integrated Water Resources
Planning and Management 20.00 12.50e The Netherlands
PAKISTAN
Earthquake Emergency Assistance 300.00c 35.00e EC
New Bong Escape Hydropower 37.30 37.30 IsDB
37.30 Commercial banks
SRI LANKA
National Highways Sector 150.00 8.00e OPEC Fund
North East Community Restoration and
c e
Development II 40.00 5.90 Sida
Tsunami-Affected Areas Rebuilding 157.00c 53.20e EC
48.00 g AFD
Subtotal 1,276.60 193.30 93.30 37.30
SOUTHEAST ASIA
INDONESIA
Community Water Services and Health 64.69 4.00e CIDA
7.50e DFID
5.00e The Netherlands
Development Policy Support Program 200.00 400.00 World Bank
Earthquake and Tsunami Emergency Support 290.00d 3.50e The Netherlands
Tangguh Liquefied Natural Gas 350.00 1,000.00 JBIC-(non-ODA)
754.00 International banks
1,200.00 Commercial banks in PRC
PHILIPPINES
Small and Medium Enterprise Development
Support 25.00 18.40e Commercial lenders with ADB Partial Credit
Guarantee
Subtotal 929.69 20.00 1,400.00 1,972.40

TOTAL COFINANCING 4,053.15 352.55 1,805.42 5,227.07

of which, ADB-administered 322.85 223.95 30.50 68.40

– Nil.
a Cofinancing is provided in conjunction with ADB-financed projects and programs. Cofinancing opportunities therefore depend on ADB’s lending and investment
program.
b Comprising debt cofinancing (e.g., syndicated loans, bonds, and floating rate notes) from commercial/market sources and guarantees.
c Funding includes an ADF loan and a grant package.
d Funding is a grant from either Asian Development Fund (ADF), Asian Tsunami Fund (ATF), or Pakistan Earthquake Fund (PEF).
e ADB provides full or partial administration.
f Anchor loan was approved in prior years with cofinancing arranged this year.
g ADB provides partial administration of the cofinanced component up to $13.5 million equivalent.

120
Table 8
LOAN DISBURSEMENTS, 2004 AND 2005
(amounts in $ thousand)

2004

% of Total % of Total % of Total

OCR OCR ADF ADF Total Disbursements

Projecta
Nondevelopment Finance Institution 1,219,033 49 607,040 57 1,826,073 51
Development Finance Institution 33,320 1 – – 33,320 1
Total Project Loans 1,252,353 50 607,040 57 1,859,393 52

ANNEX
STATISTICAL
Programb 908,688 36 230,328 22 1,139,016 32
Sectorc 237,614 10 217,727 21 455,341 13
Private Sectord 109,414 4 – – 109,414 3
TOTAL 2,508,069 100 1,055,095 100 3,563,164 100

2 0 0 5

% of % of % of Total % Change
Total Total Disburse- (2005/2004)
OCR OCR ADF ADF Total ments OCR ADF Total

Projecta
Nondevelopment Finance Institution 1,416,233 40 761,893 61 2,178,126 46 16 26 19
Development Finance Institution 66,515 2 – – 66,515 1 100 – 100
Total Project Loans 1,482,748 42 761,893 61 2,244,641 47 18 26 21
Programb 1,500,094 43 308,580 25 1,808,674 38 65 34 59
Sectorc 311,096 9 176,332 14 487,428 10 31 (19) 7
Private Sectord 204,449 6 – – 204,449 4 87 – 87
TOTAL 3,498,387 100 1,246,805 100 4,745,192 100 39 18 33
– Nil; ADF = Asian Development Fund; OCR = ordinary capital resources.
( ) Negative.
a A project loan is a loan provided to finance specific projects. ADB uses development finance institutions in its developing member countries (DMCs) as vehicles
to finance small- and medium-sized projects in the private sector.
b A program loan is a loan provided to support DMCs’ efforts to improve the policy, institutional, and investment environments of sector development. It helps
meet short-term costs that policy adjustments entail.
c A sector loan is a loan provided to develop a specific sector or subsector. It finances a large number of subprojects in a single sector or subsector.
d Excludes equity investments.

Table 9
PROGRAM LOAN DISBURSEMENTS, 2005
($ million)

OCR ADF Total

Afghanistan – 1.89 1.89

Bangladesh 50.00 4.78 54.78
Cambodia – 22.94 22.94
India 205.00 – 205.00
Indonesia 750.00 – 750.00
Lao People’s Democratic Republic – 11.29 11.29
Mongolia – 8.80 8.80
Nepal – 2.48 2.48
Pakistan 280.09 152.32 432.41
Philippines 175.00 – 175.00
Sri Lanka 20.00 – 20.00
Tajikistan – 8.34 8.34
Uzbekistan 20.00 – 20.00
Viet Nam – 95.75 95.75
TOTAL 1,500.09 308.58 1,808.67
– Nil; ADF = Asian Development Fund; OCR = ordinary capital resources.

121
 Table 10
PRIVATE SECTOR APPROVALS AND TOTAL PROJECT COSTS BY COUNTRY, 2005
($ million)

Complementary
Loan/Political
Equity Total Risk Guarantee Partial Political Swap Total Total
Invest- ADB Coguarantor Credit Risk with ADB Project
Loan ment Funds Program Guarantee Guarantee DMCs Approvals Cost

AFGHANISTAN
Afghanistan Renewal Fund – 5.50 5.50 – – – – 5.50 20.00
STATISTICAL
ANNEX

CHINA, PEOPLE’S REPUBLIC OF

Business Development Bank
Limited 20.72 – 20.72 – – – 20.72 35.72
Bank of China – 75.00 75.00 – – – 75.00 100.00
Tsinghua Water Infrastructure
Development 20.00 20.00 – – – 20.00 100.00
INDIA
Actis Asset Reconstruction Company
Private Limited – 5.60 5.60 – – – – 5.60 22.20
Infrastructure Development
Finance Company Limited 50.00 – 50.00 – – – – 50.00 50.00
Yes Bank Limited 23.00 – 23.00 – – – 23.00 23.00
BTS India Private Equity Fund – 15.00 15.00 – – – 15.00 50.00
INDONESIA
Tangguh Liquefied Natural Gas 350.00 – 350.00 – – – – 350.00 6,303.00
LAO PEOPLE’S DEMOCRATIC REPUBLIC
Nam Theun 2 Power
Company Limited 50.00 – 50.00 – – 50.00 – 100.00 1,450.00
PAKISTAN
New Bong Escape Hydropower 37.30 – 37.30 – – – – 37.30 149.20
PHILIPPINES
Cameron Grandville Asset
Management Inc. 5.00 – 5.00 – – – – 5.00 10.00
Credit Information Bureau
Development Support – 1.00 1.00 – 18.40 – – 19.40 38.50

REGIONAL
Lombard Asia III LP 30.00 30.00 30.00 250.00
Aureos South-East Asia Fund 20.00 20.00 20.00 100.00
Flagship Capital Corporation – 30.00 30.00 – – – – 30.00 120.00
Inter Asia Capital Inc. 15.00 15.00 15.00 120.00

TOTAL 536.02 217.10 753.12 – 18.40 50.00 – 821.52 8,941.62

– Nil; DMCs = developing member countries.

Table 11
PRIVATE SECTOR APPROVALS AND TOTAL PROJECT COSTS BY SECTOR, 2005
($ million)

Complementary
Loan/Political
Equity Total Risk Guarantee Partial Political Swap Total Total
Invest- ADB Coguarantor Credit Risk with ADB Project
Loan ment Funds Program Guarantee Guarantee DMCs Approvals Cost

Infrastructure 437.30 20.00 457.30 – – 50.00 – 507.30 8,002.20

Investment Funds and
Financial Institutions 98.72 197.10 295.82 – 18.40 – – 314.22 939.42
Others – – – – – – – – –

TOTAL 536.02 217.10 753.12 – 18.40 50.00 – 821.52 8,941.62

– Nil; DMCs = developing member countries.

122
Table 12
PRIVATE SECTOR APPROVALS BY YEAR, 1983–2005
(amounts in $ million)
Complementary
Loan/Political
Total Risk Guarantee Partial Political Swap Total Total
No. of Equity ADB Coguarantor Credit Risk with ADB Project
Projectsa Loan Investmentb Funds Program Guarantee Guarantee DMCs Approvalsa Cost

1983 2 – 2.96 2.96 – – – – 2.96 36.00

1984 1 – 0.42 0.42 – – – – 0.42 2.80
1985 5 – 3.40 3.40 – – – – 3.40 39.68
1986 5 6.46 6.01 12.47 – – – – 12.47 42.72

ANNEX
STATISTICAL
1987 8 20.50 27.61 48.11 5.00 – – – 53.11 524.34
1988 12 58.00 35.67 93.67 – – – – 93.67 524.24
1989 16 95.70 67.59 163.29 51.10 – – – 214.39 1,178.55
1990 17 78.85 35.94 114.79 24.00 – – – 138.79 2,051.63
1991 10 156.80 20.52 177.32 – – – – 177.32 1,330.07
1992 4 50.00 5.42 55.42 81.50 – – – 136.92 409.39
1993 9 182.10 20.70 202.80 19.30 – – – 222.10 1,513.70
1994 9 – 48.70 48.70 – – – – 48.70 919.20
1995 8 68.00 99.41 167.41 5.83 – – – 173.24 1,050.32
1996 8 98.50 80.15 178.65 91.50 – – – 270.15 1,788.77
1997 5 45.00 49.50 94.50 – 50.00 – – 144.50 1,239.69
1998 6 136.12 39.44 175.56 151.08 65.00 – – 391.64 1,152.70
1999 3 101.50 7.40 108.90 61.50 – – – 170.40 847.70
2000 11 152.00 77.65 229.65 45.00 – 101.00 – 375.65 1,629.84
2001 6 37.50 30.36 67.86 – – – – 67.86 648.00
2002 7 110.00 35.53 145.53 – – 60.00 – 205.53 1,176.60
2003 7 167.00 35.65 202.65 100.00 170.00 70.00 – 542.65 2,300.00
2004 15 c 292.50 164.40 456.90 – – 10.00 200.00 666.90 2,227.70
2005 17 d 536.02 217.10 753.12 – 18.40 50.00 – 821.52 8,941.62
TOTAL 191 2,392.55 1,111.53 3,504.08 635.81 303.40 291.00 200.00 4,934.28 31,575.26
– Nil; DMCs = developing member countries.
a Net of cancellations.
b Also includes lines of equity and equity underwritings.
c Includes an approved project for the expansion of the Grameenphone Telecommunications in Bangladesh.
d Includes an approved project for the Infrastructure Development Finance Company Limited in India.

Table 13
CUMULATIVE PRIVATE SECTOR APPROVALS BY COUNTRY, 1983–2005
(amounts in $ million)
Complementary
Loan/Political
Equity Total Risk Guarantee Partial Political Swap Total Total
No. of Invest- ADB Coguarantor Credit Risk with ADB Project
Projects a Loan mentb Funds Program Guarantee Guarantee DMCs Approvalsa Cost

Afghanistan 4 35.00 8.10 43.10 – – 10.00 – 53.10 265.50

Bangladesh 8c 137.20 14.98 152.18 20.00 – 70.00 – 242.18 890.36
Bhutan 1 – 0.53 0.53 – – – – 0.53 0.79
China, People’s
Rep. of 14 137.22 277.30 414.52 171.50 – – – 586.02 2,935.52
India 33d 310.70 166.75 477.45 5.00 – – – 482.45 3,754.06
Indonesia 13 432.00 23.65 455.65 63.50 – – – 519.15 7,017.22
Korea, Rep. of 5 – 8.96 8.96 – – – – 8.96 292.23
Lao PDR 1 50.00 – 50.00 – – 50.00 – 100.00 1,450.00
Malaysia 1 – 2.00 2.00 – – – – 2.00 3.64
Mongolia 1 4.50 1.60 6.10 – – – – 6.10 40.00
Nepal 4 49.55 3.26 52.81 5.83 – – – 58.64 218.03
Pakistan 29 279.10 30.63 309.73 129.90 65.00 – – 504.63 1,960.19
Philippines 23 475.32 40.85 516.17 113.58 18.40 – 200.00 848.15 2,698.72
Samoa 1 – 0.40 0.40 – – – – 0.40 1.60
Sri Lanka 9 72.00 13.58 85.58 – 115.00 31.00 – 231.58 519.73
Thailand 10 71.46 77.07 148.53 100.00 – 70.00 – 318.53 3,071.80
Viet Nam 6 168.50 – 168.50 26.50 – 60.00 – 255.00 1,470.00
Regional 28 170.00 441.87 611.87 – 105.00 – – 716.87 4,985.87
TOTAL 191 2,392.55 1,111.53 3,504.08 635.81 303.40 291.00 200.00 4,934.29 31,575.26
– Nil; DMCs = developing member countries.
a Net of cancellations.
b Includes equity investments, lines of equity, and equity underwritings.
c Includes an approved project for the expansion of the Grameenphone Telecommunications in Bangladesh.
d Includes an approved project for the Infrastructure Development Finance Co. Limited in India.
123
 Table 14
NUMBER OF LOANS AND PROJECTS APPROVED AND UNDER ADMINISTRATION, PROJECT COMPLETION
REPORTS (PCRs) CIRCULATED, PROJECTS COMPLETED, LOANS CLOSED, AND PROJECT/PROGRAM
PERFORMANCE AUDIT REPORTS (PPARs) CIRCULATED
(as of 31 December 2005)

Cumulative Cumulative Cumulative Cumulative Cumulative Cumulative

No. of No. of No. of No. of No. of No. of
Loans Effective Projects Blended Supplementary Cofinanced
Approveda Loans Approvedb Loans Loans Projects

Afghanistan 19 15 18 – 1 6
STATISTICAL
ANNEX

Azerbaijan 5 1 3 2 – 1
Bangladesh 171 166 155 10 5 78
Bhutan 20 20 19 – – 7
Cambodia 36 35 28 2 1 15
China, People’s Rep. of 119 113 117 – – 63
Cook Islands 13 13 13 – – 1
Fiji Islands 16 16 16 – – 7
Hong Kong, China 5 5 5 – – –
India 95 88 82 3 – 23
Indonesia 279 274 247 23 2 61
Kazakhstan 12 12 8 2 – 1
Kiribati 6 6 6 – – 1
Korea, Rep. of 81 81 80 – – 8
Kyrgyz Republic 25 23 19 – – 5
Lao People’s Democratic Republic 64 64 57 – 3 36
Malaysia 76 76 74 1 1 9
Maldives 15 13 15 – – 4
Marshall Islands 12 12 11 1 – 1
Micronesia, Fed. States of 8 6 6 1 – –
Mongolia 37 36 31 – – 8
Myanmar 32 32 28 2 2 12
Nauru 1 1 1 – – –
Nepal 114 111 102 2 9 44
Pakistan 250 237 191 36 5 76
Papua New Guinea 57 57 46 10 – 11
Philippines 195 193 165 18 4 64
Samoa 31 29 27 – 4 10
Singapore 14 14 14 – – 2
Solomon Islands 16 16 15 – – 5
Sri Lanka 133 130 115 10 5 45
Taipei,China 12 12 12 – – –
Tajikistan 18 16 14 2 – 3
Thailand 84 84 80 2 2 37
Timor-Leste – – – – – –
Tonga 15 14 15 – – 3
Turkmenistan – – – – – –
Tuvalu 3 3 2 – 1 –
Uzbekistan 21 18 18 2 – 4
Vanuatu 9 9 8 – 1 3
Viet Nam 73 65 64 3 – 32
Regionale 6 5 13 1 – 6

TOTAL 2,198 2,121 1,940 133 46 692

– Nil.
a Includes special assistance loans and private sector loans but excludes loans terminated.
b A project with multiple loans is counted as one project. Supplementary loans, special implementation assistance loans, and subprogram loans of program loan
clusters are not counted as separate projects.
c Includes projects/loans that have been approved but still awaiting effectivity, inactive loans, fully disbursed private sector loans without government guarantee
but still under administration; excludes projects/loans exclusively financed from other sources.
d Refers to projects physically completed.

