ADB seeks new role to avoid midlife crisis

Tokyo (ANTARA News) - After four decades of fighting poverty, the Asian Development Bank is considering an ambitious overhaul to try to safeguard its relevance in a rapidly shifting economic landscape.

With extreme poverty expected to have been largely conquered in Asia by the end of the next decade, a key issue for the ADB at its annual meeting this weekend in Kyoto will be how to sharpen its focus to keep up with the times.

"The Asian economies are growing quite fast and that means that absolute poverty will be substantially reduced by 2020," ADB president Haruhiko Kuroda told AFP in a recent interview.

But he said many people would still be struggling to get by on just two or three dollars a day even if their incomes rise above the dollar-a-day line.

"And even if income poverty is substantially reduced, child mortality rates, HIV/AIDS, clean water, sanitation -- a lot of non-income related Millennium Development Goals will not be achieved even by 2015 or 2020," Kuroda said.

An outside panel of experts last month urged the ADB to "radically transform itself", estimating that by 2020 widespread absolute poverty will have been beaten in most Asian countries.

They said the development bank should increase its focus on supporting more equitable and environmentally sustainable growth, and take a more regional or global approach instead of concentrating on individual countries.

"Their argument, although very bold, I think is basically correct," said Kuroda, a former Japanese vice minister of finance for international affairs who took the helm of the Manila-based development bank in February 2005.

"How to reduce poverty so much by 2020 and how to reform ourselves so as to respond to the changing needs of our developing countries -- that is a big challenge," he added.

The ADB's primary role when it was established in 1966 was to borrow money from the capital markets to lend to developing Asian economies that might struggle to raise affordable funds on their own.

But many Asian nations can now easily tap capital markets themselves.

Singapore and South Korea, for instance, have already become donor countries to the ADB, whose biggest shareholders are the United States and Japan, followed by China and India.

Asian nations have also accumulated vast foreign currency reserves that they are now considering putting to better use to aid their development.

"Over the next decade many countries could become donor countries but I must say there are many countries like India, Pakistan and Bangladesh that will continue to borrow," said Kuroda.

Asian infrastructure investment

And while some fast-growing economies may need less borrowing to fight poverty, there will still be a huge need for investment in energy efficient infrastructure, he added.

"Our assistance could be scaled up rather than scaled down," he said, noting that the ADB's lending of 6.82 billion dollars in 2006 was dwarfed by Asia's infrastructure investment needs of some 300 billion dollars a year.

The four-day ADB meeting, which gets underway Friday, will also assess the health of the Asian economies a decade after the regional financial crisis, as well as prospects for further financial integration.

Last year the 10-member Association of Southeast Asian Nations along with China, Japan and South Korea agreed to study the creation of a single Asian currency akin to the euro, although little progress is expected any time soon.

Kuroda said a common Asian currency was a "long-term vision."

"The single currency even in Europe took more than 30 years after discussion started. In Asia it would take even more," he said.

ASEAN ministers will meet again Saturday on the sidelines of the ADB meeting to discuss how to bolster the system of bilateral currency swaps that was introduced in 2000 in a bid to prevent another regional financial crisis.