Beijing ADB's second-largest borrower with US$1.2b in loans
SHEEL KOHLI in Washington
The Asian Development Bank says Beijing has jumped from third- to second-largest borrower last year, as the mainland increased calls for help to expand its infrastructure and for assistance in financial-sector and state-enterprise reforms.
The bank, releasing its annual report today, said the mainland had borrowed US$1.2 billion - or 20.1 per cent of the ADB's $5.9 billion of lending last year - bringing Beijing's loans since it became an ADB member in 1986 to $4.5 billion.
All ADB lending dropped sharply from the 1997 level of $9.4 billion, when its resources were strained by a $4 billion financial sector programme it provided to South Korea.
Beijing's calls on the bank's resources have moved it from third-largest ADB client in 1997 to second.
Indonesia ranks first, with $1.8 billion borrowed last year.
Officials believe the mainland is likely to become the bank's largest borrower within five years.
The bank said that, despite a satisfactory performance from its mainland portfolio, it had encountered 'several difficulties', particularly when trying to implement mainland projects.
These included securing counterpart funds in a timely manner and later encountering cost overruns due to domestic inflation.
The cost of domestic borrowing was another problem, and project progress had sometimes been hampered by a lack of co-ordination between Beijing and the bank.
'A recent post-evaluation report also suggests there is a need for continuing efforts to improve development impact and project quality in [the mainland],' the bank said.
'The bank-wide implementation of the project performance report system in November 1998 is expected to help monitor the achievement of development objectives.' The bank said that, to help improve future projects, training seminars to enhance the capacity of executing agencies were being provided as was technical assistance to develop the bidding law, policies and regulatory framework for the contracting industry.
The bank said its aid was aimed at tackling the mainland's emerging economic challenges while it promotes economic growth, reduces poverty, supports human development, improves the status of women and protects the environment.
It said co-financing mobilised from all sources amounted to about $3 billion for 24 projects - including $950 million for Thailand's Export Financing Facility - close to 50 per cent of the bank's total lending.