124
 Cumulative No. of No. of No. of No. of
No. of No. of No. of PCRs Projects Loans PCRs PPARs
Loans Under Projects Under Circulated/ Completedd Closed Circulated Circulated
Administrationc Administrationa,c Prepared in 2005 in 2005 in 2005 in 2005

10 10 – – – – – Afghanistan

ANNEX
STATISTICAL
5 3 – – – – – Azerbaijan
41 34 114 4 3 8 1 Bangladesh
5 5 11 3 1 – – Bhutan
23 20 9 4 1 2 1 Cambodia
45 44 70 8 1 6 3 China, People’s Rep. of
1 1 12 1 1 1 – Cook Islands
4 4 10 – – – – Fiji Islands
– – 5 – – – – Hong Kong, China
40 36 41 4 2 1 2 India
42 34 178 11 6 14 1 Indonesia
4 3 6 2 – – 1 Kazakhstan
1 1 4 1 – – – Kiribati
– – 61 – – – 1 Korea, Rep. of
11 11 11 3 2 4 – Kyrgyz Republic
23 22 33 3 2 3 1 Lao People’s Democratic Republic
1 1 54 1 1 – – Malaysia
7 7 7 2 1 1 – Maldives
1 1 8 1 1 – 1 Marshall Islands
5 3 3 – – 1 – Micronesia, Fed. States of
16 14 17 2 – 1 1 Mongolia
– – 26 – – – – Myanmar
– – 1 – – – – Nauru
27 25 74 1 – 1 – Nepal
73 48 126 11 2 4 2 Pakistan
10 10 33 1 1 – – Papua New Guinea
29 24 118 6 6 3 – Philippines
5 5 20 1 – – – Samoa
– – 7 – – – – Singapore
1 1 14 1 1 – – Solomon Islands
52 42 70 6 3 3 – Sri Lanka
– – 1 – – – – Taipei,China
12 11 4 4 3 1 – Tajikistan
2 2 58 1 – 1 2 Thailand
– – 4 – – 2 – Timor-Leste
– – 16 – – 1 – Tonga
– – – – – – – Turkmenistan
2 1 1 – – – – Tuvalu
15 14 2 2 2 1 – Uzbekistan
– – 8 – – – – Vanuatu
42 38 20 8 2 2 2 Viet Nam
2 2 3 – – – – Regional e

557 477 1,260 92 42 61 19 TOTAL

e Includes the regional projects–Greater Mekong Subregion (GMS): Phnom Pehn to Ho Chi Minh City Highway (Cambodia and Viet Nam loan components);
GMS: East-West Corridor (Lao PDR and Viet Nam loan components); Almaty-Bishkek Regional Road Rehabilitation (Kazakhstan and Kyrgyz Republic loan components);
GMS: Mekong Tourism Development (Cambodia, Lao PDR, and Viet Nam loan components); Regional Power Transmission Modernization (Tajikistan and Uzbekistan
loan components); Regional Trade Facilitation and Customs Cooperations Program (Kyrgyz Republic and Tajikistan loan components); Asian Finance and Investment
Corporation Ltd; and Trade Finance Facilitation Program.

125
 Table 15
AMOUNT OF LOANS APPROVED, CONTRACTS AWARDED, AND DISBURSEMENTS
(as of 31 December 2005; amounts in $ million)

Cumulative
Cumulative Loan Cumulative Net Contracts Contracts
Amounts Approved a Effective Loansb,c Awarded in 2005c,d Awarded c,d

Afghanistan 752.28 597.18 97.73 373.66

Azerbaijan 104.00 22.00 1.38 1.38
Bangladesh 8,044.69 7,692.19 316.86 5,506.49
STATISTICAL
ANNEX

Bhutan 138.46 138.46 2.47 101.51

Cambodia 850.24 840.24 96.40 622.90
China, People’s Rep. of 16,375.40 14,953.60 1,375.53 10,274.47
Cook Islands 29.50 29.50 0.63 28.16
Fiji Islands 249.90 249.90 19.70 181.42
Hong Kong, China 101.50 101.50 – 94.50
India 14,936.21 13,648.90 994.31 9,165.91
Indonesia 20,728.50 20,112.81 909.70 14,056.34
Kazakhstan 501.60 501.60 – 432.44
Kiribati 15.14 15.14 0.94 14.28
Korea, Rep. of 6,338.33 6,338.33 – 5,572.55
Kyrgyz Republic 588.50 565.50 20.05 465.63
Lao People’s Democratic Republic 1,183.14 1,183.14 87.03 960.42
Malaysia 1,987.54 1,987.54 3.48 1,422.37
Maldives 91.48 80.48 13.38 65.95
Marshall Islands 78.13 78.13 1.59 65.10
Micronesia, Fed. States of 75.14 56.14 3.76 39.53
Mongolia 620.34 610.34 17.85 484.74
Myanmar 530.86 530.86 – 418.77
Nauru 5.00 5.00 – 2.30
Nepal 2,214.98 2,164.98 69.59 1,454.62
Pakistan 15,035.24 14,147.04 728.46 10,285.51
Papua New Guinea 873.99 873.99 24.95 648.38
Philippines 8,799.03 8,574.03 236.07 5,823.74
Samoa 129.98 115.92 0.35 106.99
Singapore 181.08 181.08 – 130.22
Solomon Islands 79.31 79.31 8.81 63.91
Sri Lanka 3,703.25 3,483.25 184.05 2,653.91
Taipei,China 100.39 100.39 – 90.28
Tajikistan 273.84 224.34 43.74 140.58
Thailand 5,388.07 5,388.07 15.62 4,154.90
Tonga 57.79 52.89 – 58.18
Tuvalu 7.82 7.82 – 4.18
Uzbekistan 914.70 789.70 86.14 421.99
Vanuatu 51.25 51.25 – 47.91
Viet Nam 3,732.37 3,141.67 180.12 1,857.72
Regional f 171.50 170.00 – –

TOTAL 116,040.44 109,884.18 5,540.67 78,293.82

– Nil.
a Includes special assistance loans and private sector loans but excludes loans terminated. The US dollar equivalent is in accordance with the prevailing exchange
rate at the time of loan approval.
b Net effective loan refers to effective loan amount less cancellation.
c The US dollar equivalent is in accordance with the prevailing exchange rate as of 31 December 2005.
d Excludes private sector loans without government guarantee.

126
 % of Cumulative % of Cumulative
Contracts Awarded Disbursements
to Cumulative Net Disbursements Cumulative to Cumulative Net
Effective Loansc in 2005 Disbursementse Effective Loans

62.57 58.91 286.65 48.00 Afghanistan

6.27 0.50 0.50 2.29 Azerbaijan
71.59 280.18 5,572.63 72.45 Bangladesh

ANNEX
STATISTICAL
73.31 12.45 98.82 71.37 Bhutan
74.13 84.47 564.58 67.19 Cambodia
68.71 892.12 9,920.25 66.34 China, People’s Rep. of
95.46 1.17 26.15 88.64 Cook Islands
72.60 14.07 160.56 64.25 Fiji Islands
93.11 – 94.50 93.11 Hong Kong, China
67.15 698.28 8,144.63 59.67 India
69.89 1,014.99 15,112.95 75.14 Indonesia
86.21 26.06 432.58 86.24 Kazakhstan
94.33 1.56 13.55 89.50 Kiribati
87.92 – 5,560.32 87.73 Korea, Rep. of
82.34 30.40 452.41 80.00 Kyrgyz Republic
81.18 93.76 905.76 76.56 Lao People’s Democratic Republic
71.56 7.52 1,403.28 70.60 Malaysia
81.95 4.94 57.25 71.14 Maldives
83.32 0.80 63.99 81.91 Marshall Islands
70.42 1.75 36.78 65.52 Micronesia, Fed. States of
79.42 29.92 491.98 80.61 Mongolia
78.88 – 411.83 77.58 Myanmar
46.00 – 2.30 46.00 Nauru
67.19 43.66 1,437.19 66.38 Nepal
72.70 563.51 10,530.69 74.44 Pakistan
74.19 21.50 634.01 72.54 Papua New Guinea
67.92 279.89 6,280.29 73.25 Philippines
92.30 2.66 102.66 88.57 Samoa
71.91 – 144.44 79.77 Singapore
80.58 2.76 57.91 73.02 Solomon Islands
76.19 206.00 2,573.91 73.89 Sri Lanka
89.93 – 91.14 90.78 Taipei,China
62.67 26.07 99.59 44.39 Tajikistan
77.11 21.03 4,183.05 77.64 Thailand
110.01 – 52.26 98.83 Tonga
53.47 0.10 4.26 54.45 Tuvalu
53.44 91.69 374.31 47.40 Uzbekistan
93.48 – 48.99 95.59 Vanuatu
59.13 225.87 1,955.16 62.23 Viet Nam
– 6.62 110.58 65.05 Regional f

71.25 4,745.19 78,494.68 71.43 TOTAL

e The cumulative disbursements may exceed the cumulative contracts awarded due to disbursed amount without procurement contract summary sheet, e.g., interest
during construction, contingencies, and private sector loans that do not require procurement.
f Includes regional loan on the Establishment of the Pacific Aviation Safety Office and private sector loans to Asian Finance and Investment Corporation Ltd. and
Trade Finance Facilitation Program.

127
 Table 16
CONTRACTS AWARDED BY COUNTRY OF ORIGIN,a 2005
PROJECT LOANS—ORDINARY CAPITAL RESOURCES (amounts in $ million)

Goods and Total

Related Services, % Consulting % Contracts %
and Civil Works Distribution Services Distribution Awarded Distribution
Afghanistan 0.00 0.00 0.00 0.00 0.00 0.00
Armenia 0.00 0.00 0.00 0.00 0.00 0.00
Australia 4.92 0.20 15.97 12.45 20.89 0.80
Austria 3.82 0.15 0.00 0.00 3.82 0.15
Azerbaijan 0.00 0.00 0.00 0.00 0.00 0.00
Bangladesh 8.32 0.34 0.00 0.00 8.32 0.32
Belgium 0.02 0.00 0.00 0.00 0.02 0.00
STATISTICAL
ANNEX

Bhutan 0.00 0.00 0.00 0.00 0.00 0.00

Cambodia 0.00 0.00 0.00 0.00 0.00 0.00
Canada 1.44 0.06 0.19 0.15 1.63 0.06
China, People’s Rep. of 1,351.33 54.75 1.40 1.09 1,352.74 52.10
Cook Islands 0.00 0.00 0.00 0.00 0.00 0.00
Denmark 2.83 0.11 6.13 4.78 8.96 0.34
Fiji Islands 3.54 0.14 0.00 0.00 3.54 0.14
Finland 0.65 0.03 5.70 4.44 6.35 0.24
France 33.39 1.35 0.00 0.00 33.39 1.29
Germany 16.42 0.67 0.00 0.00 16.42 0.63
Hong Kong, China 21.78 0.88 2.27 1.77 24.06 0.93
India 603.24 24.44 42.44 33.10 645.68 24.87
Indonesia 72.94 2.96 4.43 3.45 77.37 2.98
Italy 11.68 0.47 1.51 1.18 13.19 0.51
Japan 35.01 1.42 0.46 0.36 35.47 1.37
Kazakhstan 0.00 0.00 0.00 0.00 0.00 0.00
Kiribati 0.00 0.00 0.00 0.00 0.00 0.00
Korea, Rep. of 0.42 0.02 0.00 0.00 0.42 0.02
Kyrgyz Republic 0.00 0.00 0.00 0.00 0.00 0.00
Lao People’s Democratic Republic 11.07 0.45 0.00 0.00 11.07 0.43
Luxembourg 0.00 0.00 0.00 0.00 0.00 0.00
Malaysia 73.49 2.98 0.00 0.00 73.49 2.83
Maldives 0.00 0.00 0.00 0.00 0.00 0.00
Marshall Islands 0.01 0.00 0.00 0.00 0.01 0.00
Micronesia, Fed. States of 0.00 0.00 0.00 0.00 0.00 0.00
Mongolia 0.00 0.00 0.00 0.00 0.00 0.00
Myanmar 0.00 0.00 0.00 0.00 0.00 0.00
Nauru 0.00 0.00 0.00 0.00 0.00 0.00
Nepal 0.00 0.00 0.00 0.00 0.00 0.00
The Netherlands 0.95 0.04 1.44 1.12 2.39 0.09
New Zealand 9.40 0.38 2.14 1.67 11.54 0.44
Norway 0.00 0.00 0.00 0.00 0.00 0.00
Pakistan 22.89 0.93 13.28 10.35 36.17 1.39
Palau 0.00 0.00 0.00 0.00 0.00 0.00
Papua New Guinea 2.50 0.10 0.22 0.17 2.73 0.10
Philippines 32.78 1.33 0.23 0.18 33.01 1.27
Portugal 0.00 0.00 0.00 0.00 0.00 0.00
Samoa 0.00 0.00 0.00 0.00 0.00 0.00
Singapore 1.73 0.07 6.06 4.72 7.79 0.30
Solomon Islands 0.00 0.00 0.00 0.00 0.00 0.00
Spain 0.42 0.02 0.04 0.03 0.46 0.02
Sri Lanka 0.00 0.00 0.00 0.00 0.00 0.00
Sweden 35.20 1.43 1.40 1.09 36.60 1.41
Switzerland 14.77 0.60 0.00 0.00 14.77 0.57
Taipei,China 22.28 0.90 0.00 0.00 22.28 0.86
Tajikistan 0.06 0.00 0.38 0.29 0.43 0.02
Thailand 11.54 0.47 0.00 0.00 11.54 0.44
Timor-Leste 0.00 0.00 0.00 0.00 0.00 0.00
Tonga 0.00 0.00 0.00 0.00 0.00 0.00
Turkey 31.05 1.26 0.00 0.00 31.05 1.20
Turkmenistan 0.00 0.00 0.00 0.00 0.00 0.00
Tuvalu 0.00 0.00 0.00 0.00 0.00 0.00
United Kingdom 9.44 0.38 6.65 5.18 16.09 0.62
United States 11.60 0.47 15.74 12.28 27.35 1.05
Uzbekistan 4.98 0.20 0.17 0.13 5.15 0.20
Vanuatu 0.00 0.00 0.00 0.00 0.00 0.00
Viet Nam 0.00 0.00 0.00 0.00 0.00 0.00
Regional 0.39 0.02 0.00 0.00 0.39 0.02
International Organizations 0.00 0.00 0.00 0.00 0.00 0.00

TOTALb 2,468.30 100.00 128.24 100.00 2,596.54 100.00

0.00 Data negligible.

a Represents the country of origin where the goods are mined, produced, grown, and/or manufactured, based on US dollar value equivalent of contract.
b Totals may not add due to rounding.

