50 YEARS OF ADB: IMPROVING LIVES FOR A BETTER FUTURE ASIAN DEVELOPMENT BANK 2016 ANNUAL REPORT CONTENTS CHAPTER 1 CHAPTER 2 CHAPTER 3 CHAPTER 4 8 16 36 42 2 PRESIDENT’S MESSAGE 4 BOARD OF DIRECTORS 6 FINANCIAL HIGHLIGHTS CHAPTER 1 8 Improving Lives for a Better Future CHAPTER 2 16 Central and West Asia 20 East Asia 24 Pacific 28 South Asia 32 Southeast Asia CHAPTER 3 36 Developing the Private Sector CHAPTER 4 42 Delivering an Effective Organization SPECIAL APPENDIX 49 Impact of the ADF–OCR Merger and ADB’s Financial Statements ANNUAL REPORT 2016 USB CONTENTS FINANCIAL REPORT OPERATIONAL DATA ORGANIZATIONAL INFORMATION ADB MEMBER FACT SHEETS Population . B 2015 We connected . B 3 million 1966 new households to electricity (2010–2016) GDP per capita A CHANGING , TOGETHER We provided 2015 REGION 8.4 million WE DELIVER households with Since ADB’s founding in 1966, Asia 1966 new and improved has transformed from the world’s Asia has changed a lot in the past water supplies poorest region to a dynamic center 50 years. So has ADB. We have (2010–2016) of global growth and home to more evolved to meet the changing than half the world’s people. demands of the region, to ensure Poverty (less than $1.90 a day) we continue to produce results that improve people’s lives. B 1990 We built and upgraded . B 92,000 2015 kilometers of roads (2010–2016) ASSISTANCE IN PRC’s Shanghai’s Pudong area A BANK FOR booms after the opening of ADVERSITY ADB-supported $267 million HALF THE In the midst of the 1997-1998 Shanghai Yangpu Bridge. From economic shocks to natural Asian financial crisis, ADB WORLD disasters, the region has suered provides $7.8 billion to the three many setbacks. ADB provides hardest-hit economies of ADB has provided more than emergency funds and advice to Indonesia, the Republic of $267 billion in assistance to the Korea, and Thailand. region since its first loan help its members through More than 2 million, mostly poor, to Thailand in 1968. Our projects challenging times. people in India benefit from 2,000 km of ADB-funded rural roads. fuel economic growth and reduce poverty. After Typhoon Yolanda (Haiyan) devastates the Philippines in 2013, ADB provides $900 million for immediate and long-term relief. . B ADB is an international development finance institution. Our goal is to reduce poverty TOTAL OPERATIONS and promote sustainable economic growth in Asia and the Pacific. We provide loans, ’s WHO WE ARE grants, equity investments, and guarantees to our developing member countries. We RECORD RESULTS . B M . B supplement our financial support with development knowledge and policy advice. LOAN AND GRANT TECHNICAL ASSISTANCE COFINANCING APPROVALS 50 YEARS OF ADB: IMPROVING LIVES FOR A BETTER FUTURE ASIAN DEVELOPMENT BANK 2016 ANNUAL REPORT PRESIDENT’S MESSAGE The Asian Development century later, the region’s economic growth and success Bank (ADB) was created in reducing poverty have exceeded even the most 50 years ago through the optimistic forecasts. collective wishes and collaborative efforts of But we cannot be complacent. The fact remains that governments across Asia there are still 330 million people living in absolute poverty and the Pacific, and from across Asia and the Pacific. A lack of infrastructure other countries around continues to limit economic growth, inhibit poverty the world. The Bank’s reduction, and restrict improvements to quality of life. purpose was clear from Implementing the Sustainable Development Goals and the beginning: to foster the climate change actions agreed at the 21st Conference economic growth and of Parties on Climate Change are also priorities for our regional cooperation. region. The private sector needs to be further developed. Because ADB’s founders wanted our organization to be Gender equality needs strengthening at every level. The truly multilateral, they encouraged developed nations in challenges of urbanization, aging, and public health must North America and Europe to become members. Held on be addressed. 19 December 1966 in Manila, ADB’s opening ceremony This 50th edition of the ADB annual report provides celebrated the union of 31 members, with 19 from Asia a fascinating insight into the history of the region and and the Pacific and 12 from other continents. Today, our ADB’s contribution to it. The report gives a strong membership has more than doubled to 67, including 48 account of where ADB now stands as an institution, and members from Asia and the Pacific. I’m pleased with our progress. In the mid-1960s, food was in short supply across The combination of Asian Development Fund (ADF) poverty-stricken Asia and the region lacked access to lending operations and ordinary capital resources (OCR) development finance. ADB’s focus therefore was on took effect on 1 January 