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ADF running out of fund

Wealthy Asian nations

urged to help pour

MANILA: A fund aimed at helping millions of Asians living in poverty is fast running out and the region's wealthy nations are being urged to make up their minds quickly about topping it up, Asian Development Bank officials say.

While Asia contains some of the world's most dynamic economies, it still has about 750 million people living below internationally recognised poverty levels, officials of the Manila-based bank say.

The Asian Development Fund (ADF) which provides low-cost loans to the poorest of the poor is running out of cash and despite several meetings of donor nations and potential donors no firm decisions have yet been taken on replenishing it.

"We will be running out of money some time next year," bank president Mitsuo Sato said, underlining the urgency facing a donors' meeting scheduled for Sunday in Manila just before the multilateral agency's annual meeting.

"The beneficiaries of this kind of operation are very poor countries, for example Nepal, Bangladesh, Cambodia, Laos, Vietnam," Sato said in a recent interview.

The kind of projects the ADF helps finance include helping to meet such basic needs as providing villagers with safe drinking water or rudimentary health services.

ADB officials say there are several hurdles to overcome such as persuading current donors to increase their contributions and nations such as Singapore, Malaysia and Thailand to start contributing for the first time.

The obstacles raised by the donors and potential donors range from Singapore's belief in self-help to South Korea seeking increased voting rights to Taiwan's dislike for the title "Taipei, China" by which it is known at the bank to avoid offending China.

"They're very much concerned about their title ... which they don't like," Sato said.

Sato would like to see all these issues reconciled by year-end and agreement on topping up the ADF to more than the $4.2 billion settled on at the last replenishment in 1992.

"I very much hope we can exceed the past replenishment... but it's not a very easy task because of the difficult budgetary situations prevailing in many of our countries," the president said.

Another major issue is whether China and India should be allowed to get ADF loans, which carry an interest rate of just one percent a year against six percent or more for other ADB loans.

Both giants have been excluded from the ADF in the past although they are allowed to borrow from a similar fund run by the World Bank.

Sato says he would like to see them included in the ADF as well although there are problems.

"These two countries are like very big elephants that may crowd out other smaller countries," he said.-Reuter