128
Table 17
CONTRACTS AWARDED BY COUNTRY OF ORIGIN,a 2005
PROJECT LOANS—ASIAN DEVELOPMENT FUND (amounts in $ million)

Goods and Total

Related Services, % Consulting % Contracts %
and Civil Works Distribution Services Distribution Awarded Distribution
Afghanistan 0.00 0.00 0.00 0.00 0.00 0.00
Armenia 0.00 0.00 0.00 0.00 0.00 0.00
Australia 4.39 0.45 11.96 10.07 16.35 1.49
Austria 0.00 0.00 0.00 0.00 0.00 0.00
Azerbaijan 0.05 0.01 0.00 0.00 0.05 0.00
Bangladesh 172.40 17.56 10.21 8.60 182.61 16.60
Belgium 0.00 0.00 0.00 0.00 0.00 0.00

ANNEX
STATISTICAL
Bhutan 1.76 0.18 0.00 0.00 1.76 0.16
Cambodia 31.75 3.24 4.82 4.05 36.57 3.32
Canada 1.63 0.17 3.90 3.28 5.53 0.50
China, People’s Rep. of 50.46 5.14 0.04 0.03 50.49 4.59
Cook Islands 0.54 0.05 0.09 0.08 0.63 0.06
Denmark 0.09 0.01 10.91 9.18 10.99 1.00
Fiji Islands 0.00 0.00 0.38 0.32 0.38 0.03
Finland 0.17 0.02 0.00 0.00 0.17 0.02
France 2.61 0.27 0.23 0.19 2.84 0.26
Germany 4.48 0.46 5.76 4.85 10.24 0.93
Hong Kong, China 0.29 0.03 0.00 0.00 0.29 0.03
India 61.65 6.28 2.11 1.78 63.76 5.79
Indonesia 37.23 3.79 14.05 11.83 51.28 4.66
Italy 3.52 0.36 0.00 0.00 3.52 0.32
Japan 15.49 1.58 15.01 12.63 30.50 2.77
Kazakhstan 1.52 0.15 0.00 0.00 1.52 0.14
Kiribati 0.00 0.00 0.00 0.00 0.00 0.00
Korea, Rep. of 57.85 5.89 0.00 0.00 57.85 5.26
Kyrgyz Republic 16.26 1.66 1.09 0.92 17.35 1.58
Lao People’s Democratic Republic 27.72 2.82 0.63 0.53 28.35 2.58
Luxembourg 0.00 0.00 0.00 0.00 0.00 0.00
Malaysia 8.13 0.83 0.00 0.00 8.13 0.74
Maldives 4.65 0.47 0.00 0.00 4.65 0.42
Marshall Islands 0.02 0.00 0.00 0.00 0.02 0.00
Micronesia, Fed. States of 0.40 0.04 0.06 0.05 0.46 0.04
Mongolia 7.24 0.74 0.26 0.22 7.50 0.68
Myanmar 0.00 0.00 0.00 0.00 0.00 0.00
Nauru 0.00 0.00 0.00 0.00 0.00 0.00
Nepal 45.17 4.60 3.69 3.11 48.86 4.44
The Netherlands 0.19 0.02 1.65 1.39 1.84 0.17
New Zealand 0.57 0.06 1.05 0.89 1.62 0.15
Norway 0.00 0.00 0.22 0.19 0.22 0.02
Pakistan 143.88 14.66 7.90 6.65 151.79 13.79
Palau 0.00 0.00 0.00 0.00 0.00 0.00
Papua New Guinea 4.10 0.42 0.26 0.22 4.36 0.40
Philippines 4.48 0.46 2.80 2.36 7.28 0.66
Portugal 0.00 0.00 0.00 0.00 0.00 0.00
Samoa 0.00 0.00 0.35 0.30 0.35 0.03
Singapore 6.16 0.63 0.00 0.00 6.16 0.56
Solomon Islands 0.07 0.01 0.00 0.00 0.07 0.01
Spain 0.46 0.05 0.12 0.10 0.58 0.05
Sri Lanka 134.18 13.67 2.72 2.29 136.90 12.44
Sweden 0.67 0.07 0.59 0.50 1.26 0.11
Switzerland 0.76 0.08 0.05 0.04 0.82 0.07
Taipei,China 0.37 0.04 0.00 0.00 0.37 0.03
Tajikistan 9.73 0.99 1.61 1.36 11.34 1.03
Thailand 26.12 2.66 1.39 1.17 27.51 2.50
Timor-Leste 0.00 0.00 0.00 0.00 0.00 0.00
Tonga 0.00 0.00 0.00 0.00 0.00 0.00
Turkey 9.30 0.95 0.00 0.00 9.30 0.85
Turkmenistan 0.00 0.00 0.00 0.00 0.00 0.00
Tuvalu 0.00 0.00 0.00 0.00 0.00 0.00
United Kingdom 3.79 0.39 3.87 3.26 7.66 0.70
United States 14.37 1.46 7.45 6.28 21.82 1.98
Uzbekistan 0.00 0.00 0.00 0.00 0.00 0.00
Vanuatu 0.00 0.00 0.00 0.00 0.00 0.00
Viet Nam 64.87 6.61 1.56 1.31 66.43 6.04
Regional 0.02 0.00 0.00 0.00 0.02 0.00
International Organizations 0.00 0.00 0.00 0.00 0.00 0.00

TOTALb 981.54 100.00 118.79 100.00 1,100.32 100.00

0.00 Data negligible.

a Represents the country of origin where the goods are mined, produced, grown, and/or manufactured, based on US dollar value equivalent of contract.
b Totals may not add due to rounding.

129
 Table 18
CONTRACTS AWARDED BY COUNTRY OF ORIGIN,a 2005
PROJECT LOANS—ORDINARY CAPITAL RESOURCES AND ASIAN DEVELOPMENT FUND COMBINED
(amounts in $ million)

Goods and Total

Related Services, % Consulting % Contracts %
and Civil Works Distribution Services Distribution Awarded Distribution
Afghanistan 0.00 0.00 0.00 0.00 0.00 0.00
Armenia 0.00 0.00 0.00 0.00 0.00 0.00
Australia 9.31 0.27 27.94 11.31 37.24 1.01
Austria 3.82 0.11 0.00 0.00 3.82 0.10
Azerbaijan 0.05 0.00 0.00 0.00 0.05 0.00
STATISTICAL

Bangladesh 180.72 5.24 10.21 4.13 190.93 5.16

ANNEX

Belgium 0.02 0.00 0.00 0.00 0.02 0.00

Bhutan 1.76 0.05 0.00 0.00 1.76 0.05
Cambodia 31.75 0.92 4.82 1.95 36.57 0.99
Canada 3.07 0.09 4.09 1.66 7.16 0.19
China, People’s Rep. of 1,401.79 40.63 1.44 0.58 1,403.23 37.96
Cook Islands 0.54 0.02 0.09 0.04 0.63 0.02
Denmark 2.92 0.08 17.03 6.90 19.95 0.54
Fiji Islands 3.54 0.10 0.38 0.15 3.91 0.11
Finland 0.82 0.02 5.70 2.31 6.51 0.18
France 36.01 1.04 0.23 0.09 36.24 0.98
Germany 20.90 0.61 5.76 2.33 26.66 0.72
Hong Kong, China 22.08 0.64 2.27 0.92 24.35 0.66
India 664.88 19.27 44.55 18.03 709.43 19.19
Indonesia 110.17 3.19 18.48 7.48 128.65 3.48
Italy 15.20 0.44 1.51 0.61 16.71 0.45
Japan 50.50 1.46 15.46 6.26 65.97 1.78
Kazakhstan 1.52 0.04 0.00 0.00 1.52 0.04
Kiribati 0.00 0.00 0.00 0.00 0.00 0.00
Korea, Rep. of 58.27 1.69 0.00 0.00 58.27 1.58
Kyrgyz Republic 16.26 0.47 1.09 0.44 17.35 0.47
Lao People’s Democratic Republic 38.79 1.12 0.63 0.25 39.41 1.07
Luxembourg 0.00 0.00 0.00 0.00 0.00 0.00
Malaysia 81.62 2.37 0.00 0.00 81.62 2.21
Maldives 4.65 0.13 0.00 0.00 4.65 0.13
Marshall Islands 0.03 0.00 0.00 0.00 0.03 0.00
Micronesia, Fed. States of 0.40 0.01 0.06 0.02 0.46 0.01
Mongolia 7.24 0.21 0.26 0.10 7.50 0.20
Myanmar 0.00 0.00 0.00 0.00 0.00 0.00
Nauru 0.00 0.00 0.00 0.00 0.00 0.00
Nepal 45.17 1.31 3.69 1.49 48.86 1.32
The Netherlands 1.14 0.03 3.08 1.25 4.23 0.11
New Zealand 9.97 0.29 3.19 1.29 13.17 0.36
Norway 0.00 0.00 0.22 0.09 0.22 0.01
Pakistan 166.77 4.83 21.18 8.57 187.95 5.08
Palau 0.00 0.00 0.00 0.00 0.00 0.00
Papua New Guinea 6.60 0.19 0.48 0.20 7.08 0.19
Philippines 37.27 1.08 3.03 1.23 40.30 1.09
Portugal 0.00 0.00 0.00 0.00 0.000 0.00
Samoa 0.00 0.00 0.35 0.14 0.35 0.01
Singapore 7.89 0.23 6.06 2.45 13.94 0.38
Solomon Islands 0.07 0.00 0.00 0.00 0.07 0.00
Spain 0.89 0.03 0.15 0.06 1.04 0.03
Sri Lanka 134.18 3.89 2.72 1.10 136.90 3.70
Sweden 35.87 1.04 1.99 0.81 37.86 1.02
Switzerland 15.53 0.45 0.05 0.02 15.58 0.42
Taipei,China 22.65 0.66 0.00 0.00 22.65 0.61
Tajikistan 9.78 0.28 1.99 0.81 11.77 0.32
Thailand 37.65 1.09 1.39 0.56 39.05 1.06
Timor-Leste 0.00 0.00 0.00 0.00 0.00 0.00
Tonga 0.00 0.00 0.00 0.00 0.00 0.00
Turkey 40.36 1.17 0.00 0.00 40.36 1.09
Turkmenistan 0.00 0.00 0.00 0.00 0.00 0.00
Tuvalu 0.00 0.00 0.00 0.00 0.00 0.00
United Kingdom 13.23 0.38 10.52 4.26 23.74 0.64
United States 25.97 0.75 23.20 9.39 49.17 1.33
Uzbekistan 4.98 0.14 0.17 0.07 5.15 0.14
Vanuatu 0.00 0.00 0.00 0.00 0.00 0.00
Viet Nam 64.87 1.88 1.56 0.63 66.43 1.80
Regional 0.41 0.01 0.00 0.00 0.41 0.01
International Organizations 0.00 0.00 0.00 0.00 0.00 0.00

TOTALb 3,449.83 100.00 247.02 100.00 3,696.86 100.00

0.00 Data negligible.

a Represents the country of origin where the goods are mined, produced, grown, and/or manufactured, based on US dollar value equivalent of contract.
b Totals may not add due to rounding.

130
Table 19
ESTIMATES OF PAYMENT TO SUPPLYING COUNTRIES FOR FOREIGN PROCUREMENT
UNDER PROGRAM LENDING,a 2005

Ordinary Capital Resources (OCR) Asian Development Fund (ADF) Combined OCR and ADF

$ Million % Distribution $ Million % Distribution $ Million % Distribution

Afghanistan 3.11 0.20 0.30 0.10 3.42 0.19
Armenia 0.00 0.00 0.00 0.00 0.00 0.00
Australia 73.53 4.79 4.83 1.57 78.36 4.25
Austria 6.39 0.42 0.43 0.14 6.81 0.37
Azerbaijan 0.01 0.00 0.85 0.28 0.86 0.05
Bangladesh 3.42 0.22 0.39 0.13 3.81 0.21
Belgium 28.93 1.88 3.16 1.03 32.09 1.74

ANNEX
STATISTICAL
Bhutan 0.07 0.00 0.01 0.00 0.08 0.00
Cambodia 0.08 0.00 0.41 0.13 0.49 0.03
Canada 25.17 1.64 1.60 0.52 26.78 1.45
China, People’s Rep. of 142.68 9.29 32.21 10.47 174.89 9.49
Cook Islands 0.00 0.00 0.00 0.00 0.00 0.00
Denmark 4.08 0.27 0.60 0.20 4.69 0.25
Fiji Islands 0.08 0.01 0.01 0.00 0.09 0.00
Finland 5.74 0.37 0.73 0.24 6.47 0.35
France 19.32 1.26 4.28 1.39 23.60 1.28
Germany 61.78 4.02 6.68 2.17 68.46 3.71
Hong Kong, China 21.41 1.39 9.34 3.04 30.75 1.67
India 178.22 11.60 3.85 1.25 182.07 9.87
Indonesia 10.95 0.71 4.61 1.50 15.56 0.84
Italy 20.17 1.31 3.06 0.99 23.23 1.26
Japan 177.90 11.58 19.18 6.23 197.08 10.69
Kazakhstan 0.10 0.01 1.71 0.56 1.81 0.10
Kiribati 0.00 0.00 0.00 0.00 0.00 0.00
Korea, Rep. of 85.50 5.57 18.32 5.96 103.82 5.63
Kyrgyz Republic 0.01 0.00 0.20 0.07 0.21 0.01
Lao People’s Democratic Republic 0.02 0.00 0.31 0.10 0.33 0.02
Luxembourg 0.13 0.01 0.06 0.02 0.19 0.01
Malaysia 60.09 3.91 12.48 4.06 72.57 3.94
Maldives 0.00 0.00 0.00 0.00 0.01 0.00
Marshall Islands 0.00 0.00 0.00 0.00 0.00 0.00
Micronesia, Fed. States of 0.00 0.00 0.00 0.00 0.00 0.00
Mongolia 0.00 0.00 8.80 2.86 8.80 0.48
Myanmar 1.40 0.09 0.19 0.06 1.59 0.09
Nauru 0.03 0.00 0.00 0.00 0.03 0.00
Nepal 0.35 0.02 2.53 0.82 2.88 0.16
The Netherlands 19.93 1.30 3.21 1.04 23.14 1.26
New Zealand 6.02 0.39 0.56 0.18 6.58 0.36
Norway 1.30 0.08 0.14 0.04 1.44 0.08
Pakistan 3.02 0.20 85.03 27.64 88.05 4.78
Palau 0.00 0.00 0.00 0.00 0.00 0.00
Papua New Guinea 0.95 0.06 0.00 0.00 0.96 0.05
Philippines 103.43 6.73 1.01 0.33 104.43 5.66
Portugal 0.37 0.02 0.11 0.04 0.48 0.03
Samoa 0.16 0.01 0.00 0.00 0.16 0.01
Singapore 111.02 7.23 23.89 7.77 134.91 7.32
Solomon Islands 0.05 0.00 0.01 0.00 0.06 0.00
Spain 7.88 0.51 1.12 0.36 9.00 0.49
Sri Lanka 22.00 1.43 0.51 0.17 22.51 1.22
Sweden 9.36 0.61 0.99 0.32 10.34 0.56
Switzerland 18.71 1.22 3.00 0.97 21.71 1.18
Taipei,China 47.06 3.06 0.00 0.00 47.06 2.55
Tajikistan 0.03 0.00 0.02 0.01 0.05 0.00
Thailand 43.47 2.83 14.12 4.59 57.60 3.12
Timor-Leste 0.00 0.00 0.00 0.00 0.00 0.00
Tonga 0.00 0.00 0.00 0.00 0.00 0.00
Turkey 3.66 0.24 0.97 0.32 4.64 0.25
Turkmenistan 0.06 0.00 0.73 0.24 0.79 0.04
Tuvalu 0.00 0.00 0.00 0.00 0.00 0.00
United Kingdom 33.01 2.15 4.52 1.47 37.54 2.04
United States 162.33 10.57 14.32 4.66 176.65 9.58
Uzbekistan 0.61 0.04 3.59 1.17 4.21 0.23
Vanuatu 0.33 0.02 0.01 0.00 0.34 0.02
Viet Nam 10.72 0.70 8.66 2.81 19.38 1.05
Regional 0.00 0.00 0.00 0.00 0.00 0.00
International Organizations 0.00 0.00 0.00 0.00 0.00 0.00

TOTALb 1,536.15 100.00 307.66 100.00 1,843.86 100.00

0.00 Data negligible.

a Estimates are based on import data drawn from the latest information available on borrowers’ trade statistics compiled by the International Monetary Fund Direction
of Trade Statistics.
b Totals may not add due to rounding.