2017. OCR equity almost tripled, technical assistance and loans to agriculture. Half a from $17.3 billion to $48.1 billion, as $30.8 billion of ADF 2 ADB AR 2016 loans and other assets were transferred from the ADF. Assets amounting to $2.5 billion remained in the ADF to support its grant operations. The newly enlarged OCR window will offer the poorer borrowing countries concessional lending on the same terms and conditions as before, while the ADF itself will provide only grant assistance going forward. This reform is expected to raise ADB annual loan and grant approvals by a targeted 50%—from $13.5 billion in 2014 to $20 billion in 2020 (see Special Appendix). The effects of the combination became evident even before it became effective. In 2016, ADB approved loans and grants to our developing member countries totaling a record $17.47 billion, compared to $15.99 billion in 2015. Disbursements also scaled new heights, rising to $12.26 billion. Our private sector operations amounted to more than $2.5 billion for the second year running. On the back of strong partnerships with various development stakeholders, we also mobilized cofinancing worth $14.06 billion— another record. These results pushed our total operations for 2016 to $31.70 billion, the highest in ADB history. In May 2016, we also completed a strong replenishment of the ADF 12 for the period 2017–2020. The contributions from our donors will enable a doubling of the minimum allocation for small countries, strengthened support for disaster risk management, and enhanced regional health security. The increase in our development financing to Asia and the Pacific reflects our strong commitment to improving the lives of the region’s people. As ADB celebrates 50 years of providing As ADB celebrates development assistance, we will strive even harder to meet the 50 years ... , we will changing needs of our developing member countries. In the next 50 years, we should strengthen work in three broad areas of strive even harder to achievement: providing a combination of finance and knowledge for developing countries, promoting good policies, and expanding meet the changing programs of regional cooperation. needs of our developing member countries. Takehiko Nakao President and Chairman of the Board of Directors MANAGEMENT TEAM Left to right: Vice-Presidents Stephen P. Groff, Wencai Zhang, Bambang Susantono, Diwakar Gupta, Deborah Stokes, Ingrid van Wees; Managing Director General Juan Miranda; The Secretary Woochong Um. 3 BOARD OF DIRECTORS Front, left to right: The Board of Directors provides strategic wider currency choices for recipients of Directors Paul direction to ADB; approves policies, loans, concessional loans. Dominguez, Mathew and grants; and ensures that shareholder Fox, Koichi Hasegawa, guidance is implemented. In 2016, the Board The Board approved changes to ADB’s main Won-Mok Choi, held 43 formal meetings and 49 informal crisis lending instrument, the Countercyclical Maurizio Ghirga, Support Facility. The move refined the facility’s Zhongjing Wang, sessions. It approved $17.64 billion in loans, President and grants, equity investments, guarantees, and access criteria, while strengthening Board Chairman of the technical assistance projects. It endorsed new consultation, enhancing coordination with Board of Directors country partnership strategies for Bangladesh, other multilateral organizations, and clarifying Takehiko Nakao, the People’s Republic of China, Indonesia, the difference between crisis lending and Directors Bhimantara Tajikistan, Timor-Leste, and Viet Nam. It also policy-based lending. The Board supported the Widyajala, David endorsed the Pacific Approach 2016–2020, a revision of the concessional assistance policy, Murchison, Philaslak which consolidated the performance-based Yukkasemwong, strategic framework that serves as the overall Swati Dandekar, country partnership strategy for the 11 smallest allocation policy and the ADF grant framework. Kshatrapati Shivaji. Pacific island countries. To complete the alignment of policies with the ADF-OCR merger, ADB reviewed its Back, left to right: investment strategy and authority, broadening Alternate Directors MAJOR POLICY INITIATIVES its scope to include reputable international Muhammad Sami In 2015, to make more development assistance credit rating agencies and consider socially Saeed, Scott Dawson, available to countries most in need, the responsible investing. Masashi Tanabe, Board of Directors endorsed the proposal to Johannes Schneider, merge the lending operations of the Asian The Board provided guidance in the ongoing Wenxing Pan, Mario Di Development Fund (ADF) with ADB’s review of ADB’s capital adequacy framework Maio, Joar Strand, and proposed reforms to strengthen the staff Philip