Hyderabad, May 06: The ADB today virtually rejected
Finance Minister P Chidambaram's demand to reduce its lending
rates to pre-2000 level, saying the interest rates on its
loans are "extremely low".
"We lend at about Libor+10, which is extremely low when
explained in the long term nature of these loans," Asian
Development Bank president Haruhiko Kuroda told reporters
here.
Earlier in the day, Chidambaram had asked the
Manila-based ADB to reduce its loan charges to the levels
prevailing before year 2000, saying financial parameters of
the bank had been robust and cost of funds were critical to
its business.
To a question on the Finance Minister's suggestion,
Kuroda said because of strong financial conditions of the
bank, it had reduced charges on loans by lowering cost of
funds in many ways.
Chidambaram, who is also the chairman of the ADB's board
of governors, said the commitment fee should either be
eliminated or substantially reduced through improvements in
operations and internal efficiency of the bank.
Kuroda said ADB's lending had some borrowing cost,
including interest payment and commitment fee.
He said since the bank's lending was based on London
Inter Bank Offer Rate (Libor), interest rates fluctuate on the
basis of market rates.
"We could borrow at very low rates, and adding
administrative costs to that, we lend. The bank's lending
rates are very low," he said.
On Finance Minister's another suggestion that the
ADB shift its focus to facilitate private investment in the
region, Kuroda said the bank's yet-to-be-unveiled medium term
strategy would show private sector had a key role to play in
poverty eradication and development in developing countries.
"Finance Minister's suggestions are in conformity with
our strategic priorities in the coming years," he said.
Kuroda said the ADB had been very active in developing
bond markets in Asia for the last three years so that savings
in the region could be channelised for its investment needs
and global imbalances reduced.
"We provide various technical assistance to developing
member economies on bond markets and will continue to develop
these market in the region, necessary for reducing global
imbalances and using regional savings for its investment
purposes," the ADB president said.
The bank also provides summary and outlook on bond
markets in the region, he said, adding it had already issued
local currency-denominated bonds, including in rupees.
He said though it was working closely to develop bond
markets in Asean+3 (China, Japan and Korea), its assistance was
not limited to this region alone.
On Chidambaram's suggestion for ADB to be inclusive in
its initiatives for financial integration, Kuroda said the
bank's efforts at regional cooperation include monetary
cooperation as well.
Chidambaram's suggestion was in view of initial talks
among Asean+3 countries (of which India is not a part) on
common currency unit in Asia.
"ADB is prepared to assist any country or sub-region in
asia. In this respect, we are helping Asean+3 finance
ministers process of monetary integration. It means that we
will cooperate with any sub-region," he said.
ADB drawing up action plan to counter corruption
The ADB is formulating an action
plan to prevent corruption and enhance its effectiveness in
the Asia-Pacific region, its president Haruhiko Kuroda said
today.
"We are working closely with the other multilateral
development banks to develop a common framework on
anti-corruption," Kuroda told reporters after the 39th annual
general meeting of the ADB AME to a close here today.
Pledging the bank's commitment to scale up lending in the
coming years with a particular focus on infrastructure,
transport and energy sectors, he said its medium term strategy
would lay special emphasis on improving governance and
preventing corruption in the region.
"We have already made a substantial review on this
crucial issue and the results have been among the
stake-holders. We are currently in the process of developing
an action plan," he said, adding constant monitoring of the
implementation of the ADB-assisted projects would be done.
"We have noticed that our resources and attention have
been thinly spread and so the end-result have not been
successful always. We have to focus much more," Kuroda said.
Noting that the four-day meeting saw the bank's board
of governors extending full support to the efforts in regional
cooperation and integration, he said, "we will further
strengthen our support in this area, recognising the different
needs of the countries and the sub-regions".
Bureau Report