131
 Table 20
CUMULATIVE CONTRACTS AWARDED BY COUNTRY OF ORIGIN,a
TECHNICAL ASSISTANCE OPERATIONS (as of 31 December 2005)

ADB’s % Administered % Japan % Total %

Own Distri- Trust Distri- Special Distri- Contracts Distri-
Resources bution Funds bution Fund bution Awarded bution
Afghanistan 0.58 0.05 0.65 0.17 0.02 0.00 1.25 0.05
Armenia 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Australia 135.57 12.55 37.31 9.96 105.27 13.08 278.14 12.31
Austria 0.81 0.07 0.00 0.00 0.11 0.01 0.92 0.04
Azerbaijan 0.39 0.03 0.11 0.03 0.00 0.00 0.50 0.02
Bangladesh 10.92 1.01 3.18 0.85 4.36 0.54 18.47 0.81
Belgium 3.66 0.33 1.04 0.27 2.20 0.27 6.90 0.30
STATISTICAL
ANNEX

Bhutan 0.41 0.03 0.02 0.00 0.06 0.00 0.49 0.02

Cambodia 0.96 0.08 1.84 0.49 0.37 0.04 3.17 0.14
Canada 76.77 7.10 39.05 10.43 61.92 7.69 177.74 7.86
China, People’s Rep. of 10.47 0.97 2.72 0.72 6.92 0.86 20.12 0.89
Cook Islands 0.05 0.00 0.17 0.04 0.00 0.00 0.22 0.01
Denmark 11.80 1.09 3.38 0.90 15.46 1.92 30.63 1.35
Fiji Islands 0.79 0.07 0.65 0.17 0.18 0.02 1.61 0.07
Finland 7.02 0.65 5.86 1.56 7.96 0.98 20.84 0.92
France 21.97 2.03 12.43 3.32 21.21 2.63 55.60 2.46
Germany 22.20 2.05 8.16 2.18 32.16 3.99 62.52 2.76
Hong Kong, China 22.27 2.06 4.90 1.31 20.25 2.51 47.42 2.09
India 37.51 3.47 13.01 3.47 13.99 1.73 64.50 2.85
Indonesia 14.26 1.32 3.84 1.02 11.52 1.43 29.62 1.31
Italy 4.97 0.46 0.82 0.21 2.59 0.32 8.38 0.37
Japan 27.05 2.50 11.35 3.03 22.74 2.82 61.14 2.70
Kazakhstan 0.59 0.05 1.35 0.36 0.14 0.01 2.08 0.09
Kiribati 0.00 0.00 0.03 0.00 0.01 0.00 0.03 0.00
Korea, Rep. of 4.81 0.44 1.22 0.32 3.56 0.44 9.58 0.42
Kyrgyz Republic 1.05 0.09 0.11 0.03 0.05 0.00 1.21 0.05
Lao People’s Democratic Republic 2.92 0.27 1.84 0.49 0.91 0.11 5.67 0.25
Luxembourg 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Malaysia 9.74 0.90 0.24 0.06 3.19 0.39 13.17 0.58
Maldives 0.09 0.00 0.02 0.00 0.03 0.00 0.14 0.00
Marshall Islands 0.10 0.01 0.08 0.02 0.00 0.00 0.18 0.00
Micronesia, Fed. States of 0.01 0.00 0.00 0.00 0.00 0.00 0.01 0.00
Mongolia 0.99 0.09 0.39 0.10 0.61 0.07 2.00 0.08
Myanmar 0.87 0.08 0.52 0.13 0.01 0.00 1.40 0.06
Nauru 0.01 0.00 0.01 0.00 0.00 0.00 0.03 0.00
Nepal 7.20 0.66 1.64 0.43 1.40 0.17 10.24 0.45
The Netherlands 20.81 1.92 18.40 4.91 26.44 3.28 65.66 2.90
New Zealand 59.83 5.54 14.13 3.77 54.99 6.83 128.95 5.70
Norway 4.57 0.42 7.54 2.01 3.36 0.41 15.47 0.68
Pakistan 18.76 1.73 4.76 1.27 3.23 0.40 26.74 1.18
Palau 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Papua New Guinea 1.20 0.11 0.04 0.01 1.02 0.12 2.26 0.10
Philippines 72.50 6.71 16.10 4.30 30.18 3.75 118.77 5.25
Portugal 0.04 0.00 0.00 0.00 0.09 0.01 0.13 0.00
Samoa 0.86 0.08 0.01 0.00 0.87 0.10 1.73 0.07
Singapore 14.08 1.30 1.23 0.32 9.93 1.23 25.25 1.11
Solomon Islands 0.38 0.03 0.02 0.00 0.21 0.02 0.61 0.02
Spain 3.08 0.28 1.69 0.45 0.89 0.11 5.66 0.25
Sri Lanka 11.06 1.02 2.91 0.77 3.08 0.38 17.05 0.75
Sweden 6.15 0.56 3.94 1.05 7.49 0.93 17.58 0.77
Switzerland 9.87 0.91 5.26 1.40 11.51 1.43 26.64 1.18
Taipei,China 1.05 0.09 0.07 0.01 2.05 0.25 3.16 0.14
Tajikistan 0.23 0.02 0.13 0.03 0.08 0.00 0.43 0.01
Thailand 12.26 1.13 4.88 1.30 10.66 1.32 27.81 1.23
Timor-Leste 0.23 0.02 0.00 0.00 0.01 0.00 0.24 0.01
Tonga 0.31 0.02 0.00 0.00 0.15 0.01 0.46 0.02
Turkey 0.28 0.02 0.13 0.03 0.05 0.00 0.47 0.02
Turkmenistan 0.02 0.00 0.05 0.01 0.00 0.00 0.07 0.00
Tuvalu 0.06 0.00 0.00 0.00 0.00 0.00 0.06 0.00
United Kingdom 155.80 14.42 55.80 14.91 125.05 15.54 336.65 14.90
United States 217.23 20.11 66.18 17.68 162.47 20.19 445.88 19.74
Uzbekistan 0.31 0.02 0.13 0.03 0.04 0.00 0.49 0.02
Vanuatu 0.74 0.06 0.01 0.00 1.20 0.14 1.94 0.08
Viet Nam 2.92 0.27 2.36 0.62 2.09 0.25 7.36 0.32
Regional 3.31 0.30 6.47 1.72 3.35 0.41 13.14 0.58
International Organizations 23.21 2.14 4.07 1.08 4.90 0.60 32.17 1.42

TOTALb 1,079.96 100.00 374.25 100.00 804.59 100.00 2,258.75 100.00

0.00 Data negligible.

a Represents the country of origin where the goods are mined, produced, grown, and/or manufactured, based on US dollar value equivalent of contract.
b Totals may not add due to rounding.

132
Table 21
CONTRACTS AWARDED BY COUNTRY OF ORIGIN,a 2003–2005
TECHNICAL ASSISTANCE OPERATIONS (amounts in $ million)

2003 2004 2005

Value % Value % Value %

Afghanistan 0.56 0.36 0.27 0.18 0.22 0.14
Armenia 0.00 0.00 0.00 0.00 0.00 0.00
Australia 19.32 12.35 17.42 11.65 22.68 13.91
Austria 0.00 0.00 0.00 0.00 0.12 0.07
Azerbaijan 0.04 0.02 0.11 0.07 0.14 0.09
Bangladesh 1.21 0.77 1.61 1.08 2.84 1.74
Belgium 1.10 0.70 0.30 0.20 0.10 0.06

ANNEX
STATISTICAL
Bhutan 0.07 0.05 0.09 0.06 0.18 0.11
Cambodia 0.71 0.45 0.56 0.38 0.73 0.45
Canada 15.91 10.17 7.49 5.01 9.72 5.96
China, People’s Rep. of 2.38 1.52 2.53 1.69 3.56 2.18
Cook Islands 0.03 0.02 0.00 0.00 0.00 0.00
Denmark 2.05 1.31 0.24 0.16 2.31 1.42
Fiji Islands 0.25 0.16 0.05 0.03 0.72 0.44
Finland 1.59 1.02 2.39 1.60 0.62 0.38
France 5.77 3.69 3.47 2.32 2.87 1.76
Germany 6.59 4.21 5.09 3.40 5.68 3.48
Hong Kong, China 2.37 1.51 4.43 2.97 4.25 2.60
India 3.32 2.12 10.35 6.92 3.69 2.26
Indonesia 3.46 2.21 1.88 1.26 3.52 2.16
Italy 0.31 0.20 0.11 0.08 0.07 0.04
Japan 4.32 2.76 7.83 5.23 6.94 4.26
Kazakhstan 0.17 0.11 0.67 0.45 0.52 0.32
Kiribati 0.00 0.00 0.00 0.00 0.00 0.00
Korea, Rep. of 0.38 0.24 0.09 0.06 0.42 0.26
Kyrgyz Republic 0.17 0.11 0.39 0.26 0.16 0.10
Lao People’s Democratic Republic 0.22 0.14 0.47 0.31 1.67 1.03
Luxembourg 0.00 0.00 0.00 0.00 0.00 0.00
Malaysia 1.01 0.65 1.29 0.86 0.55 0.34
Maldives 0.00 0.00 0.02 0.02 0.03 0.02
Marshall Islands 0.00 0.00 0.01 0.01 0.09 0.06
Micronesia, Fed. States of 0.00 0.00 0.00 0.00 0.01 0.00
Mongolia 0.23 0.15 0.48 0.32 0.16 0.10
Myanmar 0.01 0.01 0.12 0.08 0.05 0.03
Nauru 0.00 0.00 0.00 0.00 0.03 0.02
Nepal 0.65 0.42 0.96 0.64 1.13 0.69
The Netherlands 4.08 2.61 1.75 1.17 1.02 0.62
New Zealand 6.53 4.17 11.56 7.73 9.29 5.70
Norway 1.03 0.66 4.30 2.88 0.99 0.61
Pakistan 3.97 2.54 4.42 2.95 4.98 3.06
Palau 0.00 0.00 0.00 0.00 0.00 0.00
Papua New Guinea 0.09 0.05 0.00 0.00 0.03 0.02
Philippines 12.07 7.72 7.49 5.01 10.93 6.70
Portugal 0.00 0.00 0.00 0.00 0.00 0.00
Samoa 0.03 0.02 0.10 0.07 0.03 0.02
Singapore 2.05 1.31 1.40 0.94 2.94 1.81
Solomon Islands 0.00 0.00 0.04 0.03 0.01 0.00
Spain 1.35 0.86 1.08 0.72 0.77 0.47
Sri Lanka 1.15 0.73 1.65 1.11 0.68 0.41
Sweden 1.52 0.97 0.68 0.45 1.72 1.06
Switzerland 0.40 0.26 0.42 0.28 1.87 1.15
Taipei,China 0.00 0.00 0.00 0.00 0.01 0.01
Tajikistan 0.06 0.04 0.08 0.05 0.15 0.09
Thailand 1.71 1.09 3.02 2.02 1.70 1.04
Timor-Leste 0.52 0.33 0.02 0.01 0.00 0.00
Tonga 0.06 0.04 0.18 0.12 0.03 0.02
Turkey 0.03 0.02 0.10 0.07 0.04 0.03
Turkmenistan 0.02 0.01 0.00 0.00 0.05 0.03
Tuvalu 0.00 0.00 0.00 0.00 0.00 0.00
United Kingdom 22.76 14.55 18.96 12.68 18.07 11.09
United States 22.11 14.14 18.08 12.09 23.06 14.15
Uzbekistan 0.05 0.03 0.12 0.08 0.10 0.06
Vanuatu 0.00 0.00 0.09 0.06 0.04 0.02
Viet Nam 0.00 0.00 1.42 0.95 1.09 0.67
Regional 0.65 0.42 1.87 1.25 7.68 4.71
International Organizations 0.00 0.00 0.00 0.00 0.00 0.00

TOTALb 156.43 100.00 149.52 100.00 163.00 100.00

0.00 Data negligible.

a Represents the country of origin where the goods are mined, produced, grown, and/or manufactured, based on US dollar value equivalent of contract.
b Totals may not add due to rounding.

133
 Table 22
TECHNICAL ASSISTANCE GRANTS BY COUNTRY AND REGIONAL ACTIVITIES,a 1967–2005, 2004, 2005
(Amounts in $ thousand)

1 9 6 7 – 2 0 0 5b 2 0 0 4

TASF JSF Other

No. Amount % No. Financing Financing Sources Total %

Afghanistan 50 50,242.70 1.81 14 8,900.00 – 4,706.00 13,606.00 6.97

Armenia 1 150.00 0.01 – – – – – –
Azerbaijan 20 10,542.00 0.38 5 750.00 1,800.00 – 2,550.00 1.31
STATISTICAL
ANNEX

Bangladesh 312 165,238.33 5.94 12 2,030.00 3,840.00 420.00 6,290.00 3.22

Bhutan 94 35,375.15 1.27 5 750.00 600.00 300.00 1,650.00 0.85

Cambodia 133 85,129.60 3.06 12 2,300.00 600.00 1,688.00 4,588.00 2.35
China, People’s Rep. of 480 256,809.65 9.23 32 11,154.00 800.00 4,750.00 16,704.00 8.56

Cook Islands 27 8,945.00 0.32 – – – – – –

Fiji Islands 77 25,474.80 0.92 3 295.00 600.00 – 895.00 0.46

India 212 115,789.86 4.16 15 1,800.00 1,250.00 7,150.00 10,200.00 5.23

Indonesia 480 240,449.17 8.64 24 5,530.00 2,806.50 9,240.00 17,576.50 9.01
Kazakhstan 57 26,367.00 0.95 4 750.00 950.00 – 1,700.00 0.87
Kiribati 34 11,410.70 0.41 1 800.00 – – 800.00 0.41

Korea, Rep. of 33 5,010.15 0.18 – – – – – –

Kyrgyz Republic 63 37,171.40 1.34 7 600.00 2,600.00 700.00 3,900.00 2.00
Lao People’s
Democratic Republic 215 104,902.08 3.77 11 1,870.00 1,300.00 2,950.00 6,120.00 3.14

Malaysia 92 25,202.30 0.91 – – – – – –

Maldives 55 19,125.00 0.69 3 1,000.00 – – 1,000.00 0.51
Marshall Islands 44 18,357.00 0.66 2 760.00 – 150.00 910.00 0.47

Micronesia, Fed. States of 39 22,678.00 0.82 3 550.00 300.00 – 850.00 0.44

Mongolia 121 58,870.65 2.12 7 1,214.00 850.00 586.00 2,650.00 1.36
Myanmar 38 10,716.00 0.39 – – – – – –

Nauru 6 1,721.81 0.06 – – – – – –

Nepal 247 113,993.70 4.10 10 1,254.00 1,630.00 300.00 3,184.00 1.63
Pakistan 301 152,565.40 5.48 22 3,530.00 2,285.00 22,605.00 28,420.00 14.57

Papua New Guinea 126 45,513.60 1.64 1 300.00 – 200.00 500.00 0.26
Philippines 316 141,554.25 5.09 10 2,670.00 2,700.00 625.00 5,995.00 3.07
Samoa 81 22,676.50 0.82 3 300.00 400.00 – 700.00 0.36

Singapore 2 577.42 0.02 – – – – – –

Solomon Islands 56 13,845.24 0.50 3 1,200.00 – 650.00 1,850.00 0.95
Sri Lanka 220 91,588.10 3.29 4 1,500.00 850.00 1,600.00 3,950.00 2.02

Taipei,China 1 100.00 – – – – – – –
Tajikistan 48 25,285.00 0.91 5 500.00 1,500.00 800.00 2,800.00 1.44
Thailand 150 54,998.60 1.98 – – – – – –

Timor-Leste 26 11,250.90 0.40 3 400.00 500.00 – 900.00 0.46

Tonga 52 14,441.50 0.52 3 450.00 250.00 – 700.00 0.36
Turkmenistan 3 565.00 0.02 – – – – – –

Tuvalu 18 4,487.00 0.16 1 – 300.00 – 300.00 0.15

Uzbekistan 62 31,980.00 1.15 6 1,625.00 875.00 – 2,500.00 1.28
Vanuatu 53 14,964.76 0.54 2 1,100.00 – 200.00 1,300.00 0.67
Viet Nam 190 121,750.46 4.38 16 1,650.00 2,650.00 3,380.00 7,680.00 3.94

Subtotal 4,635 2,197,815.77 79.00 249 57,532.00 32,236.50 63,000.00 152,768.50 78.31
Regional 1,288 584,430.26 21.00 72 20,882.00 7,785.00 13,653.50 42,320.50 21.69

TOTAL 5,923 2,782,246.04 100.00 321 78,414.00 40,021.50 76,653.50 195,089.00 100.00

– Nil; JSF = Japan Special Fund; TASF = Technical Assistance Special Fund; ATF = Asian Tsunami Fund.
a Excludes technical assistance financed under loans that are included in ADB’s loan data.
b Cumulative data are adjusted to exclude technical assistance projects withdrawn by governments.

134
 2 0 0 5

TASF JSF ATF Other

No. Financing Financing Financing Sources Total %

11 8,295.00 – – 190.00 8,485.00 4.27 Afghanistan

1 150.00 – – – 150.00 0.08 Armenia
5 1,050.00 1,040.00 – 850.00 2,940.00 1.48 Azerbaijan

ANNEX
STATISTICAL
13 2,520.00 3,700.00 – 1,230.00 7,450.00 3.75 Bangladesh

5 1,400.00 300.00 – – 1,700.00 0.86 Bhutan

14 1,650.00 2,200.00 – 3,765.00 7,615.00 3.83 Cambodia
34 14,840.00 – – 3,494.60 18,334.60 9.23 China, People’s Rep. of

1 600.00 – – – 600.00 0.30 Cook Islands

3 1,000.00 600.00 – – 1,600.00 0.80 Fiji Islands

9 2,368.00 – – 3,960.00 6,328.00 3.18 India

6 3,700.00 600.00 – 6,030.00 10,330.00 5.20 Indonesia
3 – 1,300.00 – – 1,300.00 0.65 Kazakhstan
– – – – – – – Kiribati

– – – – – – – Korea, Rep. of
4 900.00 900.00 – – 1,800.00 0.91 Kyrgyz Republic
7 550.00 1,500.00 – 974.30 3,024.30 1.52 Lao People’s
Democratic Republic

– – – – – – – Malaysia
6 1,100.00 40.00 – 777.00 1,917.00 0.96 Maldives
1 – – – 300.00 300.00 0.15 Marshall Islands

– – – – – – – Micronesia, Fed. States of

3 500.00 900.00 – 250.00 1,650.00 0.83 Mongolia
– – – – – – – Myanmar

2 – – – 477.81 477.81 0.24 Nauru

4 1,320.00 – – 835.00 2,155.00 1.08 Nepal
25 8,279.00 1,545.00 – 5,452.00 15,276.00 7.69 Pakistan

3 1,150.00 1,000.00 – – 2,150.00 1.08 Papua New Guinea

7 3,720.00 500.00 – 400.00 4,620.00 2.32 Philippines
2 350.00 300.00 – – 650.00 0.33 Samoa

– – – – – – – Singapore
2 895.00 – – 200.00 1,095.00 0.55 Solomon Islands
8 2,062.50 550.00 – 500.00 3,112.50 1.57 Sri Lanka

– – – – – – – Taipei,China
6 1,400.00 500.00 – 2,100.00 4,000.00 2.01 Tajikistan
7 1,045.00 – 2,000.00 300.00 3,345.00 1.68 Thailand

2 600.00 600.00 – – 1,200.00 0.60 Timor-Leste

1 – 700.00 – – 700.00 0.35 Tonga
– – – – – – – Turkmenistan
– – – – – – – Tuvalu

5 600.00 1,400.00 – 300.00 2,300.00 1.16 Uzbekistan

– – – – – – – Vanuatu
20 1,850.00 3,725.00 – 6,675.00 12,250.00 6.16 Viet Nam

220 63,894.50 23,900.00 2,000.00 39,060.71 128,855.21 64.84 Subtotal

79 25,615.00 4,450.00 – 39,800.75 69,865.75 35.16 Regional

299 89,509.50 28,350.00 2,000.00 78,861.47 198,720.97 100.00 T O T A L

135
 Table 23
TECHNICAL ASSISTANCE GRANTS, 2005 ($ thousand)

Advisory
Project and
Preparatory Operational Sector
AFGHANISTAN
Small to Medium-Sized Hydropower Development 800.00 Energy
Natural Gas Development 995.00 Energy
Commercial Agriculture Development 995.00 Agriculture and Natural Resources
Financial Market and Private Sector Development Program 1,000.00 Finance
Capacity Building of the Ministry of Energy and Water 750.00 Energy
Capacity Strengthening of the Civil Aviation Sector 1,000.00 Transport and Communications
Capacity Building for Economic Management 390.00a Law, Economic Management, and
STATISTICAL
ANNEX

Public Policy
Capacity Building for Road Sector Institutions 1,000.00 Transport and Communications
Building the Capacity of the Ministry of Commerce
for Trade and Transit Facilitation 400.00 Industry and Trade
Capacity Development for Irrigation and Water Resources 755.00 Agriculture and Natural Resources
Capacity Building for Regional Cooperation 400.00 Law, Economic Management, and
Public Policy
Subtotal 3,790.00 4,695.00
ARMENIA
Seminars on ADB Operational Policies and Procedures 150.00 Law, Economic Management, and
Public Policy
Subtotal 150.00
AZERBAIJAN
Southern Road Corridor Improvement (Alyat-Astara Road) 700.00b Transport and Communications
Social Infrastructure for Internally Displaced Persons
b
and Vulnerable Population (Supplementary) 340.00 Health, Nutrition, and Social Protection
Renewable Energy Development 700.00c Energy
Transport Sector Development Strategy 350.00 Transport and Communications
Participatory Strategy Development and Implementation
for Achieving the Millennium Development Goals 850.00d Law, Economic Management, and
Public Policy
Subtotal 1,740.00 1,200.00
BANGLADESH
Dhaka Water Supply 1,000.00 Water Supply, Sanitation, and Waste
Management
Padma Multipurpose Bridge 800.00b Transport and Communications
Secondary Education Sector Improvement II (Supplementary) 120.00 Education
Second Command Area Development 950.00e Agriculture and Natural Resources
Good Governance Project 1,000.00 b Law, Economic Management, and
Public Policy
Support for Financial Management and Monitoring 150.00 Multisector
Early Warning Systems Study 250.00f Multisector
Second Urban Primary Health Care Bridging Support 150.00g Health, Nutrition, and Social Protection
Corporatization of the Bangladesh Power Development Board 800.00b Energy
Strengthening Project Management on Agribusiness Development 600.00 Agriculture and Natural Resources
Improving National Accounts, Price, and Wage Statistics 400.00 Law, Economic Management, and
Public Policy
Participation of the Urban Poor in Municipal Governance 480.00h Multisector
Supporting Good Governance Initiatives II 750.00i Law, Economic Management, and
Public Policy
Subtotal 3,870.00 3,580.00
BHUTAN
Financial Sector/Nonbank Financial Institutions Reform Program 500.00 Finance
Capacity Building for the Bhutan Power Corporation 400.00 Energy
Capacity Building to Implement Environmental Assessment Procedures 200.00 Agriculture and Natural Resources
Capacity Building in Road Safety and Road Asset Management 300.00b Transport and Communications
Strengthening of the Payment and Settlement System (Supplementary) 300.00 Finance
Subtotal 500.00 1,200.00

a Of this amount, $200,000 is to be financed from the Technical Assistance Special Fund (TASF) and $190,000 by the Government of Australia with ADB acting
as executing agency.
b To be financed from the Japan Special Fund (JSF).
c Of this amount, $500,000 is to be financed from the TASF and $200,000 by the Government of Finland with ADB acting as executing agency
d Of this amount, $200,000 is to be financed from the TASF and $650,000 from the Cooperation Fund for National Poverty Reduction Strategies (NPRS).
e Of this amount, $600,000 is to be financed from the JSF and $350,000 from the Poverty Reduction Cooperation Fund (PRF).
f To be financed by the Government of the Netherlands with ADB acting as executing agency.
g To be financed by the Government of the United Kingdom with ADB acting as executing agency.
h To be financed from the PRF.
i Of this amount, $250,000 is to be financed from the TASF and $500,000 from the JSF.

136
CONTINUED

Advisory
Project and
Preparatory Operational Sector
CAMBODIA
Sustainable Rural Water Supply and Sanitation 150.00 Water Supply, Sanitation, and Waste
Management
Transport Infrastructure Development and Maintenance 1,000.00a Transport and Communications
Second Phase of Support to Local Administration 400.00a Law, Economic Management, and
Public Policy
Tonle Sap Lowland Stabilization 1,000.00 b Agriculture and Natural Resources
Capacity Building of the Inland Fisheries Research

ANNEX
STATISTICAL
and Development Institute II 300.00 Agriculture and Natural Resources
Community Self-Reliance and Flood Risk Reduction 500.00c Agriculture and Natural Resources
Cambodia Business Initiative in Rural Development 150.00c Agriculture and Natural Resources
Capacity Building for National Economic Policy Analysis
and Development Management 500.00 Law, Economic Management, and
Public Policy
Participatory Poverty Assessment of the
Tonle Sap (Supplementary) 100.00c Agriculture and Natural Resources
Restructuring of the Railway in Cambodia 1,500.00 d Transport and Communications
Financial Sector Program Implementation 500.00 Finance
Study of the Influence of Built Structures on the
Fisheries of the Tonle Sap 765.00e Agriculture and Natural Resources
Financial Sector Blueprint Update 150.00f Finance
Developing Deposit Services in Rural Cambodia 600.00c Finance
Subtotal 2,550.00 5,065.00
CHINA, PEOPLE’S REPUBLIC OF
Taiyuan-Zhongwei Railway 500.00 Transport and Communications
Inner Mongolia Autonomous Region Environmental Improvement 500.00 Energy
Guiyang Integrated Water Resources Management 960.00g Agriculture and Natural Resources
Heilongjiang Road Network Development 500.00 Transport and Communications
Nanjing Qinhuai River Environmental Improvement 600.00 Multisector
Hefei Urban Environment Improvement 750.00 Multisector
Integrated Ecosystem Management and Environmental Protection
of the Baiyangdian Lake Catchment 500.00 Agriculture and Natural Resources
Dryland Farming in the Northern Region 400.00 Agriculture and Natural Resources
Western Roads Development 800.00 Transport and Communications
Ningxia Yinchuan Integrated Ecosystem Management 850.00h Agriculture and Natural Resources
Railway Development 500.00 Transport and Communications
Shaanxi-Qinling Mountains Integrated Ecosystem Management 500.00 Agriculture and Natural Resources
Poverty Reduction in Coal Mine Areas in Shanxi Province 500.00c Energy
Nongovernment Organization-Government Partnerships
in Village-Level Poverty Alleviation 1,000.00 c Multisector
Developing a Result-Based National Monitoring and
Evaluation System for Key Projects 400.00 Law, Economic Management, and
Public Policy
i
Nanjing Water Utility Long-Term Capital Finance in Commercial Markets 600.00 Law, Economic Management, and
Public Policy
Development of Asset-Backed Securities Market and
Restructuring of Asset Management Companies 1,000.00 Finance
Support for the Preparation of the 11th Five-Year Plan 500.00 Law, Economic Management, and
Public Policy
PRC Country Environmental Analysis 150.00 Agriculture and Natural Resources
Alternative Energy Supply for Rural Poor in Remote Areas 500.00c Energy
Evaluating Poverty Impacts of Transport Projects 150.00 Transport and Communications
Flood Management Strategy Study (Supplementary) 49.60 j Agriculture and Natural Resources
Rural Road Development Strategy 350.00 Transport and Communications
Alternative Livelihood Options to Facilitate Coal Sector Restructuring 300.00c Multisector
Urban Poverty Strategy Study II 300.00c Multisector
Road Safety Improvement 625.00k Transport and Communications
Railway Passenger and Freight Policy Reform Study 400.00 Transport and Communications

a To be financed from the JSF.

b Of this amount, $200,000 is to be financed from the TASF and $800,000 from the JSF.
c To be financed from the PRF.
d To be financed by the Government of France with ADB acting as executing agency.
e To be financed by the Government of Finland with ADB acting as executing agency.
f To be financed by the Government of Spain with ADB acting as executing agency.
g Of this amount, $800,000 is to be financed from the TASF and $160,000 from the Cooperation Fund for the Water Sector (CFWS).
h Of this amount, $500,000 is to be financed from the TASF and $350,000 from the Global Environment Facility (GEF).
i Of this amount, $490,000 is to be financed from the TASF and $110,000 from the CFWS.
j To be financed from the CFWS.
k Of this amount, $400,000 is to be financed from the TASF and $225,000 from the Global Road Safety Partnership (GRSP).

137
 CONTINUED

Advisory
Project and
Preparatory Operational Sector
Study on Sustainable Urbanization in Metropolitan Regions 500.00 Multisector
Energy Conservation and Resource Management 600.00 Energy
Application of Public-Private Partnerships in Urban
Rail-Based Transportation 500.00 Transport and Communications
National Fund for Development of Credit Guarantees
for Private Enterprises 700.00 Finance
Provincial Development Strategy of Selected Provinces
in Northwestern Region 1,000.00 Law, Economic Management, and
STATISTICAL
ANNEX

Public Policy
Institutional Development of SEPA’s Regional Supervision Centers 550.00 Agriculture and Natural Resources
Bank of China Ltd. for Improving Corporate Governance 300.00 Finance
Subtotal 7,360.00 10,974.60
COOK ISLANDS
Strengthening Disaster Management and Mitigation 600.00 Multisector
Subtotal 600.00
FIJI ISLANDS
Rural and Outer Islands Development 700.00 Agriculture and Natural Resources
Strengthening Commercial Agriculture Development 600.00a Agriculture and Natural Resources
Private Sector Development Roadmaps 300.00 Law, Economic Management, and
Public Policy
Subtotal 700.00 900.00
INDIA
Uttaranchal State Roads 368.00 Transport and Communications
Uttaranchal Urban Development 600.00 Water Supply, Sanitation, and Waste
Management
North Eastern Region Urban Development (Phase II) 960.00b Multisector
A Study on the Development of an Agency to Facilitate
Issuance of Residential Mortgage-Backed Securities 250.00c Finance
Water Users Association Empowerment for Improved Irrigation
Management in Chhattisgarh 1,900.00 d Agriculture and Natural Resources
Institutional Strengthening and Capacity Building for Madhya
Pradesh State Road Sector (Supplementary) 600.00d Transport and Communications
Uttaranchal Power Sector Capacity Building 500.00 Energy
Integrated Coastal Management and Related Investment Development 250.00d Agriculture and Natural Resources
Development of Road Agencies in the North Eastern States 900.00 Transport and Communications
Subtotal 1,928.00 4,400.00
INDONESIA
Second Community and Local Government Support Sector 600.00 Multisector
Support for Decentralized Education Management II (Supplementary) 6,030.00e Education
Supporting an Effective Institutional Framework for
Fiscal Decentralization 500.00 Law, Economic Management, and
Public Policy
Natural Resources Management in a Decentralized Framework 600.00 Agriculture and Natural Resources
Secondary Mortgage Facility 600.00a Finance
Support for Infrastructure Development 2,000.00 Multisector
Subtotal 600.00 9,730.00
KAZAKHSTAN
Second Rural Water Supply and Sanitation Sector 650.00a Water Supply, Sanitation, and Waste
Management
Strengthening the Water Supply Sector Program 150.00a Water Supply, Sanitation, and Waste
Management
Financial Sector Governance Phase II 500.00a Finance
Subtotal 650.00 650.00
KYRGYZ REPUBLIC
Vocational Education and Skills Training 300.00a Education
Reform and Modernization of Revenue Administration 500.00 Law, Economic Management, and
Public Policy

a To be financed from the JSF.

b Of this amount, $160,000 is to be financed from the CFWS and $800,000 from the Government of the United Kingdom with ADB acting as executing agency.
c To be financed by the Government of Switzerland with ADB acting as executing agency.
d To be financed by the Government of the United Kingdom with ADB acting as executing agency.
e To be financed by the European Commission (EC).

138
CONTINUED

Advisory
Project and
Preparatory Operational Sector
Support to the Development and Implementation of
the National Poverty Reduction Strategy II 400.00 Law, Economic Management, and
Public Policy
Supporting Banking Sector and Capital Market Development Program 600.00a Finance
Subtotal 800.00 1,000.00
LAO PEOPLE’S DEMOCRATIC REPUBLIC
Health Sector Development Program 700.00a Health, Nutrition, and Social Protection

ANNEX
STATISTICAL
Northern Greater Mekong Subregion Transport Network Improvement 800.00a Transport and Communications
Poverty Reduction Through Land Tenure Consolidation,
Participatory Natural Resources Management and
Local Communities Skills Building (Supplementary) 124.30b Agriculture and Natural Resources
Operationalization of the Northern Region Development Strategy 150.00 Law, Economic Management, and
Public Policy
Capacity Development for Monitoring Development Results
of the National Growth and Poverty Eradication Strategy 150.00c Law, Economic Management, and
Public Policy
Public Expenditure Planning for National Growth and
Poverty Eradication Strategy 700.00d Law, Economic Management, and
Public Policy
Capacity Building for Gender Mainstreaming in Agriculture 400.00 Agriculture and Natural Resources
Subtotal 1,500.00 1,524.30
MALDIVES
Strengthening of the Public Accounting System (Supplementary) 40.00 a Law, Economic Management, and
Public Policy
Small and Medium-Sized Enterprise Development 600.00 Industry and Trade
Developing a Results-Oriented 7th National Development Plan 377.00d Law, Economic Management, and
Public Policy
Promoting Sound Environmental Management in the
Aftermath of the Tsunami Disaster 400.00e Water Supply, Sanitation, and
Waste Management
Strengthening Project Management and Monitoring for the
Ministry of Finance and Treasury 250.00 Law, Economic Management, and
Public Policy
Strengthening of Public Service Division 250.00 Law, Economic Management, and
Public Policy
Subtotal 640.00 1,277.00
MARSHALL ISLANDS
Increasing Ownership of and Effective Demand for
Improved Urban Waste Management 300.00b Water Supply, Sanitation, and
Waste Management
Subtotal 300.00
MONGOLIA
Urban Development and Housing 600.00f Multisector
Prefeasibility Study of the Western Regional Road Corridor Development 150.00 Transport and Communications
Capacity Building for Financial Sector Reforms 900.00a Finance
Subtotal 600.00 1,050.00
NAURU
Reform of the Nauru Phosphate Corporation 375.00g Energy
Capacity Building for Financial and Economic Management (Supplementary) 102.81g Finance
Subtotal 477.81
NEPAL
Education Sector Development Program I 600.00h Education
Preparation of Education Sector Development Policy and Strategy
(Supplementary) 110.00 Education
Regional Development Strategy 760.00 Law, Economic Management, and
Public Policy
Reaching the Most Disadvantaged Groups in Mainstream Rural Development 685.00b Health, Nutrition, and Social Protection
Subtotal 600.00 1,555.00

a To be financed from the JSF.

b To be financed from the PRF.
c To be financed from the Cooperation Fund in Support of Managing for Developmental Results (MDRCF).
d To be financed from the Cooperation Fund for National Poverty Reduction Strategies (NPRS).
e To be financed from the CFWS.
f Of this amount, $350,000 is to be financed from the TASF and $250,000 from the PRF.
g To be financed by the Government of Australia with ADB acting as executing agency.
h Of this amount, $450,000 is to be financed from the TASF and $150,000 from the PRF.

139
 CONTINUED

Advisory
Project and
Preparatory Operational Sector
PAKISTAN
Rawalpindi Environmental Improvement (Supplementary) 70.00 Water Supply, Sanitation, and Waste
Management
Punjab Devolved Social Services Sector Development Program (Supplementary) 340.00a Multisector
Mega City Development 150.00 Water Supply, Sanitation, and Waste
Management
North-West Frontier Province Devolved Social Services Program 450.00b Multisector
Punjab Irrigated Agriculture Development Sector 1,242.00 c Agriculture and Natural Resources
STATISTICAL
ANNEX

Power Transmission Enhancement 500.00b Energy

Private Participation in Infrastructure Sector Development Program 1,000.00 Finance
Bahawalpur Rural Development, Phase II 300.00 Multisector
Mega City Sustainable Development 1,000.00 Multisector
Supporting and Monitoring Progress under the Access to Justice
Program (Supplementary) 400.00 Law, Economic Management, and
Public Policy
Support to Implementation of Decentralization II (Supplementary) 450.00 Law, Economic Management, and
Public Policy
Support for Poverty Reduction Initiatives in Pakistan (Supplementary) 109.00 Law, Economic Management, and
Public Policy
Agribusiness Development Project Implementation Support 150.00 Agriculture and Natural Resources
Support to Implementation of Gender Reform Action Plans 4,565.00 d Multisector
Operational Support to the Office of the Energy Advisor 150.00 Energy
Developing Social Health Insurance 350.00 Health, Nutrition, and Social Protection
Support of Infrastructure Investments 150.00 Multisector
Balochistan Capacity Building for Devolved Social Services 300.00 Multisector
Independent Monitoring of Remedial Actions for the Chashma
Right Bank Irrigation, Stage III 150.00 Agriculture and Natural Resources
Additional Works for Preparation of Hill Torrents Management 150.00 Agriculture and Natural Resources
National Agriculture Sector Strategy 350.00 Agriculture and Natural Resources
Capacity Building for the Office of the Auditor General of Pakistan 2,000.00 Law, Economic Management, and
Public Policy
Support for Subprogram 3 of the Punjab Resource Management Program 150.00 Law, Economic Management, and
Public Policy
Results-Based Monitoring of Projects 500.00 Law, Economic Management, and
Public Policy
Balochistan Economic Report 300.00 Law, Economic Management, and
Public Policy
Subtotal 5,052.00 10,224.00
PAPUA NEW GUINEA
HIV/AIDS Prevention and Control in Rural Development Enclaves 150.00 Health, Nutrition, and Social Protection
PNG Gas Project 1,000.00 Energy
Policies for Private Sector Development 1,000.00 b Law, Economic Management, and
Public Policy
Subtotal 1,150.00 1,000.00
PHILIPPINES
Metro Manila Urban Services for the Poor 700.00 Multisector
Strengthening the Anti-Money Laundering Regime (Phase II) 400.00e Law, Economic Management, and
Public Policy
Support for Health Sector Reform 1,000.00 Health, Nutrition, and Social Protection
Harmonization and Managing for Results 700.00 Law, Economic Management, and
Public Policy
Support the Implementation of the Microfinance Development Program 500.00b Finance
Strategy for Sustainable Aquaculture Development for Poverty Reduction 600.00 Agriculture and Natural Resources
Debt and Risk Management 720.00 Law, Economic Management, and
Public Policy
Subtotal 700.00 3,920.00
SAMOA
Promoting Economic Use of Customary Land 300.00b Law, Economic Management, and
Public Policy
National Teacher Development Framework 350.00 Education
Subtotal 650.00

a To be financed by the Government of the United Kingdom with ADB acting as executing agency.
b To be financed from the JSF.
c Of this amount, $595,000 is to be financed from the JSF; $557,000 by the Government of The Netherlands; and $90,000 from the CFWS with ADB acting as
executing agency.
d Of this amount, $100,000 is to be financed from the TASF; $800,000 from the PRF; and $3,665,000 by the Government of Canada with ADB acting as executing
agency.
e To be financed from the Cooperation Fund for Regional Trade and Financial Security Initiative (RTFSI).

140
CONTINUED

Advisory
Project and
Preparatory Operational Sector
SOLOMON ISLANDS
Implementation of Interisland Transport Reforms 495.00 Transport and Communications
Supporting Business Law Reform 600.00a Law, Economic Management, and
Public Policy
Subtotal 1,095.00
SRI LANKA
Small and Medium Enterprise Sector Development Program II 550.00b Industry and Trade

ANNEX
STATISTICAL
Education Sector Development Program 700.00 Education
Sri Lanka Post-Tsunami Needs Assessment and Preparation for
Emergency Assistance Implementation Strategies 500.00c Multisector
Needs Assessment in Conflict-Affected Areas (Supplementary) 6.50 Multisector
Strengthening Technical Education 120.00 Education
Strengthening Local Government Infrastructure Financing 500.00 Multisector
Capacity Building of the Environmental and Social Division
of the Road Development Authority 400.00 Transport and Communications
Independent External Monitoring of Resettlement Activities
of the Southern Transport Development 336.00 Transport and Communications
Subtotal 1,250.00 1,862.50
TAJIKISTAN
Power Rehabilitation Phase II 500.00b Energy
Rural Development 850.00d Agriculture and Natural Resources
Tax Administration Modernization and Governance Enhancement 500.00 Law, Economic Management, and
Public Policy
Improving Aid Coordination and Portfolio Management (Supplementary) 650.00e Law, Economic Management, and
Public Policy
Local Government Finance Capacity Building 700.00f Law, Economic Management, and
Public Policy
Farm Analysis and Awareness-Raising for Debt Resolution 800.00c Agriculture and Natural Resources
Subtotal 1,850.00 2,150.00
THAILAND
Commercial Financing for Local Government Units 670.00 Law, Economic Management, and
Public Policy
Preparing a Development Plan for the Tsunami Affected Andaman Region 150.00g Multisector
Supporting Post-Tsunami Activities and Coastal Zone Management 150.00g Law, Economic Management, and
Public Policy
Promoting International Cooperation on Anti-Money Laundering and
Combating the Financing of Terrorism 300.00h Law, Economic Management, and
Public Policy
Subregional Development Plan for the Tsunami-Affected Andaman Region 1,700.00 g Law, Economic Management, and
Public Policy
Capacity Building for Pollution Taxation and Resource Mobilization for
Environment and Natural Resources Sectors–Phase II 225.00 Agriculture and Natural Resources
Infrastructure Investment Advisory Assistance to the Public Debt
Management Office of Thailand 150.00 Multisector
Subtotal 3,345.00
TIMOR-LESTE
Urban Water Supply and Sanitation 600.00b Water Supply, Sanitation, and Waste
Management
Infrastructure Sectors Capacity Development 600.00 Multisector
Subtotal 600.00 600.00
TONGA
Integrated Urban Development 700.00b Water Supply, Sanitation, and Waste
Management
Subtotal 700.00

a Of this amount, $400,000 is to be financed from the TASF and $200,000 by the Government of Australia with ADB acting as executing agency.
b To be financed from the JSF.
c To be financed from the PRF.
d Of this amount, $700,000 is to be financed from the TASF and $150,000 from the PRF.
e To be financed by the Government of the United Kingdom with ADB acting as executing agency.
f Of this amount, $200,000 is to be financed from the TASF and $500,000 from the Governance Cooperation Fund (GCF).
g To be financed from the Asian Tsunami Fund (ATF).
h To be financed from the RTFSI.

141
 CONTINUED

Advisory
Project and
Preparatory Operational Sector
UZBEKISTAN
Rural Renewable Energy Development 300.00a Energy
Development of Market Infrastructure for Private Farms
and Agribusinesses 600.00 Agriculture and Natural Resources
Financial Sector Infrastructure Development 400.00b Finance
Transport Sector Strategy (2006–2020) 600.00b Transport and Communications
Effective Management of Investments and Reforms in Basic Education 400.00b Education
Subtotal 900.00 1,400.00
STATISTICAL
ANNEX

VIET NAM
Support to Implementation of Poverty Reduction Program II
Outlined under the Poverty Reduction Support Credit IV 150.00 Law, Economic Management, and
Public Policy
Kunming-Haiphong Transport Corridor (Supplementary) 350.00b Transport and Communications
Song Bung 4 Hydropower Phase II 1,575.00c Energy
Financial Sector Development Program III 900.00b Finance
Capacity Building for Water Resources Management (Supplementary) 500.00d Agriculture and Natural Resources
Strategic Secondary Education Planning and Cooperation 600.00e Education
Results-Based Monitoring of Poverty Reduction and Growth 400.00f Law, Economic Management, and
Public Policy
Strengthening Agriculture Science and Technology Management 700.00b Agriculture and Natural Resources
Implementing the Regulatory and Supervisory Framework for Microfinance 250.00g Finance
Support to Thua Thien Hue and Quang Tri Provinces for Sustainable
Poverty Reduction and Growth Programs 900.00h Law, Economic Management, and
Public Policy
Muong Duong Thermal Power Generation 550.00 Energy
Capacity Building to Dak Nong Province for Improving Poverty Reduction
and Growth Performance 650.00i Law, Economic Management, and
Public Policy
Support for Pro-poor Health Policies (Supplementary) 50.00g Health, Nutrition, and Social Protection
Developing Benefit Sharing Mechanisms for People Adversely Affected
by Power Generation Projects 150.00g Energy
Strengthening Institutional Capacity of Local Stakeholders for
Implementation of Son La Livelihood and Resettlement Plan 1,000.00 g Energy
Expressway Network Development Plan 1,150.00 Transport and Communications
Implementation of the Environmental Management Plan for
the Son La Hydropower 800.00a Energy
Capacity Building in the Strategic Environmental Assessment of
a
the Hydropower Sector 475.00 Energy
Air Pollution, Poverty, and Health Effects in Ho Chi Minh City 600.00g Health, Nutrition, and Social Protection
Support to Implement the Anti-Money Laundering Decree 500.00b Multisector
Subtotal 2,975.00 9,275.00

TOTAL 43,005.00 85,850.21

a To be financed by the Government of Finland with ADB acting as executing agency.

b To be financed from the JSF.
c Of this amount, $975,000 is to be financed from the JSF and $600,000 by the Government of France with ADB acting as executing agency.
d To be financed by the Government of Denmark with ADB acting as executing agency.
e Of this amount, $300,000 is to be financed from the JSF and $300,000 by the Government of Denmark with ADB acting as executing agency.
f To be financed from the MDRCF.
g To be financed from the PRF.
h To be financed from the NPRS.
i Of this amount, $325,000 is to be financed from the PRF and $325,000 from the NPRS.

142
Table 24
TECHNICAL ASSISTANCE GRANTS BY SECTOR,a 1967–2005, 2004, 2005

1967–2005b 2004 2005

No. $ Thousand % No. $ Thousand % No. $ Thousand %

Agriculture and
Natural Resources 1,051 493,445.32 22.45 46 27,184.00 17.79 38 21,165.90 16.43
Education 274 131,058.72 5.96 17 8,275.00 5.42 10 9,330.00 7.24
Energy 470 212,634.05 9.67 25 15,080.00 9.87 23 14,420.00 11.19
Finance 421 194,300.72 8.84 18 10,275.00 6.73 20 11,052.81 8.58

ANNEX
STATISTICAL
Health, Nutrition, and
Social Protection 166 76,125.90 3.46 12 4,670.00 3.06 8 3,685.00 2.86
Industry and Trade 260 106,305.00 4.84 14 7,750.00 5.07 3 1,550.00 1.20
Law, Economic
Management, and
Public Policy 868 415,024.55 18.88 56 28,626.50 18.74 49 26,116.00 20.27
Transport and
Communications 588 273,980.45 12.47 28 14,890.00 9.75 28 17,124.00 13.29
Water Supply, Sanitation,
and Waste Management 240 101,483.45 4.62 17 9,070.00 5.94 12 5,110.00 3.97
Multisector 297 193,457.62 8.80 16 26,948.00 17.64 29 19,301.50 14.98

TOTALc 4,635 2,197,815.77 100.00 249 152,768.50 100.00 220 128,855.21 100.00

a Excludes loan-financed technical assistance (included in loan data) and regional activities.
b Cumulative data adjusted to exclude technical assistance grants withdrawn by governments.
c Totals may not add due to rounding.

Table 25
TECHNICAL ASSISTANCE: LOAN AND GRANT-FINANCED BY SECTOR, 2005
(amounts in $ million)

Loan Granta Total %

Agriculture and Natural Resources 26.78 21.17 47.95 15.85

Education 5.66 9.33 14.99 4.96
Energy 8.65 14.42 23.07 7.63
Finance – 11.05 11.05 3.65
Health, Nutrition, and Social Protection 2.63 3.69 6.32 2.09
Industry and Trade – 1.55 1.55 0.51
Law, Economic Management, and Public Policy 1.70 26.12 27.82 9.20
Transport and Communications 45.43 17.12 62.55 20.68
Water Supply, Sanitation, and Waste Management 26.92 5.11 32.03 10.59
Multisector 55.84 19.30 75.14 24.84

TOTAL 173.61 128.86 302.47 100.00

a Excludes regional technical assistance grants.

143
 Table 26
REGIONAL TECHNICAL ASSISTANCE ACTIVITIES, 2005

$ Thousand

CONFERENCE
Regional Workshops in Preparation for the Second High-Level Forum on
Harmonization and Alignment for Aid Effectiveness (Supplementary) 41.93a
High Level Coordination Meeting on Rehabilitation and Reconstruction
Assistance to Tsunami-Affected Countries 150.00
Environmental Inputs for the Second GMS Summit 90.00
Joint Conference on Worker Remittances and Poverty Reduction with
STATISTICAL
ANNEX

Inter-American Development Bank and United Nations Development Programme 150.00

Fifteenth Tax Conference 150.00b
Energy Efficiency Initiative Consultation Workshop 150.00
Establishment of the Central Asia Regional Economic Cooperation (CAREC)
Members Electricity Regulators Forum 500.00
International Conference on ‘Asia 2015: Ending Poverty?’ 150.00
Competition Law and Policy Roundtable 100.00
Subtotal 1,481.93

RESEARCH
Making Markets Work Better for the Poor (Supplementary) 443.60c
Preparing a Pacific Governance Strategy 17.22d
Strengthening Pro-Poor Policy in the Pacific 1,850.00e
Better Air Quality Management in Asia (Supplementary) 390.00f
Subregional Cooperation for Information and Communications
Technology in Basic Education 600.00
Development and Dissemination of Water-Saving Rice Technologies
in South Asia 1,000.00
Managing the Cities in Asia 980.00
Establishment of Regional Knowledge Hubs 990.00
Subtotal 6,270.82

STUDY
South Asia Subregional Economic Cooperation Information and
Communication Technology Development Master Plan 450.00
Regional Environmental Compliance and Enforcement Network 250.00g
Greater Mekong Subregion Southern Coastal Corridor 1,000.00 b
Special Evaluation Study on Urban Sector Strategy and Operations 150.00
Socioeconomic Implications of HIV/AIDS in the Pacific 300.00
Developing New Policy Paradigms for Sustainable Livelihoods Protection
and Natural Resource Management among Ethnic Minorities of the
GMS: A Study of Policies and Their Impacts, Strategies for Change 150.00h
ASEAN+3 Regional Multicurrency Bond 400.00b
Rural Finance in Central Asia (Supplementary) 50.00i
Technical Assistance for Selected Evaluation Studies for 2005 1,250.00
Greater Mekong Subregion Regional Communicable Diseases Control (Supplementary) 250.00j
Preparation of International Public Sector Financial Audit Guidelines 235.00
GMS: Rehabilitation of the Railway in Cambodia 625.00b

a Of this amount, $32,505 is to be financed by the Government of Japan and $9,426 from the European Bank for Reconstruction and Development (EBRD) with
ADB acting as executing agency.
b To be financed from the Japan Special Fund (JSF).
c Of this amount, $385,000 is to be financed from the Poverty Reduction Cooperation Fund (PRF) and $58,600 by the Government of Australia with ADB acting
as executing agency.
d To be financed by the Government of the United States Department of Interior (USDOI) with ADB acting as executing agency.
e Of this amount, $925,000 is to be financed from the PRF and $925,000 by the Government of Australia with ADB acting as executing agency.
f To be financed from private sector contributions.
g To be financed from the Governance Cooperation Fund (GCF).
h To be financed from the Cooperation Fund for National Poverty Reduction Strategies (NPRS).
i To be financed by the Government of Denmark with ADB acting as executing agency.
j To be financed by the Government of Belgium with ADB acting as executing agency.

144
CONTINUED

$ Thousand

Reviewing the Poverty Impact of Regional Economic Integration in the GMS (Supplementary) 100.00a
Demographic and Health Surveys in Pacific Island Countries 1,000.00
Socioeconomic Impact of Road Crashes 925.00b
Enhancing the Business Environment of the GMS 500.00c
Innovative Information and Communications Technology in Education, and Its Potential
for Reducing Poverty in the Asia and Pacific Region 800.00b
GMS: Preparing the Sustainable Tourism Development Project 900.00
A Study on Economic Cooperation Between East Asia and South Asia 500.00

ANNEX
STATISTICAL
Development of Catastrophe Risk Insurance Mechanisms 150.00b
Facilitation of Transport Cooperation among Central Asia Regional Economic
Cooperation Countries (Phase I) 650.00d
Supporting Enhanced Cooperation among Southeast Asian Equity Markets 500.00
Subtotal 11,135.00

TRAINING
Regional Capacity Building Workshop on Performance-Based Allocation of ADF Resources 400.00
Greater Mekong Subregion Phnom Penh Plan for Development Management II 3,573.00e
Capacity Building in Local Banks in Developing Member Countries Participating in the Trade
Finance Facilitation Program 225.00
Enhancing Financial Disclosure Standards in Transitional Economies 500.00
Strengthening the Audit Capability of Members of the Asian Organization of
Supreme Audit Institutions 650.00d
Results-focused Project Design and Management 850.00
Improving Delivery of Infrastructure Services 800.00
Implementation of Pacific Education Strategy: Skills Development 975.00d
Preparation and Pilot of the Community of Practice on Managing for
Development Results (CoP-MfDR) 150.00
Public Policy Training Program 2006 950.00f
Strengthening Economic and Financial Monitoring in Selected ASEAN+3 Countries 600.00
Strengthening and Collection of Purchasing Power Parity Data in Selected Developing
Member Countries (Supplementary) 670.00
Pacific Financial Technical Assistance Centre 2005–2008 800.00
Support to ADB–Inter-American Development Bank Partnership Agreement 75.00
Capacity Building of Private Sector Financial Institutions in Meeting Environmental
and Social Challenges 150.00g
Support to Boao Forum for Asia 2006 50.00
Leadership Enhancement and Advancement Program (Supplementary) 50.00h
Developing Pro-Poor Governance Capability and Knowledge 875.00b
Subtotal 12,343.00

OTHERS
Support Development of the Action Plan on Trade and Investment Facilitation in GMS 150.00
Central Asian Countries Initiative for Land Management 1,250.00i
Strengthening Malaria Control for Ethnic Minorities 750.00b
HIV/AIDS Vulnerability and Risk Reduction Among Ethnic Minority Groups Through Communication Strategies 700.00b
Legal Empowerment for Women and Disadvantaged Groups 550.00b

a To be financed from the NPRS.

b To be financed from the PRF.
c Of this amount, $300,000 is to be financed from the Technical Assistance Special Fund (TASF) and $200,000 by the Government of the People’s Republic of China
with ADB acting as executing agency.
d To be financed from the JSF.
e Of this amount, $800,000 is to be financed from the TASF; $500,000 from the Regional Cooperation and Poverty Reduction Fund (RCPF); $1,923,000 by the
Government of France; and $350,000 by the Government of New Zealand with ADB acting as executing agency.
f To be financed from the Japan Fund for Public Policy Training (JFPPT).
g To be financed by the Government of Switzerland with ADB acting as executing agency.
h To be financed by the Government of Australia with ADB acting as executing agency.
i Of this amount, $500,000 is to be financed from the TASF; $700,000 from the Global Environment Facility Grant (GEF); and $50,000 from the Global Mechanism
(GM).
j To be financed by the Government of Belgium with ADB acting as executive agency.

145
 CONTINUED

$ Thousand

ADB’s Continued Participation in the Cities Alliance 600.00

Aviation Legislative and Regulatory Review 450.00a
Enhancing the Development Effectiveness of the GMS Economic Cooperation Program 2,500.00
Establishment of the GMS Environment Operations Center 150.00
Portal for Statistics Resources 140.00
Implementing Pilot Projects for Small Piped Water Networks 400.00b
Facilitating Knowledge Management for Pro-Poor Policies and Projects 980.00c
Improving the Key Indicators of Developing Asia and Pacific Countries 140.00
STATISTICAL
ANNEX

Greater Silk Road Initiative 2006 985.00

Asian Development Outlook 2006 340.00
Supporting the Achievement of the MDGs in the Asia and Pacific Region: Phase II 325.00
Strengthening Country Safeguard Systems 800.00
Capacity Building for Regional Cooperation in Central Asia 400.00d
Core Environment Program and Biodiversity Conservation Corridors Initiative in the Greater Mekong Subregion 24,970.00 e
Rolling Out Air Quality Management in Asia 655.00f
Promoting Environmental Investment in Asia and the Pacific 400.00g
South Asia Subregional Economic Cooperation III 1,000.00
Subtotal 38,635.00

TOTAL 69,865.75

a To be financed from the Cooperation Fund for Regional Trade and Financial Security Initiative (RTFSI).
b Of this amount, $200,000 is to be financed from the TASF and $200,000 by the Government of France with ADB acting as executing agency.
c To be financed from the PRF.
d To be financed from the RCPF.
e Of this amount, $1,220,000 is to be financed from the TASF; $550,000 from the PRF; $13,200,000 by the Government of the Netherlands; and $10,000,000
by the Government of Sweden with ADB acting as executing agency.
f To be financed by the Government of Finland with ADB acting as executing agency.
g Of this amount, $200,000 is to be financed from TASF and $200,000 by the Government of Finland with ADB acting as executing agency.

146
Table 27
NET TRANSFER OF RESOURCES
(ORDINARY CAPITAL RESOURCES AND ASIAN DEVELOPMENT FUND), a,b 2003–2005
($ million)

OCR ADF
2003 2004 2005 2003 2004 2005

Afghanistan – 1.65 33.51 54.54 40.48 20.66

Azerbaijan – – – – – 0.50
Bangladesh 20.19 89.61 93.38 47.69 (70.07) (12.21)

ANNEX
STATISTICAL
Bhutan (0.06) (0.07) (0.14) 3.34 5.35 10.48
Cambodia – – 68.40 70.87 76.73
China, People’s Rep. of (1,977.89) 0.49 544.64 – – –
Cook Islands – – – (0.02) 1.14 0.53
Fiji Islands 0.92 4.11 8.30 – – –
Hong Kong, China – – – – – –
India (1,197.14) (1,036.01) 457.20 – – –
Indonesia (432.15) (282.67) 105.23 30.08 28.93 37.58
Kazakhstan (19.73) (85.67) (153.38) 0.16 0.22 (0.47)
Kiribati – – – 2.27 2.32 1.36
Korea, Rep. of (2,122.84) (66.84) (1,756.33) – – –
Kyrgyz Republic – – – 22.18 50.36 25.10
Lao People’s Democratic Republic – – 25.07 40.53 31.00 47.78
Malaysia (69.04) (59.48) (52.99) – – –
Maldives – – – 3.91 0.94 3.66
Marshall Islands 0.22 (0.34) (0.21) 3.98 0.74 (0.05)
Micronesia, Fed. States of – – – 2.42 0.63 1.24
Mongolia – 6.00 (0.57) 34.52 32.54 21.13
Myanmar (1.44) – – – – –
Nauru – – – – – –
Nepal (6.08) (6.01) (5.71) (0.43) (17.34) 2.92
Pakistan 10.86 (922.29) 150.45 (14.18) 59.31 92.46
Papua New Guinea (13.09) (14.57) (4.78) (4.63) (0.10) (4.75)
Philippines (54.82) (194.47) (89.81) (17.43) (24.07) (29.13)
Samoa – – – (0.81) (0.17) (0.35)
Singapore – – – – – –
Solomon Islands – – – (2.98) (0.71) 1.16
Sri Lanka 36.37 36.64 21.16 129.37 79.66 101.54
Taipei,China – – – – – –
Tajikistan – – – 14.24 19.00 25.22
Thailand (223.22) (98.67) (390.98) (3.56) (3.55) (3.44)
Timor-Leste – – – – – –
Tonga – – – 5.02 (1.26) (1.37)
Turkmenistan – – – – – –
Tuvalu – – – 0.09 0.01 0.06
Uzbekistan 29.01 68.39 69.70 3.22 2.43 (0.21)
Vanuatu – – – (0.84) (0.92) (0.93)
Viet Nam 60.62 6.79 (13.39) 219.69 160.80 195.02
Regional (2.58) (6.32) (27.65) – –

TOTALc (5,961.86) (2,559.73) (987.32) 640.76 468.54 612.24

– Nil; ADF = Asian Development Fund; OCR = ordinary capital resources.

( ) Negative.
a Net transfer of resources for OCR defined as loan disbursements less principal repayments/prepayments and interest/charges received. Includes private sector loans
and net equity investments.
b Net transfer of resources for ADF defined as loan disbursements less principal repayments and interest/charges received. Includes private sector loans.
c Totals may not add due to rounding.

147
 Table 28
NET TRANSFER OF RESOURCES
(ORDINARY CAPITAL RESOURCES AND ASIAN DEVELOPMENT FUND COMBINED),a 1996–2005
($ million)

1996–2000
Average 2001 2002 2003 2004 2005

Afghanistan – – 82.99 54.54 42.13 54.17

Azerbaijan – – – – – 0.50
Bangladesh 166.07 104.33 71.96 67.88 19.54 81.17
Bhutan 3.84 5.57 12.71 3.28 5.28 10.34
STATISTICAL
ANNEX

Cambodia 28.81 46.42 76.40 68.40 70.87 76.73

China, People’s Rep. of 456.64 555.26 (246.41) (1,977.89) 0.49 544.64
Cook Islands 1.67 0.21 (0.33) (0.02) 1.14 0.53
Fiji Islands (4.39) (2.74) (2.98) 0.92 4.11 8.30
Hong Kong, China – – – – – –
India 203.37 (218.21) (122.96) (1,197.14) (1,036.01) 457.20
Indonesia (4.67) (44.26) 115.78 (402.07) (253.74) 142.80
Kazakhstan 41.04 (15.10) (26.50) (19.57) (85.45) (153.85)
Kiribati 0.12 1.32 0.72 2.27 2.32 1.36
Korea, Rep. of 538.17 (268.83) (136.36) (2,122.84) (66.84) (1,756.33)
Kyrgyz Republic 43.20 55.83 24.17 22.18 50.36 25.10
Lao People’s Democratic Republic 60.32 34.61 37.65 40.53 31.00 72.84
Malaysia (33.27) (49.30) (49.42) (69.04) (59.48) (52.99)
Maldives 1.76 2.16 5.59 3.91 0.94 3.66
Marshall Islands 6.76 7.87 7.59 4.20 0.40 (0.26)
Micronesia, Fed. States of 5.29 2.25 1.08 2.42 0.63 1.24
Mongolia 40.65 27.46 22.67 34.52 38.54 20.56
Myanmar (6.85) – – (1.44) – –
Nauru 0.44 (0.07) – – – –
Nepal 70.98 25.56 (9.26) (6.51) (23.35) (2.79)
Pakistan 98.27 72.61 58.21 (3.32) (862.98) 242.91
Papua New Guinea (5.81) 13.29 (16.95) (17.72) (14.67) (9.52)
Philippines (117.78) (80.57) (196.71) (72.25) (218.54) (118.94)
Samoa (0.84) 1.61 (1.22) (0.81) (0.17) (0.35)
Singapore – – – – – –
Solomon Islands 2.26 (0.80) – (2.98) (0.71) 1.16
Sri Lanka 81.48 65.03 125.26 165.74 116.30 122.70
Taipei,China – – – – – –
Tajikistan 4.40 2.75 13.81 14.24 19.00 25.22
Thailand 89.37 (72.05) (1,462.42) (226.78) (102.22) (394.42)
Timor-Leste – – – – – –
Tonga 2.39 (0.61) 4.14 5.02 (1.26) (1.37)
Turkmenistan – – – – – –
Tuvalu 0.56 1.14 (0.04) 0.09 0.01 0.06
Uzbekistan 14.82 30.47 16.35 32.23 70.82 69.49
Vanuatu 5.39 2.13 (0.24) (0.84) (0.92) (0.93)
Viet Nam 143.05 161.54 223.03 280.31 167.59 181.62
Regional 11.03 (2.54) (8.23) (2.58) (6.32) (27.65)

TOTALb 1,948.55 464.32 (1,379.92) (5,321.09) (2,091.18) (375.08)

– Nil.
( ) Negative.
a Net transfer of resources defined as loan disbursements less principal repayments/prepayments and interest/charges received. Includes private sector loans and
net equity investments.
b Totals may not add due to rounding.

148
FINANCIAL RESOURCES
Table 29
ASIAN DEVELOPMENT FUND (ADF) RESOURCES AND COMMITMENT AUTHORITY

ADF-CONTRIBUTED RESOURCES
($ million; as of 31 December 2005)

Change in 2005
Valued as of Exchange Rate Net Valued as of
31 December 2004 Addition Adjustment Change 31 December 2005
($ equivalent) ($ equivalent) ($ equivalent) ($ equivalent) ($ equivalent) (SDR equivalenta)

ANNEX
STATISTICAL
Australia 1,270.23 52.74 (79.77) (27.03) 1,243.20 869.81
Austria 223.64 6.52 (29.40) (22.88) 200.76 140.46
Belgium 202.15 – (26.41) (26.41) 175.74 122.96
Canada 1,471.93 40.44 56.84 97.28 1,569.21 1,097.91
China, People’s Republic of 0.00 7.00 – 7.00 7.00 4.90
Denmark 224.30 6.80 (29.89) (23.09) 201.21 140.78
Finland 123.98 4.18 (16.52) (12.34) 111.64 78.11
France 1,162.14 – (151.86) (151.86) 1,010.28 706.85
Germany 1,723.97 45.41 (226.19) (180.77) 1,543.21 1,079.72
Hong Kong, China 36.55 4.48 – 4.48 41.03 28.71
Indonesia 14.96 – – – 14.96 10.47
Italy 778.15 – (101.69) (101.69) 676.46 473.29
Japan 12,697.80 285.15 (1,643.99) (1,358.85) 11,338.94 7,933.38
Korea, Rep. of 154.37 30.01 4.51 34.52 188.89 132.16
Luxembourg 21.31 20.65 (4.92) 15.73 37.04 25.92
Malaysia 6.71 1.17 0.04 1.21 7.92 5.54
Nauru 1.93 – – – 1.93 1.35
The Netherlands 671.64 24.15 (89.78) (65.63) 606.00 423.99
New Zealand 100.28 6.27 (5.66) 0.61 100.89 70.59
Norway 177.68 7.84 (18.51) (10.67) 167.02 116.86
Portugal 69.72 – (9.11) (9.11) 60.61 42.41
Singapore 4.12 0.95 (0.06) 0.89 5.01 3.51
Spain 263.28 50.37 (37.23) 13.14 276.42 193.40
Sweden 277.05 10.34 (46.11) (35.77) 241.28 168.81
Switzerland 372.25 10.33 (52.33) (42.01) 330.23 231.05
Taipei,China 43.03 4.48 – 4.47 47.50 33.23
Thailand 5.18 0.73 (0.30) 0.43 5.61 3.93
Turkey 104.14 1.29 – 1.29 105.43 73.76
United Kingdom 954.55 – (100.28) (100.28) 854.27 597.70
United States 3,135.59 99.20 – 99.20 3,234.79 2,263.25
TOTALb 26,292.60 720.50 (2608.63) (1,888.13) 24,404.47 17,074.81

ADF COMMITMENT AUTHORITY

($ million; as of 31 December 2005)

2004 2005

Carryover from ADF VIII 114.90 c

ADF IX Contributions 497.60 d
ADF VII & VIII Contributions 3,464.19 151.77
OCR Net Income Transfer 350.00 40.00
Loan Savings and Cancellation 495.20e
Expanded Advance Commitment Authority 3,200.00 899.34
Less: Provision for Disbursement Risk 280.11 44.81
Total ADF Commitment Authority 7,229.28f 1,658.80g
Less: Loans and Grants Committed 6,383.90 1,619.03
Carryover of Conditional Loans Committed 720.93

ADF Commitment Authority Available for Future Commitments 124.45 c 39.77

– Nil.
a Refers to special drawing rights (SDR) valued at the rate of $1.42927 per SDR as of 31 December 2005.
b Totals may not add due to rounding.
c The US dollar equivalent of SDR80.39 million at each year-end exchange rates.
d Contributions received to finance forgone interest of grants are excluded as they have been incorporated in the computation of the Expanded Advance Commitment
Authority.
e Refers to resources made available from loan savings and cancellations to directly finance additional loans under a special arrangement applicable during 2003
and 2004.
f Includes resources made available under the ADF VIII period (2001–2004).
g Includes resources made available under the ADF IX period (starting 1 January 2005).

149
 Table 30
TECHNICAL ASSISTANCE SPECIAL FUND
($ thousand equivalent; as of 31 December 2005)

Total Amount
Contributions Utilized

Direct Voluntary Contributions

Australia 2,484 2,484
Austria 159 159
Bangladesh 47 47
STATISTICAL
ANNEX

Belgium 1,394 1,394

Canada 3,346 3,346
China, People’s Rep. of 1,600 1,600

Denmark 1,963 1,963

Finland 237 237
France 1,697 1,697

Germany 3,315 3,315

Hong Kong, China 100 100
India 2,958 2,958

Indonesia 250 250

Italy 774 774
Japan 47,710 47,710

Korea, Rep. of 1,900 1,900

Malaysia 909 909
Nauru – –

The Netherlands 1,338 1,338

New Zealand 1,096 1,096
Norway 3,279 3,279

Pakistan 1,666 1,596

Singapore 1,100 1,100
Spain 190 190

Sri Lanka 6 6
Sweden 862 862
Switzerland 1,035 1,035

Taipei,China 200 200

Turkey – –
United Kingdom 5,617 5,617

United States 1,500 1,500

Subtotal 88,732 88,662

Regularized Replenishment Contributionsa 368,475 255,443

Transfer to Asian Development Fund (3,472) (3,472)

Allocation from OCR Net Incomeb 803,726 700,461

Subtotal 1,168,729 952,432

Total 1,257,461 1,041,094

– Nil; ADF = Asian Development Fund; OCR = ordinary capital resources.

( ) Negative.
a Represents Technical Assistance Special Fund (TASF) portion of contributions to the replenishment of the Asian Development Fund and the TASF authorized by
Governors’ Resolution Nos. 182, 214, and 300 at historical values.
b Includes income, repayments, and reimbursements to the TASF since 1980, including unrealized investment holding gains (losses).

150
Table 31
JAPAN SPECIAL FUND—Regular and Supplementary Contributions
Statement of Activities and Change in Net Assets
($ million)

1988-1999a 2000 2001 2002 2003 2004 2005 Total

Contributions Committed 745.0 37.6 30.9 22.5 16.7 24.2 27.3 904.2
Revenue 89.3 19.6 14.2 5.9 3.3 4.3 7.1 143.7

Total 834.3 57.2 45.1 28.4 20.0 28.5 34.4 1,047.9

ANNEX
STATISTICAL
Transfer to Cooperation Fund for
Regional Trade and Financial
Security Initiative – – – – – (1.0) – (1.0)
Expenses 604.6 60.8 65.9 35.9 39.6 19.7 33.4 859.9
Exchange Gain (loss) (23.5) (0.1) (1.0) (0.6) (0.3) 1.2 (0.8) (25.1)
Translation Adjustments (14.0) 1.5 – – – – – (12.5)

Change in Net Assets 192.2 (2.2) (21.8) (8.1) (19.9) 9.0 0.2 149.4

– Data not applicable.

( ) Negative.
a Prior years’ amounts have been restated to conform with the 1995 presentation.

Table 32
JAPAN SPECIAL FUND—Asian Currency Crisis Support Facility
Statement of Activities and Change in Net Assets
($ million)

1999-2000 2001 2002 2003 2004 2005 Total

Contributions Committed 241.0a – – – – – 241.0

Revenue 0.4 0.3 1.4 0.7 0.5 1.1 4.4
Total 241.4 0.3 1.4 0.7 0.5 1.1 245.4
Transfer to Japan Fund for Poverty Reduction – – (90.0) – – – (90.0)
Interest Payment Assistance written back – – 33.2 – – – 33.2
Expenses 105.3 8.8 16.2 1.2 (0.9) (0.8) 129.8
Exchange Gain (loss) – (0.2) (1.5) – – – (1.7)
Translation Adjustments 0.9 (28.4) 1.2 – – – (26.3)

Change in Net Assets 137.0 (37.1) (71.9) (0.5) 1.4 1.9 30.8

– Data not applicable.

( ) Negative.
a A guarantee facility is provided under the ACCSF for which the Government of Japan (GOJ) has made available noninterest-bearing, nonnegotiable notes in the
amount of 360 billion yen, encashable by ADB at any time to meet a call on any guarantee. In the absence of any concluded guarantee, the note was returned
to GOJ on 25 March 2002.

151
 Table 33
JAPAN FUND FOR POVERTY REDUCTION, 2005

$ Thousand

AZERBAIJAN
Mahalla Business Development 1,500
BANGLADESH
Social Development for Erosion-Affected Poor in the Jamuna-Meghna Floodplains 790
BHUTAN
Improving the Well-Being of Road Workers 500
STATISTICAL
ANNEX

CAMBODIA
Improving Primary School Access in Disadvantaged Communes 1,870
Improving the Access of Poor Floating Communities on the Tonle Sap to Social Infrastructure and Livelihood Activities 1,000
Women’s Development Centers 1,800
INDONESIA
Enriching Lives of the Urban Poor through Food Fortification 1,750
Sustainable Livelihood Development for Coastal Communities in the Special Province of Nanggroe Aceh Darussalam 2,500
Rehabilitation of Coral Reef and Mangrove Resources in the Special Province of Nanggroe Aceh Darussalam 1,500
Seismically Upgraded Housing in Nanggroe Aceh Darussalam and North Sumatera 2,000
Restoration of Microenterprise and Microfinance in Aceh 2,000
LAO PEOPLE’S DEMOCRATIC REPUBLIC
Sustainable Agroforestry Systems for Livelihood Enhancement of the Rural Poor 1,500
MALDIVES
Restoration of Livelihoods of the Tsunami-Affected Farmers in the Maldives 1,000
MONGOLIA
Maternal Mortality Reduction 1,000
PAKISTAN
Enhancing Road Improvement Benefits to Poor Communities in the North-West Frontier Province 1,000
SRI LANKA
Public Works Restoration and Rehabilitation of Line Drainage Systems of Tsunami-Affected Local Government Roads 2,000
Post-Tsunami Utility Connections for the Poor 2,000
TAJIKISTAN
Community-Based Rural Road Maintenance 1,800
VIET NAM
Community-Based Agricultural Extension and Training in Mountainous Districts 900

TOTAL 28,410

Table 34
JAPAN FUND FOR INFORMATION AND COMMUNICATION TECHNOLOGY, 2005

$ Thousand

INDONESIA
Support for the Local Government Performance Measurement System 730
PHILIPPINES
Developing the Philippine Business Registry 700
REGIONAL
Empowering the Rural Areas Through Community E-Centers Under the South Asia Subregional Economic Cooperation Program 1,000

TOTAL 2,430

152
Table 35
PROJECTS FINANCED BY THEMATIC FUNDS,a 2005

$ Thousand

COOPERATION FUND FOR NATIONAL POVERTY REDUCTION STRATEGIES

AZERBAIJAN
Participatory Strategy Development and Implementation for Achieving the Millennium Development Goals 650.0
LAO PEOPLE’S DEMOCRATIC REPUBLIC
Public Expenditure Planning for National Growth and Poverty Eradication Strategy 700.0
MALDIVES

ANNEX
STATISTICAL
Developing a Results-Oriented 7th National Development Plan 377.0
VIET NAM
Support to Thua Thien Hue and Quang Tri Provinces for Formulating Sustainable Poverty Reduction and Growth Programs 900.0
Capacity Building to Dak Nong Province for Improving Poverty Reduction and Growth Performance 325.0
REGIONAL
Developing New Policy Paradigms for Sustainable Livelihoods 150.0
Protection and Natural Resource Management among Ethnic Minorities of the GMS:
A Study of Policies and Their Impacts, Strategies for Change
Reviewing the Poverty Impact of Regional Economic Integration in the GMS (Supplementary) 100.0
Subtotal 3,202.0
COOPERATION FUND FOR THE WATER SECTOR
CHINA, PEOPLE’S REPUBLIC OF
Guiyang Integrated Water Resources Management 160.0
Nanjing Water Utility Long-Term Capital Finance in Commercial Markets 110.0
Flood Management Strategy Study (Supplementary) 49.6
INDIA
North Eastern Region Urban Development Phase II 160.0
MALDIVES
Promoting Sound Environmental Management in the Aftermath of the Tsunami Disaster 400.0
PAKISTAN
Punjab Irrigated Agriculture Development Sector 90.0
Subtotal 969.6
COOPERATION FUND IN SUPPORT OF MANAGING FOR DEVELOPMENT RESULTS
LAO PEOPLE’S DEMOCRATIC REPUBLIC
Capacity Development for Monitoring Development Results of the National Growth and Poverty Eradication Strategy 150.0
VIET NAM
Results-Based Monitoring of Poverty Reduction and Growth 400.0
Subtotal 550.0
COOPERATIVE FUND FOR REGIONAL TRADE AND FINANCIAL SECURITY INITIATIVE
PHILIPPINES
Strengthening Anti-Money Laundering Regime (Phase II) 400.0
THAILAND
Promoting International Cooperation on Anti-Money Laundering and Combatting the Financing of Terrorism 300.0
REGIONAL
Aviation Legislative and Regulatory Review 450.0
Subtotal 1,150.0
GLOBAL ENVIRONMENT FACILITY
CHINA, PEOPLE’S REPUBLIC OF
Ningxia Yinchuan Integrated Ecosystem Management 350.0
REGIONAL
Central Asian Countries Initiative for Land Management 700.0
Subtotal 1,050.0
GOVERNANCE COOPERATION FUND
TAJIKISTAN
Local Government Finance Capacity Building 500.0
REGIONAL
Regional Environmental Compliance and Enforcement Network 250.0
Subtotal 750.0

GMS = Greater Mekong Subregion.

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 CONTINUED

$ Thousand

POVERTY REDUCTION AND REGIONAL COOPERATION FUND (PRC)

REGIONAL
GMS Phnom Penh Plan for Development Management II 500.0
Enhancing the Business Environment of the GMS 200.0
Capacity Building for Regional Cooperation in Central Asia 400.0
Subtotal 1,100.0
POVERTY REDUCTION COOPERATION FUND
BANGLADESH
Participation of Urban Poor in Municipal Governance 480.0
STATISTICAL
ANNEX

Command Area Development 350.0

CAMBODIA
Cambodia Business Initiative in Rural Development 150.0
Community Self-Reliance and Flood Risk Reduction 500.0
Participatory Poverty Assessment of the Tonle Sap (Supplementary) 100.0
Developing Deposit Services in Rural Cambodia 600.0
CHINA, PEOPLE’S REPUBLIC OF
Poverty Reduction in Coal Mine Areas in Shanxi Province 500.0
NGO-Government Partnerships in Village-Level Poverty Alleviation 1,000.0
Alternative Energy Supply for Rural Poor in Remote Areas 500.0
Alternative Livelihood Options to Facilitate Coal Sector Restructuring 300.0
Urban Poverty Strategy Study II 300.0
LAO PEOPLE’S DEMOCRATIC REPUBLIC
Poverty Reduction through Land Tenure Consolidation, Participatory 124.3
Natural Resources Management and Local Communities
Skills Building (Supplementary)
MARSHALL ISLANDS
Increasing Ownership and Effective Demand for Improved Urban Waste Management 300.0
MONGOLIA
Urban Development and Housing 250.0
NEPAL
Education Sector Development Program I 150.0
Reaching the Most Disadvantaged Groups in Mainstream Rural Development 685.0
PAKISTAN
Support to Implementation of Gender Reform Action Plans 800.0
SRI LANKA
Sri Lanka Post-Tsunami Needs Assessment and Preparation for Emergency Assistance Implementation Strategies 500.0
TAJIKISTAN
Rural Development 150.0
Farm Analysis and Awareness-Raising for Debt Resolution 800.0
VIET NAM
Implementing the Regulatory and Supervisory Framework for Microfinance 250.0
Support for Pro-Poor Health Policies (Supplementary) 50.0
Capacity Building Support to Dak Nong Province for Improving Poverty Reduction and Growth Performance 325.0
Developing Benefit-Sharing Mechanisms for People Adversely Affected by Power Generation Projects 150.0
Strengthening Institutional Capacity of Local Stakeholders for Implementation of Son La Livelihood and Resettlement Plan 1,000.0
Air Pollution, Poverty and Health Effects in Ho Chi Minh City 600.0
REGIONAL
Strengthening Malaria Control for Ethnic Minorities 750.0
HIV/AIDS Vulnerability and Risk Reduction among Ethnic Minority Groups through Communication Strategies 700.0
Strengthening Pro-Poor Policy in the Pacific 925.0
Legal Empowerment for Women and Disadvantaged Groups 550.0
Socioeconomic Impact of Road Crashes 925.0
Making Markets Work Better for the Poor (Supplementary) 385.0
Facilitating Knowledge Management for Pro-Poor Policies and Projects 980.0
Innovative Information and Communications Technology in Education and Its Potential for Reducing Poverty in the Asia and
Pacific Region 800.0
Development of Catastrophe Risk Insurance Mechanisms 150.0
Core Environment Program and Biodiversity Conservation Corridors Initiative in the GMS 550.0
Developing Pro-Poor Governance Capability and Knowledge 875.0
Subtotal 18,504.3

TOTAL 27,275.9
GMS = Greater Mekong Subregion; NGO = nongovernment organization; HIV/AIDS = human immunodeficiency virus/acquired immunodeficiency syndrome.

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